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<TITLE>FORM S-1</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">As filed with the Securities and Exchange
Commission on December&nbsp;10, 2004</FONT></B>
</DIV>

<DIV align="right">
<B><FONT size="2">Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
</DIV>

<DIV align="left">
<HR size="4" noshade color="#000000" style="margin-top: -5px">
</DIV>

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<P align="center">
<B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<DIV align="center">
<B><FONT size="5">Form&nbsp;S-1</FONT></B>
</DIV>

<DIV align="center">
<B>REGISTRATION STATEMENT</B>
</DIV>

<DIV align="center">
<B>UNDER</B>
</DIV>

<DIV align="center">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

<DIV align="center">
<B><FONT size="6">Charter Communications, Inc.</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Exact name of registrant as specified in its
Charter)</FONT></I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Delaware</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">4841</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">43-1857213</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <I><FONT size="2">(State or other jurisdiction of<BR>
    incorporation or organization)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer<BR>
    Identification Number)</FONT></I></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center">
<B><FONT size="2">12405 POWERSCOURT DRIVE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">ST. LOUIS, MISSOURI 63131</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(314)&nbsp;965-0555</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including area code,</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">of registrant principal executive
offices)</FONT></I>
</DIV>

<DIV align="center">
<B><FONT size="2">Curtis S. Shaw,&nbsp;Esq.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Executive Vice President, General Counsel and
Secretary</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">12405 Powerscourt Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">St.&nbsp;Louis, Missouri 63131</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(314)&nbsp;965-0555</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Name, address, including zip code, and
telephone number,</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">including area code, of agent for
service)</FONT></I>
</DIV>

<DIV align="center">
<B><I><FONT size="2">Copies to:</FONT></I></B>
</DIV>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Alvin G. Segel,&nbsp;Esq.<BR>
    Irell&nbsp;&#38; Manella LLP<BR>
    1800 Avenue of the Stars, Suite&nbsp;900<BR>
    Los Angeles, California 90067-4276<BR>
    (310) 277-1010</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">Jeremy W. Dickens<BR>
    Brian A. Haskel<BR>
    Weil, Gotshal &#38; Manges LLP<BR>
    767 Fifth Avenue<BR>
    New York, NY 10153<BR>
    (212) 310-8000</FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Approximate date of commencement of proposed
sale to the public:</FONT></B><FONT size="2"> As soon as
practicable after this Registration Statement becomes effective.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;If any of the securities
being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule&nbsp;415 under the Securities
Act of 1933, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;If this form is filed to
register additional securities for an offering pursuant to
Rule&nbsp;462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;If this form is a
post-effective amendment filed pursuant to Rule&nbsp;462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;If this form is a
post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same
offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;If delivery of the
prospectus is expected to be made pursuant to Rule&nbsp;434,
please check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="center">
<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

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<TR>
    <TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of Each Class of</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price Per</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount of Registration</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Securities to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Unit(1)</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Aggregate Offering Price</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Fee</FONT></B></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A Common Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">150,000,000&nbsp;shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$2.15
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$322,500,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$40,861
    </FONT></TD>
</TR>

<TR>
    <TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calculated pursuant to Rule&nbsp;457(a) under the
    Securities Act of 1993, as amended, solely for purposes of
    calculating the registration fee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;<B>The Registrant hereby
amends this Registration Statement on such date or dates as may
be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section&nbsp;8(a) of the Securities Act of 1933,
as amended, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to
said Section&nbsp;8(a), may determine.</B>
</FONT>

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<HR size="1" noshade color="#000000" style="margin-top: -2px">

<DIV align="left">
<HR size="4" noshade color="#000000" style="margin-top: -10px">
</DIV>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5"><TR><TD>
<B><FONT size="2" color="#E8112D">The information in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state or
jurisdiction where the offer or sale is not
permitted.</FONT></B><FONT size="2"> <BR>
</FONT>
</TD></TR></TABLE>

<P align="center">
<B><FONT size="2" color="#E8112D">SUBJECT TO COMPLETION, DATED
DECEMBER 10, 2004</FONT></B>

<P align="left">
<B><FONT size="2">PROSPECTUS</FONT></B>

<P align="center">
<IMG src="y69007y6900706.gif" alt="(CHARTER COMMUNCATIONS LOGO)">

<P align="center">
<B><FONT size="5">150,000,000&nbsp;Shares</FONT></B>

<P align="center">
<B><FONT size="6">Charter Communications, Inc.</FONT></B>

<P align="center">
<B><FONT size="5">Class A Common Stock</FONT></B>

<DIV align="center">
<B><FONT size="5">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share</FONT></B>
</DIV>

<P align="center">
<HR size="1" width="22%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of our Class&nbsp;A common stock
offered hereby are shares that we will loan to Citigroup Global
Markets Limited, as borrower, through Citigroup Global Markets
Inc., as agent, pursuant to a share lending agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Class A common stock is quoted on the Nasdaq
National Market under the symbol &#147;CHTR.&#148; The last
reported sale price of our Class A common stock on the Nasdaq
National Market on December&nbsp;7, 2004 was $2.13&nbsp;per
share.
</FONT>

<P align="center">
<HR size="1" width="22%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Investing in our Class&nbsp;A common stock involves risks.
See &#147;Risk Factors&#148; beginning on page&nbsp;8.</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
</FONT>

<P align="center">
<HR size="1" width="22%" align="center" noshade>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Public Offering Price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the share lending agreement, we will
receive a loan fee of $.001 for each share that we lend. We have
been advised by Citigroup Global Markets Limited that it, or its
affiliates, intend(s) to use the proceeds from the sales of the
shares of our Class&nbsp;A common stock offered pursuant to this
prospectus to facilitate transactions by which investors in our
5.875%&nbsp;convertible senior notes due 2009 issued on
November&nbsp;22, 2004 will hedge their investments in the
5.875% convertible notes. See &#147;Share Lending
Agreement&#148; and &#147;Underwriting&#148; on pages&nbsp;79
and 181, respectively, of this prospectus. We will not receive
any of the proceeds from the sale of the shares of Class&nbsp;A
common stock in this offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriter expects to deliver the shares to
purchasers on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004.
</FONT>

<P align="center">
<HR size="1" width="22%" align="center" noshade>

<P align="center">
<B><FONT size="6">Citigroup</FONT></B>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2004
</FONT>
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<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="93%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#101'>Disclosure Regarding
    Forward-Looking Statements</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">i
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#102'>Additional Information</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">ii
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#103'>Summary</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#104'>Risk Factors</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">8
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#105'>Use of Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">23
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#106'>Price Range of Common Stock
    and Dividend Policy</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">24
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#107'>Capitalization</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">25
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#108'>Unaudited Pro Forma
    Financial Information</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">28
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#109'>Selected Historical
    Consolidated Financial Data</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">35
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#110'>Supplementary Quarterly
    Financial Data</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">37
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#111'>Management&#146;s Discussion
    and Analysis of Financial Condition and Results of Operations</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">38
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#112'>Business</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">79
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#113'>Regulation and
    Legislation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">99
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#114'>Management</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">104
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#115'>Security Ownership of
    Certain Beneficial Owners and Management</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">118
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#116'>Certain Relationships and
    Related Transactions</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">121
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#117'>Description of Certain
    Indebtedness</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">141
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#118'>Description of Capital Stock
    and Membership Units</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">166
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#119'>Shares Eligible for Future
    Sale</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">174
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#120'>Certain United States Tax
    Considerations for Non-United States Holders</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">176
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#121'>Share Lending Agreement</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">179
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#122'>Underwriting</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">181
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#123'>Legal Matters</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">182
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#124'>Independent Auditors</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">182
    </FONT></TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y69007exv21w1.txt">EX-21.1 SUBSIDIARIES OF CHARTER COMMUNICATIONS, INC.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="y69007exv23w1.txt">EX-23.1 CONSENT OF KPMG LLP</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV align="left">
<A name='101'></A>
</DIV>

<!-- link1 "DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS" -->

<P align="center">
<B><FONT size="2">DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus includes forward-looking
statements within the meaning of Section&nbsp;27A of the
Securities Act and Section&nbsp;21E of the Exchange Act,
regarding, among other things, our plans, strategies and
prospects, both business and financial. Although we believe that
our plans, intentions and expectations reflected in or suggested
by these forward-looking statements are reasonable, we cannot
assure you that we will achieve or realize these plans,
intentions or expectations. Forward-looking statements are
inherently subject to risks, uncertainties and assumptions. Many
of the forward-looking statements contained in this prospectus
may be identified by the use of forward-looking words such as
&#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148;
&#147;should,&#148; &#147;planned,&#148; &#147;will,&#148;
&#147;may,&#148; &#147;intend,&#148; &#147;estimate&#148; and
&#147;potential,&#148; among others. Important factors that
could cause actual results to differ materially from the
forward-looking statements we make in this
</FONT>

<P align="center"><FONT size="2">i
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">prospectus are set forth in this prospectus and
in other reports or documents that we file from time to time
with the Securities and Exchange Commission, or SEC, and
include, but are not limited to:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to sustain and grow revenues and cash
    flows from operating activities by offering video, high-speed
    data, telephony and other services and to maintain a stable
    customer base, particularly in the face of increasingly
    aggressive competition from other service providers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the availability of funds to meet interest
    payment obligations under our debt and to fund our operations
    and necessary capital expenditures, either through cash flows
    from operating activities, further borrowings or other sources;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to comply with all covenants in our
    indentures and credit facilities, any violation of which would
    result in a violation of the applicable facility or indenture
    and could trigger a default of other obligations under
    cross-default provisions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to repay or refinance debt as it
    becomes due;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any adverse consequences arising out of our
    restatement of our 2000, 2001 and 2002 financial statements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the results of the pending grand jury
    investigation by the United States Attorney&#146;s Office for
    the Eastern District of Missouri, and our ability to reach a
    final approved settlement with respect to the putative class
    action, the unconsolidated state action, and derivative
    shareholders litigation against us on the terms of the memoranda
    of understanding described herein;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to obtain programming at reasonable
    prices or to pass programming cost increases on to our customers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">general business conditions, economic uncertainty
    or slowdown;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the effects of governmental regulation, including
    but not limited to local franchise taxing authorities, on our
    business.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">All forward-looking statements attributable to us
or any person acting on our behalf are expressly qualified in
their entirety by this cautionary statement.
</FONT>

<DIV align="left">
<A name='102'></A>
</DIV>

<!-- link1 "ADDITIONAL INFORMATION" -->

<P align="center">
<B><FONT size="2">ADDITIONAL INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the SEC a registration
statement on Form&nbsp;S-1 to register the sale of the
securities covered by this prospectus. This prospectus, which
forms part of that registration statement, does not contain all
the information included in the registration statement. For
further information about us and the securities described in
this prospectus, you should refer to the registration statement
and its exhibits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Class&nbsp;A common stock is quoted on the
Nasdaq National Market under the symbol &#147;CHTR.&#148; We
file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy at
prescribed rates any document we file at the SEC&#146;s public
reference rooms at Room&nbsp;1200, 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the
SEC&#146;s website at www.sec.gov.
</FONT>

<P align="center"><FONT size="2">ii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "SUMMARY" -->

<P align="center">
<B><FONT size="2">SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary contains a general discussion of our
business, and summary financial information. It does not contain
all the information that you should consider before making an
investment decision regarding our Class&nbsp;A common stock. For
a more complete understanding of an investment in our
Class&nbsp;A common stock, you should read this entire
prospectus. Unless otherwise noted, all business data in this
summary is as of September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Unless otherwise stated, the discussion in
this prospectus of our business and operations includes the
business and operations of Charter Communications, Inc. and its
subsidiaries. Unless the context otherwise requires, the terms
&#147;we,&#148; &#147;us&#148; and &#147;our&#148; refer to
Charter Communications, Inc. and its direct and indirect
subsidiaries on a consolidated basis. The term
&#147;Charter&#148; refers to the issuer, Charter Communication,
Inc.</FONT></I>

<P align="center">
<B><FONT size="2">Our Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a broadband communications company
operating in the United States, with approximately
6.3&nbsp;million customers at September&nbsp;30, 2004. Through
our broadband network of coaxial and fiber optic cable, we offer
our customers traditional cable video programming (analog and
digital, which we refer to as &#147;video&#148; service),
high-speed cable Internet access (which we refer to as
&#147;high-speed data service&#148;), advanced broadband cable
services (such as video on demand (&#147;VOD&#148;), high
definition television service, and interactive television) and,
in some of our markets, we offer telephone service (which we
refer to as &#147;telephony&#148;). See
&#147;Business&nbsp;&#151; Products and Services&#148; for
further description of these terms, including
&#147;customers.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2004, we served
approximately 6.1&nbsp;million analog video customers, of which
approximately 2.7&nbsp;million were also digital video
customers. We also served approximately 1.8&nbsp;million
high-speed data customers (including approximately 205,000 who
received only high-speed data services). We also provided
telephony service to approximately 40,000 customers as of that
date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive offices are located at
Charter Plaza, 12405&nbsp;Powerscourt Drive, St.&nbsp;Louis,
Missouri 63131. Our telephone number is (314)&nbsp;965-0555 and
we have a website accessible at www.charter.com. The information
posted or linked on our website is not part of this prospectus
and you should rely solely on the information contained in this
prospectus and the related documents to which we refer herein
when deciding to make an investment in our Class&nbsp;A common
stock.
</FONT>

<P align="center">
<B><FONT size="2">Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal financial goal is to maximize our
return on invested capital. To do so, we will focus on
increasing revenues, growing our customer base, improving
customer retention and enhancing customer satisfaction by
providing reliable, high-quality service offerings, superior
customer service and attractive bundled offerings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Specifically, in the near term, we are focusing
on:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">refining our sales and marketing efforts to grow
    revenues through consistent branding initiatives, promoting our
    advanced services and emphasizing what we believe to be
    advantages over our competitors, including one-stop shopping for
    video, voice, high-speed data and interactive services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enhancing our digital service with new content
    and continued deployment of advanced products such as digital
    video recorder (&#147;DVR&#148;) service, high definition
    television service, VOD and subscription video on demand
    (&#147;SVOD,&#148; VOD service for selected programming
    categories);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">implementing what we believe is an attractive and
    competitive price point strategy for various levels and bundled
    packages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">improving customer service and satisfaction;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">managing our operating costs by exercising
    discipline in capital and operational spending;&nbsp;and
    </FONT></TD>
</TR>

</TABLE>
</DIV>

<P align="center"><FONT size="2">1
</FONT>
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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identifying opportunities to continue to improve
    our balance sheet and liquidity.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our high-speed data service will
continue to provide a substantial portion of our revenue growth
in the near future. We also plan to continue to expand our
marketing of high-speed data service to the business community,
which we believe has shown an increasing interest in high-speed
data service and private network services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe we offer our customers an excellent
choice of services through a variety of bundled packages,
particularly with respect to our digital video and high-speed
data services. Our digital platform enables us to offer a
significant number and variety of channels, and we offer
customers the opportunity to choose among groups of channel
offerings, including premium channels, and to combine selected
programming with other services such as high-speed data, high
definition television (in selected markets) and VOD (in selected
markets).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have reduced the number of our customer
contact centers from over 300 at December&nbsp;31, 2000, to 36
at September&nbsp;30, 2004. Our 14 largest customer contact
centers now serve approximately 95% of our customers. We
anticipate that this initiative will improve overall customer
satisfaction while reducing costs. We believe that consolidation
and standardization of call centers enable us to provide a more
consistent experience for our customers and to improve sales
through the use of better trained, more efficient and
sales-oriented customer service representatives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to pursue opportunities to improve
our balance sheet and liquidity. Our efforts in this regard have
resulted in the completion of a number of transactions since
September 2003, as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the signing of an agreement providing for the
    issuance by our subsidiaries CCO Holdings, LLC and CCO Holdings
    Capital Corp. of $550&nbsp;million of senior floating rate notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the recent sale of $862.5&nbsp;million of 5.875%
    convertible senior notes due 2009;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale of non-core cable systems for
    $824&nbsp;million, the proceeds of which we used to reduce our
    indebtedness;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance by our subsidiaries, CCH&nbsp;II and
    Charter Holdings, of approximately $1.6&nbsp;billion of senior
    notes which they exchanged in private transactions for
    approximately $1.9&nbsp;billion of outstanding indebtedness of
    Charter and Charter Holdings, resulting in a $294&nbsp;million
    reduction of our consolidated debt outstanding;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale in April 2004 of $1.5&nbsp;billion of
    senior second lien notes by our subsidiary, Charter
    Communications Operating, LLC (&#147;Charter Operating&#148;),
    together with the concurrent refinancing of its credit
    facilities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Going forward, we plan to continue to identify
and pursue opportunities to improve our liquidity and reduce
indebtedness in order to enhance the long-term strength of our
balance sheet and our business.
</FONT>

<P align="center">
<B><FONT size="2">Recent Events</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Agreement to issue CCO&nbsp;Holdings,&nbsp;LLC
    senior floating rate notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;1, 2004, our subsidiaries,
CCO&nbsp;Holdings,&nbsp;LLC and CCO&nbsp;Holdings
Capital&nbsp;Corp., agreed to issue and sell $550&nbsp;million
senior floating rate notes due&nbsp;2010 in a private
transaction to qualified institutional buyers in reliance on
Rule&nbsp;144A and outside the United States to
non-U.S.&nbsp;persons in reliance on Regulation&nbsp;S. The
notes will have an annual interest rate of LIBOR
plus&nbsp;4.125%, payable quarterly. The closing of the sale of
these notes is expected to occur on December&nbsp;15, 2004, and
we anticipate that the net proceeds from the sale of the notes
will be used to pay down bank debt and for general corporate
purposes.
</FONT>
</DIV>

<P align="center"><FONT size="2">2
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale of 5.875% Convertible Senior
    Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;22, 2004, we issued
$862.5&nbsp;million original principal amount of 5.875%
Convertible Senior Notes due 2009, which are convertible into
shares of our Class&nbsp;A common stock, par value $.001 per
share, at a rate of 413.2231 shares per $1,000 principal amount
of notes (or approximately $2.42 per share), subject to
adjustment in certain circumstances. In connection with the
issuance of the notes, we agreed to file a registration
statement containing this prospectus and also file a shelf
registration statement covering resales of the notes and the
Class&nbsp;A common stock issuable upon conversion of the notes.
We agreed to use the proceeds from the sale of the notes to
redeem our outstanding 5.75% convertible senior notes due 2005.
That redemption is scheduled to be completed on
December&nbsp;23, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For additional terms of the notes and the
arrangements governing the loan of shares of our Class&nbsp;A
common stock covered by this prospectus, see &#147;Share Lending
Agreement&#148; and &#147;Description of Certain
Indebtedness&nbsp;&#151; Outstanding Notes&nbsp;&#151; Charter
Communications, Inc. Notes&nbsp;&#151;&nbsp;5.875% Convertible
Senior Notes due 2009.&#148;
</FONT>

<P align="center">
<B><FONT size="2">The Offering</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shares of Class A common stock offered by
    us hereby
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">150,000,000 shares
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Approximate number of shares of Class A common
    stock to be outstanding after the offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">454,890,987 shares (including the 150,000,000
    shares offered hereby)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nasdaq National Market Symbol
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">CHTR
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of our Class&nbsp;A common stock
offered hereby are shares that we have loaned to Citigroup
Global Markets Limited pursuant to a share lending agreement,
dated as of November 22, 2004, which we refer to as the
&#147;share lending agreement.&#148; Under the share lending
agreement, we receive a loan fee of $.001 per share. We will not
receive any proceeds from this offering. See &#147;Share Lending
Agreement&#148; and &#147;Underwriting.&#148;
</FONT>

<P align="center">
<B><FONT size="2">Risk Factors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investing in our Class A common stock involves
substantial risk. See the &#147;Risk Factors&#148; section of
this prospectus for a description of certain of the risks you
should consider before investing in our Class&nbsp;A common
stock.
</FONT>
</DIV>

<P align="center"><FONT size="2">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="center">
<B><FONT size="2">Organizational Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The chart below sets forth our organizational
structure and that of our principal direct and indirect
subsidiaries. The equity ownership, voting percentages and
indebtedness amounts shown below are approximations as of
September&nbsp;30, 2004 on the pro forma basis described in
&#147;Unaudited Pro Forma Financial Information&#148; and do not
give effect to any exercise, conversion or exchange of then
outstanding options, preferred stock, convertible notes and
other convertible or exchangeable securities. See &#147;&#151;
Recent Events.&#148;
</FONT>

<P align="center">
<IMG src="y69007y6900707.gif" alt="(ORGANIZATIONAL FLOW CHART)">

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Charter acts as the sole manager of Charter
    Holdco and most of its limited liability company subsidiaries.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These membership units are held by Charter
    Investment, Inc. and Vulcan Cable&nbsp;III Inc., each of which
    is 100% owned by Paul G. Allen, our Chairman and controlling
    shareholder. They are exchangeable at any time on a one-for-one
    basis for shares of Charter Class&nbsp;A common stock.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents 100% of the preferred membership
    interests in CC&nbsp;VIII, LLC, a subsidiary of CC&nbsp;V
    Holdings, LLC. An issue has arisen regarding the ultimate
    ownership of such CC&nbsp;VIII, LLC membership interests
    following Mr.&nbsp;Allen&#146;s acquisition of those interests
    on June&nbsp;6, 2003. See &#147;Certain Relations and Related
    Transactions&nbsp;&#151;&nbsp;Transactions Arising out of Our
    Organizational Structure and Mr. Allen&#146;s Investment in
    Charter Communications, Inc. and Its
    Subsidiaries&nbsp;&#151;&nbsp;Equity Put
    Rights&nbsp;&#151;&nbsp;CC&nbsp;VIII.&#148;
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CC&nbsp;V&nbsp;Holdings, LLC, the issuer of
    $113&nbsp;million accreted value of senior discount notes, is a
    direct wholly owned subsidiary of CCO&nbsp;NR&nbsp;Holdings,
    LLC, and holds 100% of the common membership units of
    CC&nbsp;VIII, LLC. Mr.&nbsp;Allen through Charter Investment,
    Inc. holds 100% of the preferred membership units in
    CC&nbsp;VIII, LLC. CC&nbsp;VIII, LLC holds 100% of the equity of
    CC&nbsp;VIII Operating, LLC, which in turn holds 100% of the
    equity of a number of operating subsidiaries. One such operating
    subsidiary (CC&nbsp;Michigan, LLC) is a guarantor of the
    CC&nbsp;V Holdings senior discount notes.
    </FONT></TD>
</TR>

</TABLE>
</DIV>

<P align="center"><FONT size="2">4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<P align="center">
<B><FONT size="2">Summary Consolidated Financial Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is a holding company whose principal
assets are a controlling common equity interest in Charter
Communications Holding Company, LLC and &#147;mirror&#148; notes
that are payable by Charter Communications Holding Company, LLC
to Charter which have the same principal amount and terms as
those of Charter&#146;s convertible senior notes. Charter
Communications Holding Company, LLC is a holding company whose
primary assets are equity interests in our cable operating
subsidiaries and intercompany loan receivables. Charter
consolidates Charter Communications Holding Company, LLC on the
basis of voting control. Charter Communications Holding Company,
LLC&#146;s limited liability agreement provides that so long as
Charter&#146;s Class&nbsp;B common stock retains its special
voting rights, Charter will maintain 100% voting interest in
Charter Communications Holding Company, LLC. Voting control
gives Charter full authority and control over the operations of
Charter Communications Holding Company, LLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents summary financial
and other data for Charter and its subsidiaries and has been
derived from the audited consolidated financial statements of
Charter and its subsidiaries for the three years ended
December&nbsp;31, 2003 and the unaudited consolidated financial
statements of Charter and its subsidiaries for the nine months
ended September&nbsp;30, 2004. The consolidated financial
statements of Charter and its subsidiaries for the years ended
December&nbsp;31, 2001 to 2003 have been audited by KPMG LLP, an
independent registered public accounting firm. The pro forma
data set forth below represent our unaudited pro forma
consolidated financial statements after giving effect to the
following transactions as if they occurred on January&nbsp;1 of
the respective period for the statement of operations data and
other financial data and as of the last day of the respective
period for the operating data and balance sheet data:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;the disposition of certain assets in
    October 2003 and in March and April 2004 and the use of proceeds
    in each case to pay down credit facilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;the issuance and sale of the CCH&nbsp;II
    senior notes in September 2003, the CCO Holdings senior notes in
    November 2003, the CCO Holdings senior floating rate notes in
    December 2004 and the Charter Operating senior second lien notes
    in April 2004 with proceeds used to refinance or repay
    outstanding debt and for general corporate purposes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;an increase in amounts outstanding under
    the Charter Operating credit facilities in April 2004 and the
    use of such funds, together with the proceeds of the sale of the
    Charter Operating senior second lien notes, to refinance amounts
    outstanding under the credit facilities of our subsidiaries, CC
    VI Operating, CC VIII Operating and Falcon;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(4)&nbsp;the issuance and sale of
    $863&nbsp;million of 5.875% convertible senior notes in November
    2004 with proceeds used for (i)&nbsp;the purchase of certain
    U.S.&nbsp;government securities pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii)&nbsp;redemption of the outstanding 5.75% convertible senior
    notes due 2005, and (iii)&nbsp;general corporate purposes; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(5)&nbsp;the issuance of the shares offered
    hereby pursuant to a share lending agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following information should be read in
conjunction with &#147;Selected Historical Consolidated
Financial Data,&#148; &#147;Capitalization,&#148;
&#147;Unaudited Pro Forma Financial Information,&#148;
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations,&#148; &#147;Share Lending
Agreement&#148; and the historical consolidated financial
statements and related notes included elsewhere in this
prospectus.
</FONT>
</DIV>

<P align="center"><FONT size="2">5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma(a)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(Dollars in millions, except per share, share and customer data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statement of Operations Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total revenues</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,672</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(b)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and Expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unfavorable contracts and other settlements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total costs and expenses</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,855</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,322</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,310</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,722</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,289</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,768</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(348</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(853</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,353</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,506</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,308</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,376</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,141</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(746</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,144</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,594,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,440,261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Financial Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,774</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,363</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(817</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(885</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(671</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash flows from financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(142</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(431</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deficiencies of earnings to cover fixed charges(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,530</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
</DIV>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Operating Data (end of period)(d):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Analog video customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,431,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,200,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,074,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digital video customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,671,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,588,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,688,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Residential high-speed data customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,565,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,527,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,819,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephony customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As of September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data (end of period):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest(e)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,075</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Actual revenues exceeded pro forma revenues for
    the year ended December&nbsp;31, 2003 and the nine months ended
    September&nbsp;30, 2004 by $189&nbsp;million and
    $29&nbsp;million, respectively. Pro forma net loss exceeded
    actual net loss by $504&nbsp;million and $139&nbsp;million for
    the year ended December&nbsp;31, 2003 and the nine months ended
    September&nbsp;30, 2004, respectively. The unaudited pro forma
    financial information required allocation of certain revenues
    and expenses and such information has been presented for
    comparative purposes and is not intended (a)&nbsp;to provide any
    indication of what our actual financial position or results of
    operations would have been had the transactions described above
    been completed on the dates indicated or (b)&nbsp;to project our
    results of operations for any future date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Pro forma revenue by quarter is as follows:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenue</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenue</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1st Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2nd Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3rd Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total through September&nbsp;30
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4th Quarter 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 2003 pro forma revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(c)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Earnings include net loss plus fixed charges.
    Fixed charges consist of interest expense and an estimated
    interest component of rent expense.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(d)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">See &#147;Business&nbsp;&#151; Products and
    Services&#148; for definitions of the terms contained in this
    section.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(e)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, plus preferred membership interests in CC&nbsp;VIII,
    LLC, an indirect subsidiary of Charter Holdco. Paul G. Allen
    indirectly holds the preferred membership units in CC&nbsp;VIII
    as a result of the exercise of a put right originally granted in
    connection with the Bresnan transaction in 2000. An issue has
    arisen regarding the ultimate ownership of the CC&nbsp;VIII
    membership interests following the consummation of the Bresnan
    put transaction on June&nbsp;6, 2003. See &#147;Certain
    Relationships and Related Transactions&nbsp;&#151; Transactions
    Arising Out of Our Organizational Structure and
    Mr.&nbsp;Allen&#146;s Investment in Charter and Its
    Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151;
    CC&nbsp;VIII.&#148; Reported losses allocated to minority
    interest on the statement of operations are limited to the
    extent of any remaining minority interest on the balance sheet
    related to Charter Communications Holding Company, LLC. Because
    minority interest in Charter Communications Holding Company, LLC
    was substantially eliminated at December&nbsp;31, 2003,
    beginning in the first quarter of 2004, Charter began to absorb
    substantially all losses before income taxes that otherwise
    would have been allocated to minority interest. As a result of
    negative equity at Charter Communications Holding Company, LLC,
    during the nine months ended September&nbsp;30, 2004, no
    additional losses were allocated to minority interest, resulting
    in an approximate additional $2.0&nbsp;billion of net losses.
    Subject to any changes in Charter Communications Holding
    Company, LLC&#146;s capital structure, Charter will absorb
    substantially all future losses.
    </FONT></TD>
</TR>

</TABLE>
</DIV>

<P align="center"><FONT size="2">7
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='104'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">An investment in our Class&nbsp;A common stock
entails the following risks. You should carefully consider these
risk factors, as well as the other information contained in this
prospectus, before making a decision to invest in our
Class&nbsp;A common stock.</FONT></I>

<P align="left">
<B><FONT size="2">Risks Related to Significant Indebtedness of
Us and Our Subsidiaries</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We and our subsidiaries have a significant
    amount of existing debt and may incur substantial additional
    debt in the future, which could adversely affect our financial
    health and our ability to react to changes in our
    business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and our subsidiaries have a significant amount
of debt and may (subject to applicable restrictions in their
debt instruments) incur additional debt in the future. As of
September&nbsp;30, 2004, our total debt was approximately
$18.5&nbsp;billion, and our shareholders&#146; deficit was
approximately $4.1&nbsp;billion. On the pro forma basis set
forth in &#147;Summary Consolidated Financial Data&#148;, our
total debt would have been approximately $18.9&nbsp;billion at
September&nbsp;30, 2004, and the deficiency of earnings to cover
fixed charges for the nine-month period ended September&nbsp;30,
2004 would have been approximately $3.5&nbsp;billion. In 2006
and beyond, significant amounts will become due under our
remaining long-term debt obligations. The maturities of these
obligations are set forth in &#147;Description of Certain
Indebtedness.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that as a result of our significant
levels of debt and operating performance, our access to the debt
markets could be limited. If our business does not generate
sufficient cash flow from operating activities, and sufficient
funds are not available to us from borrowings under our credit
facilities or from other sources, we may not be able to repay
our debt, grow our business, respond to competitive challenges,
or to fund our other liquidity and capital needs. Further, if we
are unable to refinance our debt, we could be forced to
restructure our obligations or seek protection under the
bankruptcy laws. If we were to raise capital through the
issuance of additional equity or to engage in a recapitalization
or other similar transaction, our shareholders could suffer
significant dilution and our noteholders might not receive all
principal and interest payments to which they are contractually
entitled on a timely basis or at all.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our significant amount of debt could have other
important consequences to you. For example, it will or could:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">require us to dedicate a significant portion of
    our cash flow from operating activities to payments on our debt,
    which will reduce our funds available for working capital,
    capital expenditures and other general corporate expenses;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our flexibility in planning for, or
    reacting to, changes in our business, the cable and
    telecommunications industries and the economy at large;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">place us at a disadvantage as compared to our
    competitors that have proportionately less debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make us vulnerable to interest rate increases,
    because a significant amount of our borrowings are, and will
    continue to be, at variable rates of interest;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">expose us to increased interest expense as we
    refinance our existing lower interest rate instruments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">adversely affect our relationship with customers
    and suppliers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our ability to borrow additional funds in
    the future; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make it more difficult for us to satisfy our
    obligations to the holders of our notes and for our subsidiaries
    to satisfy their obligations to their lenders under their credit
    facilities and to their bondholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A default by one of our subsidiaries under its
debt obligations could result in the acceleration of those
obligations, the obligations of our other subsidiaries and our
obligations under our convertible notes. If current debt levels
increase, the related risks that we and you now face will
intensify.
</FONT>

<P align="center"><FONT size="2">8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The agreements and instruments governing
    our debt and the debt of our subsidiaries contain restrictions
    and limitations that could significantly affect our ability to
    operate our business and adversely affect you, as a
    shareholder.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The credit facilities of our subsidiaries and the
indentures governing our and our subsidiaries&#146; other debt
contain a number of significant covenants that could adversely
affect our stockholders and our ability to operate our business.
These covenants restrict our and our subsidiaries&#146; ability
to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends or make other distributions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receive distributions from our subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make certain investments or acquisitions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into related party transactions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dispose of assets or merge;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur additional debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">repurchase or redeem equity interests and debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant liens;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pledge assets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Furthermore, the credit facilities of Charter
Communications Operating, LLC (&#147;Charter Operating&#148;)
require Charter Operating and its subsidiaries to maintain
specified financial ratios and meet financial tests and to
provide audited financial statements with an unqualified opinion
from our independent auditors. The ability to comply with these
provisions may be affected by events beyond our control.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The breach of any covenants or obligations in the
foregoing indentures or credit facilities could result in a
default under the applicable debt agreement or instrument and
could trigger acceleration of the related debt, which in turn
could trigger defaults under other agreements governing our
long-term indebtedness. In addition, the secured lenders under
the Charter Operating credit facilities and the Charter
Operating senior second-lien notes could foreclose on their
collateral, which includes equity interests in our subsidiaries,
and exercise other rights of secured creditors. Any default
under those credit facilities, the indentures governing our
convertible notes or our subsidiaries&#146; debt could adversely
affect our growth, our financial condition and our results of
operations. See &#147;Description of Certain Indebtedness.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not generate sufficient cash flow to
    fund our capital expenditures, ongoing operations and debt
    obligations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to service our debt and our
subsidiaries&#146; debt and to fund our subsidiaries&#146;
planned capital expenditures and our subsidiaries&#146; ongoing
operations will depend on our ability to generate cash flow. Our
ability to generate cash flow is dependent on many factors,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our future operating performance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the demand for our products and services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">general economic conditions and conditions
    affecting customer and advertiser spending;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition and our ability to stabilize customer
    losses;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">legal and regulatory factors affecting our
    business.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of these factors are beyond our control. If
we are unable to generate sufficient cash flow, we may not be
able to repay our debt, operate our business, respond to
competitive challenges or fund our other liquidity and capital
needs. This may also result in future impairments to the
franchises in our financial statements.
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">Charter Operating may not be able to access
    funds under its credit facilities if it fails to satisfy the
    covenant restrictions in its credit facilities, which could
    adversely affect our financial condition and our ability to
    conduct our business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our subsidiaries have historically relied on
access to credit facilities in order to fund operations and to
service parent company debt, and we expect such reliance to
continue in the future. Unused availability under the Charter
Operating credit facilities was approximately $957&nbsp;million
as of September&nbsp;30, 2004. However, our access to these
funds is subject to our satisfaction of the covenants and
conditions to borrowing in those facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An event of default under the credit facilities
or indentures, if not waived, could result in the acceleration
of those debt obligations and, consequently, other debt
obligations. Such acceleration could result in the exercise of
remedies by our creditors and could force us to seek the
protection of the bankruptcy laws, which could materially
adversely impact our ability to operate our business and to make
payments under our debt instruments. In addition, an event of
default under the credit facilities, such as the failure to
maintain the applicable required financial ratios, would prevent
additional borrowing under our subsidiary credit facilities,
which could materially adversely affect our ability to operate
our business and to make payments under our debt instruments.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD width="97%"></TD>
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    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not have the ability to raise the
    funds necessary to fulfill our obligations under our
    indebtedness following a change of control, which would place us
    in default under the applicable debt instruments.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may not have the ability to raise the funds
necessary to fulfill our obligations under our convertible
senior notes and our subsidiaries&#146; senior notes, senior
discount notes, senior floating rate notes and credit facilities
following a change of control. Under the indentures governing
our convertible senior notes, upon the occurrence of specified
change of control events, we are required to offer to repurchase
all of our outstanding convertible senior notes. However, we may
not have sufficient funds at the time of the change of control
event to make the required repurchase of our convertible senior
notes, and our subsidiaries are limited in their ability to make
distributions or other payments to us to fund any required
repurchase. In addition, a change of control under our
subsidiaries&#146; credit facilities and indentures governing
our subsidiaries&#146; notes would require the repayment of
borrowings under those credit facilities and indentures. Because
such credit facilities and notes are obligations of our
subsidiaries, the credit facilities and our subsidiaries&#146;
notes would have to be repaid by our subsidiaries before their
assets could be available to us to repurchase our convertible
senior notes. Our failure to make or complete a change of
control offer would place us in default under our convertible
senior notes. The failure of our subsidiaries to make a change
of control offer or repay the amounts outstanding under their
credit facilities would place them in default of these
agreements and could result in a default under the indentures
governing our convertible senior notes.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Paul G. Allen and his affiliates are not
    obligated to purchase equity from, contribute to or loan funds
    to us or any of our subsidiaries in the future.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Paul G. Allen and his affiliates have purchased
equity, contributed funds and provided other financial support
to Charter and Charter Communications Holding Company, LLC
(&#147;Charter Holdco&#148;) in the past. However,
Mr.&nbsp;Allen and his affiliates are not obligated to purchase
equity from, contribute to or loan funds to us or any of our
subsidiaries in the future.
</FONT>

<P align="left">
<B><FONT size="2">Risks Related to Our Business</FONT></B>

<DIV>&nbsp;</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD></TD>
    <TD>
    <B><I><FONT size="2">We operate in a very competitive business
    environment, which affects our ability to attract and retain
    customers and can adversely affect our business and operations.
    We have lost a significant number of customers to direct
    broadcast satellite competition, and further loss of customers
    could have a material negative impact on our
    business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The industry in which we operate is highly
competitive. In some instances, we compete against companies
with fewer regulatory burdens, easier access to financing,
greater personnel resources, greater
</FONT>

<P align="center"><FONT size="2">10
</FONT>
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<FONT size="2">brand name recognition and longer-established
relationships with regulatory authorities and customers.
Increasing consolidation in the cable industry and the repeal of
certain ownership rules may provide additional benefits to
certain of our competitors, either through access to financing,
resources or efficiencies of scale.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal competitor for video services
throughout our territory is direct broadcast satellite
television services, or DBS, and, in markets where it is
available, our principal competitor for data services is digital
subscriber line service, or DSL. Competition from DBS, including
intensive marketing efforts, aggressive pricing and the ability
of DBS to provide certain services that we currently do not
provide, has had an adverse impact on our ability to retain
customers. Our major DBS competitors continue to offer a greater
variety of channel packages than do we, and are especially
competitive at the lower end pricing and have been intensively
marketing their services. DBS has grown rapidly over the last
several years and continues to do so. We have lost a significant
number of customers to DBS competition, and will continue to
face serious challenges from DBS providers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Local telephone companies and electric utilities
can offer video and other services in competition with us and
they may increasingly do so in the future. For example, certain
telephone companies have begun more extensive deployment of
fiber in their networks that will enable them to begin providing
video services, as well as telephony and Internet access
services, to residential and business customers. We also face
competition from free broadcast television and from other
communications and entertainment media. Further loss of
customers to DBS or other alternative video and data services
could have a material negative impact on our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to our high-speed data services, we
face competition, including intensive marketing efforts and
aggressive pricing, from telephone companies and other providers
of &#147;dial-up&#148; and DSL. DSL service is competitive with
high-speed data service over cable systems. Telephone companies
(which already have telephone lines into the household, an
existing customer base and other operational functions in place)
and other companies offer DSL service. In addition, certain DBS
providers are now providing two-way high-speed Internet access
services, which are competing with our ability to provide
bundled services to our customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to attract new customers, from time to
time we make promotional offers, including offers of temporarily
reduced-price or free service. These promotional programs result
in significant advertising, programming and operating expenses,
and also require us to make capital expenditures to acquire
additional digital set-top terminals. Customers who subscribe to
our services as a result of these offerings may not remain
customers for any significant period of time following the end
of the promotional period. A failure to retain existing
customers and customers added through promotional offerings or
to collect the amounts they owe us could have an adverse effect
on our business and financial results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mergers, joint ventures and alliances among
franchised, wireless or private cable operators, satellite
television providers, local exchange carriers and others, and
the repeal of certain ownership rules may provide additional
benefits to some of our competitors, either through access to
financing, resources or efficiencies of scale, or the ability to
provide multiple services in direct competition with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot assure you that our cable systems will
allow us to compete effectively. Additionally, as we expand our
offerings to include other telecommunications services, and to
introduce new and enhanced services, we will be subject to
competition from other providers of the services we offer. We
cannot predict the extent to which competition may affect our
business and operations in the future.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our dispute with Paul G. Allen concerning
    the ownership of an interest in CC VIII, LLC could adversely
    impact the value of our common stock, our ability to repay our
    debt and our ability to obtain future financing.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our acquisition of the cable systems
owned by Bresnan Communications Company Limited Partnership in
February 2000, CC VIII, LLC, our indirect limited liability
company subsidiary, issued, after adjustments, 24,273,943
Class&nbsp;A preferred membership units (which we collectively
refer to as the
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">CC VIII interest) with a value and an initial
capital account of approximately $630&nbsp;million to certain
sellers affiliated with AT&#38;T Broadband, subsequently owned
by Comcast Corporation (which we refer to as the Comcast
sellers). Our controlling shareholder, Paul&nbsp;G. Allen,
granted the Comcast sellers the right to sell to him the
CC&nbsp;VIII interest for approximately $630&nbsp;million plus
4.5% interest annually from February 2000 (which we refer to as
the Comcast put right). In April 2002, the Comcast sellers
exercised the Comcast put right in full, and this transaction
was consummated on June&nbsp;6, 2003. Accordingly,
Mr.&nbsp;Allen has become the holder of the CC VIII interest,
indirectly through an affiliate.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are in a dispute with Mr.&nbsp;Allen as to
whether he is entitled to retain the CC VIII interest, or
whether he must exchange that interest for units of our
subsidiary, Charter Holdco. The dispute and related matters
(including certain issues associated with the ultimate
disposition of the interest in CC VIII) are more fully described
in &#147;Certain Relationships and Related
Transactions&nbsp;&#151; Transactions Arising out of Our
Organizational Structure and Mr. Allen&#146;s Investment in
Charter and Its Subsidiaries&nbsp;&#151; Equity Put
Rights&nbsp;&#151; CC VIII.&#148; If it is determined that
Mr.&nbsp;Allen is entitled to retain such an ownership interest,
then our indirect interest in CC&nbsp;VIII would continue not to
include the value of Mr.&nbsp;Allen&#146;s retained interest in
CC&nbsp;VIII. As a result, the amounts available for repayment
of our creditors, including creditors of our subsidiaries, may
be affected, and the value of our Class&nbsp;A common stock may
be adversely affected. Further, such retained interest in
CC&nbsp;VIII could adversely affect our borrowing capacity or
make it more difficult for us to secure financing for our
CC&nbsp;VIII subsidiary. In addition, in the event of the sale
of our CC&nbsp;VIII subsidiary or its assets, if it is
determined that Mr.&nbsp;Allen is entitled to retain such
preferred membership interest, then he would be entitled to
receive a portion of such proceeds and the amount available to
us and our security holders would not include
Mr.&nbsp;Allen&#146;s portion of these proceeds.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We are currently the subject of certain
    lawsuits, government investigations and other legal matters, the
    unfavorable outcome of which could adversely affect our business
    and financial condition.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of putative federal class action
lawsuits have been filed against us and certain of our former
and present officers and directors alleging violations of
securities laws. These actions have been consolidated for
pretrial purposes. In addition, a number of other lawsuits have
been filed against us in other jurisdictions. A shareholders
derivative suit was filed in the U.S.&nbsp;District Court for
the Eastern District of Missouri against us and our then current
directors. Also, three shareholders derivative suits were filed
in Missouri state court against us, our then current directors
and our former independent auditor, which actions have been
consolidated. The federal shareholders derivative suit and the
consolidated derivative suit each allege that the individual
defendants breached their fiduciary duties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, we entered into Memoranda of
Understanding setting forth agreements in principal to settle
and resolve the class actions and derivative suits described
above on the terms set forth in the Memoranda. The settlements
are subject to a number of conditions, including the
parties&#146; negotiation and execution of definitive settlement
documents (including without limitation a stipulation of
settlement and related papers), court approval of both
settlements and certain payments by our insurance carriers.
Accordingly, there can be no assurance that the settlements will
become effective or that the actions will be resolved on the
terms set forth in the Memoranda or at all. In the event that
the settlements do not become final, the litigations would
presumably resume.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2002, we became aware of a grand jury
investigation being conducted by the U.S.&nbsp;Attorney&#146;s
Office for the Eastern District of Missouri into certain of our
accounting and reporting practices focusing on how we reported
customer numbers, and our reporting of amounts received from
digital set-top terminal suppliers for advertising. The
U.S.&nbsp;Attorney&#146;s Office publicly stated in July 2003
that we are not a target of the investigation. We have also been
advised by the U.S.&nbsp;Attorney&#146;s Office that no member
of our board of directors, including our Chief Executive
Officer, is a target of the investigation. On July&nbsp;24,
2003, a federal grand jury charged four of our former officers
with conspiracy and mail and wire fraud, alleging improper
accounting and reporting practices focusing on revenue from
digital set-top terminal suppliers and inflated customer account
numbers. On July&nbsp;25, 2003, one of the former officers who
was indicted entered a guilty plea. The trial for the other
three former officers is scheduled to begin on February&nbsp;7,
2005. We are fully cooperating with the investigation.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;4, 2002, we received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January&nbsp;23,
2003, and subsequently served document and testimony subpoenas
on us and a number of our former employees. The investigation
and subpoenas generally concerned our prior reports with respect
to our determination of the number of customers and various of
our accounting policies and practices including our
capitalization of certain expenses and dealings with certain
vendors, including programmers and digital set-top terminal
suppliers. On July&nbsp;27, 2004, the SEC reached a final
agreement with us to settle the investigation. In the Settlement
Agreement and Cease and Desist Order, we agreed to entry of an
administrative order prohibiting any future violations of United
States securities laws and requiring certain other remedial
internal practices and public disclosures. We neither admitted
nor denied any wrongdoing, and the SEC assessed no fine against
us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina state court purportedly on
behalf of a class of Charter Holdco&#146;s customers, alleging,
among other things, that Charter Holdco improperly charged them
a wire maintenance fee without request or permission. They also
claimed that Charter Holdco improperly required them to rent
analog and/or digital set-top terminals even though their
television sets were &#147;cable ready.&#148; A substantively
identical case was filed in the Superior Court of
Athens&nbsp;&#151; Clarke County, Georgia by Emma S. Tobar on
March&nbsp;26, 2002, alleging a nationwide class for these
claims. Following mediation the parties reached a tentative
settlement, subject to final documentation and court approval.
On November&nbsp;10, 2004, the court granted final approval of
the settlement, rejecting the positions advanced by two
objectors to the settlement. One of the objectors recently has
filed a similar, but not identical, lawsuit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Furthermore, we are also a party to other, or
otherwise involved in other lawsuits, claims, proceedings and
legal matters that have arisen in the ordinary course of
conducting our business. In addition, our restatement of our
2000, 2001 and 2002 financial statements could lead to
additional or expanded claims or investigations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot predict with certainty the ultimate
outcome of any of the lawsuits, claims, investigations,
proceedings and other legal matters to which we are a party to,
or otherwise involved in, due to, among other things,
(i)&nbsp;the inherent uncertainties of litigation, government
investigations and proceedings and legal matters generally,
(ii)&nbsp;the remaining conditions to the finalization of the
settlements described above, (iii)&nbsp;the possibility of
appeals and objections to the settlements described above, and
(iv)&nbsp;the need for us to comply with, and/or otherwise
implement, certain covenants, conditions, undertakings,
procedures and other obligations that would be, or have been,
imposed under the terms of the settlements and resolutions
described above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The termination of the settlements described
above, an unfavorable outcome in any of the lawsuits pending
against us, in any government investigation or proceeding or in
any other legal matter, including those described above, or our
failure to comply with or properly implement the terms of the
settlements described above, could result in substantial
potential liabilities and otherwise have a material adverse
effect on our business, consolidated financial condition and
results of operations, in our liquidity, our operations, and/or
our ability to comply with any debt covenants. Further, these
legal matters, and our actions in response to them, could result
in substantial potential liabilities, additional defense and
other costs, increase our indemnification obligations, divert
management&#146;s attention, and/or adversely affect our ability
to execute our business and financial strategies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;Business&nbsp;&#151;&nbsp;Legal
Proceedings&#148; for additional information concerning these
and other litigation matters.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have a history of net losses and expect
    to continue to experience net losses. Consequently, we may not
    have the ability to finance future operations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have had a history of net losses and expect to
continue to report net losses for the foreseeable future. Our
net losses are principally attributable to insufficient revenue
to cover the interest costs we incur because of our high level
of debt, the depreciation expenses that we incur resulting from
the capital investments we have made in our cable properties,
and the amortization and impairment of our franchise
intangibles. We expect that these expenses (other than
amortization and impairment of franchises) will
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<FONT size="2">remain significant, and we expect to continue to
report net losses for the foreseeable future. We reported losses
before cumulative effect of accounting change of
$1.2&nbsp;billion for 2001, $2.3&nbsp;billion for 2002,
$238&nbsp;million for 2003 and $181&nbsp;million and
$3.2&nbsp;billion for the nine months ended September&nbsp;30,
2003 and 2004, respectively. Continued losses would reduce our
cash available from operations to service our indebtedness, as
well as limit our ability to finance our operations.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not have the ability to pass our
    increasing programming costs on to our customers, which would
    adversely affect our cash flow and operating
    margins.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Programming has been, and is expected to continue
to be, our largest operating expense item. In recent years, the
cable industry has experienced a rapid escalation in the cost of
programming, particularly sports programming. We expect this
escalation to continue, and because of market and competitive
factors, we may not be able to pass programming cost increases
on to our customers. As measured by programming costs, and
excluding premium services (substantially all of which were
renegotiated and renewed in 2003) as of September&nbsp;30, 2004,
approximately 33% of our current programming contracts (computed
based on programming expenditures) have expired or are scheduled
to expire by the end of 2004, and approximately another 12% will
expire by the end of 2005. There can be no assurance that these
agreements will be renewed on favorable or comparable terms. The
inability to fully pass programming cost increases on to our
customers would have an adverse impact on our cash flow and
operating margins.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If our required capital expenditures exceed
    our projections, we may not have sufficient funding, which could
    adversely affect our growth, financial condition and results of
    operations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the nine months ended September&nbsp;30,
2004, we spent approximately $639&nbsp;million on capital
expenditures. During 2004 we expect to spend approximately
$850&nbsp;million to $950&nbsp;million on capital expenditures.
The actual amount of our capital expenditures depends on the
level of growth in high-speed data customers and in the delivery
of other advanced services, as well as the cost of introducing
any new services. We may need additional capital if there is
accelerated growth in high-speed data customers or in the
delivery of other advanced services. If we cannot obtain such
capital from increases in our cash flow from operating
activities, additional borrowings or other sources, our growth,
financial condition and results of operations could suffer
materially.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our inability to respond to technological
    developments and meet customer demand for new products and
    services could limit our ability to compete
    effectively.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is characterized by rapid
technological change and the introduction of new products and
services. We cannot assure you that we will be able to fund the
capital expenditures necessary to keep pace with unanticipated
technological developments, or that we will successfully
anticipate the demand of our customers for products and services
requiring new technology. Our inability to maintain and expand
our upgraded systems and provide advanced services in a timely
manner, or to anticipate the demands of the marketplace, could
materially adversely affect our ability to attract and retain
customers. Consequently, our growth, financial condition and
results of operations could suffer materially.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may not be able to carry out our
    strategy to improve operating results by standardizing and
    streamlining operations and procedures.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In prior years, we experienced rapid growth
through acquisitions of a number of cable operators and the
rapid rebuild and rollout of advanced services. Our future
success will depend in part on our ability to standardize and
streamline our operations. The failure to implement a consistent
corporate culture and management, operating or financial systems
or procedures necessary to standardize and streamline our
operations and effectively operate our enterprise could have a
material adverse effect on our business, results of operations
and financial condition.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The loss of any of our key executives could
    adversely affect our ability to manage our
    business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our success is substantially dependent upon the
retention and the continued performance of our key executives,
including Carl Vogel (President and Chief Executive Officer) and
Derek Chang (Executive Vice President of Finance and Strategy
and interim co-Chief Financial Officer). The loss of the
services of any of our key executives could adversely affect our
growth, financial condition and results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Malicious and abusive Internet practices
    could impair our high-speed data services.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our high-speed data customers utilize our network
to access the Internet and, as a consequence, we or they may
become victim to common malicious and abusive Internet
activities, such as unsolicited mass advertising (or spam) and
dissemination of viruses, worms and other destructive or
disruptive software. These activities could have adverse
consequences on our network and our customers, including
degradation of service, excessive call volume to call centers
and damage to our or our customers&#146; equipment and data.
Significant incidents could lead to customer dissatisfaction
and, ultimately, loss of customers or revenue, in addition to
increased costs to us to service our customers and protect our
network. Any significant loss of high-speed data customers or
revenue or significant increase in costs of serving those
customers could adversely affect our growth, financial condition
and results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We could be deemed an &#147;investment
    company&#148; under the Investment Company Act of 1940. This
    would impose significant restrictions on us and would be likely
    to have a material adverse impact on our growth, financial
    condition and results of operation.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal assets are our equity interests in
Charter Holdco and certain indebtedness of Charter Holdco. If
our membership interest in Charter Holdco were to constitute
less than 50% of the voting securities issued by Charter Holdco,
then our interest in Charter Holdco could be deemed an
&#147;investment security&#148; for purposes of the Investment
Company Act. This may occur, for example, if a court determines
that the Class&nbsp;B common stock is no longer entitled to
special voting rights and, in accordance with the terms of the
Charter Holdco limited liability company agreement, our
membership units in Charter Holdco were to lose their special
voting privileges. A determination that such interest was an
investment security could cause us to be deemed to be an
investment company under the Investment Company Act, unless an
exemption from registration were available or we were to obtain
an order of the Securities and Exchange Commission excluding or
exempting us from registration under the Investment Company Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If anything were to happen which would cause us
to be deemed an investment company, the Investment Company Act
would impose significant restrictions on us, including severe
limitations on our ability to borrow money, to issue additional
capital stock and to transact business with affiliates. In
addition, because our operations are very different from those
of the typical registered investment company, regulation under
the Investment Company Act could affect us in other ways that
are extremely difficult to predict. In sum, if we were deemed to
be an investment company it could become impractical for us to
continue our business as currently conducted and our growth, our
financial condition and our results of operations could suffer
materially.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If a court determines that the Class&nbsp;B
    common stock is no longer entitled to special voting rights, we
    would lose our rights to manage Charter Holdco. In addition to
    the investment company risks discussed above, this could
    materially impact the value of the Class&nbsp;A common
    stock.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a court determines that the Class&nbsp;B
common stock is no longer entitled to special voting rights,
Charter would no longer have a controlling voting interest in,
and would lose its right to manage, Charter Holdco. If this were
to occur:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we would retain our proportional equity interest
    in Charter Holdco but would lose all of our powers to direct the
    management and affairs of Charter Holdco and its subsidiaries;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we would become strictly a passive investment
    vehicle and would be treated under the Investment Company Act as
    an investment company.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">15
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This result, as well as the impact of being
treated under the Investment Company Act as an investment
company, could materially adversely impact:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the liquidity of the Class&nbsp;A common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">how the Class&nbsp;A common stock trades in the
    marketplace;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the price that purchasers would be willing to pay
    for the Class&nbsp;A common stock in a change of control
    transaction or otherwise;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the market price of the Class&nbsp;A common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Uncertainties that may arise with respect to the
nature of our management role and voting power and
organizational documents, including legal actions or proceedings
relating thereto, may also materially adversely impact the value
of the Class&nbsp;A common stock.
</FONT>

<P align="left">
<B><FONT size="2">Risks Related to Mr.&nbsp;Allen&#146;s
Controlling Position</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The failure by Mr.&nbsp;Allen to maintain a
    minimum voting and economic interest in us could trigger a
    change of control default under our subsidiary&#146;s credit
    facilities.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating credit facilities provide
that the failure by Mr.&nbsp;Allen to maintain a 35% direct or
indirect voting interest in the applicable borrower would result
in a change of control default. Such a default could result in
the acceleration of repayment of our and our subsidiaries&#146;
indebtedness, including borrowings under the Charter Operating
credit facilities. See &#147;&#151;&nbsp;Risks Related to
Significant Indebtedness of Us and Our Subsidiaries&nbsp;&#151;
We may not have the ability to raise the funds necessary to
fulfill our obligations under our indebtedness following a
change of control, which would place us in default under the
applicable debt instruments.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Mr.&nbsp;Allen controls our stockholder
    voting and may have interests that conflict with your
    interests.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen has the ability to control us.
Through his control of approximately 93% of the voting power of
our capital stock, Mr.&nbsp;Allen, as sole Class&nbsp;B
shareholder, is entitled to elect all but one of its board
members and effectively has the voting power to elect the
remaining board member as well since he controls more than the
majority of the vote of the Class&nbsp;A and Class&nbsp;B
shareholders voting together as a class. By virtue of
Mr.&nbsp;Allen&#146;s control of the voting power of the
Company, we are a &#147;controlled company&#148; under Nasdaq
rule&nbsp;4350(c)(5) and are not subject to requirements that a
majority of our directors be &#147;independent&#148; (as defined
in Nasdaq&#146;s rules) or that there be a nominating committee
of Charter&#146;s board. The Company does not have a nominating
committee. Mr.&nbsp;Allen thus has the ability to control
fundamental corporate transactions requiring equity holder
approval, including, but not limited to, the election of all of
our directors, approval of merger transactions involving us and
the sale of all or substantially all of our assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen is not restricted from investing
in, and has invested and engaged in, other businesses involving
or related to the operation of cable television systems, video
programming, high-speed data service, telephony or business and
financial transactions conducted through broadband interactivity
and Internet services. Mr.&nbsp;Allen may also engage in other
businesses that compete or may in the future compete with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen&#146;s control over our management
and affairs could create conflicts of interest if he is faced
with decisions that could have different implications for him,
us and the holders of our Class&nbsp;A common stock. Further,
Mr.&nbsp;Allen could effectively cause us to enter into
contracts with another entity in which he owns an interest or to
decline a transaction into which he (or another entity in which
he owns an interest) ultimately enters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Current and future agreements between us and
either Mr.&nbsp;Allen or his affiliates may not be the result of
arm&#146;s-length negotiations. Consequently, such agreements
may be less favorable to us than agreements that we could
otherwise have entered into with unaffiliated third parties.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We are not permitted to engage in any
    business activity other than the cable transmission of video,
    audio and data unless Mr.&nbsp;Allen authorizes us to pursue
    that particular business activity, which could adversely affect
    our ability to offer new products and services outside of the
    cable transmission business and to enter into new businesses,
    and could adversely affect our growth, financial condition and
    results of operations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation and Charter
Holdco&#146;s limited liability company agreement provide that
Charter and Charter Holdco and its subsidiaries, cannot engage
in any business activity outside the cable transmission business
except for specified businesses. This will be the case unless we
first offer the opportunity to pursue the particular business
activity to Mr.&nbsp;Allen, he decides not to pursue it and he
consents to our engaging in the business activity. The cable
transmission business means the business of transmitting video,
audio (including telephone services), and data over cable
television systems owned, operated or managed by us from time to
time. These provisions may limit our ability to take advantage
of attractive business opportunities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The loss of Mr.&nbsp;Allen&#146;s services
    could adversely affect our ability to manage our
    business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen is Chairman of our board of
directors and provides strategic guidance and other services to
us. If we were to lose his services, our growth, financial
condition and results of operations could be adversely impacted.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">The special tax allocation provisions of
    the Charter Holdco limited liability company agreement may cause
    us in some circumstances to pay more taxes than if the special
    tax allocation provisions were not in effect.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdco&#146;s limited liability company
agreement provided that through the end of 2003, net tax losses
of Charter Holdco that would otherwise have been allocated to us
based generally on our percentage ownership of outstanding
common membership units of Charter Holdco would instead be
allocated to the membership units held by Vulcan Cable&nbsp;III
Inc. and Charter Investment, Inc. The purpose of these special
tax allocation provisions was to allow Mr.&nbsp;Allen to take
advantage for tax purposes of the losses generated by Charter
Holdco. However, beginning in 2002, due to tax capital account
limitations, certain net tax losses of Charter Holdco were
allocated to us and have continued to be so allocated since that
time. The limited liability company agreement further provides
that beginning at the time that Charter Holdco generates net tax
profits (as determined under the applicable federal income tax
rules for determining book profits), the net tax profits that
would otherwise have been allocated to us based generally on our
percentage of outstanding common membership units of Charter
Holdco will instead generally be allocated to membership units
held by Vulcan Cable&nbsp;III Inc. and Charter Investment, Inc.
In some situations, the special tax allocation provisions could
result in our having to pay taxes in an amount that is more or
less than if Charter Holdco losses and net tax profits to its
members based generally on the percentage of outstanding common
membership units owned by such members from the time of the
completion of the offering. See &#147;Description of Capital
Stock and Membership Units&nbsp;&#151; Special Tax Allocation
Provisions.&#148; For further discussions on the details of the
tax allocation provision see &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations&nbsp;&#151;&nbsp;Critical Accounting Policies and
Estimates&nbsp;&#151;&nbsp;Income Taxes.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">The issuance of our Class&nbsp;A common
    stock offered hereby pursuant to the share lending agreement, as
    well as possible future conversions of our convertible notes,
    significantly increases the risk that we will experience an
    ownership change in the future for tax purposes, resulting in a
    material limitation on the use of a substantial amount of our
    existing net operating loss carryforwards.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, we had
approximately $2.8&nbsp;billion of tax net operating losses
(resulting in a gross deferred tax asset of approximately
$1.1&nbsp;billion), expiring in the years 2019 through 2023 and
anticipate that we will generate approximately an additional
$2.0&nbsp;billion (which would result in an additional gross
deferred tax asset of approximately $814&nbsp;million) by
December&nbsp;31, 2004, which would expire in 2024. Due to
uncertainties in projected future taxable income, valuation
allowances have been
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">established against the gross deferred tax assets
for book accounting purposes except for deferred benefits
available to offset certain deferred tax liabilities. Currently,
such tax net operating losses can accumulate and be used to
offset any future taxable income of Charter. An &#147;ownership
change&#148; as defined in Section&nbsp;382 of the Internal
Revenue Code of 1986, as amended, would place significant
limitations, on an annual basis, on the use of such net
operating losses to shelter any future taxable income we may
generate. Such limitations, in conjunction with the net
operating loss expiration provisions, could effectively
eliminate our ability to use a substantial portion of our net
operating losses to offset future taxable income. The shares
issued hereby are being issued pursuant to a share lending
agreement. See &#147;Share Lending Agreement.&#148; While the
tax treatment of the issuance of shares offered hereby pursuant
to a borrowing transaction under the share lending agreement is
uncertain, we do not believe that this issuance would result in
our experiencing an ownership change. However, future
transactions and the timing of such transactions, such as
additional stock issuances by us (including but not limited to
issuances upon future conversion of our 5.875% convertible
senior notes), reacquisitions of the borrowed shares by us, or
acquisitions or sales of shares by certain holders of our
shares, including persons who have held, currently hold, or
accumulate in the future five percent or more of our outstanding
stock (including upon an exchange by Paul Allen or his
affiliates, directly or indirectly, of membership units of
Charter Holdco), could cause an ownership change. Many of the
foregoing transactions are beyond our control.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Risks Related to Regulatory and Legislative
Matters</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our business is subject to extensive
    governmental legislation and regulation, which could adversely
    affect our business by increasing our expenses.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Regulation of the cable industry has increased
cable operators&#146; administrative and operational expenses
and limited their revenues. Cable operators are subject to,
among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">rules governing the provision of cable equipment
    and compatibility with new digital technologies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">rules and regulations relating to subscriber
    privacy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limited rate regulation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">requirements that, under specified circumstances,
    a cable system carry a local broadcast station or obtain consent
    to carry a local or distant broadcast station;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">rules for franchise renewals and
    transfers;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other requirements covering a variety of
    operational areas such as equal employment opportunity,
    technical standards and customer service requirements.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, many aspects of these regulations
are currently the subject of judicial proceedings and
administrative or legislative proposals. There are also ongoing
efforts to amend or expand the federal, state and local
regulation of some of our cable systems, which may compound the
regulatory risks we already face. Certain states and localities
are considering new telecommunications taxes that could increase
operating expenses.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our cable systems are operated under
    franchises that are subject to non-renewal or termination. The
    failure to renew a franchise in one or more key markets could
    adversely affect our business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable systems generally operate pursuant to
franchises, permits and similar authorizations issued by a state
or local governmental authority controlling the public
rights-of-way. Many franchises establish comprehensive
facilities and service requirements, as well as specific
customer service standards and monetary penalties for
non-compliance. In many cases, franchises are terminable if the
franchisee fails to comply with significant provisions set forth
in the franchise agreement governing system operations.
Franchises are generally granted for fixed terms and must be
periodically renewed. Local franchising authorities may resist
granting a renewal if either past performance or the prospective
operating proposal is considered inadequate. Franchise
authorities often demand concessions or other commitments as a
condition to renewal. In some instances, franchises have not
been renewed at expiration, and we have
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<DIV align="left">
<FONT size="2">operated and are operating under either temporary
operating agreements or without a license while negotiating
renewal terms with the local franchising authorities.
Approximately 28% of our franchises, covering approximately 30%
of our video customers, have either expired or expire on or
before December&nbsp;31, 2006.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot assure you that we will be able to
comply with all significant provisions of our franchise
agreements and certain of our franchisors have from time to time
alleged that we have not complied with these agreements.
Additionally, although historically we have renewed our
franchises without incurring significant costs, we cannot assure
you that we will be able to renew, or to renew as favorably, our
franchises in the future. A termination of and/or a sustained
failure to renew a franchise in one or more key markets could
adversely affect our business in the affected geographic area.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our cable systems are operated under
    franchises that are non-exclusive. Accordingly, local
    franchising authorities can grant additional franchises and
    create competition in market areas where none existed
    previously, resulting in overbuilds, which could adversely
    affect results of operations.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable systems are operated under
non-exclusive franchises granted by local franchising
authorities. Consequently, local franchising authorities can
grant additional franchises to competitors in the same
geographic area or operate their own cable systems. As a result,
competing operators may build systems in areas in which we hold
franchises. In some cases municipal utilities may legally
compete with us without obtaining a franchise from the local
franchising authority. The existence of more than one cable
system operating in the same territory is referred to as an
overbuild. These overbuilds could adversely affect our growth,
financial condition and results of operations by creating or
increasing competition. As of September&nbsp;30, 2004, we are
aware of overbuild situations impacting approximately 5% of our
estimated homes passed, and potential overbuild situations in
areas servicing approximately 2% of our estimated homes passed.
Additional overbuild situations may occur in other systems.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Local franchise authorities have the
    ability to impose additional regulatory constraints on our
    business, which could further increase our
    expenses.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the franchise agreement, cable
authorities in some jurisdictions have adopted cable regulatory
ordinances that further regulate the operation of cable systems.
This additional regulation increases the cost of operating our
business. We cannot assure you that the local franchising
authorities will not impose new and more restrictive
requirements. Local franchising authorities also have the power
to reduce rates and order refunds on the rates charged for basic
services.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Further regulation of the cable industry
    could cause us to delay or cancel service or programming
    enhancements or impair our ability to raise rates to cover our
    increasing costs, resulting in increased losses.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, rate regulation is strictly limited to
the basic service tier and associated equipment and installation
activities. However, the Federal Communications Commission (or
FCC) and the U.S.&nbsp;Congress continue to be concerned that
cable rate increases are exceeding inflation. It is possible
that either the FCC or the U.S.&nbsp;Congress will again
restrict the ability of cable system operators to implement rate
increases. Should this occur, it would impede our ability to
raise our rates. If we are unable to raise our rates in response
to increasing costs, our losses would increase.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There has been considerable legislative interest
recently in requiring cable operators to offer historically
bundled programming services on an &#225; la carte basis.
Although the FCC recently made a recommendation to Congress
against the &#225; la carte mandate, it is still possible that
new marketing restrictions could be adopted in the future.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Actions by pole owners might subject us to
    significantly increased pole attachment costs.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pole attachments are cable wires that are
attached to poles. Cable system attachments to public utility
poles historically have been regulated at the federal or state
level, generally resulting in favorable
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<FONT size="2">pole attachment rates for attachments used to
provide cable service. The FCC clarified that a cable
operator&#146;s favorable pole rates are not endangered by the
provision of Internet access, and that approach ultimately was
upheld by the Supreme Court of the United States, except that
subsequently on October&nbsp;6, 2003, the United States Court of
Appeals for the Ninth Circuit held that cable modem service is
not &#147;cable service&#148; but is part
&#147;telecommunications service&#148; and part
&#147;information service,&#148; which possibly could lead to
higher pole attachment rates. The Ninth Circuit&#146;s decision
has been appealed to the U.S.&nbsp;Supreme Court, which has
agreed to hear the case. Despite the existing regulatory regime,
utility pole owners in many areas are attempting to raise pole
attachment fees and impose additional costs on cable operators
and others. In addition, the favorable pole attachment rates
afforded cable operators under federal law can be increased by
utility companies if the operator provides telecommunications
services, as well as cable service, over plant attached to
utility poles. Any significant increased costs could have a
material adverse impact on our profitability and discourage
system upgrades and the introduction of new products and
services.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We may be required to provide access to our
    networks to other Internet service providers, which could
    significantly increase our competition and adversely affect our
    ability to provide new products and services.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of companies, including telephone
companies and Internet service providers, or ISPs, have
requested local authorities and the FCC to require cable
operators to provide non-discriminatory access to cable&#146;s
broadband infrastructure, which allows cable to deliver a
multitude of channels and/or services, so that these companies
may deliver Internet services directly to customers over cable
facilities. A federal court in each of California, Virginia and
Florida has struck down &#147;open-access&#148; requirements
imposed by a variety of franchising authorities as unlawful.
Each of these decisions struck down the &#147;open-access&#148;
requirements on different legal grounds. On October&nbsp;6,
2003, however, the United States Court of Appeals for the Ninth
Circuit issued a decision holding that cable modem service is
part &#147;telecommunications service&#148; and part
&#147;information service.&#148; The U.S. Supreme Court has
agreed to hear an appeal of that decision. If not overturned,
the decision could potentially result in &#147;open access&#148;
requirements being imposed on us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that allocating a portion of our
bandwidth capacity to other Internet service providers:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">would impair our ability to use our bandwidth in
    ways that would generate maximum revenues;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">would strengthen our Internet service provider
    competitors by granting them access and lowering their costs to
    enter into our markets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, if we were required to provide
access in this manner, it could have a significant adverse
impact on our profitability. This requirement could impact us in
many ways, including by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increasing competition;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increasing the expenses we incur to maintain our
    systems; and/or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increasing the expense of upgrading and/or
    expanding our systems.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Changes in channel carriage regulations
    could impose significant additional costs on us.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable operators also face significant regulation
of their channel carriage. They currently can be required to
devote substantial capacity to the carriage of programming that
they would not carry voluntarily, including certain local
broadcast signals, local public, educational and government
access programming, and unaffiliated commercial leased access
programming. This carriage burden could increase in the future,
particularly if the FCC were to require cable systems to carry
both the analog and digital versions of local broadcast signals.
The FCC currently is conducting a proceeding in which it is
considering this channel usage possibility, although it
previously issued a tentative decision against such dual
carriage.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Offering voice communications service may
    subject us to additional regulatory burdens, causing us to incur
    additional costs.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, we began to offer voice communications
services on a limited basis over our broadband network. We
continue to explore development and deployment of VOIP services.
The regulatory requirements applicable to VOIP service are
unclear although the FCC recently declared that certain VOIP
services are not subject to traditional state public utility
regulation. The full extent of the FCC preemption of VOIP
services is not yet clear. Expanding our offering of these
services may require us to obtain certain authorizations,
including federal, state and local licenses. We may not be able
to obtain such authorizations in a timely manner, or at all, and
conditions could be imposed upon such licenses or authorizations
that may not be favorable to us. Furthermore, telecommunications
companies generally are subject to significant regulation, and
it may be difficult or costly for us to comply with such
regulations, were it to be determined that they applied to VOIP
offerings such as ours. In addition, pole attachment rates are
higher for providers of telecommunications services than for
providers of cable service. If there were to be a final legal
determination by the FCC, a state Public Utility Commission, or
appropriate court that VOIP services are subject to these higher
rates, our pole attachment costs could increase significantly,
which could adversely affect our financial condition and results
of operations.
</FONT>

<P align="left">
<B><FONT size="2">Additional Risks Related to this
Offering</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The market price of our Class&nbsp;A common
    stock may be volatile, which could cause the value of your
    investment to decline.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is impossible to predict whether the price of
our Class&nbsp;A common stock will rise or fall. Trading prices
of our Class&nbsp;A common stock will be influenced by our
operating results and prospects and by economic, financial,
regulatory and other factors. In addition, general market
conditions, including the level of, and fluctuations in, the
trading prices of stocks generally, and sales of substantial
amounts of our Class&nbsp;A common stock by us in the market
after this offering, or the perception that such sales may
occur, could affect the price of our Class&nbsp;A common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The price of our Class&nbsp;A common stock also
could be affected by any sales of our Class&nbsp;A common stock
by investors who view our recently issued
5.875%&nbsp;convertible senior notes as a more attractive means
of equity participation in our company and by hedging or
arbitrage trading activity that we expect to develop involving
our Class&nbsp;A common stock as a result of this offering and
the recent issuance of our convertible notes. The hedging or
arbitrage could, in turn, affect the trading prices of our
Class&nbsp;A common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The market price of our Class&nbsp;A common
    stock could be adversely affected by the large number of
    additional shares of Class&nbsp;A common stock eligible for
    issuance in the future.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004,
304,803,455&nbsp;shares of Class&nbsp;A common stock were issued
and outstanding, and 50,000&nbsp;shares of Class&nbsp;B common
stock were issued and outstanding. An additional
339,132,031&nbsp;shares of Class&nbsp;A common stock were
issuable upon conversion of outstanding units of Charter Holdco
(increasing by 24,273,943&nbsp;shares if Mr.&nbsp;Allen is
required to contribute his CC&nbsp;VIII membership interest to
Charter Holdco), and 28,213,409&nbsp;shares were issuable upon
the exercise of outstanding options. An additional
356&nbsp;million shares are now issuable upon conversion of our
recently issued 5.875% convertible senior notes due 2009. In
addition, additional shares and warrants to acquire shares are
expected to be issued in connection with the settlement of
certain outstanding litigation matters, as more fully described
in &#147;Business&nbsp;&#151; Legal Proceedings.&#148; All of
the 339,132,031&nbsp;shares of Class&nbsp;A common stock
issuable upon exchange of Charter Holdco membership units and
all shares of the Class&nbsp;A common stock issuable upon
conversion of shares of our Class&nbsp;B common stock will have
&#147;demand&#148; and/or &#147;piggyback&#148; registration
rights attached to them. All of the 356&nbsp;million shares
issuable upon conversion of the 5.875% convertible senior notes
are expected to be eligible for resale pursuant to a shelf
registration statement. The sale of a substantial number of
shares of Class&nbsp;A common stock or the perception that such
sales could occur could adversely affect the market price for
the Class&nbsp;A common stock because the sale could cause the
amount of the Class&nbsp;A common stock available for sale in
the market to exceed the demand for the Class&nbsp;A common
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<FONT size="2">stock and could also make it more difficult for
us to sell equity securities or equity-related securities in the
future at a time and price that we deem appropriate. This could
adversely affect our ability to fund our current and future
obligations. See &#147;Shares Eligible for Future Sale.&#148;
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The effect of the issuance of our shares of
    Class&nbsp;A common stock pursuant to the share lending
    agreement and upon conversion of the recently issued 5.875%
    convertible notes, including sales of our Class&nbsp;A common
    stock in short sale transactions by the holders of the 5.875%
    convertible notes, may have a negative effect on the market
    price of our Class&nbsp;A common stock.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed pursuant to a share lending
agreement to lend to Citigroup Global Markets Limited the
150&nbsp;million shares of our common stock that are being
offered pursuant to this prospectus. In addition, we recently
sold $862.5&nbsp;million original aggregate principal amount of
5.875% convertible senior notes due 2009, which are currently
convertible into approximately 356&nbsp;million shares of our
Class&nbsp;A common stock. We have been advised by Citigroup
Global Markets Limited that it or an affiliate intends to
facilitate the establishment by holders of those convertible
notes of hedged positions in the convertible notes. While
issuance of shares upon the conversion of the convertible notes
may require a reduction of an equal number in the outstanding
borrowed shares under the share lending agreement, the effect of
the increase in the number of shares of our Class&nbsp;A common
stock issued or issuable pursuant to the share lending agreement
or upon conversion of the 5.875%&nbsp;convertible senior notes
could have a negative effect on the market price of our
Class&nbsp;A common stock. The market price of our Class&nbsp;A
common stock also could be negatively affected by other short
sales of our Class&nbsp;A common stock by the purchasers of the
5.875%&nbsp;convertible senior notes to hedge their investment
in the convertible notes. See &#147;Share Lending
Agreement&#148; and &#147;Underwriting.&#148;
</FONT>

<P align="center"><FONT size="2">22
</FONT>
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<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "USE OF PROCEEDS" -->

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of the proceeds from the sale of our
Class&nbsp;A common stock offered by this prospectus will be
received by us. However, pursuant to the share lending
agreement, we will receive a loan fee of $0.001 for each share
that we lend to Citigroup Global Markets Limited, which will be
used for general corporate purposes. See &#147;Share Lending
Agreement.&#148;
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY" -->

<P align="center">
<B><FONT size="2">PRICE RANGE OF COMMON STOCK AND DIVIDEND
POLICY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Class&nbsp;A common stock is quoted on the
Nasdaq National Market under the symbol &#147;CHTR.&#148; The
following table sets forth, for the periods indicated, the range
of high and low last reported sale price per share of
Class&nbsp;A common stock on the Nasdaq National Market. There
is no established trading market for our Class&nbsp;B common
stock.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter through December&nbsp;8
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of October&nbsp;31, 2004, there were 3,785
holders of record of our Class&nbsp;A common stock, one holder
of our Class&nbsp;B common stock, and 13 holders of record of
our Series&nbsp;A Convertible Redeemable Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The last reported sale price of our Class&nbsp;A
common stock on the Nasdaq National Market on December&nbsp;7,
2004 was $2.13 per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have never paid and do not expect to pay any
cash dividends on our Class&nbsp;A common stock in the
foreseeable future. Charter Holdco is required under certain
circumstances to pay distributions pro rata to all its common
members to the extent necessary for any common member to pay
taxes incurred with respect to its share of taxable income
attributed to Charter Holdco. Covenants in the indentures and
credit agreements governing the debt of our subsidiaries
restrict their ability to make distributions to us and,
accordingly, limit our ability to declare or pay cash dividends.
We intend to cause Charter Holdco and its subsidiaries to retain
future earnings, if any, to finance the operation of the
business of Charter Holdco and its subsidiaries.
</FONT>

<P align="center"><FONT size="2">24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='107'></A>
</DIV>

<!-- link1 "CAPITALIZATION" -->

<P align="center">
<B><FONT size="2">CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth as of
September&nbsp;30, 2004, on a consolidated basis:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the actual (historical)&nbsp;capitalization of
    Charter;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The capitalization of Charter, on a pro forma
    basis to reflect the sale by CCO Holdings, LLC of
    $550&nbsp;million of senior floating rate notes due 2010 with
    the net proceeds used to repay borrowings under Charter
    Communications Operating, LLC&#146;s revolving credit facility
    and for general corporate purposes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the capitalization of Charter, on a pro forma as
    adjusted basis to reflect:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="4%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance and sale of $863&nbsp;million of
    5.875%&nbsp;convertible senior notes in November 2004 and the
    use of the proceeds for (i)&nbsp;purchase of certain U.S.
    government securities which were pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii)&nbsp;redemption of outstanding 5.75%&nbsp;convertible
    senior notes due 2005 and (iii)&nbsp;general corporate purposes;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance of the shares offered hereby
    pursuant to a share lending agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following information should be read in
conjunction with &#147;Selected Historical Consolidated
Financial Data,&#148; &#147;Unaudited Pro Forma Financial
Information,&#148; &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations&#148;
and the historical consolidated financial statements and related
notes included elsewhere in this prospectus.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">As of September&nbsp;30, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">as adjusted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Long-term debt:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Communications, Inc.:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.875%&nbsp;convertible senior notes due 2009(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">829</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.75%&nbsp;convertible senior notes due 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.75%&nbsp;convertible senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior and senior discount notes(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCH&nbsp;II:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCO Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8&nbsp;3/4%&nbsp;senior notes due 2013
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior floating rate notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Operating:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.000%&nbsp;senior second lien notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.375%&nbsp;senior second lien notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Renaissance:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.00%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC V Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.875%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Credit facilities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Operating(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Preferred stock&nbsp;&#151;
    redeemable(d)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Minority interest(e)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Shareholders&#146; deficit:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A common stock; $.001&nbsp;par value;
    1.75&nbsp;billion shares authorized; 304,803,455, 304,803,455
    and 454,803,455&nbsp;shares issued and outstanding,
    respectively(f)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B common stock; $.001&nbsp;par value;
    750&nbsp;million shares authorized; 50,000&nbsp;shares issued
    and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock; $.001&nbsp;par value;
    250&nbsp;million shares
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">25
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">As of September&nbsp;30, 2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">as adjusted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in-capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,856</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,856</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,862</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,075</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Represents issuance and sale of the 5.875%
    convertible senior notes. This assumes proceeds of
    $863&nbsp;million of which $33&nbsp;million, related to certain
    provisions of the 5.875% convertible senior notes that for
    accounting purposes were derivatives which required bifurcation,
    is based on preliminary estimates and is recorded as accounts
    payable and accrued expenses and other long-term liabilities,
    and may differ as a result of finalization of an independent
    valuation, with the resulting long-term debt of
    $829&nbsp;million. The debt will accrete from the
    $829&nbsp;million to the $863&nbsp;million face value over three
    years, the duration of our pledged securities.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">As of September&nbsp;30, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">as adjusted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Represents the following Charter Holdings notes:
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">8.250%&nbsp;senior notes due 2007
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">8.625%&nbsp;senior notes due 2009
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">9.920%&nbsp;senior discount notes due 2011
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">10.000%&nbsp;senior notes due 2009
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2010
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">10.750%&nbsp;senior notes due 2009
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">11.125%&nbsp;senior notes due 2011
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">13.500%&nbsp;senior discount notes due 2011
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">9.625%&nbsp;senior notes due 2009
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">10.000%&nbsp;senior notes due 2011
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2011
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">12.125%&nbsp;senior discount notes due 2012
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    &nbsp;&nbsp;<FONT size="2">Total
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(c)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The amounts outstanding under the Charter
    Operating credit facilities as of September&nbsp;30, 2004
    totaled $5.4&nbsp;billion. Borrowing availability under the
    credit facilities totaled $957&nbsp;million as of
    September&nbsp;30, 2004, none of which was restricted due to
    covenants.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(d)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In connection with Charter&#146;s acquisition of
    Cable USA, Inc. and certain cable system assets from affiliates
    of Cable USA, Inc., Charter issued 545,259&nbsp;shares of
    Series&nbsp;A Convertible Redeemable Preferred Stock valued at
    and with a liquidation preference of $55&nbsp;million. Holders
    of the preferred stock have no voting rights but are entitled to
    receive cumulative cash dividends at an annual rate of 5.75%,
    payable quarterly. The preferred stock is redeemable by Charter
    at its option on or after August&nbsp;31, 2004 and must be
    redeemed by Charter at any time upon a change of control, or if
    not previously redeemed or converted, on August&nbsp;31, 2008.
    The preferred stock is convertible, in whole or in part, at the
    option of the holders from April&nbsp;1, 2002 through
    August&nbsp;31, 2008, into shares of Class&nbsp;A common stock
    at an initial conversion rate equal to a conversion price of
    $24.71&nbsp;per share of Class&nbsp;A common stock, subject to
    certain customary adjustments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(e)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, or approximately 53% of total members&#146; equity of
    Charter Communications Holding Company, LLC, plus
    $650&nbsp;million of preferred membership interests in CC VIII,
    LLC, an indirect subsidiary of Charter Communications Holding
    Company, LLC. Paul G. Allen indirectly holds the preferred
    membership units in CC VIII as a result of the exercise of put
    rights originally granted in connection with the Bresnan
    transaction in 2000. An issue has arisen regarding the ultimate
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">ownership of the CC VIII membership interests
    following the consummation of the Bresnan put transaction on
    June&nbsp;6, 2003. See &#147;Certain Relationships and Related
    Transactions&nbsp;&#151; Transactions Arising Out of Our
    Organizational Structure and Mr.&nbsp;Allen&#146;s Investment in
    Charter and its Subsidiaries&nbsp;&#151; Equity Put
    Rights&nbsp;&#151; CC VIII&#148;. Reported losses allocated to
    minority interest on the statement of operations are limited to
    the extent of any remaining minority interest on the balance
    sheet related to Charter Communications Holding Company, LLC.
    Because minority interest in Charter Communications Holding
    Company, LLC was substantially eliminated at December&nbsp;31,
    2003, beginning in the first quarter of 2004, Charter began to
    absorb substantially all losses before income taxes that
    otherwise would have been allocated to minority interest.
    Subject to any changes in Charter Communications Holding
    Company, LLC&#146;s capital structure, Charter will absorb
    substantially all future losses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(f)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Although the shares offered by this prospectus
    will be considered issued and outstanding, we do not expect they
    will impact earnings per share under current accounting
    literature. See &#147;Share Lending Agreement.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">27
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='108'></A>
</DIV>

<!-- link1 "UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS" -->

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following unaudited pro forma consolidated
financial statements are based on the historical consolidated
financial statements of Charter, adjusted on a pro forma basis
to reflect the following transactions as if they had occurred on
September&nbsp;30, 2004 (for the unaudited pro forma
consolidated balance sheet) and on January&nbsp;1, 2003 (for the
unaudited pro forma consolidated statement of operations):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;the disposition of certain assets in
    October 2003 and in March and April 2004 and the use of proceeds
    in each case to pay down credit facilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;the issuance and sale of the CCH&nbsp;II
    senior notes in September 2003, the CCO Holdings senior notes in
    November 2003, the CCO Holdings senior floating rate notes in
    December 2004 and the Charter Operating senior second lien notes
    in April 2004 with proceeds used to refinance or repay
    outstanding debt and for general corporate purposes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;an increase in amounts outstanding under
    the Charter Operating credit facilities in April 2004 and the
    use of such funds, together with the proceeds of the sale of the
    Charter Operating senior second lien notes, to refinance amounts
    outstanding under the credit facilities of our subsidiaries,
    CC&nbsp;VI Operating, CC&nbsp;VIII Operating and Falcon;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(4)&nbsp;the issuance and sale of
    $863&nbsp;million of 5.875% convertible senior notes in November
    2004 with proceeds used for (i)&nbsp;the purchase of certain
    U.S.&nbsp;government securities pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii)&nbsp;redemption of outstanding 5.75% convertible senior
    notes due 2005, and (iii)&nbsp;general corporate
    purposes;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(5)&nbsp;the issuance of the shares offered
    hereby pursuant to a share lending agreement. See &#147;Share
    Lending Agreement.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unaudited pro forma adjustments are based on
information available to us as of the date of this prospectus
and certain assumptions that we believe are reasonable under the
circumstances. The Unaudited Pro Forma Consolidated Financial
Statements required allocation of certain revenues and expenses
and such information has been presented for comparative purposes
and is not intended (a)&nbsp;to provide any indication of what
our actual financial position or results of operations would
have been had the transactions described above been completed on
the dates indicated or (b)&nbsp;to project our results of
operations for any future date.
</FONT>

<P align="center"><FONT size="2">28
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">For the Year Ended December&nbsp;31,
2003</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Asset</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Financing</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dispositions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Transactions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;A)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;B)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Subtotal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;C)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(Dollars in millions, except per share and share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Revenues</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(137</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(189</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Costs and Expenses:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating(excluding depreciation and amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unfavorable contracts and other adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(174</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,704</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,722</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,241</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,655</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,673</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest and income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,212</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(348</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(835</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(853</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(45</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(724</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(746</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;A:</FONT></B><FONT size="2">
Represents the elimination of operating results related to the
disposition of certain assets in October 2003 and in March and
April 2004 and a reduction of interest expense related to the
use of the net proceeds from such sales to repay a portion of
our subsidiaries&#146; credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;B:</FONT></B><FONT size="2">
Represents adjustment to interest expense associated with the
completion of the financing transactions discussed in pro forma
assumptions two and three (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest in the Charter Operating senior second
    lien notes and the amended and restated Charter Operating credit
    facilities at a weighted average rate of 5.1%
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on CCH&nbsp;II 10.25%&nbsp;senior notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on CCO Holdings 8&nbsp;3/4%&nbsp;senior
    notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on CCO Holdings senior floating rate
    notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred financing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Historical interest expense for Charter Operating
    credit facilities and on subsidiary credit facilities repaid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(253</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Historical interest expense for CCI and CCH
    senior and senior discount notes repaid with proceeds from
    CCH&nbsp;II refinancing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(117</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense for Charter Operatings&#146;
    revolving credit facility repaid with proceeds from issuance of
    the CCO Holdings senior floating rate notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase in interest expense for other
    financing transactions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net gain on debt exchange represents the
elimination of the gain realized on the purchase of an aggregate
of $609&nbsp;million principal amount of our convertible senior
notes and $1.3&nbsp;billion principal amount of Charter
Communications Holdings, LLC&#146;s senior notes and senior
discount notes in consideration for an aggregate of
$1.6&nbsp;billion principal amount of 10.25%&nbsp;notes due 2010
issued by CCH&nbsp;II, LLC. The gain is net of the write-off of
deferred financing costs associated with the retired debt of
$27&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;C:</FONT></B><FONT size="2">
Represents the increase in interest expense from the issuance of
$863&nbsp;million of convertible senior notes due 2009 with a
stated interest rate of 5.875% and the amortization of deferred
debt issuance cost associated with such issuance reduced by the
use of proceeds to retire $588&nbsp;million of the 5.75%
convertible senior notes due in 2005 and the interest on the
$144&nbsp;million of securities purchased and pledged as
security for interest payments on such debt (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="91%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on the convertible senior notes issued
    in November 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred debt issuance costs(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less interest from the pledged securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less interest on 5.75%&nbsp;convertible senior
    notes retired with proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma interest expense adjustment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The adjustment related to the amortization of
    deferred financing cost is based on preliminary information
    available at this time and is subject to change based on
    finalization of an independent valuation and on finalization of
    the amount of financing costs to be deferred.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">30
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">For the Nine Months Ended September&nbsp;30,
2004</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Asset</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Financing</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dispositions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Transactions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;A)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;B)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Subtotal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;C)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(Dollars in millions, except per share and share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Revenues</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Costs and Expenses</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,099</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairments of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss) on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,855</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,275</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,289</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,223</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,250</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,264</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes, and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(108</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,516</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,353</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(108</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,492</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,506</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,362</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,376</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,127</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,141</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,144</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">31
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;A:</FONT></B><FONT size="2">
Represents the elimination of operating results related to the
disposition of certain assets in March and April 2004 and a
reduction of interest expense related to the use of the net
proceeds from such sales to repay a portion of our
subsidiaries&#146; credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;B:</FONT></B><FONT size="2">
Represents adjustment to interest expense associated with the
completion of the financing transactions discussed in pro forma
assumptions two and three (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="91%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on the Charter Operating senior second
    lien notes and the amended and restated Charter Operating credit
    facilities at a weighted average rate of 4.9%
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on CCO Holdings senior floating rate
    notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred financing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Historical interest expense for Charter Operating
    credit facilities and on subsidiary credit facilities repaid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(83</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense for Charter Operating&#146;s
    revolving credit facility repaid with proceeds from issuance of
    the CCO Holdings senior floating rate notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net increase in interest expense for other
    financing transactions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Loss on extinguishment of debt represents the
elimination of the write-off of deferred financing fees and
third party costs related to the Charter Operating refinancing
in April 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;C:</FONT></B><FONT size="2">
Represents the increase in interest expense from the issuance of
$863&nbsp;million of convertible senior notes due 2009 with a
stated interest rate of 5.875% and the amortization of deferred
debt issuance cost associated with such issuance reduced by the
use of proceeds to retire $588&nbsp;million of the 5.75%
convertible senior notes due in 2005 and the interest on the
$144&nbsp;million of securities purchased and pledged as
security for interest payments on such debt (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="91%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest on the convertible senior notes issued
    in November 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred debt issuance costs(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less interest from the pledged securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less interest on 5.75%&nbsp;convertible senior
    notes retired with proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma interest expense adjustment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(a)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The adjustment related to the amortization of
    deferred financing cost is based on preliminary information
    available at this time and is subject to change based on
    finalization of the amount of financing costs to be deferred.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC.</FONT></B>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONSOLIDATED BALANCE
SHEET</FONT></B>

<DIV align="center">
<B><FONT size="2">As of September&nbsp;30, 2004</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Financing</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Transactions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;A)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Subtotal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Note&nbsp;B)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="23" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT ASSETS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables from related party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INVESTMENT IN CABLE PROPERTIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total investment in cable properties, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER NONCURRENT ASSETS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="23"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="23" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND SHAREHOLDERS&#146;
    DEFICIT</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT LIABILITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LONG-TERM DEBT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,634</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">DEFERRED MANAGEMENT FEES&nbsp;&#151; RELATED PARTY
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER LONG-TERM LIABILITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MINORITY INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">PREFERRED STOCK-REDEEMABLE
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SHAREHOLDERS&#146; DEFICIT:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,856</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,856</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,862</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,075</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note&nbsp;A:</FONT></B><FONT size="2">
Financing transactions represent the issuance in December 2004
of $550&nbsp;million of senior floating rate notes by CCO
Holdings with proceeds used for (i)&nbsp;repayment of
$400&nbsp;million under Charter Operatings&#146; revolving
credit facility, (ii)&nbsp;payment of financing costs and
(iii)&nbsp;general corporate purposes. The amount of financing
costs deferred is based on preliminary information regarding
actual expenses. Sources and uses are as follows (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Source of funds:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of senior floating rate notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total sources
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Uses of funds:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repay Charter Operatings&#146; revolving credit
    facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payment of financing costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General corporate purposes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total uses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Note
B:</FONT></B><FONT size="2">&nbsp;&nbsp;Offering adjustments
include the issuance and sale of approximately $863&nbsp;million
of convertible senior notes with proceeds used (i)&nbsp;to
purchase approximately $144&nbsp;million of securities, which
are pledged as security for interest payments on such debt,
(ii)&nbsp;to call, at 101.15%, the outstanding 5.75% convertible
senior notes due 2005, (iii)&nbsp;to pay financing cost and
(iv)&nbsp;for general corporate purposes. The short-term portion
of the pledged securities is recorded on our unaudited pro forma
consolidated balance sheet in prepaid expenses and other current
assets, while the long-term portion is recorded in other assets.
Certain provisions of the 5.875%&nbsp;convertible senior notes
with a fair value of $33&nbsp;million for accounting purposes
are considered derivatives and require bifurcation. These
derivatives are preliminary estimates and may differ based on
finalization of independent valuations and have been bifurcated
from the long-term debt, with the short-term portion recorded as
accounts payable and accrued expenses and the long-term portion
recorded as other long-term liabilities on the unaudited pro
forma consolidated balance sheet. Additionally, the fair market
value of the stock borrow arrangement of approximately
$13&nbsp;million was recorded as deferred financing cost (other
noncurrent assets) and additional paid in capital on the
unaudited consolidated balance sheet. The amount of financing
costs deferred is based on preliminary information available at
this time and is subject to adjustment based on final
information regarding actual expenses. Sources and uses are as
follows (in millions):
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sources of funds:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of 5.875% convertible senior notes due
    2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total sources
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Uses of funds:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redeem 5.75% convertible senior notes due 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase pledged securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payment of financing cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General corporate purposes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total uses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">34
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA" -->

<P align="center">
<B><FONT size="2">SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents summary financial
and other data for Charter and its subsidiaries and has been
derived from (i)&nbsp;the audited consolidated financial
statements of Charter and its subsidiaries for the four years
ended December&nbsp;31, 2003, (ii)&nbsp;the unaudited
consolidated financial statements of Charter and its
subsidiaries for the year ended December&nbsp;31, 1999, and
(iii)&nbsp;the unaudited consolidated financial statements of
Charter and its subsidiaries for the nine months ended
September&nbsp;30, 2003 and 2004. The consolidated financial
statements of Charter and its subsidiaries for the years ended
December&nbsp;31, 2000 to 2003 have been audited by KPMG LLP, an
independent registered public accounting firm. The following
information should be read in conjunction with
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and the historical
consolidated financial statements and related notes included
elsewhere in this prospectus.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(Dollars in millions, except share and per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Statement of Operations Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,428</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,141</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,807</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,566</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,819</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,602</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,701</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Costs and Expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">460</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,187</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,486</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,807</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,952</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,457</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,552</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">329</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">606</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">826</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">963</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">940</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">702</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">735</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">745</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,398</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,683</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,436</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,453</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,095</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,105</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">(Gain) loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">23</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,638</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,433</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Option compensation expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">80</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">38</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">34</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">36</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Unfavorable contracts and other settlements
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,614</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,229</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,018</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,888</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,303</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,296</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,855</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(186</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,322</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">516</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">306</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(444</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,040</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,310</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,163</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gain (loss) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">267</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">267</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(638</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">573</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,280</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,461</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,176</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">377</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">297</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(868</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,768</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(348</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,353</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income tax benefit (expense)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">460</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">116</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,308</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">35
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(Dollars in millions, except share and per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(184</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2.22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,811,202</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">225,697,775</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">269,594,386</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">294,440,261</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">294,597,519</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">294,503,840</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">299,411,053</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Other Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Deficiencies of earnings to cover fixed charges(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(638</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Balance Sheet Data (end of period):</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,967</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24,352</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">26,463</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">22,384</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,364</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,451</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,084</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8,937</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,061</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,343</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,671</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,647</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,498</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,484</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Minority interest(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,571</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,434</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,050</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">689</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">763</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">637</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Redeemable securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">751</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,104</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Preferred stock&nbsp;&#151; redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">55</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">55</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">55</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Shareholders&#146; equity (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,011</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,767</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,585</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">41</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(127</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Earnings include net loss plus fixed charges.
    Fixed charges consist of interest expense and an estimated
    interest component of rent expense.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, plus preferred membership interests in CC VIII, LLC, an
    indirect subsidiary of Charter. Paul G. Allen indirectly holds
    the preferred membership units in CC VIII, LLC as a result of
    the exercise of a put right originally granted in connection
    with the Bresnan transaction in 2000. An issue has arisen
    regarding the ultimate ownership of the CC VIII, LLC membership
    interest following the consummation of the Bresnan put
    transaction on June&nbsp;6, 2003. See &#147;Certain
    Relationships and Related Transactions&nbsp;&#151; Transactions
    Arising Out of Our Organizational Structure and
    Mr.&nbsp;Allen&#146;s Investment in Charter and Its
    Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151; CC
    VIII.&#148; Reported losses allocated to minority interest on
    the statement of operations are limited to the extent of any
    remaining minority interest on the balance sheet related to
    Charter Communications Holding Company, LLC. Because minority
    interest in Charter Communications Holding Company, LLC was
    substantially eliminated at December&nbsp;31, 2003, beginning in
    the first quarter of 2004, Charter began to absorb substantially
    all losses before income taxes that otherwise would have been
    allocated to minority interest. As a result of negative equity
    at Charter Communications Holding Company, LLC, during the nine
    months ended September&nbsp;30, 2004, no additional losses were
    allocated to minority interest, resulting in an approximate
    additional $2.0&nbsp;billion of net losses. Subject to any
    changes in Charter Communications Holding Company, LLC&#146;s
    capital structure, Charter will absorb substantially all future
    losses.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "SUPPLEMENTARY QUARTERLY FINANCIAL DATA" -->

<P align="center">
<B><FONT size="2">SUPPLEMENTARY QUARTERLY FINANCIAL
DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables present quarterly financial
data for the periods presented on the consolidated statements of
operations (in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,344</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(235</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(366</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,766</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(294</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(416</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,295</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295,106,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,522,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302,604,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31, 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,178</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before minority interest and
    income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(286</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)&nbsp;applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic income (loss)&nbsp;per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted Income (loss)&nbsp;per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding, basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,466,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,474,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,566,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,875,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding, diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,466,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,474,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637,822,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,875,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,597</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(234</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(354</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(367</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(317</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,872</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.08</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,394,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,453,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,454,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,457,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">37
</FONT>

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<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND
ANALYSIS</FONT></B>

<DIV align="center">
<B><FONT size="2">OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reference is made to &#147;Disclosure Regarding
Forward-Looking Statements,&#148; which describe important
factors that could cause actual results to differ from
expectations and non-historical information contained herein. In
addition, the following discussion should be read in conjunction
with the audited consolidated financial statements of Charter
Communications, Inc. and subsidiaries as of and for the years
ended December&nbsp;31, 2003, 2002 and 2001 and the unaudited
consolidated financial statements of Charter Communications,
Inc. and subsidiaries as of and for the nine months ended
September&nbsp;30, 2004 included in this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">Introduction</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, we undertook a number of transition
activities including reorganizing our workforce, adjusting our
video pricing and packages, call center consolidations and
implementing billing conversions. Due to the focus on such
activities and certain financial constraints, we reduced
spending on marketing our products and services. The reduced
marketing activities and other necessary operational changes
negatively impacted customer retention and acquisition,
primarily during the first half of the year. During the second
half of 2003, we increased our marketing efforts and implemented
promotional campaigns to slow the loss of analog video
customers, and to accelerate advanced service penetration,
especially in high-speed data.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2003 and the nine months ended
September&nbsp;30, 2004, we took a series of steps intended to
improve our balance sheet and liquidity. The issuance of
approximately $862.5&nbsp;million original principal amount of
convertible senior notes due 2009, the net proceeds of which
have been used to purchase a portfolio of U.S.&nbsp;government
securities as security for certain interest payments on the new
notes and will be used to redeem Charter&#146;s
$588&nbsp;million outstanding 5.75%&nbsp;Convertible Senior
Notes due October 2005, and our subsidiaries&#146; issuance of
$550&nbsp;million of senior floating rate notes with the net
proceeds used to repay Charter Operatings&#146; revolving credit
facility and for general corporate purposes, are our most recent
examples of these efforts. In addition, since September 2003:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We and our subsidiaries exchanged
    $1.9&nbsp;billion of indebtedness for $1.6&nbsp;billion of
    indebtedness while extending maturities and achieving
    approximately $294&nbsp;million of debt discount.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our subsidiary, CCO Holdings, sold
    $500&nbsp;million total principal amount of
    8&nbsp;3/4%&nbsp;senior notes and used the net proceeds to repay
    approximately $486&nbsp;million principal amount of our
    subsidiaries&#146; credit facilities, providing additional
    financial flexibility for use of our subsidiary&#146;s credit
    facilities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our subsidiaries amended the Charter Operating
    credit facilities and concurrently issued $1.5&nbsp;billion in
    senior second lien notes to refinance bank debt of CC VI
    Operating, CC VIII Operating and Falcon. The transaction
    extended beyond 2008 approximately $8.0&nbsp;billion of
    scheduled debt maturities and credit facility commitment
    reductions which would have otherwise come due before that time.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our subsidiaries completed the sale of cable
    systems in Port Orchard, Washington, for a total price of
    approximately $91&nbsp;million, subject to adjustments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We closed the sale of cable systems in Florida,
    Pennsylvania, Maryland, Delaware and West Virginia with Atlantic
    Broadband Finance, LLC. We closed on the sale of an additional
    cable system in New York to Atlantic Broadband Finance, LLC in
    April 2004. Subject to post-closing contractual adjustments, the
    Company expects the total net proceeds from the sale of all of
    these systems to be approximately $733&nbsp;million, of which
    $5&nbsp;million is currently held in an indemnity escrow account
    (with the unused portion thereof to be released by March&nbsp;1,
    2005). The proceeds received to date have been used to repay a
    portion of amounts outstanding under our subsidiary&#146;s
    credit facilities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We significantly reduced capital spending from
    approximately $2.2&nbsp;billion for the year ended
    December&nbsp;31, 2002 to approximately $854&nbsp;million for
    the year ended December&nbsp;31, 2003, primarily due to the
    substantial completion of our network rebuild and upgrade.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">38
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the years 1999 through 2001, we grew
significantly, principally through acquisitions of other cable
businesses financed by debt and, to a lesser extent, equity. We
have no current plans to pursue any significant acquisitions.
However, we may pursue exchanges of non-strategic assets or
divestitures, such as the sale of cable systems to Atlantic
Broadband Finance, LLC discussed above. We therefore do not
believe that our historical growth rates are accurate indicators
of future growth.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, our ability to fund operations and
investing activities has depended on our continued access to
credit under our subsidiary&#146;s credit facilities. While our
use of cash has changed over time such that the substantial
majority of our cash now comes from cash flows from operating
activities, we expect we will continue to borrow under our
subsidiary&#146;s credit facilities from time to time to fund
cash needs. The occurrence of an event of default under our
subsidiary&#146;s credit facilities could result in borrowings
from these facilities being unavailable to us and could, in the
event of a payment default or acceleration, also trigger events
of default under our notes and our subsidiaries&#146;
outstanding notes and would have a material adverse effect on us.
</FONT>

<P align="left">
<B><FONT size="2">Adoption of New Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing in January 2002 and continuing through
the first quarter of 2003, our management elected to implement a
number of new policies including:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Change in Disconnect and Bad Debt
Policies.</FONT></I><FONT size="2"> Our estimated customer count
is intended to include those people receiving cable service
(regardless of payment status), except for complementary
accounts (such as our employees). Our disconnect and bad debt
guidelines for slow or nonpaying customers provide that, in
general, customers are to be terminated for non-payment after
approximately 60-75&nbsp;days, and written off/referred to
collection at approximately 90-110&nbsp;days. We initially began
implementing this policy in January 2002 after we decided to
change our past practice under which we did not promptly
disconnect these customers on a uniform basis. Effective
year-end 2001, we also increased our allowance for doubtful
accounts. The number of our customers who are presently more
than 90&nbsp;days overdue and our bad debt expense associated
with such customers are lower than they were prior to the
institution of these policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Procedures to Ensure Adherence to Disconnect
and Customer Count Policies.</FONT></I><FONT size="2"> During
our review of internal audit findings and in the course of
internal investigations, and subsequently in the course of
responding to governmental investigations, we became concerned
that certain employees either were not complying or had not
previously been complying with our customer count and disconnect
policies. We have since announced to our employees that a
failure to follow these polices will be met with disciplinary
action including, in appropriate cases, termination. We have
terminated and disciplined employees who have not followed the
policies. We have instituted regular review of customer reports
by senior employees in an effort to ensure adherence to our
policies and consistency of application throughout our various
operating divisions, and we have established a telephone hotline
number for employees to call and report misconduct relating to
the reporting of customer numbers. We have also elected not to
provide guidance on expected customer numbers in our public
disclosures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Corporate Compliance
Program.</FONT></I><FONT size="2"> Prior to 2003, we did not
have a formal compliance program. In early 2003, we established
a corporate compliance program, pursuant to which we provide
training to our employees, and provide a revised Code of Conduct
to our employees that is incorporated into our Employee
Handbook. The Code and Handbook require that employees report
violations of the Code or other behavior which they believe
might be unethical or illegal. Employees can report matters to
their supervisor, to the Human Resources Department, or through
a hotline or through a secure website, and may do so
anonymously. The compliance program is overseen by a compliance
committee comprised of our high-ranking officers, which meets at
least on a quarterly basis. The Chief Compliance Officer also
reports to the Audit Committee on a quarterly basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Treatment of Data Only
Customers.</FONT></I><FONT size="2"> We have changed our
methodology for reporting analog cable video customers to
exclude those customers who receive high-speed data service
only. This represents a change in our methodology from prior
reports through September&nbsp;30, 2002, in which high-speed
data service only customers (which numbered approximately 55,900
at September&nbsp;30, 2002) were included within our analog
cable video customers. We made this change because we determined
that a substantial number of those customers who only received
high-speed data service were unable to receive our most
</FONT>

<P align="center"><FONT size="2">39
</FONT>

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<DIV align="left">
<FONT size="2">basic level of analog video service because this
service was physically secured or blocked, was unavailable in
certain areas or the customers were unaware that this service
was available to them. In addition, in light of our decision to
begin marketing of our high-speed data services as a separate
product, we believed that separate disclosure of this
information would assist investors in understanding our current
business and in monitoring what we expected to be an increasing
number of data only customers. See &#147;Business&nbsp;&#151;
Products and Services.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Disclosure
Committee.</FONT></I><FONT size="2"> We established a Disclosure
Committee, consisting of senior personnel from the business
units, our internal audit group, and the finance and legal
groups, and we now follow an extensive review and certification
process in connection with our filings with the SEC and other
disclosure documents.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Audit Committee.</FONT></I><FONT size="2"> We
modified our Audit Committee&#146;s charter to expand the role
of the committee and to comply with the Sarbanes-Oxley Act of
2002 and the rules issued thereunder (including applicable
Nasdaq rules).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Accounting Policy
Changes.</FONT></I><FONT size="2"> Consistent with the
description of the restatement, we have revised a number of our
accounting policies, including treatment of launch incentives
received from programmers. For a complete discussion of
accounting changes and adjustments brought about as a result of
the re-audit or restatement, see &#147;&#151;&nbsp;Restatement
of Prior Results.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Restatement of Prior Results</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There were no restatements in 2003 or 2004 of
prior results. However, certain reclassifications have been made
to 2002 and 2001 amounts to conform to 2003 presentation. Also,
as discussed in our annual report on Form&nbsp;10-K for the year
ended December&nbsp;31, 2002, on November&nbsp;19, 2002, we
announced that we had determined that additional franchise costs
and deferred income tax liability should have been recorded for
the differences between the financial statement and tax basis of
assets we acquired in connection with certain cable businesses
acquired throughout 1999 and 2000. As a result of this
restatement, we engaged KPMG LLP to perform audits as of and for
the years ended December&nbsp;31, 2001 and 2000 because our
former accountants, Arthur Andersen LLP, were no longer
available to provide an opinion as to restated financial
statements. In connection with these audits, we concluded that
it was appropriate to make certain additional adjustments to
previously reported results. Among other things, adjustments
were made to previous interpretations and applications of
generally accepted accounting principles (&#147;GAAP&#148;) that
had been consistently followed by us since 2000 and throughout
the restatement period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These adjustments reduced revenues reported in
our 2002 quarterly reports on Form&nbsp;10-Q for the first three
quarters of 2002 by a total of $38&nbsp;million, and in our 2001
annual report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2001 and 2000 by $146&nbsp;million and
$108&nbsp;million, respectively. Such adjustments represent
approximately 1%, 4% and 3% of previously reported revenues for
the respective periods in 2002, 2001 and 2000. Our previously
reported consolidated net loss increased by a total of
$26&nbsp;million for the first three quarters of 2002 and
decreased by $11&nbsp;million for the year ended
December&nbsp;31, 2001. Our previously reported net loss
increased by $29&nbsp;million for the year ended
December&nbsp;31, 2000, primarily due to adjustments related to
the original accounting for acquisitions and elements of our
rebuild and upgrade activities. Net cash flows from operating
activities for the years ended December&nbsp;31, 2001 and 2000
were reduced by $30&nbsp;million and $303&nbsp;million,
respectively. The most significant categories of adjustments
related to the following items outlined below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Launch Incentives from
Programmers.</FONT></I><FONT size="2"> Amounts previously
recognized as advertising revenue in connection with the launch
of new programming channels have been deferred and recorded in
other long-term liabilities in the year such launch support was
provided, and amortized as a reduction of programming costs
based upon the relevant contract term. These adjustments
decreased revenue $30&nbsp;million for the first three quarters
of 2002, and $118&nbsp;million and $76&nbsp;million for the
years ended December&nbsp;31, 2001 and 2000, respectively.
Additionally, for the year ended December&nbsp;31, 2000, we
increased marketing expense by $24&nbsp;million for other
promotional activities associated with launching new programming
services previously deferred and subsequently amortized. The
corresponding amortization of
</FONT>

<P align="center"><FONT size="2">40
</FONT>

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<DIV align="left">
<FONT size="2">such deferred amounts reduced programming
expenses by $36&nbsp;million for the first three quarters of
2002, and $27&nbsp;million and $5&nbsp;million for the years
ended December&nbsp;31, 2001 and 2000, respectively.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Customer Incentives and Inducements.
</FONT></I><FONT size="2">Marketing inducements paid to
encourage potential customers to switch from satellite providers
to Charter-branded services and enter into multi-period service
agreements were previously deferred and recorded as property,
plant and equipment and recognized as depreciation and
amortization expense over the life of customer contracts. These
amounts have been restated as a reduction of revenue in the
period such inducements were paid. Revenue declined a total of
$5&nbsp;million for the first three quarters of 2002, and
$19&nbsp;million and $2&nbsp;million for the years ended
December&nbsp;31, 2001 and 2000, respectively. Substantially all
of these amounts are offset by reduced depreciation and
amortization expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capitalized Labor and Overhead
Costs.</FONT></I><FONT size="2"> Certain elements of labor costs
and related overhead allocations previously capitalized as
property, plant and equipment as part of our rebuild activities,
customer installation and new service introductions have been
expensed in the period incurred. Such adjustments increased
operating expenses by $73&nbsp;million for the first three
quarters of 2002, and $93&nbsp;million and $52&nbsp;million for
the years ended December&nbsp;31, 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Customer Acquisition
Costs.</FONT></I><FONT size="2"> Certain customer acquisition
campaigns were conducted through third-party contractors in
2000, 2001 and portions of 2002. The costs of these campaigns
were originally deferred and recorded as other assets and
recognized as amortization expense over the average customer
contract life. These amounts have been reported as marketing
expense in the period incurred and totaled $32&nbsp;million for
the first three quarters of 2002, and $59&nbsp;million and
$4&nbsp;million and for the years ended December&nbsp;31, 2001
and 2000, respectively. We discontinued this program in the
third quarter of 2002 as contracts for third-party vendors
expired. Substantially all of these amounts are offset by
reduced depreciation and amortization expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Rebuild and Upgrade of Cable Systems.
</FONT></I><FONT size="2">In 2000, as we were completing our
acquisitions, we initiated a three-year program to replace,
upgrade and integrate a substantial portion of our network (the
rebuild program). This rebuild/upgrade of the cable network
infrastructure was envisioned as providing the platform capacity
through which many broadband communication services could be
provided to the marketplace for many years to come. Such a
rebuild program was unprecedented and is not expected to recur.
We began implementation of this three-year rebuild program in
January 2000 and adhered to it over the period. It was expanded
in July 2001 to encompass cable system assets acquired in June
2001 from AT&#38;T Broadband. There were no other significant
modifications to the rebuild program over the three-year period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As the rebuild program was beginning in early
2000, we were nearing the end of a period in which we were
acquired by Paul G. Allen and merged with Marcus Cable and in
which we had subsequently completed an initial public offering
and acquired 16 cable businesses adding approximately
5&nbsp;million additional customers. We were faced with
integrating these acquisitions, administering the rebuild
program and also putting in place processes and new personnel to
handle the increased size and complexity of an operation that
had grown significantly in a period of about 18&nbsp;months.
During the first quarter of 2000, management also recognized the
need to reassess depreciable lives of the property that was
subject to the three-year rebuild program. Based on a review of
the rebuild program, $3&nbsp;billion of assets were identified
as being subject to replacement, and accordingly, management
reduced the useful lives of those assets. In connection with the
restatement, however, it has been determined that some of these
assets were to be retained and not replaced because sections of
the network were scheduled to be upgraded and not rebuilt. In a
cable system <I>rebuild </I>there is outright replacement and
retirement of substantially all components of the network,
whereas an <I>upgrade </I>involves the retention of the original
property, particularly the fiber and coaxial cabling.
</FONT>

<P align="center"><FONT size="2">41
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Presented below is a schedule of the costs of
cable distribution system assets subject to the rebuild program,
as originally recorded, reconciled to the final determinations
in the restatement. The depreciation lives were shortened for
this asset pool as discussed previously and supplemented below.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total asset population subject to rebuild and
    upgrade, as originally recorded
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets which were never intended to be replaced
    but rather were upgraded and remain in service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(946</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of assets inadvertently excluded from the
    asset population
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustment to record acquired assets at
    depreciated replacement cost at date of acquisition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total adjusted asset value subject to replacement
    and thus shortened depreciation life
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the restatement process, we
conducted a detailed system-by-system analysis of the rebuild
program to identify those assets which were intended to be
rebuilt versus upgraded and determined that approximately
$844&nbsp;million of trunk and distribution cabling, and
$102&nbsp;million of headend equipment (in aggregate,
$946&nbsp;million) was enhanced and retained in service.
Accordingly, an adjustment was made in the restatement with
effect from January&nbsp;1, 2000 to properly exclude those
assets from the population of assets treated as subject to
replacement and thus for which a shortened depreciation life was
previously assigned.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The evaluation conducted in connection with the
restatement also revealed the inadvertent exclusion of
$401&nbsp;million of trunk and distribution cabling and
electronics, which were acquired in 1999, from the population of
assets that were subject to shortened depreciation lives. This
group of assets were misclassified within our fixed assets
sub-ledger for one acquisition and thus omitted from the
analysis performed in connection with the preparation of our
historical financial statements. Accordingly, an adjustment was
made in the restatement to properly include these assets as well.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Furthermore, we reduced the value of assets
subject to replacement by a total of approximately
$1.2&nbsp;billion to record the assets at estimated depreciated
replacement cost at the date of acquisition. This includes a
$598&nbsp;million reduction originally recorded in our
previously issued financial statements and a $627&nbsp;million
adjustment identified as part of the restatement. As a result of
the items identified above, we determined that depreciation
expense was overstated by a total of $413&nbsp;million for the
first three quarters of 2002, and $330&nbsp;million and
$119&nbsp;million in the years ended 2001 and 2000,
respectively. This resulted in net loss being overstated by a
total of $192&nbsp;million for the first three quarters of 2002,
and $146&nbsp;million and $48&nbsp;million for the years ended
2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Deferred Tax Liabilities/ Franchise
Assets.</FONT></I><FONT size="2"> Adjustments were made to
record deferred tax liabilities associated with the acquisition
of various cable television businesses. These adjustments
increased amounts assigned to franchise assets by
$1.4&nbsp;billion with a corresponding increase in deferred tax
liabilities of $1.2&nbsp;billion. The balance of the entry was
recorded to equity and minority interest. In addition, as
described above, a correction was made to reduce amounts
assigned in purchase accounting to assets identified for
replacement over the three-year period of our rebuild and
upgrade of our network. This reduced the amount assigned to the
network assets to be retained and increased the amount assigned
to franchise assets by approximately $627&nbsp;million with a
resulting increase in amortization expense for the years
restated. Such adjustments increased the impairment of
franchises recognized in the first quarter of 2002 by
$199&nbsp;million (before minority interest) and increased
amortization expense by $130&nbsp;million and $121&nbsp;million
for the years ended December&nbsp;31, 2001 and 2000,
respectively. This resulted in net loss being understated by a
total of $71&nbsp;million for the first three quarters of 2002,
and $57&nbsp;million and $49&nbsp;million for the years ended
2001 and 2000, respectively.
</FONT>

<P align="center"><FONT size="2">42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Adjustments.</FONT></I><FONT size="2">
In addition to the items described above, certain other
adjustments were made that increased net loss by
$38&nbsp;million and decreased net loss by $10&nbsp;million,
respectively, for the years ended December&nbsp;31, 2001 and
2000. These adjustments were as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During 2000, advertising revenue was recognized
    in conjunction with the promotion of equipment offered by two
    set-top terminal manufacturers from which we purchased digital
    set-top terminals. However, in connection with our restatement
    announced in April 2003, we reversed all advertising revenues
    from the set-top terminal manufacturers recognized in 2000.
    Based on a reassessment of the underlying structure of the
    arrangements during 2000, the prices paid for set-top terminals
    and the advertising revenues recognized were determined to be in
    excess of fair value. We therefore reduced our advertising
    revenue and decreased our related property, plant and equipment
    associated with the purchase of set-top terminals.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During 2001 and 2000, certain post-acquisition
    marketing and customer acquisition costs were charged against
    purchase accounting reserves in the financial statements. These
    costs have been reclassified to record them as period cost in
    the appropriate fiscal year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During 2002, 2001 and 2000, certain state taxes,
    which are equity-based taxes and not based on income, were
    reclassified as operating expenses, rather than as taxes
    recorded in &#147;other expenses&#148; on our consolidated
    statements of operations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During 2000, we received management fees from a
    joint venture pursuant to the terms of the joint venture
    agreement and recognized revenue. Based on the limited amount of
    operational management activities performed on behalf of the
    joint venture, we determined this amount should be reclassified
    from revenue and recorded as investment income within
    &#147;other expense&#148; on our consolidated statements of
    operations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During 2000 and 2001, we accounted for the
    outstanding and unexercised portion of separated employees&#146;
    options by reversing all (both vested and unvested) previously
    recorded compensation expense for separated employees who
    forfeited stock-based awards. Compensation related to vested
    awards should not have been reversed at the time of separation,
    as the employee did not &#147;fail to fulfill an
    obligation&#148; associated with such vested awards. Stock
    compensation expense was increased to eliminate the effect of
    such reversal during 2000 and 2001. In addition, the computation
    of the compensation expense was adjusted during 2000 to reverse
    a miscalculation recorded during such years.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tables below set forth our condensed
consolidated balance sheets as of December&nbsp;31, 2001 and
December&nbsp;31, 2000, and condensed consolidated statement of
operations and condensed consolidated statement of cash flows
information for the years ended December&nbsp;31, 2001 and 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Controls.</FONT></I><FONT size="2"> The major
adjustments discussed above, including for the rebuild and
upgrade of cable systems and deferred tax matters/franchise,
generally relate to non-routine items and did not result from
control deficiencies in our core accounting operations. Since
our period of rapid growth in 2000 and early 2001, in which we
were rapidly acquiring cable systems, we have integrated the
various accounting processes of our acquired cable systems. We
have also substantially improved the quantity and, we believe,
the quality of our accounting and internal audit staff. In
addition, we are developing better interactions between our
accounting and internal audit staff and the other elements of
our organization. These changes in our staff have been
supplemented with changes in accounting and internal controls
processes and systems which we believe result in an improved
ability of management to understand and analyze underlying
business data. As part of our acquisitions integration process,
we have, among other things, standardized our data and put in
place a data warehouse, which has enhanced our abilities to
analyze our operating data. Budgeting has been integrated into
our financial systems, through the use of specialized commercial
software rather than spreadsheet programs. Additionally, we have
implemented in the first quarter 2004, a job costing system,
that tracks capital at the project level. These changes have
given us the ability to better understand, analyze and manage
our business data. The role of our internal audit staff has also
been expanded, particularly with respect to capitalization and
depreciation. We believe that these changes have improved our
controls over both recurring transactions and non-recurring
transactions.
</FONT>

<P align="center"><FONT size="2">43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth selected
consolidated balance sheet information, showing previously
reported and restated amounts, as of December&nbsp;31, 2001 (in
millions):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Restated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,962</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">341</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth selected
consolidated statement of operations information, showing
previously reported and restated amounts, for the year ended
December&nbsp;31, 2001 (in millions, except per share and share
data):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Restated</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,196</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,656</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,178</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,179</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,594,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,594,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth selected
consolidated balance sheet information, showing previously
reported and restated amounts, as of December&nbsp;31, 2000 (in
millions):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Restated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,829</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,568</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth selected
consolidated statement of operations information, showing
previously reported and restated amounts, for the year ended
December&nbsp;31, 2000 (in millions, except per share and share
data):
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Restated</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,187</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stock compensation expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,229</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(971</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest and income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,055</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(829</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,697,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,697,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth selected
consolidated cash flow information, showing previously reported
and restated amounts, for the years ended December&nbsp;31, 2001
and 2000 (in millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As Previously</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reported</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash from operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash from investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,809</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,774</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,054</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,751</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash from financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">45
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Acquisitions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding our significant acquisitions from January&nbsp;1, 1999
to December&nbsp;31, 2002 (none in 2003 or 2004):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Purchase Price</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquisition</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Assumed</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Issued/Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Customers</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Paid</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Debt</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(approx)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(Dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Renaissance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">American Cable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Greater Media Systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">176,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Helicon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vista
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cable Satellite
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rifkin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">463,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">InterMedia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">278,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fanch
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Falcon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(d)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">977,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Avalon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11/99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">832</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">270,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 1999 Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,109,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interlake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1/00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bresnan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,014</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(e)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">695,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital Cable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Farmington
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Kalamazoo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9/00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(f)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 2000 Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">781,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">AT&#38;T Systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6/01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,736</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(g)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">551,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cable USA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8/01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(h)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 2001 Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">581,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High Speed Access Corp.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enstar Limited Partnership Systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enstar Income Program&nbsp;II-1, L.P.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9/02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 2002 Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total 1999-2002 Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,500,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Represents a preferred limited liability company
    interest in Charter Helicon, LLC, an indirect wholly owned
    subsidiary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Relates to preferred equity in Charter Holdco,
    approximately $130&nbsp;million, excluding accrued dividends, of
    which was subsequently exchanged for shares of Charter
    Class&nbsp;A common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(c)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">As part of this transaction, we agreed to
    &#147;swap&#148; certain of our non-strategic cable systems
    serving customers in Indiana, Montana, Utah and Northern
    Kentucky valued at approximately $420&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(d)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Relates to common membership units in Charter
    Holdco issued to certain of the Falcon sellers, which were
    subsequently exchanged for shares of Charter Class&nbsp;A common
    stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">46
</FONT>
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<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(e)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Comprised of $385&nbsp;million in equity in
    Charter Holdco and $629&nbsp;million of equity in CC VIII.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(f)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In connection with this transaction, we acquired
    all of the outstanding stock of Cablevision of Michigan in
    exchange for 11,173,376&nbsp;shares of Charter Class&nbsp;A
    common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(g)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Comprised of approximately $1.7&nbsp;billion, as
    adjusted, in cash and a cable system located in Florida valued
    at approximately $25&nbsp;million, as adjusted.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(h)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In connection with this transaction, at the
    closing we and Charter Holdco acquired all of the outstanding
    stock of Cable USA and the assets of related affiliates in
    exchange for cash and 505,664&nbsp;shares of Charter
    Series&nbsp;A convertible redeemable preferred stock. In the
    first quarter of 2003, an additional $0.34&nbsp;million in cash
    was paid and 39,595 additional shares of Charter Series&nbsp;A
    convertible redeemable preferred stock were issued to certain
    sellers.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All acquisitions were accounted for under the
purchase method of accounting and results of operations were
included in our consolidated financial statements from their
respective dates of acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have no current plans to pursue any
significant acquisitions. However, we will continue to evaluate
opportunities to consolidate our operations through the sale of
cable systems to, or exchange of like-kind assets with, other
cable operators as such opportunities arise, and on a very
limited basis, consider strategic new acquisitions. Our primary
criteria in considering these opportunities are the
rationalization of our operations into geographic clusters and
the potential financial benefits we expect to ultimately realize
as a result of the sale, exchange, or acquisition.
</FONT>

<P align="left">
<B><FONT size="2">Overview of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximately 86% of our revenues for the nine
months ended September&nbsp;30, 2004 and the year ended
December&nbsp;31, 2003 are attributable to monthly subscription
fees charged to customers for our video, high-speed data,
telephone and commercial services provided by our cable systems.
Generally, these customer subscriptions may be discontinued by
the customer at any time. The remaining 14% of revenue is
derived primarily from pay-per-view and VOD programming where
users are charged a fee for individual programs viewed,
advertising revenues, installation or reconnection fees charged
to customers to commence or reinstate service, commissions
related to the sale of merchandise by home shopping services and
franchise fee revenues, which are collected by us but then paid
to local franchising authorities. We have generated increased
revenues during the past three years, primarily through the sale
of digital video and high-speed data services to new and
existing customers, price increases on video services and
customer growth from acquisitions. Going forward, our goal is to
increase revenues by stabilizing our analog video customer base,
implementing price increases on certain services and packages
and increasing revenues from incremental high-speed data
services, digital video and advanced products and services such
as telephony using voice-over-Internet protocol
(&#147;VOIP&#148;), video on demand (&#147;VOD&#148;), high
definition television and digital video recorder service
provided to our customers. To accomplish this, we are increasing
prices for certain services and we are offering new bundling of
services combining digital video and our advanced services (such
as high-speed data service and high definition television) at
what we believe are attractive price points. See
&#147;Business&nbsp;&#151; Sales and Marketing&#148; for more
details.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our success in our efforts to grow revenues and
improve margins will be impacted by our ability to compete
against companies with often fewer regulatory burdens, easier
access to financing, greater personnel resources, greater brand
name recognition and long-established relationships with
regulatory authorities and customers. Additionally, controlling
our cost of operations is critical, particularly cable
programming costs, which have historically increased at rates in
excess of inflation and are expected to continue to increase.
See &#147;Business&nbsp;&#151; Programming&#148; for more
details. We are attempting to control our costs of operations by
maintaining strict controls on expenses. More specifically, we
are focused on managing our cost structure by renegotiating
programming agreements to reduce the rate of historical
increases in programming cost, managing our workforce to control
increases and improve productivity, and leveraging our size in
purchasing activities.
</FONT>

<P align="center"><FONT size="2">47
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our expenses primarily consist of operating
costs, selling, general and administrative expenses,
depreciation and amortization expense and interest expense.
Operating costs primarily include programming costs, the cost of
our workforce, cable service related expenses, advertising sales
costs, franchise fees and expenses related to customer billings.
Our income from operations decreased from $306&nbsp;million for
the nine months ended September&nbsp;30, 2003 to loss of
operations of $2.2&nbsp;billion for the nine months ended
September&nbsp;30, 2004, principally due to the impairment of
franchises of $2.4&nbsp;billion recorded in the third quarter of
2004. The nine months ended September&nbsp;30, 2004 includes a
gain on the sale of certain cable systems to Atlantic Broadband
Finance, LLC which is substantially offset by an increase in
option compensation expense and special charges when compared to
the nine months ended September&nbsp;30, 2003. For the year
ended December&nbsp;31, 2003, income from operations was
$516&nbsp;million and for the years ended December&nbsp;31, 2002
and 2001, our loss from operations was $4.3&nbsp;billion and
$1.2&nbsp;billion, respectively. Operating margin, which is
defined as income (loss) from operations divided by revenues,
was 11% for the year ended December&nbsp;31, 2003, whereas for
the years ending December&nbsp;31, 2002 and 2001, we had
negative operating margins of 95% and 32%, respectively. The
improvement in income from operations and operating margin from
2002 to 2003 was principally due to a $4.6&nbsp;billion
franchise impairment charge in the fourth quarter of 2002 which
did not recur in 2003 and the recognition of gains in 2003 of
$93&nbsp;million related to unfavorable contracts and other
settlements and gain on sale of system. The increase in loss
from operations and negative operating margins from 2001 to 2002
was primarily as a result of a $4.6&nbsp;billion franchise
impairment charge in the fourth quarter of 2002, partially
offset by a decrease in amortization expense of
$1.5&nbsp;billion as a result of the adoption of
SFAS&nbsp;No.&nbsp;142, <I>Goodwill and Other Intangible
Assets</I>, which eliminated the amortization of franchises
determined to have an indefinite life. Although we do not expect
charges for impairment in the future of comparable magnitude,
potential charges could occur due to changes in market
conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a history of net losses. Further, we
expect to continue to report net losses for the foreseeable
future. Our net losses are principally attributable to
insufficient revenue to cover the interest costs we incur
because of our high level of debt, the depreciation expenses
that we incur resulting from the capital investments we have
made in our cable properties, and the amortization and
impairment of our franchise intangibles. We expect that these
expenses (other than amortization and impairment of franchises)
will remain significant, and we therefore expect to continue to
report net losses for the foreseeable future. Additionally,
because minority interest in Charter Holdco was substantially
eliminated at December&nbsp;31, 2003, beginning in the first
quarter of 2004, we began to absorb substantially all future
losses before income taxes that otherwise would have been
allocated to minority interest. This resulted in an additional
$2.0&nbsp;billion of net loss for the nine months ended
September&nbsp;30, 2004. Subject to any changes in Charter
Holdco&#146;s capital structure, future losses will continue to
be absorbed by Charter.
</FONT>

<P align="left">
<B><FONT size="2">Critical Accounting Policies and
Estimates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain of our accounting policies require our
management to make difficult, subjective or complex judgments.
Management has discussed these policies with the Audit Committee
of Charter&#146;s board of directors and the Audit Committee has
reviewed the following disclosure. We consider the following
policies to be the most critical in understanding the estimates,
assumptions and judgments that are involved in preparing our
financial statements and the uncertainties that could affect our
results of operations, financial condition and cash flows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Capitalization of labor and overhead costs;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Useful lives of property, plant and equipment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Impairment of property, plant, and equipment,
    franchises, and goodwill;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Income taxes;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Litigation.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">48
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, there are other items within our
financial statements that require estimates or judgment but are
not deemed critical, such as the allowance for doubtful
accounts, but changes in judgment, or estimates in these other
items could also have a material impact on our financial
statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Capitalization of labor and overhead
costs.</FONT></I><FONT size="2"> The cable industry is capital
intensive, and a large portion of our resources are spent on
capital activities associated with extending, rebuilding, and
upgrading our cable network. As of September&nbsp;30, 2004 and
December&nbsp;31, 2003 and 2002, the net carrying amount of our
property, plant and equipment (consisting primarily of cable
network assets) was approximately $6.4&nbsp;billion
(representing 38% of total assets), $7.0&nbsp;billion
(representing 33% of total assets) and $7.7&nbsp;billion
(representing 34% of total assets), respectively. Total capital
expenditures for the nine months ended September&nbsp;30, 2004
and the years ended December&nbsp;31, 2003, 2002 and 2001 were
approximately $639&nbsp;million, $854&nbsp;million,
$2.2&nbsp;billion and $2.9&nbsp;billion, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs associated with network construction,
initial customer installations, installation refurbishments and
the addition of network equipment necessary to provide advanced
services are capitalized. Costs capitalized as part of initial
customer installations include materials, direct labor, and
certain indirect costs. These indirect costs are associated with
the activities of personnel who assist in connecting and
activating the new service and consist of compensation and
overhead costs associated with these support functions. The
costs of disconnecting service at a customer&#146;s dwelling or
reconnecting service to a previously installed dwelling are
charged to operating expense in the period incurred. Costs for
repairs and maintenance are charged to operating expense as
incurred, while equipment replacement and betterments, including
replacement of cable drops from the pole to the dwelling, are
capitalized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Direct labor costs directly associated with
capital projects are capitalized. We capitalize direct labor
costs associated with personnel based upon the specific time
devoted to network construction and customer installation
activities. Capitalizable activities performed in connection
with customer installations include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Scheduling a &#147;truck roll&#148; to the
    customer&#146;s dwelling for service connection;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Verification of serviceability to the
    customer&#146;s dwelling (i.e., determining whether the
    customer&#146;s dwelling is capable of receiving service by our
    cable network and/ or receiving advanced or data services);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Customer premise activities performed by in-house
    field technicians and third-party contractors in connection with
    customer installations, installation of network equipment in
    connection with the installation of expanded services and
    equipment replacement and betterment;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Verifying the integrity of the customer&#146;s
    network connection by initiating test signals downstream from
    the headend to the customer&#146;s digital set-top terminal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We capitalized internal direct labor costs of
$59&nbsp;million, $88&nbsp;million, $173&nbsp;million and
$171&nbsp;million, for the nine months ended September&nbsp;30,
2004 and the years ended December&nbsp;31, 2003, 2002 and 2001,
respectively. Capitalized internal direct labor costs
substantially decreased in 2003 compared to 2002 primarily due
to the substantial completion of the upgrade of our systems and
a decrease in the amount of capitalizable installation costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Judgment is required to determine the extent to
which indirect costs (&#147;overhead&#148;) are incurred as a
result of specific capital activities, and therefore should be
capitalized. We capitalize overhead using an overhead rate
applied to the amount of direct labor capitalized. We have
established the overhead rates based on an analysis of the
nature of costs incurred in support of capitalizable activities
and a determination of the portion of costs that is directly
attributable to capitalizable activities. The primary costs that
are included in the determination of the overhead rate are
(i)&nbsp;employee benefits and payroll taxes associated with
capitalized direct labor, (ii)&nbsp;direct variable costs
associated with capitalizable activities, consisting primarily
of installation and construction vehicle costs, (iii)&nbsp;the
cost of support personnel, such as dispatch, that directly
assist with capitalizable installation activities, and
(iv)&nbsp;indirect costs directly attributable to capitalizable
activities.
</FONT>

<P align="center"><FONT size="2">49
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While we believe our existing capitalization
policies are appropriate, a significant change in the nature or
extent of our system activities could affect management&#146;s
judgment about the extent to which we should capitalize direct
labor or overhead in the future. We monitor the appropriateness
of our capitalization policies, and perform updates to our
internal overhead study on a periodic basis to determine whether
facts or circumstances warrant a change to our capitalization
policies. We capitalized overhead of $57&nbsp;million,
$86&nbsp;million, $162&nbsp;million and $134&nbsp;million,
respectively, for the nine months ended September&nbsp;30, 2004
and the years ended December&nbsp;31, 2003, 2002 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Useful lives of property, plant and
equipment.</FONT></I><FONT size="2"> We evaluate the
appropriateness of estimated useful lives assigned to our
property, plant and equipment, and revise such lives to the
extent warranted by changing facts and circumstances. Beginning
in January 2000, we commenced a significant initiative to
rebuild and upgrade portions of our cable network. We reduced
the useful lives of certain assets with a book value of
$1.1&nbsp;billion in 2000 and an additional $125&nbsp;million in
2001. These assets were expected to be replaced and retired
through that process in approximately one to three years,
representing management&#146;s best estimate of the expected
pattern of the retirement from service of such assets. A
significant change in assumptions about the extent or timing of
future asset usage or retirements could materially affect future
depreciation expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation expense related to property, plant
and equipment totaled $1.1&nbsp;billion, $1.5&nbsp;billion,
$1.4&nbsp;billion and $1.2&nbsp;billion, representing
approximately 19%, 34%, 16% and 24% of costs and expenses, for
the nine months ended September&nbsp;30, 2004 and the years
ended December&nbsp;31, 2003, 2002 and 2001, respectively. Of
these amounts, approximately $183&nbsp;million and
$352&nbsp;million for the years ended December&nbsp;31, 2002 and
2001, respectively, relates to network assets which were
replaced and retired over the three-year period of the rebuild
initiative. Depreciation is recorded using the straight-line
method over management&#146;s estimate of the estimated useful
lives of the related assets as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cable distribution systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7-15&nbsp; years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Customer equipment and installations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3-5&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vehicles and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1-5&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5-15&nbsp; years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of property, plant and equipment,
franchises and goodwill.</FONT></I><FONT size="2"> As discussed
above, the net carrying value of our property, plant and
equipment is significant. We also have recorded a significant
amount of cost related to franchises, pursuant to which we are
granted the right to operate our cable distribution network
throughout our service areas. The net carrying value of
franchises as of September&nbsp;30, 2004, December&nbsp;31, 2003
and 2002 was approximately $9.9&nbsp;billion (representing 58%
of total assets), $13.7&nbsp;billion (representing 64% of total
assets) and $13.7&nbsp;billion (representing 61% of total
assets), respectively. Furthermore, we recorded within other
noncurrent assets approximately $52&nbsp;million of goodwill as
a result of the acquisition of High Speed Access in February
2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We adopted SFAS&nbsp;No.&nbsp;142 on
January&nbsp;1, 2002. SFAS&nbsp;No.&nbsp;142 requires that
franchise intangible assets that meet specified indefinite-life
criteria no longer be amortized against earnings, but instead
must be tested for impairment annually, or more frequently as
warranted by events or changes in circumstances. In determining
whether our franchises have an indefinite-life, we considered
the exclusivity of the franchise, the expected costs of
franchise renewals, and the technological state of the
associated cable systems with a view to whether or not we are in
compliance with any technology upgrading requirements. We have
concluded that as of January&nbsp;1, 2002, December&nbsp;31,
2002, December&nbsp;31, 2003 and September&nbsp;30, 2004 more
than 99% of our franchises qualify for indefinite-life treatment
under SFAS&nbsp;No.&nbsp;142, and that less than one percent of
our franchises do not qualify for indefinite-life treatment due
to technological or operational factors that limit their lives.
Costs of finite-lived franchises, along with costs associated
with franchise renewals, will be amortized on a straight-line
basis over 10&nbsp;years, which represents management&#146;s
best estimate of the average remaining useful lives of such
franchises. Franchise amortization expense was $3&nbsp;million
for the nine months ended September&nbsp;30, 2004 and
$9&nbsp;million for
</FONT>

<P align="center"><FONT size="2">50
</FONT>

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<DIV align="left">
<FONT size="2">each of the years ended December&nbsp;31, 2003
and 2002. Franchise amortization expense was $1.5&nbsp;billion,
representing approximately 29% of costs and expenses, for the
year ended December&nbsp;31, 2001. We expect that amortization
expense on franchise assets will be approximately
$4&nbsp;million annually for each of the next five years. Actual
amortization expense in future periods could differ from these
estimates as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant factors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;No.&nbsp;144, <I>Accounting for
Impairment or Disposal of Long-Lived Assets</I>, requires that
we evaluate the recoverability of our property, plant and
equipment and franchise assets which did not qualify for
indefinite life treatment under SFAS&nbsp;No.&nbsp;142 upon the
occurrence of events or changes in circumstances which indicate
that the carrying amount of an asset may not be recoverable.
Such events or changes in circumstances could include such
factors as changes in technological advances, fluctuations in
the fair value of such assets, adverse changes in relationships
with local franchise authorities, adverse changes in market
conditions or poor operating results. Under
SFAS&nbsp;No.&nbsp;144, a long-lived asset is deemed impaired
when the carrying amount of the asset exceeds the projected
undiscounted future cash flows associated with the asset.
Furthermore, we were required to evaluate the recoverability of
our indefinite life franchises, as well as goodwill, as of
January&nbsp;1, 2002 upon adoption of SFAS&nbsp;No.&nbsp;142,
and on an annual basis or more frequently as deemed necessary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under both SFAS&nbsp;No.&nbsp;144 and
SFAS&nbsp;No.&nbsp;142, if an asset is determined to be
impaired, it is required to be written down to its estimated
fair market value. We determine fair market value based on
estimated discounted future cash flows, using reasonable and
appropriate assumptions that are consistent with internal
forecasts. Our assumptions include these and other factors:
penetration rates for analog and digital video and high-speed
data, revenue growth rates, expected operating margins and
capital expenditures. Considerable management judgment is
necessary to estimate future cash flows, and such estimates
include inherent uncertainties, including those relating to the
timing and amount of future cash flows and the discount rate
used in the calculation. We utilize an independent third-party
appraiser with expertise in the cable industry to assist in the
determination of the fair value of intangible assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the guidance prescribed in Emerging
Issues Task Force (&#147;EITF&#148;) Issue No.&nbsp;02-7,
<I>Unit of Accounting for Testing of Impairment of
Indefinite-Lived Intangible Assets</I>, franchises were
aggregated into essentially inseparable asset groups to conduct
the valuations. The asset groups generally represent geographic
clustering of our cable systems into groups by which such
systems are managed. Management believes such grouping
represents the highest and best use of those assets. Fair value
is determined based on estimated discounted future cash flows
using assumptions that are consistent with internal forecasts.
We have historically followed a residual method of valuing our
franchise assets, which had the effect of including goodwill
with the franchise assets. We determined that our franchises
were impaired for the year ended December&nbsp;31, 2002 and as a
result recorded the cumulative effect of a change in accounting
principle of $206&nbsp;million (approximately $572&nbsp;million
before minority interest effects of $306&nbsp;million and tax
effects of $60&nbsp;million). As required by
SFAS&nbsp;No.&nbsp;142, the standard has not been retroactively
applied to results for the period prior to adoption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2004, the Securities and Exchange
Commission (&#147;SEC&#148;) staff issued Topic D-108, <I>Use of
the Residual Method to Value Acquired Assets Other than
Goodwill</I>, which requires the direct method of separately
valuing all intangible assets and does not permit goodwill to be
included in franchise assets. On September&nbsp;30, 2004, we
adopted Topic D-108 which resulted in our recording a cumulative
effect of accounting change of $765&nbsp;million (approximately
$875&nbsp;million before tax effects of $91&nbsp;million and
minority interest effects of $19&nbsp;million) for the nine
months ended September&nbsp;30, 2004. The effect of the adoption
was to increase net loss and loss per share by $765&nbsp;million
and $2.56 for the nine months ended September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We performed our annual impairment assessment as
of October&nbsp;1, 2002 using an independent third-party
appraiser and following the guidance of EITF Issue&nbsp;02-17,
<I>Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination</I>, which was issued in
October 2002 and requires the consideration of assumptions that
marketplace participants would consider, such as expectations of
future contract renewals and other benefits related to the
intangible asset. We performed an impairment
</FONT>

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<DIV align="left">
<FONT size="2">assessment during the third quarter 2004 using an
independent third-party appraiser and following the guidance of
EITF Issue&nbsp;02-17, <I>Recognition of Customer Relationship
Intangible Assets Acquired in a Business Combination</I>, and
Topic&nbsp;D-108. Revised estimates of future cash flows and the
use of a lower projected long-term growth rate in our valuation,
primarily as a result of increased competition, led to the
recognition of a $4.6&nbsp;billion impairment charge in the
fourth quarter of 2002 and a $2.4&nbsp;billion impairment charge
for the nine months ended September&nbsp;30, 2004. The valuation
completed at October&nbsp;1, 2003 showed franchise values in
excess of book value and thus resulted in no impairment.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The independent third party appraiser&#146;s
valuations as of January&nbsp;1, 2002, October&nbsp;1, 2002,
October&nbsp;1, 2003 and September&nbsp;30, 2004, yielded total
enterprise values of approximately $30&nbsp;billion,
$25&nbsp;billion, $25&nbsp;billion and $19&nbsp;billion,
respectively, which included approximately $2.4&nbsp;billion,
$3.1&nbsp;billion, $3.2&nbsp;billion and $2.0&nbsp;billion,
respectively, assigned to customer relationships and
approximately $1.4&nbsp;billion, $0.8&nbsp;billion,
$1.1&nbsp;billion and $0.9&nbsp;billion assigned to goodwill,
respectively. SFAS&nbsp;No.&nbsp;142 does not permit the
recognition of intangible assets not previously recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The valuations involve numerous assumptions as
noted above. While the economic conditions at the time of each
valuation indicate that the combination of assumptions utilized
in the appraisals are reasonable, as market conditions change so
will the assumptions with a resulting impact on the valuation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Taxes.</FONT></I><FONT size="2"> All
operations are held through Charter Holdco and its direct and
indirect subsidiaries. Charter Holdco and the majority of its
subsidiaries are not subject to income tax. However, certain of
these subsidiaries are corporations and are subject to income
tax. All of the taxable income, gains, losses, deductions and
credits of Charter Holdco are passed through to its members:
Charter, Charter Investment, Inc. and Vulcan Cable&nbsp;III Inc.
Charter is responsible for its share of taxable income or loss
of Charter Holdco allocated to it in accordance with the Charter
Holdco limited liability company agreement (&#147;LLC
Agreement&#148;) and partnership tax rules and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The LLC Agreement provides for certain special
allocations of net tax profits and net tax losses (such net tax
profits and net tax losses being determined under the applicable
federal income tax rules for determining capital accounts).
Pursuant to the LLC Agreement, through the end of 2003, net tax
losses of Charter Holdco that would otherwise have been
allocated to Charter based generally on its percentage ownership
of outstanding common units were allocated instead to membership
units held by Vulcan Cable&nbsp;III Inc. and Charter Investment,
Inc. (the &#147;Special Loss Allocations&#148;) to the extent of
their respective capital account balances. After 2003, pursuant
to the LLC Agreement, net tax losses of Charter Holdco are to be
allocated to Charter, Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. based generally on their respective percentage
ownership of outstanding common units to the extent of their
respective capital account balances. The LLC Agreement further
provides that, beginning at the time Charter Holdco generates
net tax profits, the net tax profits that would otherwise have
been allocated to Charter based generally on its percentage
ownership of outstanding common membership units will instead
generally be allocated to Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. (the &#147;Special Profit Allocations&#148;).
The Special Profit Allocations to Vulcan Cable&nbsp;III Inc. and
Charter Investment, Inc. will generally continue until the
cumulative amount of the Special Profit Allocations offsets the
cumulative amount of the Special Loss Allocations. The amount
and timing of the Special Profit Allocations are subject to the
potential application of, and interaction with, the Curative
Allocation Provisions described in the following paragraph. The
LLC Agreement generally provides that any additional net tax
profits are to be allocated among the members of Charter Holdco
based generally on their respective percentage ownership of
Charter Holdco common membership units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because the respective capital account balance of
each of Vulcan Cable&nbsp;III Inc. and Charter Investment, Inc.
was reduced to zero by December&nbsp;31, 2002, certain net tax
losses of Charter Holdco that were to be allocated for 2002,
2003 (subject to resolution of the issue described in
&#147;Certain Relationships and Related Transactions&nbsp;&#151;
Transactions Arising Out of Our Organizational Structure and
Mr.&nbsp;Allen&#146;s Investment in Charter and Its
Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151; CC
VIII&#148;) and possibly later years to Vulcan Cable&nbsp;III
Inc. and Charter Investment, Inc. will instead be allocated to
Charter (the &#147;Regulatory Allocations&#148;). The LLC
Agreement further provides that, to the extent possible, the
effect of the
</FONT>

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<DIV align="left">
<FONT size="2">Regulatory Allocations is to be offset over time
pursuant to certain curative allocation provisions (the
&#147;Curative Allocation Provisions&#148;) so that, after
certain offsetting adjustments are made, each member&#146;s
capital account balance is equal to the capital account balance
such member would have had if the Regulatory Allocations had not
been part of the LLC Agreement. The cumulative amount of the
actual tax losses allocated to Charter as a result of the
Regulatory Allocations through the year ended December&nbsp;31,
2003 is approximately $2.0&nbsp;billion to $2.6&nbsp;billion
pending the resolution of the issue described in &#147;Certain
Relationships and Related Transactions&nbsp;&#151; Transactions
Arising Out of Our Organizational Structure and
Mr.&nbsp;Allen&#146;s Investment in Charter and Its
Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151; CC
VIII.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the Special Loss Allocations and
the Regulatory Allocations referred to above, the cumulative
amount of losses of Charter Holdco allocated to Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. is in excess of
the amount that would have been allocated to such entities if
the losses of Charter Holdco had been allocated among its
members in proportion to their respective percentage ownership
of Charter Holdco common membership units. The cumulative amount
of such excess losses was approximately $3.1&nbsp;billion
through December&nbsp;31, 2002 and $2.0&nbsp;billion to
$2.5&nbsp;billion through December&nbsp;31, 2003, depending upon
the resolution of the issue described in &#147;Certain
Relationships and Related Transactions&nbsp;&#151; Transactions
Arising Out of Our Organizational Structure and
Mr.&nbsp;Allen&#146;s Investment in Charter and Its
Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151; CC
VIII.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In certain situations, the Special Loss
Allocations, Special Profit Allocations, Regulatory Allocations
and Curative Allocation Provisions described above could result
in Charter paying taxes in an amount that is more or less than
if Charter Holdco had allocated net tax profits and net tax
losses among its members based generally on the number of common
membership units owned by such members. This could occur due to
differences in (i)&nbsp;the character of the allocated income
(e.g., ordinary versus capital), (ii)&nbsp;the allocated amount
and timing of tax depreciation and tax amortization expense due
to the application of section&nbsp;704(c) under the Internal
Revenue Code, (iii)&nbsp;the potential interaction between the
Special Profit Allocations and the Curative Allocation
Provisions, (iv)&nbsp;the amount and timing of alternative
minimum taxes paid by Charter, if any, (v)&nbsp;the
apportionment of the allocated income or loss among the states
in which Charter Holdco does business, and (vi) future federal
and state tax laws. Further, in the event of new capital
contributions to Charter Holdco, it is possible that the tax
effects of the Special Profit Allocations, Special Loss
Allocations, Regulatory Allocations and Curative Allocation
Provisions will change significantly pursuant to the provisions
of the income tax regulations. Such change could defer the
actual tax benefits to be derived by Charter with respect to the
net tax losses allocated to it or accelerate the actual taxable
income to Charter with respect to the net tax profits allocated
to it. As a result, it is possible under certain circumstances,
that Charter could receive future allocations of taxable income
in excess of its currently allocated tax deductions and
available tax loss carryforwards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, under their exchange agreement with
Charter, Vulcan Cable&nbsp;III Inc. and Charter Investment, Inc.
may exchange some or all of their membership units in Charter
Holdco for Charter&#146;s Class&nbsp;B common stock, be merged
with Charter, or be acquired by Charter in a non-taxable
reorganization. If such an exchange were to take place prior to
the date that the Special Profit Allocation provisions had fully
offset the Special Loss Allocations, Vulcan Cable&nbsp;III Inc.
and Charter Investment, Inc. could elect to cause Charter Holdco
to make the remaining Special Profit Allocations to Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. immediately
prior to the consummation of the exchange. In the event Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. choose not to
make such election or to the extent such allocations are not
possible, Charter would then be allocated tax profits
attributable to the membership units received in such exchange
pursuant to the Special Profit Allocation provisions.
Mr.&nbsp;Allen has generally agreed to reimburse Charter for any
incremental income taxes that Charter would owe as a result of
such an exchange and any resulting future Special Profit
Allocations to Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003 and 2002, we have recorded net deferred
income tax liabilities of $204&nbsp;million, $417&nbsp;million
and $519&nbsp;million, respectively. Additionally, as of
September&nbsp;30, 2004, December&nbsp;31, 2003 and 2002, we
have deferred tax assets of $3.4&nbsp;billion, $1.7&nbsp;billion
and $1.5&nbsp;billion, respectively, which primarily relate to
financial and tax losses allocated to Charter from
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">Charter Holdco. We are required to record a
valuation allowance when it is more likely than not that some
portion or all of the deferred income tax assets will not be
realized. Given the uncertainty surrounding our ability to
utilize our deferred tax assets, these items have been offset
with a corresponding valuation allowance of $3.0&nbsp;billion,
$1.3&nbsp;billion and $1.4&nbsp;billion at September&nbsp;30,
2004, December&nbsp;31, 2003 and 2002, respectively.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently under examination by the
Internal Revenue Service for the tax years ending
December&nbsp;31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
our consolidated financial condition, results of operations or
our liquidity, including our ability to comply with our debt
covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Litigation.</FONT></I><FONT size="2"> As
described in &#147;Business&nbsp;&#151; Legal Proceedings,&#148;
numerous allegations have been made against us. These legal
contingencies have a high degree of uncertainty. No reserves
have been established for these matters because we are unable to
predict the outcome. When a contingency becomes estimable and
probable, a reserve is established. We have established reserves
for certain other matters. If any of the litigation matters
described in &#147;Business&nbsp;&#151; Legal Proceedings&#148;
is resolved unfavorably, such resolution could have a material
adverse effect on our consolidated financial condition, results
of operations or our liquidity, including our ability to comply
with our debt covenants.
</FONT>

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</FONT>

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<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">
<B><FONT size="2">Nine Months Ended September&nbsp;30, 2004
Compared to Nine Months Ended September&nbsp;30, 2003</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the percentages of
revenues that items in the accompanying consolidated statements
of operations constituted for the periods presented (dollars in
millions, except share data):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,855</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">158</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">92</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,163</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,223</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(870</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,353</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,503,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenues.</FONT></I><FONT size="2"> Revenues
increased by $99&nbsp;million, or 3%, from $3.6&nbsp;billion for
the nine months ended September&nbsp;30, 2003 to
$3.7&nbsp;billion for the nine months ended September&nbsp;30,
2004. This increase is principally the result of an increase of
330,200 and 24,100 high-speed data and digital video customers,
respectively, as well as price increases for video and
high-speed data services, and is offset partially by a decrease
of 423,500 analog video customers. Included in the reduction in
analog video customers and reducing the increase in digital
video and high-speed data customers are 259,100&nbsp;analog
video customers, 94,500&nbsp;digital video customers and
48,200&nbsp;high-speed data customers sold in the cable system
sales to Atlantic Broadband Finance, LLC, which closed in March
and April 2004 and to WaveDivision Holdings,
</FONT>

<P align="center"><FONT size="2">55
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">LLC which closed in October 2003 (collectively
referred to herein as the &#147;System Sales&#148;). The Systems
Sales reduced the increase in revenues by $116&nbsp;million. Our
goal is to increase revenues by stabilizing our analog video
customer base, implementing price increases on certain services
and packages and increasing revenues from incremental high-speed
data services, digital video and advanced products and services
such as telephony using VOIP, VOD, high definition television
and digital video recorder service provided to our customers.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues by service offering were as follows
(dollars in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004 over 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues decreased by $73&nbsp;million, or 3%,
from $2.6&nbsp;billion for the nine months ended
September&nbsp;30, 2003 to $2.5&nbsp;billion for the nine months
ended September&nbsp;30, 2004. Approximately $84&nbsp;million of
the decrease was the result of the Systems Sales, while the
offsetting increase of approximately $11&nbsp;million was
primarily the result of price increases and an increase in
digital video customers, partially offset by a decline in analog
video customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from high-speed data services provided
to our non-commercial customers increased $135&nbsp;million, or
33%, from $403&nbsp;million for the nine months ended
September&nbsp;30, 2003 to $538&nbsp;million for the nine months
ended September&nbsp;30, 2004. Approximately 88% of the increase
related to the increase in the average number of customers
receiving high-speed data services, whereas approximately 12%
related to the increase in average price of the service. We were
also able to offer this service to more of our customers, as the
estimated percentage of homes passed that could receive
high-speed data service increased from 85% as of
September&nbsp;30, 2003 to 88% as of September&nbsp;30, 2004 as
a result of our system upgrades. The increase in high-speed data
revenues was reduced by approximately $9&nbsp;million as a
result of the Systems Sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales increased $17&nbsp;million, or
9%, from $188&nbsp;million for the nine months ended
September&nbsp;30, 2003 to $205&nbsp;million for the nine months
ended September&nbsp;30, 2004, primarily as a result of an
increase in national advertising campaigns and election related
advertising. The increase in advertising sales was reduced by
approximately $5&nbsp;million as a result of the Systems Sales.
For the nine months ended September&nbsp;30, 2004 and 2003, we
received $9&nbsp;million and $10&nbsp;million, respectively, in
advertising revenue from vendors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial revenues consist primarily of revenues
from cable video and high-speed data services to our commercial
customers. Commercial revenues increased $26&nbsp;million, or
17%, from $149&nbsp;million for the nine months ended
September&nbsp;30, 2003 to $175&nbsp;million for the nine months
ended September&nbsp;30, 2004, primarily as a result of an
increase in commercial high-speed data revenues. The increase
was reduced by approximately $10&nbsp;million as a result of the
Systems Sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other revenues consist of revenues from franchise
fees, telephony revenue, equipment rental, customer
installations, home shopping, dial-up Internet service, late
payment fees, wire maintenance fees and other miscellaneous
revenues. Other revenues decreased $6&nbsp;million, or 2%, from
$255&nbsp;million for the nine months ended September&nbsp;30,
2003 to $249&nbsp;million for the nine months ended
September&nbsp;30, 2004.
</FONT>

<P align="center"><FONT size="2">56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Approximately $8&nbsp;million of the decrease was
the result of the Systems Sales, while the offsetting increase
was primarily the result of an increase in home shopping and
infomercial revenue.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating Expenses.
</FONT></I><FONT size="2">Operating expenses increased
$95&nbsp;million, or 7%, from $1.5&nbsp;billion for the nine
months ended September&nbsp;30, 2003 to $1.6&nbsp;billion for
the nine months ended September&nbsp;30, 2004. The increase in
operating expenses was reduced by approximately $42&nbsp;million
as a result of the System Sales. Programming costs included in
the accompanying condensed consolidated statements of operations
were $991&nbsp;million and $934&nbsp;million, representing 17%
and 28% of total costs and expenses for the nine months ended
September&nbsp;30, 2004 and 2003, respectively. Key expense
components as a percentage of revenues were as follows (dollars
in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004 over 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Programming costs consist primarily of costs paid
to programmers for analog, premium and digital channels and
pay-per-view programming. The increase in programming costs of
$57&nbsp;million, or 6%, for the nine months ended
September&nbsp;30, 2004 over the nine months ended
September&nbsp;30, 2003 was a result of price increases,
particularly in sports programming, an increased number of
channels carried on our systems and an increase in digital video
customers, partially offset by decreases in analog video
customers. Additionally, the increase in programming costs was
reduced by $30&nbsp;million as a result of the Systems Sales.
Programming costs were offset by the amortization of payments
received from programmers in support of launches of new channels
of $43&nbsp;million and $47&nbsp;million for the nine months
ended September&nbsp;30, 2004 and 2003, respectively.
Programming costs for the nine months ended September&nbsp;30,
2004 also include a $5&nbsp;million reduction related to the
settlement of a dispute with TechTV, Inc. See Note&nbsp;17 to
our September&nbsp;30, 2004 unaudited condensed consolidated
financial statements attached hereto for more information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable programming costs have increased in
every year we have operated in excess of customary inflationary
and cost-of-living type increases, and we expect them to
continue to increase because of a variety of factors, including
additional programming being provided to customers as a result
of system rebuilds that increase channel capacity, increased
costs to produce or purchase programming, increased costs for
previously discounted programming and inflationary or negotiated
annual increases. Our increasing programming costs will result
in declining operating margins for our video services to the
extent we are unable to pass on cost increases to our customers.
We expect to partially offset any resulting margin compression
from our traditional video services with revenue from advanced
video services, increased high-speed data revenues, advertising
revenues and commercial service revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries, benefits and
commissions. Advertising sales expenses increased
$7&nbsp;million, or 11%, primarily due to increased salary,
benefit and commission costs. Service costs consist primarily of
service personnel salaries and benefits, franchise fees, system
utilities, Internet service provider fees, maintenance and pole
rent expense. The increase in service costs of $31&nbsp;million,
or 7%, resulted primarily from additional activity associated
with ongoing infrastructure maintenance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, General and Administrative
Expenses.</FONT></I><FONT size="2"> Selling, general and
administrative expenses increased by $33&nbsp;million, or 5%,
from $702&nbsp;million for the nine months ended
September&nbsp;30, 2003 to $735&nbsp;million for the nine months
ended September&nbsp;30, 2004. The increase in selling, general
and administrative
</FONT>

<P align="center"><FONT size="2">57
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">expenses was reduced by $16&nbsp;million as a
result of the System Sales. Key components of expense as a
percentage of revenues were as follows (dollars in millions):
</FONT>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Nine Months Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004 over 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">636</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $14&nbsp;million, or 2%, resulted primarily from
increases in costs associated with our commercial business of
$16&nbsp;million, bad debt expense of $11&nbsp;million,
franchise taxes of $4&nbsp;million and third party call center
costs of $12&nbsp;million. These increases were partially offset
by a decrease in salaries and benefits of $19&nbsp;million and
property taxes of $14&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketing expenses increased $19&nbsp;million, or
24%, as a result of an increased investment in marketing and
branding campaigns.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Depreciation and Amortization.
</FONT></I><FONT size="2">Depreciation and amortization expense
increased by $10&nbsp;million, or 1%, from $1.10&nbsp;billion
for the nine months ended September&nbsp;30, 2003 to
$1.11&nbsp;billion for the nine months ended September&nbsp;30,
2004. The increase in depreciation related to an increase in
capital expenditures, which was offset by lower depreciation as
the result of the Systems Sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of
Franchises.</FONT></I><FONT size="2"> We performed an impairment
assessment during the third quarter of 2004 using an independent
third-party appraiser. The use of lower projected growth rates
and the resulting revised estimates of future cash flows in our
valuation, primarily as a result of increased competition, led
to the recognition of a $2.4&nbsp;billion impairment charge for
the nine months ended September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">(Gain) Loss on Sale of Assets,
Net.</FONT></I><FONT size="2"> Gain on sale of assets of
$104&nbsp;million for the nine months ended September&nbsp;30,
2004 primarily represents the pretax gain realized on the sale
of systems to Atlantic Broadband Finance, LLC which closed in
March and April 2004. Loss on sale of assets of $23&nbsp;million
for the nine months ended September&nbsp;30, 2003 primarily
represents the loss recognized on the disposition of fixed
assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Option Compensation Expense,
Net.</FONT></I><FONT size="2"> Option compensation expense of
$34&nbsp;million for the nine months ended September&nbsp;30,
2004 primarily represents the expense of approximately
$9&nbsp;million related to a stock option exchange program,
under which our employees were offered the right to exchange all
stock options (vested and unvested) issued under the 1999
Charter Communications Option Plan and 2001 Stock Incentive Plan
that had an exercise price over $10&nbsp;per share for shares of
restricted Charter Class&nbsp;A common stock or, in some
instances, cash. The exchange offer closed in February 2004.
Additionally, during the nine months ended September&nbsp;30,
2004, we recognized approximately $8&nbsp;million related to the
options granted under the Charter Long-Term Incentive Program
and approximately $17&nbsp;million related to options granted
following the adoption of Statement of Financial Accounting
Standards (&#147;SFAS&#148;) No.&nbsp;123, <I>Accounting for
Stock-Based Compensation.</I> Option compensation expense of
$1&nbsp;million for the nine months ended September&nbsp;30,
2003 primarily represents options expensed in accordance with
SFAS&nbsp;No.&nbsp;123, <I>Accounting for Stock-Based
Compensation.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Special Charges, Net.
</FONT></I><FONT size="2">Special charges of $100&nbsp;million
for the nine months ended September&nbsp;30, 2004 represents
approximately $85&nbsp;million of aggregate value of the Charter
Class&nbsp;A common stock and warrants to purchase Charter
Class&nbsp;A common stock contemplated to be issued as part of a
settlement of the consolidated federal class actions, state
derivative actions and federal derivative action lawsuits,
approximately $9&nbsp;million of litigation costs related to the
tentative settlement of a South Carolina national class action
suit, all of which settlements are subject to final
documentation and court approval and
</FONT>

<P align="center"><FONT size="2">58
</FONT>

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<DIV align="left">
<FONT size="2">approximately $9&nbsp;million of severance and
related costs of our workforce reduction. Special charges for
the nine months ended September&nbsp;30, 2004 were offset by
$3&nbsp;million received from a third party in settlement of a
dispute. Special charges of $18&nbsp;million for the nine months
ended September&nbsp;30, 2003 represents approximately
$23&nbsp;million of severance and related costs of our workforce
reduction partially offset by a $5&nbsp;million credit from a
settlement from the Internet service provider Excite@Home
related to the conversion of about 145,000 high-speed data
customers to our Charter Pipeline service in 2001. We expect to
continue to record additional special charges in 2004 related to
the continued reorganization of our operations.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest Expense,
Net.</FONT></I><FONT size="2"> Net interest expense increased by
$64&nbsp;million, or 6%, from $1.16&nbsp;billion for the nine
months ended September&nbsp;30, 2003 to $1.23&nbsp;billion for
the nine months ended September&nbsp;30, 2004. The increase in
net interest expense was a result of an increase in our average
borrowing rate from 7.95% in the nine months ended
September&nbsp;30, 2003 to 8.61% in the nine months ended
September&nbsp;30, 2004 partially offset by a decrease of
$516&nbsp;million in average debt outstanding from
$18.9&nbsp;billion for the nine months ended September&nbsp;30,
2003 compared to $18.4&nbsp;billion for the nine months ended
September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gain on Derivative Instruments and Hedging
Activities, Net.</FONT></I><FONT size="2"> Net gain on
derivative instruments and hedging activities increased
$13&nbsp;million from $35&nbsp;million for the nine months ended
September&nbsp;30, 2003 to $48&nbsp;million for the nine months
ended September&nbsp;30, 2004. The increase is primarily the
result of an increase in gains on interest rate agreements that
do not qualify for hedge accounting under
SFAS&nbsp;No.&nbsp;133, which increased from a gain of
$27&nbsp;million for the nine months ended September&nbsp;30,
2003 to a gain of $45&nbsp;million for the nine months ended
September&nbsp;30, 2004. This was coupled with a decrease in
gains on interest rate agreements, as a result of hedge
ineffectiveness on designated hedges, which decreased from
$8&nbsp;million for the nine months ended September&nbsp;30,
2003 to $3&nbsp;million for the nine months ended
September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on Debt to Equity
Conversions.</FONT></I><FONT size="2"> Loss on debt to equity
conversions of $23&nbsp;million for the nine months ended
September&nbsp;30, 2004 represents the loss recognized from
privately negotiated exchanges of a total of $30&nbsp;million
principal amount of Charter&#146;s 5.75%&nbsp;convertible senior
notes held by two unrelated parties for shares of Charter
Class&nbsp;A common stock. The exchange resulted in the issuance
of more shares in the exchange transaction than would have been
issuable under the original terms of the convertible senior
notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on Extinguishment of
Debt.</FONT></I><FONT size="2"> Loss on extinguishment of debt
of $21&nbsp;million for the nine months ended September&nbsp;30,
2004 represents the write-off of deferred financing fees and
third party costs related to the Charter Communications
Operating, LLC (&#147;Charter Operating&#148;) refinancing in
April 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gain on Debt Exchange,
Net.</FONT></I><FONT size="2"> Net gain on debt exchange of
$267&nbsp;million for the nine months ended September&nbsp;30,
2003 represents the gain realized on the purchase of an
aggregate of $609&nbsp;million principal amount of our
convertible senior notes and $1.3&nbsp;billion principal amount
of Charter Holdings&#146; senior notes and senior discount notes
in consideration for an aggregate of $1.6&nbsp;billion principal
amount of 10.25%&nbsp;notes due 2010 issued by CCH&nbsp;II. The
gain is net of the write-off of deferred financing costs
associated with the retired debt of $27&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other, Net.</FONT></I><FONT size="2"> Net
other expense of $9&nbsp;million for the nine months ended
September&nbsp;30, 2003 primarily represents losses on equity
investments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Minority Interest.</FONT></I><FONT size="2">
Minority interest represents the 2% accretion of the preferred
membership interests in our indirect subsidiary, CC VIII, LLC,
and since June&nbsp;6, 2003, the pro rata share of the profits
and losses of CC VIII, LLC. Reported losses allocated to
minority interest on the statement of operations are limited to
the extent of any remaining minority interest on the balance
sheet related to Charter Holdco. Because minority interest in
Charter Holdco was substantially eliminated at December&nbsp;31,
2003, beginning in the first quarter of 2004, Charter began to
absorb substantially all future losses before income taxes that
otherwise would have been allocated to minority interest. For
the nine months ended September&nbsp;30, 2003, 52.8% of
Charter&#146;s losses were allocated to minority interest. As a
result of
</FONT>

<P align="center"><FONT size="2">59
</FONT>

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<DIV align="left">
<FONT size="2">negative equity at Charter Holdco during the nine
months ended September&nbsp;30, 2004, no additional losses were
allocated to minority interest, resulting in an additional
$2.0&nbsp;billion of net losses. Subject to any changes in
Charter Holdco&#146;s capital structure, future losses will be
substantially absorbed by Charter.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Tax Benefit.</FONT></I><FONT size="2">
Income tax benefit of $116&nbsp;million and $86&nbsp;million was
recognized for the nine months ended September&nbsp;30, 2004 and
the nine months ended September&nbsp;30, 2003, respectively. The
income tax benefits were realized as a result of decreases in
certain deferred tax liabilities related to our investment in
Charter Holdco as well as decreases in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The income tax benefit recognized in the nine
months ended September&nbsp;30, 2004 was directly related to the
impairment of franchises as discussed above. We do not expect to
recognize a similar benefit associated with the impairment
charge in future periods. However, the actual tax provision
calculations in future periods will be the result of current and
future temporary differences, as well as future operating
results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The income tax benefit recognized in the nine
months ended September&nbsp;30, 2003 was directly related to the
tax losses allocated to Charter from Charter Holdco. In the
second quarter of 2003, Charter started receiving tax loss
allocations from Charter Holdco. Previously, the tax losses had
been allocated to Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. in accordance with the Special Loss Allocations
provided under the Charter Holdco limited liability company
agreement. We do not expect to recognize a similar benefit
related to our investment in Charter Holdco after 2003 related
to tax loss allocations received from Charter Holdco, due to
limitations associated with our ability to offset future tax
benefits against the remaining deferred tax liabilities.
However, the actual tax provision calculations in future periods
will be the result of current and future temporary differences,
as well as future operating results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cumulative Effect of Accounting Change, Net of
Tax.</FONT></I><FONT size="2"> Cumulative effect of accounting
change of $765&nbsp;million (net of minority interest effects of
$19&nbsp;million and tax effects of $91&nbsp;million) in 2004
represents the impairment charge recorded as a result of our
adoption of Topic D-108.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net Loss.</FONT></I><FONT size="2"> Net loss
increased by $3.8&nbsp;billion, from $181&nbsp;million for the
nine months ended September&nbsp;30, 2003 to $4.0&nbsp;billion
for the nine months ended September&nbsp;30, 2004 as a result of
the factors described above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Preferred Stock
Dividends.</FONT></I><FONT size="2"> On August&nbsp;31, 2001,
Charter issued 505,664&nbsp;shares (and on February&nbsp;28,
2003 issued an additional 39,595&nbsp;shares) of Series&nbsp;A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition, on which Charter pays a quarterly
cumulative cash dividends at an annual rate of 5.75% on a
liquidation preference of $100&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss Per Common
Share.</FONT></I><FONT size="2"> The loss per common share
increased by $12.76, from $0.62&nbsp;per common share for the
nine months ended September&nbsp;30, 2003 to $13.38&nbsp;per
common share for the nine months ended September&nbsp;30, 2004
as a result of the factors described above.
</FONT>

<P align="center"><FONT size="2">60
</FONT>

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<P align="left">
<B><FONT size="2">Year Ended December&nbsp;31, 2003,
December&nbsp;31, 2002 and December&nbsp;31, 2001</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the percentages of
revenues that items in the accompanying consolidated statements
of operations constitute for the indicated periods (dollars in
millions, except per share and share data):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Costs and Expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unfavorable contracts and other settlements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,322</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(95</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,310</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(348</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,768</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,308</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,440,261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,594,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">61
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Year Ended December&nbsp;31, 2003 Compared to
Year Ended December&nbsp;31, 2002</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenues.</FONT></I><FONT size="2"> Revenues
increased by $253&nbsp;million, or 6%, from $4.6&nbsp;billion
for the year ended December&nbsp;31, 2002 to $4.8&nbsp;billion
for the year ended December&nbsp;31, 2003. This increase is
principally the result of an increase of 427,500 high-speed data
customers, as well as price increases for video and high-speed
data services, and is offset partially by a decrease of 147,500
and 10,900 in analog and digital video customers, respectively.
Included within the decrease of analog and digital video
customers and reducing the increase of high-speed data customers
are 25,500 analog video customers, 12,500 digital video
customers and 12,200 high-speed data customers sold in the Port
Orchard, Washington sale on October&nbsp;1, 2003. Our goal is to
increase revenues by mitigating our past analog video customer
losses, implementing limited price increases on certain services
and packages and increasing revenues from incremental high-speed
data services, digital video and advanced products and services
such as digital video recorders, high definition television, VOD
and telephony using VOIP to our existing customer base and
commercial customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Average monthly revenue per analog video customer
increased from $56.91 for the year ended December&nbsp;31, 2002
to $61.92 for the year ended December&nbsp;31, 2003. Average
monthly revenue per analog video customer represents total
annual revenue, divided by twelve, divided by the average number
of analog video customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues by service offering are as follows
(dollars in millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003 over 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues increased by $41&nbsp;million, or 1%,
for the year ended December&nbsp;31, 2003 compared to the year
ended December&nbsp;31, 2002. The increase was primarily due to
price increases partially offset by a decline in analog and
digital video customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from high-speed data services provided
to our non-commercial customers increased $219&nbsp;million, or
65%, from $337&nbsp;million for the year ended December&nbsp;31,
2002 to $556&nbsp;million for the year ended December&nbsp;31,
2003. Approximately 93% of the increase related to the increase
in the average number of customers, whereas approximately 7%
related to the increase in average price of the service. The
increase was primarily due to the addition of high-speed data
customers within our existing service areas. We were also able
to offer this service to more of our customers, as the estimated
percentage of homes passed that could receive high-speed data
service increased from 82% as of December&nbsp;31, 2002 to 87%
as of December&nbsp;31, 2003 as a result of our system upgrades.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales decreased $39&nbsp;million, or
13%, from $302&nbsp;million for the year ended December&nbsp;31,
2002, to $263&nbsp;million for the year ended December&nbsp;31,
2003 primarily as a result of a decrease in advertising from
vendors offset partially by an increase in local advertising
sales revenues. For the years ended December&nbsp;31, 2003 and
2002, we received $15&nbsp;million and $79&nbsp;million,
respectively, in advertising revenue from vendors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial revenues consist primarily of revenues
from video and high-speed data services to our commercial
customers. Commercial revenues increased $43&nbsp;million, or
27%, from $161&nbsp;million for the year
</FONT>

<P align="center"><FONT size="2">62
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">ended December&nbsp;31, 2002, to
$204&nbsp;million for the year ended December&nbsp;31, 2003,
primarily due to an increase in commercial high-speed data
revenues.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other revenues consist of revenues from franchise
fees, equipment rental, customer installations, home shopping,
dial-up Internet service, late payment fees, wire maintenance
fees and other miscellaneous revenues. For the year ended
December&nbsp;31, 2003 and 2002, franchise fees represented
approximately 48% and 46%, respectively, of total other
revenues. Other revenues decreased $11&nbsp;million, or 3%, from
$346&nbsp;million for the year ended December&nbsp;31, 2002 to
$335&nbsp;million for the year ended December&nbsp;31, 2003. The
decrease was due primarily to a decrease in franchise fees after
an FCC ruling in March 2002, no longer requiring the collection
of franchise fees for high-speed data services. Franchise fee
revenues are collected from customers and remitted to franchise
authorities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The decrease in accounts receivable of 27%
compared to the increase in revenues of 6% is primarily due to
the timing of collection of receivables from programmers for
fees associated with the launching of their networks coupled
with our tightened credit and collections policy. These fees
from programmers are not recorded as revenue but, rather, are
recorded as reductions of programming expense on a straight-line
basis over the term of the contract. Programmer receivables
decreased $40&nbsp;million, or 57%, from $70&nbsp;million as of
December&nbsp;31, 2002 to $30&nbsp;million as of
December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating expenses.
</FONT></I><FONT size="2">Operating expenses increased
$145&nbsp;million, or 8%, from $1.8&nbsp;billion for the year
ended December&nbsp;31, 2002 to $2.0&nbsp;billion for the year
ended December&nbsp;31, 2003. Programming costs included in the
accompanying consolidated statements of operations were
$1.2&nbsp;billion and $1.2&nbsp;billion, representing 64% and
65% of total operating expenses for the years ended
December&nbsp;31, 2003 and 2002, respectively. Key expense
components as a percentage of revenues are as follows (dollars
in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003 over 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Programming costs consist primarily of costs paid
to programmers for the provision of analog, premium and digital
channels and pay-per-view programs. The increase in programming
costs of $83&nbsp;million, or 7%, was due to price increases,
particularly in sports programming, and due to an increased
number of channels carried on our systems, partially offset by
decreases in analog and digital video customers. Programming
costs were offset by the amortization of payments received from
programmers in support of launches of new channels against
programming costs of $62&nbsp;million and $57&nbsp;million for
the year ended December&nbsp;31, 2003 and 2002, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable programming costs have increased, in
every year we have operated, in excess of customary inflationary
and cost-of-living type increases, and we expect them to
continue to increase due to a variety of factors, including
additional programming being provided to customers as a result
of system rebuilds that increase channel capacity, increased
costs to produce or purchase cable programming and inflationary
or negotiated annual increases. Our increasing programming costs
will result in declining video product margins to the extent we
are unable to pass on cost increases to our customers. We expect
to partially offset any resulting margin compression from our
traditional video services with revenue from advanced video
services, increased incremental high-speed data revenues,
advertising revenues and commercial services revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries and benefits and
commissions. Advertising sales expenses increased
$1&nbsp;million, or 1%, primarily due to increased sales
commissions, taxes and benefits. Service costs
</FONT>

<P align="center"><FONT size="2">63
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">consist primarily of service personnel salaries
and benefits, franchise fees, system utilities, Internet service
provider fees, maintenance and pole rent expense. The increase
in service costs of $61&nbsp;million, or 11%, resulted primarily
from additional activity associated with ongoing infrastructure
maintenance and customer service, including activities
associated with our promotional program.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and administrative
expenses.</FONT></I><FONT size="2"> Selling, general and
administrative expenses decreased by $23&nbsp;million, or 2%,
from $963&nbsp;million for the year ended December&nbsp;31, 2002
to $940&nbsp;million for the year ended December&nbsp;31, 2003.
Key components of expense as a percentage of revenues are as
follows (dollars in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003 over 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $23&nbsp;million, or 3%, resulted primarily from
increases in salaries and benefits of $4&nbsp;million, call
center costs of $25&nbsp;million and internal network costs of
$16&nbsp;million. These increases were partially offset by a
decrease in bad debt and collection expense of $27&nbsp;million
as we continue to realize benefits from our strengthened credit
policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketing expenses decreased $46&nbsp;million, or
30%, due to reduced promotional activity related to our service
offerings including reductions in advertising, telemarketing and
direct sales activities. However, we expect marketing expenses
to increase in 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Depreciation and
amortization.</FONT></I><FONT size="2"> Depreciation and
amortization expense increased by $17&nbsp;million, or 1%, from
$1.4&nbsp;billion in 2002 to $1.5&nbsp;billion in 2003 due
primarily to an increase in depreciation expense related to
additional capital expenditures in 2003 and 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of
franchises.</FONT></I><FONT size="2"> We performed our annual
impairment assessments on October&nbsp;1, 2002 and 2003 using an
independent third-party appraiser. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in our valuation led to a $4.6&nbsp;billion impairment
charge in the fourth quarter of 2002. Our 2003 assessment
performed on October&nbsp;1, 2003 did not result in an
impairment. We do not expect to incur impairment charges of
comparable magnitude to the 2002 charge in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on sale of assets,
net.</FONT></I><FONT size="2"> Loss on sale of assets for the
year ended December&nbsp;31, 2003 represents $26 million of
losses related to the disposition of fixed assets offset by the
$21&nbsp;million gain recognized on the sale of cable systems in
Port Orchard, Washington which closed on October&nbsp;1, 2003.
Loss on sale of assets for the year ended December&nbsp;31, 2002
represents losses related to the disposition of fixed assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Option compensation expense (income),
net.</FONT></I><FONT size="2"> Option compensation expense
decreased by $1&nbsp;million for the year ended
December&nbsp;31, 2003 compared to the year ended
December&nbsp;31, 2002. Option compensation expense includes
expense related to exercise prices on certain options that were
issued prior to our initial public offering in 1999 that were
less than the estimated fair values of our common stock at the
time of grant. Compensation expense is being recognized over the
vesting period of such options and will continue to be recorded
until the last vesting period lapses in April 2004. On
January&nbsp;1, 2003, we adopted SFAS&nbsp;No.&nbsp;123,
<I>Accounting for Stock-Based Compensation</I>, using the
prospective method under which we will recognize compensation
expense of a stock-based award to an employee over the vesting
period based on the fair value of the award on the grant date.
</FONT>

<P align="center"><FONT size="2">64
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Special charges,
net.</FONT></I><FONT size="2"> Special charges of
$21&nbsp;million for the year ended December&nbsp;31, 2003
represent approximately $26&nbsp;million of severance and
related costs of our ongoing initiative to reduce our workforce
partially offset by a $5&nbsp;million credit from a settlement
from the Internet service provider Excite@Home related to the
conversion of about 145,000 high-speed data customers to our
Charter Pipeline service in 2001. In the fourth quarter of 2002,
we recorded a special charge of $35&nbsp;million, of which
$31&nbsp;million is associated with our workforce reduction
program. The remaining $4&nbsp;million is related to legal and
other costs associated with our shareholder lawsuits and
governmental investigations. We expect to continue to record
additional special charges in 2004 related to the reorganization
of our operations and costs of litigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Unfavorable contracts and other
settlements.</FONT></I><FONT size="2"> Unfavorable contracts and
other settlements of $72&nbsp;million for the year ended
December&nbsp;31, 2003 represents the settlement of estimated
liabilities recorded in connection with prior business
combinations. The majority of this benefit (approximately
$52&nbsp;million) is due to the renegotiation in 2003 of a major
programming contract, for which a liability had been recorded
for the above market portion of that agreement in conjunction
with the Falcon acquisition in 1999 and the Bresnan acquisition
in 2000. The remaining benefit relates to the reversal of
previously recorded liabilities, which, based on an evaluation
of current facts and circumstances, are no longer required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense,
net.</FONT></I><FONT size="2"> Net interest expense increased by
$54&nbsp;million, or 4%, from $1.5&nbsp;billion for the year
ended December&nbsp;31, 2002 to $1.6&nbsp;billion for the year
ended December&nbsp;31, 2003. The increase in net interest
expense was a result of increased average debt outstanding in
2003 of $18.9&nbsp;billion compared to $17.8&nbsp;billion in
2002, partially offset by a decrease in our average borrowing
rate from 8.02% in 2002 to 7.99% in 2003. The increased debt was
primarily used for capital expenditures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gain (loss) on derivative instruments and
hedging activities, net.</FONT></I><FONT size="2"> Net gain on
derivative instruments and hedging activities increased
$180&nbsp;million from a loss of $115&nbsp;million for the year
ended December&nbsp;31, 2002 to a gain of $65&nbsp;million for
the year ended December&nbsp;31, 2003. The increase is primarily
due to an increase in gains on interest rate agreements, which
do not qualify for hedge accounting under
SFAS&nbsp;No.&nbsp;133, <I>Accounting for Derivative Instruments
and Hedging Activities</I>, which increased from a loss of
$101&nbsp;million for the year ended December&nbsp;31, 2002 to a
gain of $57&nbsp;million for the year ended December&nbsp;31,
2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gain on debt exchange,
net.</FONT></I><FONT size="2"> Net gain on debt exchange of
$267&nbsp;million for the year ended December&nbsp;31, 2003
represents the gain realized on the purchase, in a non-monetary
transaction, of a total of $609&nbsp;million principal amount of
our outstanding convertible senior notes and $1.3&nbsp;billion
principal amount of Charter Holdings&#146; senior notes and
senior discount notes in consideration for a total of
$1.6&nbsp;billion principal amount of 10.25%&nbsp;notes due 2010
issued by our indirect subsidiary, CCH&nbsp;II. The gain is net
of the write-off of deferred financing costs associated with the
retired debt of $27&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on equity
investments.</FONT></I><FONT size="2"> Loss on equity
investments remained constant at $3&nbsp;million for the years
ended December&nbsp;31, 2003 and 2002. Loss on equity
investments is primarily due to losses on investments carried
under the equity method of accounting offset by realized gains
on marketable securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other expense, net.</FONT></I><FONT size="2">
Other expense increased by $12&nbsp;million from $1&nbsp;million
in 2002 to $13&nbsp;million in 2003. This increase is primarily
due to increases in costs associated with amending a revolving
credit facility of our subsidiaries and costs associated with
terminated debt transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Minority interest.</FONT></I><FONT size="2">
Minority interest represents the allocation of losses to the
minority interest based on ownership of Charter Holdco, the 10%
dividend on preferred membership units in our indirect
subsidiary, Charter Helicon, LLC and the 2% accretion of the
preferred membership interests in our indirect subsidiary, CC
VIII, LLC, and since June&nbsp;6, 2003, the pro rata share of
the profits of CC VIII, LLC. See &#147;Certain Relationships and
Related Transactions&nbsp;&#151; Transactions Arising Out of Our
Organizational Structure and Mr.&nbsp;Allen&#146;s Investment in
Charter Communications, Inc. and Its Subsidiaries&nbsp;&#151;
Equity Put Rights&nbsp;&#151; CC VIII.&#148; Additionally,
reported losses allocated to minority interest on the statement
of operations will be limited to the extent of any remaining
minority interest on the
</FONT>

<P align="center"><FONT size="2">65
</FONT>

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<DIV align="left">
<FONT size="2">balance sheet related to Charter Holdco.
Accordingly, commencing in 2004, Charter expects to absorb all,
or substantially all, future losses before income taxes because
minority interest in Charter Holdco was substantially eliminated
at December&nbsp;31, 2003. For the year ended December&nbsp;31,
2003, 53.5% of our losses before income taxes were classified as
minority interest.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income Tax Benefit.</FONT></I><FONT size="2">
Income tax benefit of $110&nbsp;million and $460&nbsp;million
was recognized for the years ended December&nbsp;31, 2003 and
2002, respectively. The income tax benefit was realized through
decreases in certain deferred tax liabilities related to our
investment in Charter Holdco, as well as to the change in the
deferred tax liabilities of certain of our indirect corporate
subsidiaries. In 2003, Charter received tax loss allocations
from Charter Holdco. Previously, the tax losses had been
allocated to Vulcan Cable&nbsp;III Inc. and Charter Investment,
Inc. in accordance with the Special Loss Allocations provided
under the Charter Holdco limited liability company agreement. We
do not expect to recognize a similar benefit related to our
investment in Charter Holdco after 2003 due to limitations on
our ability to offset future tax benefits against the remaining
deferred tax liabilities. However, the actual tax provision
calculation in future periods will be the result of current and
future temporary differences, as well as future operating
results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cumulative effect of accounting change, net of
tax.</FONT></I><FONT size="2"> Cumulative effect of accounting
change in 2002 represents the impairment charge recorded as a
result of adopting SFAS&nbsp;No.&nbsp;142.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net loss.</FONT></I><FONT size="2"> Net loss
decreased by $2.3&nbsp;billion, or 91%, from $2.5&nbsp;billion
in 2002 to $238&nbsp;million in 2003 as a result of the factors
described above. The impact of the gain on sale of system,
unfavorable contracts and settlements and gain on debt exchange,
net of minority interest and income tax impacts, was to decrease
net loss by $168&nbsp;million in 2003. The impact of the
impairment of franchises and the cumulative effect of accounting
change, net of minority interest and income tax impacts, was to
increase net loss by $1.6&nbsp;billion in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Preferred stock
dividends.</FONT></I><FONT size="2"> On August&nbsp;31, 2001,
Charter issued 505,664&nbsp;shares (and on February&nbsp;28,
2003 issued an additional 39,595&nbsp;shares) of Series&nbsp;A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition in August 2001, on which it pays a
quarterly cumulative cash dividends at an annual rate of 5.75%
on a liquidation preference of $100&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss per common
share.</FONT></I><FONT size="2"> The loss per common share
decreased by $7.73, from $8.55&nbsp;per common share for the
year ended December&nbsp;31, 2002 to $0.82&nbsp;per common share
for the year ended December&nbsp;31, 2003 as a result of the
factors described above.
</FONT>

<P align="left">
<B><FONT size="2">Year Ended December&nbsp;31, 2002 Compared to
Year Ended December&nbsp;31, 2001</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Revenues.</FONT></I><FONT size="2"> Revenues
increased by $759&nbsp;million, or 20%, from $3.8&nbsp;billion
in 2001 to $4.6&nbsp;billion in 2002. This increase is
principally the result of an increase of 538,000 and 585,200 in
the number of digital video and high-speed data customers,
respectively, as well as price increases, and is offset by a
decrease of 357,400 in analog video customers. Average monthly
revenue per analog video customer increased from $45.68 in 2001
to $56.91 in 2002. Average monthly revenue per analog video
customer represents total annual revenue, divided by twelve,
divided by the average number of analog video customers.
</FONT>

<P align="center"><FONT size="2">66
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues by service offering are as follows
(dollars in millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002 over 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues increased by $449&nbsp;million, or
15%, to $3.4&nbsp;billion in 2002 compared to $3.0&nbsp;billion
in 2001. The increase was due to a full year of revenue from the
AT&#38;T Broadband systems acquired in June 2001, general price
increases and the addition of approximately 538,000 digital
video customers partially offset by a reduction of approximately
357,400 analog video customers. Overall, the net increase in the
average number of customers resulted in approximately 7% of the
increase in video revenue, whereas approximately 93% resulted
from the increase in average price of our video products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from high-speed data services provided
to our non-commercial customers increased $189&nbsp;million, or
128%, from $148&nbsp;million for the year ended
December&nbsp;31, 2001 to $337&nbsp;million for the year ended
December&nbsp;31, 2002. Approximately 73% of the increase
related to the increase in the average number of customers,
whereas approximately 27% related to the increase in average
price of the service. The increase was primarily due to the
addition of 585,200 high-speed data customers. Between 2001 and
2002, we were able to offer this service to more of our
customers, as the estimated percentage of homes passed that
could receive high-speed data service increased from 66% to 82%
as a result of our ongoing system upgrades.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales increased $105&nbsp;million, or
53%, from $197&nbsp;million in 2001 to $302&nbsp;million in
2002. The increase was due to an increase of $53&nbsp;million,
from $13&nbsp;million in 2001 to $66&nbsp;million in 2002, in
advertising contracts with programmers, $40&nbsp;million of
additional sales primarily due to the increased advertising
capacity as a result of an increased number of channels carried
by our systems and $14&nbsp;million related to the acquisition
of AT&#38;T Broadband systems in June 2001. For the years ended
December&nbsp;31, 2002 and 2001, we received $13&nbsp;million
and $14&nbsp;million, respectively, in advertising revenues from
our two largest suppliers of digital set-top terminals
representing 0.3% and 0.4% of total revenues, respectively.
Revenues from advertising provided to vendors and programmers
are recognized based upon the fair value of advertising. Vendor
advertising purchases are made pursuant to written agreements
that are generally consistent with other third-party commercial
advertising agreements and at prices that we believe approximate
fair value. In some cases we purchased equipment from the
vendors at the same time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial revenues consist primarily of revenues
from video and high-speed data services to our commercial
customers. Commercial revenues increased $38&nbsp;million, or
31%, from $123&nbsp;million for the year ended December&nbsp;31,
2001, to $161&nbsp;million for the year ended December&nbsp;31,
2002, primarily due to an increase in commercial high-speed data
revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other revenues consist of revenues from franchise
fees, equipment rental, customer installations, home shopping,
dial-up Internet service, late payment fees, wire maintenance
fees and other miscellaneous revenues. For the years ended
December&nbsp;31, 2002 and 2001, franchise fees represented
approximately 46% and 39%, respectively, of total other
revenues. Other revenues decreased $22&nbsp;million, or 6%, from
$368&nbsp;million for the year ended December&nbsp;31, 2001 to
$346&nbsp;million for the year ended December&nbsp;31,
</FONT>

<P align="center"><FONT size="2">67
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">2002. The decrease was due to decreases in late
payment fees charged to customers and other miscellaneous
revenues. Franchise fee revenues are collected from customers
and remitted to franchise authorities.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The decrease in accounts receivable of 11%
compared to the increase in revenues of 20% is primarily due to
the timing of collection of receivables from programmers for
fees associated with the launching of their networks, coupled
with our tightened credit and collections policy. These fees
from programmers are not recorded as revenue but, rather, are
recorded as reductions of programming expense on a straight-line
basis over the term of the contract. Programmer receivables
decreased $27&nbsp;million, or 28%, from $97&nbsp;million as of
December&nbsp;31, 2001 to $70&nbsp;million as of
December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating expenses.
</FONT></I><FONT size="2">Operating expenses increased
$321&nbsp;million, or 22%, from $1.5&nbsp;billion in 2001 to
$1.8&nbsp;billion in 2002. Programming costs included in the
accompanying consolidated statements of operations were
$1.2&nbsp;billion and $963&nbsp;million, representing 65% of
total operating expenses for the years ended December&nbsp;31,
2002 and 2001, respectively. Key expense components as a
percentage of revenues are as follows (dollars in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002 over 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Programming costs consist primarily of costs paid
to programmers for the provision of analog, premium and digital
channels and pay-per-view programs. The increase in programming
costs of $203&nbsp;million, or 21%, was primarily due to price
increases, particularly in sports programming, an increased
number of channels carried on our systems and an increase in
digital video customers. In addition, approximately
$51&nbsp;million of the increase results from a full year of
costs related to the acquisition of AT&#38;T Broadband systems
in June 2001. Programming costs were offset by the amortization
of payments received from programmers in support of launches of
new channels against programming costs of $57&nbsp;million and
$35&nbsp;million for the years ended December&nbsp;31, 2002 and
2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries and benefits and
commissions. Advertising sales expenses increased
$23&nbsp;million, or 36%, primarily due to increased sales
commissions resulting from the increase in advertising revenues.
Service costs consist primarily of service personnel salaries
and benefits, franchise fees, system utilities, Internet service
provider fees, maintenance and pole rent expense. The increase
in service costs of $95&nbsp;million, or 21%, resulted primarily
from our growth in digital video and high-speed data services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selling, general and administrative
expenses.</FONT></I><FONT size="2"> Selling, general and
administrative expenses increased by $137&nbsp;million, or 17%,
from $826&nbsp;million for the year ended December&nbsp;31, 2001
to $963&nbsp;million for the year ended December&nbsp;31, 2002.
Key components of expense as a percentage of revenues are as
follows (dollars in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002 over 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">68
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $121&nbsp;million, or 18%, resulted primarily from
increases in salaries and benefits of $66&nbsp;million, bad debt
and collection expense of $24&nbsp;million and insurance of
$13&nbsp;million. The increase in bad debt expense resulted
primarily from continuing effects of our aggressive discounting
of our analog video service during late 2000 and most of 2001 in
an effort to grow our customer base and respond to price
competition from satellite providers. This practice led to an
increase in customers during the discounted period whose service
was subsequently disconnected for non-payment or who
subsequently cancelled their service without payment for
services provided. We also lengthened the period during which we
extended credit to customers, which increased exposure to
customers whose accounts were subject to cancellation and
increased bad debt expense. These increases were partially
offset by a decrease in billing expenses of $12&nbsp;million as
a result of renegotiated contracts with third-party billing
providers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketing expenses increased $16&nbsp;million, or
12%, due to increased costs associated with promotions of our
service offerings including advertising, telemarketing and
direct sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Depreciation and
amortization.</FONT></I><FONT size="2"> Depreciation and
amortization expense decreased by $1.2&nbsp;billion, or 46%,
from $2.7&nbsp;billion in 2001 to $1.4&nbsp;billion in 2002.
This decrease was due primarily to the adoption on
January&nbsp;1, 2002 of SFAS&nbsp;No.&nbsp;142, which requires
that franchise intangible assets that meet the indefinite life
criteria of SFAS&nbsp;No.&nbsp;142 no longer be amortized
against earnings but instead be tested for impairment on an
annual basis. As a result of this change, total amortization of
franchise assets decreased from $1.5&nbsp;billion in 2001 to
$9&nbsp;million in 2002. The decrease was partially offset by
the increase in depreciation expense related to additional
capital expenditures in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Impairment of
franchises.</FONT></I><FONT size="2"> We performed our annual
impairment assessment on October&nbsp;1, 2002 using an
independent third-party appraiser. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in our valuation led to a $4.6&nbsp;billion impairment
charge in the fourth quarter of 2002. We do not expect to incur
impairment charges of comparable magnitude in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on sale of assets,
net.</FONT></I><FONT size="2"> Loss on sale of assets decreased
by $7 million, or 70%, from $10 million for the year ended
December&nbsp;31, 2001 to $3 million for the year ended
December&nbsp;31, 2002 primarily as a result of a decrease in
the losses related to the disposition of fixed assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Option compensation expense (income),
net.</FONT></I><FONT size="2"> Option compensation expense
increased by $10&nbsp;million from $5&nbsp;million of net
benefit in 2001 to $5&nbsp;million of expense in 2002. The net
benefit in 2001 was primarily the result of the reversal of
$22&nbsp;million of expense previously recorded in connection
with approximately 7&nbsp;million options for which the rights
were waived by our former President and Chief Executive Officer
as part of his September 2001 separation agreement. Option
compensation expense was recorded in 2002 because exercise
prices on certain options issued prior to our initial public
offering in 1999 were less than the estimated fair values of our
common stock at the time of grant. Compensation expense is being
recognized over the vesting period of such options, which ends
in April 2004. On January&nbsp;1, 2003, we adopted
SFAS&nbsp;No.&nbsp;123 using the prospective method under which
we recognize compensation expense of a stock-based award to an
employee over the vesting period based on the fair value of the
award on the grant date. For more information, see Note&nbsp;19
to our consolidated financial statements attached hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Special charges,
net.</FONT></I><FONT size="2"> In the fourth quarter of 2002, we
recorded a special charge of $35&nbsp;million, of which
$31&nbsp;million is associated with our workforce reduction
program. The remaining $4&nbsp;million is related to legal and
other costs associated with our shareholder lawsuits and
governmental investigations. Special charges of $18&nbsp;million
in 2001 represent charges associated with the transition of
approximately 145,000 data customers from the Excite@Home
Internet service to our Charter Pipeline (now known as Charter
High Speed Internet) service, as well as employee severance
costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest expense,
net.</FONT></I><FONT size="2"> Net interest expense increased by
$193&nbsp;million, or 15%, from $1.3&nbsp;billion in 2001 to
$1.5&nbsp;billion in 2002. The increase in net interest expense
was a result of increased average debt outstanding in 2002 of
$17.8&nbsp;billion compared to $15.7&nbsp;billion in 2001,
partially offset by a decrease in our
</FONT>

<P align="center"><FONT size="2">69
</FONT>

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<DIV align="left">
<FONT size="2">average borrowing rate from 8.40% in 2001 to
8.02% in 2002. The increased debt was used for capital
expenditures.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gain (loss) on derivative instruments and
hedging activities, net.</FONT></I><FONT size="2"> Loss on
derivative instruments and hedging activities increased
$65&nbsp;million from $50&nbsp;million for the year ended
December&nbsp;31, 2001 to $115&nbsp;million for the year ended
December&nbsp;31, 2002. The increase is primarily due to an
increase in losses on interest rate agreements, which do not
qualify for hedge accounting under SFAS&nbsp;No.&nbsp;133, which
increased from $48&nbsp;million for the year ended
December&nbsp;31, 2001 to $101&nbsp;million for the year ended
December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on equity
investments.</FONT></I><FONT size="2"> Loss on equity
investments decreased by $51&nbsp;million, or 94%, from
$54&nbsp;million for the year ended December&nbsp;31, 2001 to
$3&nbsp;million for the year ended December&nbsp;31, 2002. This
decrease is primarily due to a decrease of $38&nbsp;million in
our investment in High Speed Access, a related party until our
acquisition of certain of its assets, as described more fully in
&#147;Certain Relationships and Related Transactions.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Minority interest.</FONT></I><FONT size="2">
Minority interest increased by $1.7&nbsp;billion, from
$1.5&nbsp;billion in 2001 to $3.2&nbsp;billion in 2002. Minority
interest represents the allocation of losses to the minority
interest based on ownership of Charter Holdco, the 10% dividend
on preferred membership units in our indirect subsidiary,
Charter Helicon, LLC, and the 2% accretion of the preferred
membership interests in our indirect subsidiary, CC&nbsp;VIII,
LLC issued to certain sellers of the Bresnan systems acquired by
CC&nbsp;VIII systems in February 2000. The increase is a result
of an increase in loss before minority interest. See
&#147;Certain Relationships and Related Transactions&nbsp;&#151;
Transactions Arising Out of Our Organizational Structure and
Mr.&nbsp;Allen&#146;s Investment in Charter Communications, Inc.
and Its Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151;
CC&nbsp;VIII.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Income tax benefit.</FONT></I><FONT size="2">
Income tax benefit of $460&nbsp;million and $12&nbsp;million
were recognized for the years ended December&nbsp;31, 2002 and
2001, respectively. The income tax benefits are realized through
reductions in deferred tax liabilities related to our investment
in Charter Holdco, as well as the change in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cumulative effect of accounting change, net of
tax.</FONT></I><FONT size="2"> Cumulative effect of accounting
change in 2002 represents the impairment charge recorded as a
result of adopting SFAS&nbsp;No.&nbsp;142. Cumulative effect of
accounting change in 2001 represents losses incurred upon
adoption of SFAS&nbsp;No.&nbsp;133.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Net loss.</FONT></I><FONT size="2"> Net loss
increased by $1.3&nbsp;billion, or 115%, from $1.2&nbsp;billion
in 2001 to $2.5&nbsp;billion in 2002 as a result of the
combination of factors described above. The impact of the
impairment of franchises and the cumulative effect of accounting
change, net of minority interest and income tax impacts, was to
increase net loss by $1.6&nbsp;billion in 2002. This was offset
somewhat by the decrease in amortization expense, net of
minority interest and income tax impacts, in 2002 verses 2001 of
$645&nbsp;million as a result of the adoption of
SFAS&nbsp;No.&nbsp;142 on January&nbsp;1, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Preferred stock
dividends.</FONT></I><FONT size="2"> On August&nbsp;31, 2001,
Charter issued 505,664&nbsp;shares (and on February&nbsp;28,
2003 issued an additional 39,595&nbsp;shares) of Series&nbsp;A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition in August 2001, on which it pays a
quarterly cumulative cash dividends at an annual rate of 5.75%
on a liquidation preference of $100&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss per common
share.</FONT></I><FONT size="2"> The loss per common share
increased by $4.22, from $4.33&nbsp;per common share for the
year ended December&nbsp;31, 2001 to $8.55&nbsp;per common share
for the year ended December&nbsp;31, 2002 as a result of the
factors described above.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">
<B><FONT size="2">Introduction</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This section contains a discussion of our
liquidity and capital resources, including a discussion of our
cash position, sources and uses of cash, access to credit
facilities and other financing sources, historical financing
activities, cash needs, capital expenditures and outstanding
debt. The discussion of our cash position, our access to credit
facilities and other financing sources and cash needs gives
effect to the
</FONT>

<P align="center"><FONT size="2">70
</FONT>

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<DIV align="left">
<FONT size="2">issuance of the 5.875% convertible senior notes
and the senior floating rate notes in November and December
2004, respectively, and the use of those proceeds, as discussed
in the &#147;Unaudited Pro Forma Consolidated Financial
Statements&#148;.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business requires significant cash to fund
debt service costs, capital expenditures and ongoing operations.
We have historically funded our debt service costs, operating
activities and capital requirements through cash flows from
operating activities, borrowings under our credit facilities,
sale of assets, issuances of debt and equity securities and cash
on hand. The mix of funding sources changes from period to
period, but for the nine months ended September&nbsp;30, 2004,
approximately 49% of our funding requirements were met from cash
flows from operating activities and 51% from proceeds from the
sale of systems. For the nine months ended September&nbsp;30,
2004, net cash flows used in financing activities were
$431&nbsp;million, reflecting a net repayment of
$334&nbsp;million of debt. Additionally, we increased cash on
hand by $2&nbsp;million to $129&nbsp;million during the nine
months ended September&nbsp;30, 2004. We expect that our mix of
sources of funds will continue to change in the future based on
overall needs relative to our cash flow and on the availability
of funds under our credit facilities, our access to the debt and
equity markets, the timing of possible asset sales and our
ability to generate cash flows from operating activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a significant level of debt. In the
fourth quarter of 2004, $7.5&nbsp;million of our debt will
mature. An additional $30&nbsp;million and $186&nbsp;million of
our debt will mature in 2005 and 2006, respectively. In
addition, the Charter Operating credit facilities require the
$113&nbsp;million principal amount of CC V Holdings, LLC notes
to be redeemed within 45&nbsp;days after the Charter Holdings
leverage ratio discussed below is determined to be below 8.75 to
1.0. In 2007 and beyond, significant additional amounts will
become due under our remaining long-term debt obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to operate depends upon, among other
things, our continued access to capital, including credit under
the Charter Operating credit facilities. These credit facilities
are subject to certain restrictive covenants, some of which
require us to achieve specified operating results. As of
September&nbsp;30, 2004, we were and, as of the date of this
prospectus, we are in compliance with the covenants under our
credit facilities and our indentures, and we expect to remain in
compliance with those covenants throughout 2005. If our
operating performance results in non-compliance with these
covenants, or if any of certain other events of non-compliance
under these credit facilities or indentures governing our debt
occurs, funding under the credit facilities may not be available
and defaults on some or potentially all debt obligations could
occur. As of September&nbsp;30, 2004, we had borrowing
availability under the Charter Operating credit facilities of
$957&nbsp;million, approximately $1.4 billion after giving
effect to the fourth quarter 2004 financing transactions, none
of which was restricted due to covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that cash on hand, cash flows from
operating activities and the amounts available under our credit
facilities will be adequate to meet our cash needs in 2005.
However, as the principal amounts owing under our various debt
obligations become due, meeting our liquidity needs in
subsequent years will depend on our ability to access additional
sources of capital. Cash flows from operating activities and
amounts available under our credit facilities may not be
sufficient to permit us to fund our operations and satisfy our
principal repayment obligations that come due in 2006 and we
believe will not be sufficient to fund our operations and
satisfy such repayment obligations thereafter. Continued access
to our credit facilities is subject to our remaining in
compliance with the applicable covenants of these credit
facilities, including covenants tied to our operating
performance. An event of default under the covenants governing
any of our debt instruments could result in the acceleration of
our payment obligations under that debt and, under certain
circumstances, in cross-defaults under our other debt
obligations, which would have a material adverse effect on our
consolidated financial condition and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to make interest payments on our
convertible senior notes, and, in 2006 and 2009, to repay the
outstanding principal of our convertible senior notes, will
depend on our ability to raise additional capital and/or on
receipt of payments or distributions from Charter Holdco or its
subsidiaries, including CCH&nbsp;II, CCO Holdings, LLC
(&#147;CCO Holdings&#148;) and Charter Operating. The indentures
governing the
</FONT>

<P align="center"><FONT size="2">71
</FONT>

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<DIV align="left">
<FONT size="2">CCH&nbsp;II notes, CCO Holdings notes, and
Charter Operating notes, however, restrict these entities and
their subsidiaries from making distributions to their parent
companies (including us) for payment of principal on our
convertible senior notes, in each case unless there is no
default under the applicable indenture and a specified leverage
ratio test is met. In addition, each of CCH&nbsp;II, CCO
Holdings and Charter Operating must independently assess whether
such payments or distributions are advisable. CCH&nbsp;II, CCO
Holdings and Charter Operating currently meet the applicable
leverage ratio test under each of their respective indentures,
and therefore are not currently prohibited from making any such
distributions to their respective direct parent.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions to Charter
Holdco for payment of interest or principal on our convertible
senior notes, only if, after giving effect to the distribution,
Charter Holdings can incur additional debt under the leverage
ratio test of 8.75 to 1.0, there is no default under Charter
Holdings&#146; indentures and other specified tests are met. For
the quarter ended September&nbsp;30, 2004, there were no
defaults under the Charter Holdings indentures and the other
specified tests were met. However, Charter Holdings continued
not to meet the leverage ratio test of 8.75 to 1.0 at
September&nbsp;30, 2004. As a result, distributions from Charter
Holdings to Charter or Charter Holdco have been restricted and
will continue to be restricted until that test is met.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During this restriction period, the indentures
governing the Charter Holdings notes permit Charter Holdings and
its subsidiaries to make specified investments in Charter Holdco
or Charter, up to an amount determined by a formula, as long as
there is no default under the indentures. As of
September&nbsp;30, 2004, Charter Holdco had $31&nbsp;million in
cash on hand ($120&nbsp;million after giving effect to the
fourth quarter 2004 financing transactions) and was owed
$39&nbsp;million in intercompany loans from its subsidiaries,
which were available to Charter Holdco to pay interest on
Charter&#146;s convertible senior notes, which is expected to be
approximately $27&nbsp;million for the remainder of 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the foregoing, it is likely that
Charter or Charter Holdco will require additional funding to
repay debt maturing in 2006. We are working with our financial
advisors to address such funding requirements. However, there
can be no assurance that such funding will be available to us.
Although Mr.&nbsp;Allen and his affiliates have purchased equity
from us in the past, Mr.&nbsp;Allen and his affiliates are not
obligated to purchase equity from, contribute to or loan funds
to us in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is likely that our significant amount of debt
will negatively affect our ability to access additional capital
in the future. No assurances can be given that we will not
experience liquidity problems because of adverse market
conditions, increased competition or other unfavorable events or
if we do not obtain sufficient additional financing on a timely
basis as our debt becomes due. If, at any time, additional
capital or borrowing capacity is required beyond amounts
internally generated or available through existing credit
facilities or through additional debt or equity financings, we
would consider:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">issuing equity that would significantly dilute
    existing shareholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">issuing convertible debt or some other securities
    that may have structural or other priority over our existing
    notes and may also significantly dilute Charter&#146;s existing
    shareholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">further reducing our expenses and capital
    expenditures, which would likely impair our ability to increase
    revenue;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">selling assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">issuing debt securities that may have structural
    or other priorities over our existing notes;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">requesting waivers or amendments with respect to
    our credit facilities, the availability and terms of which would
    be subject to market conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the above strategies are not successful,
ultimately, we could be forced to restructure our obligations or
seek protection under the bankruptcy laws. In addition, if we
need to raise additional capital through the issuance of equity
or find it necessary to engage in a recapitalization or other
similar transaction, our
</FONT>

<P align="center"><FONT size="2">72
</FONT>
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<DIV align="left">
<FONT size="2">shareholders could suffer significant dilution
and our noteholders might not receive all principal and interest
payments to which they are contractually entitled.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;1, 2004, we closed the sale of
certain cable systems in Florida, Pennsylvania, Maryland,
Delaware and West Virginia to Atlantic Broadband Finance, LLC.
We closed on the sale of an additional cable system in New York
to Atlantic Broadband Finance, LLC in April 2004. Subject to
post-closing contractual adjustments, we expect the total net
proceeds from the sale of all of these systems to be
approximately $733&nbsp;million, of which $5&nbsp;million is
currently held in an indemnity escrow account (with the unused
portion thereof to be released by March&nbsp;1, 2005). The
proceeds received to date have been used to repay a portion of
our credit facilities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Summary of Outstanding Contractual
    Obligations</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes our payment
obligations as of December&nbsp;31, 2003 under our long-term
debt and certain other contractual obligations and commitments
(dollars in millions).
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Payments by Period</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Less than</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1-3</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">3-5</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">More than</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1&nbsp;Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5&nbsp;Years</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Contractual Obligations</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-Term Debt(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital and Operating Lease Obligations(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming Minimum Commitments(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">703</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The tables present maturities of long-term debt
    outstanding as of December&nbsp;31, 2003 and does not reflect
    the effects of the sale of the Charter Operating senior second
    lien notes, the amendment and restatement of the Charter
    Operating credit facilities, the 5.875% convertible senior notes
    and the senior floating rate notes. Refer to &#147;Description
    of Certain Indebtedness&#148; and Notes&nbsp;9 and 23 to our
    December&nbsp;31, 2003 consolidated financial statements
    included in this prospectus for a description of our long-term
    debt and other contractual obligations and commitments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We pay programming fees under multi-year
    contracts ranging from three to six years typically based on a
    flat fee per customer, which may be fixed for the term or may in
    some cases, escalate over the term. Programming costs included
    in the accompanying statement of operations were
    $1.2&nbsp;billion, $1.2&nbsp;billion and $963&nbsp;million for
    the years ended December&nbsp;31, 2003, 2002 and 2001,
    respectively. Certain of our programming agreements are based on
    a flat fee per month or have guaranteed minimum payments. The
    table sets forth the aggregate guaranteed minimum commitments
    under our programming contracts.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Other&#148; represents other guaranteed
    minimum commitments, which consist primarily of commitments to
    our billing services vendors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following items are not included in the
contractual obligations table due to various factors discussed
below. However, we incur these costs as part of our operations:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We also rent utility poles used in our
    operations. Generally, pole rentals are cancelable on short
    notice, but we anticipate that such rentals will recur. Rent
    expense incurred for pole rental attachments for the years ended
    December&nbsp;31, 2003, 2002 and 2001, was $40&nbsp;million,
    $41&nbsp;million and $33&nbsp;million, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We pay franchise fees under multi-year franchise
    agreements based on a percentage of revenues earned from video
    service per year. We also pay other franchise related costs,
    such as public education grants under multi-year agreements.
    Franchise fees and other franchise-related costs
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">73
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">included in the accompanying statement of
    operations were $162&nbsp;million, $160&nbsp;million and
    $144&nbsp;million for the years ended December&nbsp;31, 2003,
    2002 and 2001, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We also have $153&nbsp;million in letters of
    credit, primarily to our various worker&#146;s compensation,
    property casualty and general liability carriers as collateral
    for reimbursement of claims. These letters of credit reduce the
    amount we may borrow under our credit facilities.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Historical Operating, Financing and
    Investing Activities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We held $129&nbsp;million in cash and cash
equivalents as of September&nbsp;30, 2004 compared to
$127&nbsp;million as of December&nbsp;31, 2003. The decrease in
cash and cash equivalents reflects the use of cash in funding
operations, capital expenditures and debt service cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Operating
Activities.</FONT></I><FONT size="2"> Net cash provided by
operating activities decreased $255&nbsp;million, or 40%, from
$638&nbsp;million for the nine months ended September&nbsp;30,
2003 to $383&nbsp;million for the nine months ended
September&nbsp;30, 2004. For the nine months ended
September&nbsp;30, 2004, net cash provided by operating
activities decreased primarily as a result of changes in
operating assets and liabilities that provided $80&nbsp;million
less cash during the nine months ended September&nbsp;30, 2004
than the corresponding period in 2003 and an increase in cash
interest expense of $146&nbsp;million over the corresponding
prior period. The change in operating assets and liabilities is
primarily the result of the benefit in the nine months ended
September&nbsp;30, 2003 from collection of receivables from
programmers related to network launches, while accounts
receivable remained essentially flat in the nine months ended
September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash provided by operating activities for the
years ended December&nbsp;31, 2003, 2002 and 2001 was
$765&nbsp;million, $748&nbsp;million and $489&nbsp;million,
respectively. Operating activities provided $17&nbsp;million
more cash in 2003 than in 2002 primarily due to an increase in
revenue over cash costs year over year partially offset by
changes in operating assets and liabilities that provided
$82&nbsp;million less cash in 2003 than in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating activities provided $259&nbsp;million
more cash in 2002 than in 2001 primarily due to increased
revenues of $759&nbsp;million over 2001 and changes in operating
assets and liabilities that provided $65&nbsp;million more cash
in 2002 than in 2001 offset in part by increases in operating
expenses and cash interest expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Investing
Activities.</FONT></I><FONT size="2"> Net cash provided by
investing activities for the nine months ended
September&nbsp;30, 2004 was $50&nbsp;million and net cash used
in investing activities for the nine months ended
September&nbsp;30, 2003 was $628&nbsp;million. Investing
activities provided $678&nbsp;million more cash during the nine
months ended September&nbsp;30, 2004 than the corresponding
period in 2003 primarily as a result of proceeds from the sale
of certain cable systems to Atlantic Broadband Finance, LLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in investing activities for the
years ended December&nbsp;31, 2003, 2002 and 2001 was
$817&nbsp;million, $2.4&nbsp;billion and $4.8&nbsp;billion,
respectively. Investing activities used $1.5&nbsp;billion less
cash in 2003 than in 2002 primarily as a result of reductions in
capital expenditures and acquisitions. Purchases of property,
plant and equipment used $1.3&nbsp;billion less cash in 2003
than in 2002 as a result of reduced rebuild and upgrade
activities and our efforts to reduce capital expenditures.
Payments for acquisitions used $139&nbsp;million less cash in
2003 than in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investing activities used $2.4&nbsp;billion less
cash in 2002 than in 2001 primarily as a result of reductions in
capital expenditures and acquisitions. Purchases of property,
plant and equipment used $746&nbsp;million less cash in 2002
than in 2001 as a result of our efforts to reduce capital
expenditures. Payments for acquisitions used $1.6&nbsp;billion
less cash in 2002 than in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Financing
Activities.</FONT></I><FONT size="2"> Net cash used in financing
activities for the nine months ended September&nbsp;30, 2004 and
2003 was $431&nbsp;million and $196&nbsp;million, respectively.
The increase in cash used during the nine months ended
September&nbsp;30, 2004, as compared to the corresponding period
in 2003, was primarily the result of an increase in net
repayments of long-term debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in financing activities was
$142&nbsp;million for the year ended December&nbsp;31, 2003,
whereas net cash provided by financing activities for the year
ended December&nbsp;31, 2002 and 2001 was $1.9&nbsp;billion
</FONT>

<P align="center"><FONT size="2">74
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">and $4.2&nbsp;billion, respectively. Financing
activities provided $2.1&nbsp;billion less cash in 2003 than in
2002. The decrease in cash provided in 2003 compared to 2002 was
primarily due to a decrease in borrowings of long-term debt.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financing activities provided $2.2&nbsp;billion
less cash in 2002 than in 2001. The decrease in cash provided in
2002 compared to 2001 was primarily due to a decrease in
borrowings of long-term debt. In addition, in 2001 we received
proceeds from the issuance of Class&nbsp;A common stock of
$1.2&nbsp;billion which did not recur in 2002. These decreases
in cash provided were offset partially by decreases in cash used
for repayments of long-term debt.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Capital Expenditures</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have significant ongoing capital expenditure
requirements. However, we experienced a significant decline in
such requirements in 2004 and 2003, compared to prior years.
This decline in 2004 and 2003 was primarily the result of a
substantial reduction in rebuild costs as our network had been
largely upgraded and rebuilt in prior years, consumption of
inventories, negotiated savings in contract labor and network
components including digital set-top terminals and cable modems
and reduced volume of installation related activities.
Capitalized labor and overhead declined $161&nbsp;million in
2003 compared to 2002. Capital expenditures, excluding
acquisitions of cable systems, were $639&nbsp;million,
$503&nbsp;million, $854&nbsp;million, $2.2&nbsp;billion and
$2.9&nbsp;billion for the nine months ended September&nbsp;30,
2004 and 2003 and the years ended December&nbsp;31, 2003, 2002
and 2001, respectively. The majority of the capital expenditures
in 2004 and 2003 related to our customer premise equipment
costs. The majority of the capital expenditures in 2002 related
to our rebuild and upgrade program and purchases of customer
premise equipment. See the table below for more details.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upgrading our cable systems has enabled us to
offer digital television, high-speed data services, VOD,
interactive services, additional channels and tiers, and
expanded pay-per-view options to a larger customer base. Our
capital expenditures are funded primarily from cash flows from
operating activities, the issuance of debt and borrowings under
credit facilities. In addition, during the nine months ended
September&nbsp;30, 2004 and 2003 and the years ended
December&nbsp;31, 2003, 2002 and 2001, our liabilities related
to capital expenditures decreased $23&nbsp;million,
$109&nbsp;million, $33&nbsp;million, $55&nbsp;million and
$88&nbsp;million, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2004, we expect to spend a total of
$850&nbsp;million to $950&nbsp;million on capital expenditures.
We expect that the nature of these expenditures will continue to
shift from upgrade/rebuild costs to customer premise equipment
and scalable infrastructure costs. Expected capital expenditures
for 2004 are consistent with our total capital expenditures for
2003 and significantly lower than 2002 levels because our
rebuild and upgrade plans are largely completed, a greater
portion of our work force is focused on maintenance and period
related activities, our purchases of digital set-top terminals
have declined and the volume of installation related activities
has declined. We expect to fund capital expenditures for 2004
primarily from cash flows from operating activities and
borrowings under our credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have adopted capital expenditure disclosure
guidance, which was developed by eleven publicly traded cable
system operators, including Charter, with the support of the
National Cable&nbsp;&#38; Telecommunications Association
(&#147;NCTA&#148;). The new disclosure is intended to provide
more consistency in the reporting of operating statistics in
capital expenditures and customers among peer companies in the
cable industry. These disclosure guidelines are not required
disclosure under GAAP, nor do they impact our accounting for
capital expenditures under GAAP.
</FONT>

<P align="center"><FONT size="2">75
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents our major capital
expenditures categories in accordance with NCTA disclosure
guidelines for the nine months ended September&nbsp;30, 2004 and
2003, and the years ended December&nbsp;31, 2003, 2002 and 2001
(dollars in millions):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">For the Years Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Customer premise equipment(a)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scalable infrastructure(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Line extensions(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Upgrade/ Rebuild(d)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Support capital(e)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capital expenditures(f)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Customer premise equipment includes costs
    incurred at the customer residence to secure new customers,
    revenue units and additional bandwidth revenues. It also
    includes customer installation costs in accordance with
    SFAS&nbsp;51 and customer premise equipment (e.g., set-top
    terminals and cable modems, etc.).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Scalable infrastructure includes costs, not
    related to customer premise equipment or our network, to secure
    growth of new customers, revenue units and additional bandwidth
    revenues or provide service enhancements (e.g., headend
    equipment).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(c)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Line extensions include network costs associated
    with entering new service areas (e.g., fiber/coaxial cable,
    amplifiers, electronic equipment, make-ready and design
    engineering).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(d)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Upgrade/rebuild includes costs to modify or
    replace existing fiber/coaxial cable networks, including
    betterments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(e)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Support capital includes costs associated with
    the replacement or enhancement of non-network assets due to
    technological and physical obsolescence (e.g., non-network
    equipment, land, buildings and vehicles).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(f)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Represents all capital expenditures made during
    the nine months ended September&nbsp;30, 2004 and 2003 and the
    years ended December&nbsp;31, 2003, 2002 and 2001, respectively.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Interest Rate Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are exposed to various market risks, including
fluctuations in interest rates. We use interest rate risk
management derivative instruments, such as interest rate swap
agreements and interest rate collar agreements (collectively
referred to herein as interest rate agreements) as required
under the terms of the credit facilities of our subsidiaries.
Our policy is to manage interest costs using a mix of fixed and
variable rate debt. Using interest rate swap agreements, we
agree to exchange, at specified intervals through 2007, the
difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional principal
amount. Interest rate collar agreements are used to limit our
exposure to, and to derive benefits from, interest rate
fluctuations on variable rate debt to within a certain range of
rates. Interest rate risk management agreements are not held or
issued for speculative or trading purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, long-term debt totaled approximately
$18.5&nbsp;billion and $18.6&nbsp;billion, respectively. This
debt was comprised of approximately $5.4&nbsp;billion and
$7.2&nbsp;billion of credit facility debt, $12.3&nbsp;billion
and $10.6&nbsp;billion principal amount of high-yield notes and
$744&nbsp;million and $774&nbsp;million principal amount of
convertible senior notes, respectively. As of September&nbsp;30,
2004 and December&nbsp;31, 2003, the weighted average interest
rate on the credit facility debt, was approximately 6.6% and
5.4%, respectively, the weighted average interest rate on the
high-yield notes was approximately 10.3%, and the weighted
average interest rate on the convertible notes was approximately
5.5%, resulting in a blended weighted average interest rate of
8.8% and 8.2%, respectively. Approximately 85% of our debt was
</FONT>

<P align="center"><FONT size="2">76
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">effectively fixed including the effects of our
interest rate hedge agreements as of September&nbsp;30, 2004
compared to approximately 80% at December&nbsp;31, 2003. The
fair value of our high-yield notes was $10.6&nbsp;billion and
$9.9&nbsp;billion at September&nbsp;30, 2004 and
December&nbsp;31, 2003, respectively. The fair value of credit
facility debt was $5.3&nbsp;billion and $6.9&nbsp;billion at
September&nbsp;30, 2004 and December&nbsp;31, 2003,
respectively. The fair value of our convertible senior notes was
$651&nbsp;million and $732&nbsp;million at September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively. The fair value of
high-yield notes, credit facility debt and convertible senior
notes is based on quoted market prices.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not hold or issue derivative instruments
for trading purposes. We do, however, have certain interest rate
derivative instruments that have been designated as cash flow
hedging instruments. Such instruments are those that effectively
convert variable interest payments on certain debt instruments
into fixed payments. For qualifying hedges,
SFAS&nbsp;No.&nbsp;133 allows derivative gains and losses to
offset related results on hedged items in the consolidated
statement of operations. We have formally documented, designated
and assessed the effectiveness of transactions that receive
hedge accounting. For the nine months ended September&nbsp;30,
2004 and 2003 and the years ended December&nbsp;31, 2003, 2002
and 2001, net gain (loss) on derivative instruments and hedging
activities includes gains of $3&nbsp;million, $8&nbsp;million,
$8&nbsp;million and losses of $14&nbsp;million and
$2&nbsp;million, respectively, which represent cash flow hedge
ineffectiveness on interest rate hedge agreements arising from
differences between the critical terms of the agreements and the
related hedged obligations. Changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations that meet the effectiveness criteria of
SFAS&nbsp;No.&nbsp;133 are reported in accumulated other
comprehensive loss. For the nine months ended September&nbsp;30,
2004 and 2003 and the years ended December&nbsp;31, 2003, 2002
and 2001, a gain of $31&nbsp;million, $30&nbsp;million,
$48&nbsp;million and losses of $65&nbsp;million and
$39&nbsp;million, respectively, related to derivative
instruments designated as cash flow hedges, was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS&nbsp;No.&nbsp;133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value, with the impact recorded as gain (loss) on
derivative instruments and hedging activities in our condensed
consolidated statements of operations. For the nine months ended
September&nbsp;30, 2004 and 2003 and the years ended
December&nbsp;31, 2003, 2002 and 2001, net gain (loss) on
derivative instruments and hedging activities includes gains of
$45&nbsp;million, $27&nbsp;million and $57&nbsp;million and
losses of $101&nbsp;million and $48&nbsp;million, respectively,
for interest rate derivative instruments not designated as
hedges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table set forth below summarizes the fair
values and contract terms of financial instruments subject to
interest rate risk maintained by us as of September&nbsp;30,
2004 (dollars in millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value at</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2008</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2009</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fixed Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average Interest Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.93</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Variable Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,635</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average Interest Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.05</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.85</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.86</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.48</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest Rate Instruments:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Variable to Fixed Swaps
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average Pay Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.05</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.95</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.08</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average Receive Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.64</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.96</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">77
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notional amounts of interest rate instruments
do not represent amounts exchanged by the parties and, thus, are
not a measure of our exposure to credit loss. The amounts
exchanged are determined by reference to the notional amount and
the other terms of the contracts. The estimated fair value
approximates the costs (proceeds) to settle the outstanding
contracts. Interest rates on variable debt are estimated using
the average implied forward London Interbank Offering Rate
(LIBOR) rates for the year of maturity based on the yield curve
in effect at September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2004 and December&nbsp;31,
2003, we had outstanding $2.7&nbsp;billion and $3.0&nbsp;billion
and $20&nbsp;million and $520&nbsp;million, respectively, in
notional amounts of interest rate swaps and collars,
respectively. The notional amounts of interest rate instruments
do not represent amounts exchanged by the parties and, thus, are
not a measure of exposure to credit loss. The amounts exchanged
are determined by reference to the notional amount and the other
terms of the contracts.
</FONT>

<P align="center"><FONT size="2">78
</FONT>

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<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "BUSINESS" -->

<P align="center">
<B><FONT size="2">BUSINESS</FONT></B>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a broadband communications company
operating in the United States, with approximately
6.3&nbsp;million customers at September&nbsp;30, 2004. Through
our broadband network of coaxial and fiber optic cable, we offer
our customers traditional cable video programming (analog and
digital, which we refer to as &#147;video&#148; service),
high-speed cable Internet access (which we refer to as
&#147;high-speed data service&#148;), advanced broadband cable
services (such as video on demand (&#147;VOD&#148;), high
definition television service, and interactive television) and,
in some of our markets, we offer telephone service (which we
refer to as &#147;telephony&#148;). See
&#147;Business&nbsp;&#151; Products and Services&#148; for
further description of these terms, including
&#147;customers.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2004, we served
approximately 6.1&nbsp;million analog video customers, of which
approximately 2.7&nbsp;million were also digital video
customers. We serve approximately 1.8&nbsp;million
high&#150;speed data customers (including approximately 205,000
who receive only high-speed data services). We also provided
telephony service to approximately 40,000 customers as of that
date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2004, our investment in
cable properties, long-term debt and total shareholders&#146;
deficit was $16.3&nbsp;billion, $18.5&nbsp;billion and
$4.1&nbsp;billion, respectively. Our working capital deficit was
$956&nbsp;million at September&nbsp;30, 2004. For the nine
months ended September&nbsp;30, 2004, our revenues were
approximately $3.7&nbsp;billion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a history of net losses. Further, we
expect to continue to report net losses for the foreseeable
future. Our net losses are principally attributable to
insufficient revenue to cover the interest costs we incur
because of our high level of debt, the depreciation expenses
that we incur resulting from the capital investments we have
made in our cable properties, and the amortization and
impairment of our franchise intangibles. We expect that these
expenses (other than amortization and impairment of franchises)
will remain significant, and we therefore expect to continue to
report net losses for the foreseeable future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter was organized as a Delaware corporation
in 1999 and completed an initial public offering of its
Class&nbsp;A common stock in November 1999. Charter is a holding
company whose principal assets are an approximate 47% equity
interest and a 100% voting interest in Charter Holdco, the
direct parent of Charter Holdings. Charter&#146;s only business
is to act as the sole manager of Charter Holdco and its
subsidiaries. As sole manager, Charter controls the affairs of
Charter Holdco and its subsidiaries. Certain of our subsidiaries
commenced operations under the &#147;Charter
Communications&#148; name in 1994, and our growth to date has
been primarily due to acquisitions and business combinations,
most notably acquisitions completed from 1999 through 2001,
pursuant to which we acquired a total of approximately
5.5&nbsp;million customers. We do not expect to make any
significant acquisitions in the foreseeable future, but plan to
evaluate opportunities to consolidate our operations through
exchanges of cable systems with other cable operators, as they
arise. We may also sell certain assets from time to time.
Paul&nbsp;G. Allen controls Charter with an as-converted common
equity interest of approximately 57% and a beneficial voting
control interest of approximately 92.5% as of September&nbsp;30,
2004.
</FONT>

<P align="left">
<B><FONT size="2">Adoption of New Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing in January 2002 and continuing through
the first quarter of 2003, our management elected to implement a
number of new policies described in &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&nbsp;&#151; Adoption of New Policies.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Business Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal financial goal is to maximize our
return on invested capital. To do so, we will focus on
increasing revenues, growing our customer base, improving
customer retention and enhancing customer satisfaction by
providing reliable, high-quality service offerings, superior
customer service and attractive bundled offerings.
</FONT>

<P align="center"><FONT size="2">79
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Specifically, in the near term, we are focusing
on:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">refining our sales and marketing efforts to grow
    revenues through consistent branding initiatives, promoting our
    advanced services and emphasizing what we believe to be
    advantages over our competitors, including one-stop shopping for
    video, voice, high-speed data and interactive services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enhancing our digital service with new content
    and continued deployment of advanced products such as digital
    video recorder (&#147;DVR&#148;) service, high definition
    television service, VOD and subscription video on demand
    (&#147;SVOD,&#148; VOD service for selected programming
    categories);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">implementing what we believe is an attractive and
    competitive price point strategy for various levels and bundled
    packages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">improving customer service and satisfaction;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">managing our operating costs by exercising
    discipline in capital and operational spending;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identifying opportunities to continue to improve
    our balance sheet and liquidity.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our high-speed data service will
continue to provide a substantial portion of our revenue growth
in the near future. We also plan to continue to expand our
marketing of high-speed data service to the business community,
which we believe has shown an increasing interest in high-speed
data service and private network services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe we offer our customers an excellent
choice of services through a variety of bundled packages,
particularly with respect to our digital video and high-speed
data services. Our digital platform enables us to offer a
significant number and variety of channels, and we offer
customers the opportunity to choose among groups of channel
offerings, including premium channels, and to combine selected
programming with other services such as high-speed data, high
definition television (in selected markets) and VOD (in selected
markets).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have reduced the number of our customer
contact centers from over 300 at December&nbsp;31, 2000, to 36
at September&nbsp;30, 2004. Our 14 largest customer contact
centers now serve approximately 95% of our customers. We
anticipate that this initiative will improve overall customer
satisfaction while reducing costs. We believe that consolidation
and standardization of call centers enable us to provide a more
consistent experience for our customers and to improve sales
through the use of better trained, more efficient and
sales-oriented customer service representatives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to pursue opportunities to improve
our balance sheet and liquidity. Our efforts in this regard have
resulted in the completion of a number of transactions since
September 2003, as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the signing of an agreement providing for the
    issuance by our subsidiaries CCO Holdings, LLC and CCO Holdings
    Capital Corp. of $550&nbsp;million of senior floating rate notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the recent sale of $862.5&nbsp;million of 5.875%
    convertible senior notes due 2009;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale of non-core cable systems for
    $824&nbsp;million, the proceeds of which we used to reduce our
    indebtedness;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance by our subsidiaries, CCH&nbsp;II and
    Charter Holdings, of approximately $1.6&nbsp;billion of senior
    notes which they exchanged in private transactions for
    approximately $1.9&nbsp;billion of outstanding indebtedness of
    Charter and Charter Holdings, resulting in a $294&nbsp;million
    reduction of our consolidated debt outstanding;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale in April 2004 of $1.5&nbsp;billion of
    senior second lien notes by our subsidiary, Charter
    Communications Operating, LLC (&#147;Charter Operating&#148;),
    together with the concurrent refinancing of its credit
    facilities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Going forward, we plan to continue to identify
and pursue opportunities to improve our liquidity and reduce
indebtedness in order to enhance the long-term strength of our
balance sheet and our business.
</FONT>

<P align="left">
<B><FONT size="2">Charter Background</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1998, Mr.&nbsp;Allen acquired approximately
99% of the non-voting economic interests in Marcus Cable, which
owned various operating subsidiaries that served approximately
1.1&nbsp;million customers.
</FONT>

<P align="center"><FONT size="2">80
</FONT>

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<DIV align="left">
<FONT size="2">Thereafter, in December 1998, Mr. Allen acquired,
through a series of transactions, approximately 94% of the
equity interests of Charter Investment, Inc., which controlled
various operating subsidiaries that serviced approximately
1.2&nbsp;million customers.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March and April of 1999, Mr.&nbsp;Allen
acquired the remaining interests in Marcus Cable and, through a
series of transactions, combined the Marcus companies with the
Charter companies. As a consequence, the former operating
subsidiaries of Marcus Cable and all of the cable systems they
owned came under the ownership of Charter Holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 1999, Charter was formed as a wholly
owned subsidiary of Charter Investment, Inc., and in November
1999, Charter completed its initial public offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 1999 and 2000, Charter completed 16 cable
system acquisitions for a total purchase price of
$14.7&nbsp;billion including $9.1&nbsp;billion in cash, $3.3
billion of assumed debt, $1.9&nbsp;billion of equity interests
issued and Charter cable systems valued at $420&nbsp;million.
These transactions resulted in a net total increase of
approximately 3.9&nbsp;million customers as of their respective
dates of acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001, Charter entered into several
agreements with AT&#38;T Broadband, LLC involving several
strategic cable system transactions that resulted in a net
addition of customers for our systems. In the AT&#38;T
transactions, which closed in June 2001, Charter acquired cable
systems from AT&#38;T Broadband serving approximately 551,000
customers for a total of $1.74 billion consisting of
$1.71&nbsp;billion in cash and a Charter cable system valued at
$25&nbsp;million. In 2001, Charter also acquired all of the
outstanding stock of Cable USA, Inc. and the assets of certain
of its related affiliates in exchange for consideration valued
at $100&nbsp;million (consisting of Series&nbsp;A preferred
stock with a face amount of $55&nbsp;million and the remainder
in cash and assumed debt).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, Charter purchased additional cable
systems in Illinois serving approximately 28,000 customers, for
a total cash purchase price of approximately $63&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For additional information regarding
Charter&#146;s acquisitions see &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations &#151; Acquisitions.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Products and Services</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We offer our customers traditional cable video
programming (analog and digital video) as well as high-speed
data services and in some areas advanced broadband services such
as high definition television, VOD and interactive television.
We sell our video programming and high-speed data services on a
subscription basis, with prices and related charges, that vary
primarily based on the types of service selected, whether the
services are sold as a &#147;bundle&#148; versus on an
&#147;&#224; la carte&#148; basis, and the equipment necessary
to receive the services, with some variation in prices depending
on geographic location. In addition, we offer telephony service
to a limited number of customers.
</FONT>

<P align="center"><FONT size="2">81
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes our customer
statistics for analog and digital video, residential high-speed
data, and residential telephony as of September&nbsp;30, 2004
and 2003:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Approximate as of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003(a)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cable Video Services:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Analog Video:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Residential (non-bulk) analog video customers(b)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,825,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Multi-dwelling (bulk)&nbsp;and commercial unit
    customers(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Analog video customers(b)(c)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,074,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,498,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Digital Video:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digital video customers(d)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,688,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,664,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digital percentage of analog video
    customers(b)(c)(d)(e)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Non-Video Cable Services:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Residential high-speed data customers(f)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,819,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,489,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dial-up customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephony customers(g)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<P align="left">
<FONT size="2">Pro forma for the sale of systems to Atlantic
Broadband Finance, LLC in March and April 2004 and to
WaveDivision Holdings, LLC in October 2003, as if all of these
sales had occurred as of January&nbsp;1, 2003, analog video
customers, digital video customers and residential high-speed
data customers would have been 6,239,000, 2,570,300 and
1,441,500, respectively, as of September&nbsp;30, 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;Customers&#148; include all persons our
    corporate billing records show as receiving service (regardless
    of their payment status), except for complimentary accounts
    (such as our employees). Further, &#147;customers&#148; include
    persons receiving service under promotional programs that
    offered up to two&nbsp;months of service for free, some of whom
    had not requested to be disconnected, but had not become paying
    customers as of September&nbsp;30, 2004. If such persons do not
    become paying customers, we do not believe this would have a
    material impact on our consolidated financial condition or
    consolidated results of operations. In addition, at
    September&nbsp;30, 2004 and 2003, &#147;customers&#148; include
    approximately 46,000 and 64,600 persons whose accounts were over
    60&nbsp;days past due in payment, approximately 5,500 and 7,100
    persons whose accounts were over 90&nbsp;days past due in
    payment, and approximately 2,000 and 2,300 of which were over
    120&nbsp;days past due in payment, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;Residential (non-bulk) analog video
    customers&#148; include all residential customers who receive
    video services, except for complimentary accounts (such as our
    employees).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(c)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Included within &#147;video customers&#148; are
    those in commercial and multi-dwelling structures, which are
    calculated on an equivalent bulk unit (&#147;EBU&#148;) basis.
    EBU is calculated for a system by dividing the bulk price
    charged to accounts in an area by the most prevalent price
    charged to non-bulk residential customers in that market for the
    comparable tier of service. The EBU method of estimating analog
    video customers is consistent with the methodology used in
    determining costs paid to programmers and has been consistently
    applied year over year. As we increase our effective analog
    video prices to residential customers without a corresponding
    increase in the prices charged to commercial service or
    multi-dwelling customers, our EBU count will decline even if
    there is no real loss in commercial service or multi-dwelling
    customers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(d)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;Digital video customers&#148; include all
    households that have one or more digital set-top terminals.
    Included in &#147;digital video customers&#148; on
    September&nbsp;30, 2004 and 2003 are approximately 10,700 and
    12,600 customers, respectively, that receive digital video
    service directly through satellite transmission.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(e)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Represents the number of digital video customers
    as a percentage of analog video customers.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">82
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(f)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">All of these customers also receive video service
    and are included in the video statistics above except for
    approximately 205,500 and 75,200 of these customers at
    September&nbsp;30, 2004 and 2003, respectively, who were
    residential high-speed data only customers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(g)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;Telephony customers&#148; include all
    households receiving telephone service.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Video Services</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our video service offerings include the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Basic Analog Video.</FONT></I><FONT size="2">
    All of our video customers receive a package of basic
    programming, which generally consists of local broadcast
    television, local community programming, including governmental
    and public access, and limited satellite-delivered or
    non-broadcast channels, such as weather, shopping and religious
    services. Our basic channel line-up generally has between 15 and
    30&nbsp;channels.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Expanded Basic Analog
    Video.</FONT></I><FONT size="2"> This expanded programming level
    includes a package of satellite-delivered or non-broadcast
    channels and generally has between 30 and 50 channels in
    addition to the basic channel line-up.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Premium Channels.</FONT></I><FONT size="2">
    These channels provide commercial-free movies, sports and other
    special event entertainment programming. Although we offer
    subscriptions to premium channels on an individual basis, we
    offer an increasing number of premium channel packages and offer
    premium channels with our advanced services.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Pay-Per-View.</FONT></I><FONT size="2"> These
    channels allow customers to pay on a per event basis to view a
    single showing of a recently released movie, a one-time special
    sporting event or music concert on a commercial-free basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Digital Video.</FONT></I><FONT size="2"> We
    offer digital video to our customers in several different
    service combination packages. All of our digital packages
    include a digital set-top terminal, an interactive electronic
    programming guide, up to 45 channels of digital music, an
    expanded menu of pay-per-view channels and the option to also
    receive digital packages which range from 4 to 30 additional
    video channels. We also offer our customers certain digital
    packages with one or more premium channels of their choice with
    &#147;multiplexes.&#148; Multiplexes give customers access to
    several different versions of the same premium channel, which
    are varied as to time of airing (such as east and west coast
    time slots) or programming content theme (such as westerns or
    romance). Some digital tier packages focus on the interests of a
    particular customer demographic and emphasize, for example,
    sports, movies, family or ethnic programming. In addition to
    video programming, digital video service enables customers to
    receive our advanced services such as VOD and high definition
    television. Other digital packages bundle digital television
    with our advanced services, such as high-speed data services.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">High-Speed Data Services</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We offer high-speed data services to our
residential and commercial customers primarily via cable modems
attached to personal computers. We generally offer our
high-speed data service as Charter High-Speed
Internet<SUP>TM</SUP>. We also provide traditional dial-up
Internet access in a very limited number of our markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fall of 2003, we re-priced our high-speed
data service, offering faster speed and additional features,
both as part of a service bundle and as an &#147;&#224; la
carte&#148; offering. We ended the third quarter of 2004 with
17% penetration of high-speed data homes passed, up from the 15%
penetration of high-speed data homes passed at year-end 2003.
This gave us a percentage increase in high-speed data customers
of 16% and an increase in high-speed data revenues of 33% in the
nine months ended September&nbsp;30, 2003. As of
September&nbsp;30, 2003, in most of our systems, we migrated
high-speed data customers to the fastest residential speed
available at no additional charge to our existing high-speed
data customers. These
</FONT>

<P align="center"><FONT size="2">83
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">customers remained at that speed without
additional charge through March 2004. As of September&nbsp;30,
2004, 65% of our high-speed data customers subscribe at the
fastest residential speed available.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Advanced Broadband Services</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to test, evaluate and deploy new
advanced services that we believe will provide new revenue
streams to offset overall increasing programming costs or
enhance our appeal to consumers to counter competition. These
advanced services include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Video On Demand and Subscription Video on
    Demand.</FONT></I><FONT size="2"> We offer VOD service, which
    allows customers to access hundreds of movies and other
    programming at any time with digital picture quality. In some
    systems we also offer SVOD for a single monthly fee or included
    with a digital tier premium channel subscription. As of
    September&nbsp;30, 2004, we offered VOD in systems serving
    approximately 1.3&nbsp;million digital video customers or 48% of
    our digital video customers as of that date. We expect to make
    VOD&nbsp;service available in systems serving approximately
    1.6&nbsp;million digital video customers by mid-2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">High Definition
    Television.</FONT></I><FONT size="2"> High definition television
    offers our digital customers video programming at a higher
    resolution than the standard analog or digital video image. As
    of September&nbsp;30, 2004, we offered high definition
    television in systems serving approximately 2.1&nbsp;million
    digital video customers. Our objective in 2004 was to provide at
    least 8-10 broadcast and cable network high definition channels
    per system, focusing on providing at least two local high
    definition broadcast channels per system. As of
    September&nbsp;30, 2004 we have reached our objective in systems
    covering 1.2&nbsp;million digital video customers or 57% of our
    total customers able to receive high definition television as of
    that date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Telephony Services.</FONT></I><FONT size="2">
    We continue to explore development and deployment of voice
    communications services using VOIP to transmit digital voice
    signals over our systems. At September&nbsp;30, 2004, our VOIP
    telephony service was available to approximately 416,300 homes
    passed in two markets and traditional switch-based telephony was
    available to approximately 91,800 homes passed in another
    market. At year-end 2004, we anticipate having nearly
    1&nbsp;million telephony-ready homes. We will continue to
    prepare these and additional markets for VOIP launches in 2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">i-TV Service.</FONT></I><FONT size="2"> We
    ended 2003 with interactive television service
    (&#147;i-TV&#148;) available to over 1&nbsp;million digital
    video customers. In 2004 we decreased availability of our i-TV
    channels and dropped the service in certain markets, due to
    incompatibility issues with our VOD provider in those markets.
    We are exploring a possible relaunch of i-TV in those markets in
    mid-2005. We expect to end 2004 with i-TV channels available to
    approximately 815,100 digital video customers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Commercial Services.</FONT></I><FONT size="2">
    We offer integrated network solutions to commercial and
    institutional customers. These solutions include high-speed data
    and video services. In addition, we offer high- speed data
    services to local businesses.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Digital Video Recorder</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2003, we launched digital video
recording capabilities service in four Los Angeles systems
serving 121,000 digital video customers at year-end. In April
2004, we launched DVR service in our Rochester, Minnesota
market. As of September&nbsp;30, 2004 we have DVR service
available in 33&nbsp;markets serving approximately
1.4&nbsp;million digital video customers. We expect to end 2004
with DVR deployment in systems serving approximately
1.8&nbsp;million digital video customers, which would be
approximately 67% of our digital video customers as of
September&nbsp;30, 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Sale of Advertising</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We receive revenue from the sale of local
advertising on satellite-delivered networks such as MTV&#174;,
CNN&#174; and ESPN&#174;. In any particular market, we generally
insert local advertising on a minimum of four networks, and have
covered up to 39 channels. Our system rebuilds have increased
the number of available
</FONT>

<P align="center"><FONT size="2">84
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">channels on which we are able to insert local
advertising. We also provide cross-channel advertising to some
programmers.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time, certain of our equipment
vendors have purchased advertising from us. For the nine months
ended September&nbsp;30, 2004 and the years ending
December&nbsp;31, 2003, 2002 and 2001, advertising revenue from
vendors was recognized in the amounts of $9&nbsp;million,
$15&nbsp;million, $79&nbsp;million and $27&nbsp;million
respectively. These revenues resulted from purchases at market
rates pursuant to executed binding agreements. However, in
connection with Charter&#146;s restatement announced in April
2003, we reversed all advertising revenues (approximately
$17&nbsp;million) from two set-top terminal manufacturers
recognized in 2000. Based on a reassessment of the underlying
structure of the arrangements during 2000, the prices paid for
the set-top terminals and the advertising revenue recognized
were determined to be in excess of fair value.
</FONT>

<P align="left">
<B><FONT size="2">Pricing for Our Products and
Services</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our revenues are derived principally from the
monthly fees our customers pay for the services we offer. A
one-time installation fee, which is often waived during certain
promotional periods for a standard installation, is charged to
new customers. The prices we charge vary based on the level of
service the customer chooses and the particular geographic
market. Most of our pricing is reviewed and adjusted on an
annual basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with the Federal Communications
Commission&#146;s rules, the prices we charge for cable-related
equipment, such as set-top terminals and remote control devices,
and for installation services are based on actual costs plus a
permitted rate of return.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although our cable service offerings vary across
the markets we serve because of various factors including
competition and regulatory factors, our services, when offered
on a stand-alone basis, are typically offered at monthly price
ranges, excluding franchise fees and other taxes, as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Service</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="9"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="9" align="center" nowrap><B><FONT size="1">Price Range as of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="9" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Analog video packages
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Premium channel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pay-per-view (per movie or event)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digital video packages (including high-speed data
    service for higher tiers)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video on demand (per selection)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High definition television
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">-
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digital video recorder
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, from time to time we offer free
service or reduced-price service during promotional periods in
order to attract new customers. There is no assurance that these
customers will remain as customers when the period of free
service expires.
</FONT>

<P align="left">
<B><FONT size="2">Our Network Technology</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have substantially completed the build-out of
our systems to a minimum bandwidth of 550 megahertz or greater,
which enables us to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">offer digital television, high-speed data
    services and other advanced services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">offer up to 82 analog channels, and even more
    channels when our bandwidth is used for digital signal
    transmission;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">permit two-way communication for Internet access
    and interactive services, and potentially, telephony services.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the upgrade of our systems during the
last several years and as a result of system sales, we reduced
the number of headends that serve our customers from 1,138 at
January&nbsp;1, 2001 to 744 at September&nbsp;30, 2004. Because
</FONT>

<P align="center"><FONT size="2">85
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">headends are the control centers of a cable
system, where incoming signals are amplified, converted,
processed and combined for transmission to the customer,
reducing the number of headends reduces related equipment,
service personnel and maintenance expenditures. We expect that
headend consolidation, together with our other upgrades, will
allow us to provide enhanced picture quality and greater system
reliability. As a result of the upgrade, approximately 84% of
our customers were served by headends serving at least 10,000
customers as of September&nbsp;30, 2004.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the technological
capacity of our systems as of September&nbsp;30, 2004:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">550 Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">860 Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Less than</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">750</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Two-way</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Two-way</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">550 Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">660 Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">870 Megahertz</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capability</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Enabled</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">42%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">92%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">87%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;&#151;&nbsp;Products and Services&#148;
for statistics regarding the approximate number of our customers
who purchase the various services enabled by these upgrades.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, our cable systems
consisted of approximately 220,200 strand miles, including
approximately 48,400 strand miles of fiber optic cable, passing
approximately 12.1&nbsp;million households and serving
approximately 6.3&nbsp;million customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We adopted the hybrid fiber coaxial cable
(&#147;HFC&#148;) architecture as the standard for our systems
upgrades. HFC architecture combines the use of fiber optic cable
with coaxial cable. Fiber optic cable is a communication medium
that uses glass fibers to transmit signals over long distances
with minimum signal loss or distortion. Fiber optic cable has
excellent broadband frequency characteristics, noise immunity
and physical durability and can carry hundreds of video, data
and voice channels over extended distances. Coaxial cable is
less expensive and requires a more extensive signal
amplification in order to obtain the desired transmission levels
for delivering channels. In most systems, we deliver our signals
via fiber optic cable from the headend to a group of nodes, and
use coaxial cable to deliver the signal from individual nodes to
the homes passed served by that node. Our system design enables
a maximum of 500 homes passed to be served by a single node.
Currently, our average node serves approximately 385&nbsp;homes
passed. Our system design provides for six strands of fiber to
each node, with two strands activated and four strands reserved
for spares and future services. We believe that this hybrid
network design provides high capacity and superior signal
quality. The design also provides reserve capacity for the
addition of future services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The primary advantages of HFC architecture over
traditional coaxial-only cable networks include:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increased bandwidth capacity, for more channels
    and other services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dedicated bandwidth for two-way services, which
    avoids reverse signal interference problems that can occur with
    two-way communication capability;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">improved picture quality and service reliability.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently maintain a national network
operations center to monitor our data networks and to further
our strategy of providing high quality service. Monitoring
previously done by our regional operations centers has been
migrated to our national network operations center. Centralized
monitoring becomes increasingly important as we increase the
number of customers utilizing two-way high-speed data service.
Our local dispatch centers focus primarily on monitoring the HFC
plant, also replacing our existing regional operating centers.
</FONT>

<P align="left">
<B><FONT size="2">Management of Our Systems</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of the functions associated with our
financial management are centralized, including accounting,
billing, finance and acquisitions, payroll, accounts payable and
benefits administration, information system design and support,
internal audit, purchasing, marketing, programming contract
administration and Internet service, network and circuits
administration.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To improve efficiency and operational consistency
throughout our systems, we have consolidated from three
divisions and ten regions to five operating divisions,
eliminating certain layers of middle management. Each division
is supported by operational, financial, marketing and
engineering functions. The reorganization has facilitated the
establishment of and adherence to standard practices, Charter
branding throughout our systems and improved internal
communication. We believe these improvements enhance consistency
of service delivery.
</FONT>

<P align="left">
<B><FONT size="2">Customer Care</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, we have fielded customer service
requests, inquiries and complaints through a large number of
small customer service centers throughout the country. As a
consequence of our aggressive acquisition program in 1999
through 2001, the number of these service centers grew rapidly
and in 2000 was in excess of 300 service centers. We believe
that maintaining such a large number of service centers hindered
our ability to maximize the consistency of our service delivery
and related customer satisfaction due to the logistical
challenges and poor economies of scale inherent in maintaining
and supervising such a large number of service centers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In an effort to better serve our customers, we
are consolidating our local customer care functions by operating
technologically advanced, high-volume customer contact centers,
and as a result we have closed and expect to continue to close a
number of local payment and customer service centers. By
establishing regional customer contact centers, we are able to
service our customers 24&nbsp;hours a day, seven days a week and
utilize technologically advanced equipment that we believe
enhances interactions with our customers. Our customer care
specialists receive specialized training to develop customer
contact skills and product knowledge that are targeted towards
prompt and responsive resolution of customer complaints and
customer retention, as well as towards selling additional and
higher levels of service to our customers. As of
September&nbsp;30, 2004, we had 36 customer service locations,
and our 14 largest customer service locations serviced
approximately 95% of our customers.
</FONT>

<P align="left">
<B><FONT size="2">Sales and Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the third quarter of 2004, Charter shifted
primary responsibility for implementing sales and marketing
strategies to the divisional and system level offices with a
single corporate team in place to insure compliance with certain
guidelines established by the corporate marketing department
designed to promote consistency in campaigns and promotion of
our national brand. Our marketing efforts are intended to
promote good interaction, quick information flow and sharing of
best practices between our corporate office and our field
offices, which make strategic decisions as to when and how
various marketing programs will be rolled out to customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to our focus in 2003 on certain other
operational matters and due to certain financial constraints, we
reduced spending in 2003 on marketing our products and services.
We expect to reduce marketing spending again during the fourth
quarter of 2004. For the nine months ended September&nbsp;30,
2004, we had marketing expenditures of $99&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We monitor government regulation, customer
perception, competition, pricing and product preferences, among
other factors, to increase our responsiveness to our customers.
Our coordinated marketing techniques include door-to-door
solicitation, telemarketing, media advertising, e-marketing,
direct mail solicitation and retail locations. In 2004 we have
also increased our focus on marketing and selling our services
through consumer electronics retailers and other retailers that
sell televisions or cable modems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, we introduced the first national
branding campaign in Charter&#146;s history. The &#147;Get
Hooked&#148; branding initiative has been a key focal point of
our national marketing campaigns throughout 2004, designed to
promote our long-term objective of increasing our cash flow
through deeper market penetration and growth in revenue per
customer. In 2004 our corporate team produced eight national
marketing campaigns employing the &#147;Get Hooked&#148; Charter
brand designed to:
</FONT>
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    <FONT size="2">Promote customer awareness and loyalty;
    </FONT></TD>
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    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">Attract former customers and households that have
    never subscribed to our services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Promote our advanced services (such as DVR, high
    definition television, VOD and SVOD) with the goal that our
    customers will view their cable connection as one-stop shopping
    for video, voice, high-speed data and interactive services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Promote our bundling of digital video and
    high-speed data services and pricing strategies;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Announce the launch of our advanced services as
    they become available in our systems.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Programming</FONT></B>

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    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that offering a wide variety of
programming is an important factor that influences a
customer&#146;s decision to subscribe to and retain our cable
services. We rely on market research, customer demographics and
local programming preferences to determine channel offerings in
each of our markets. We obtain basic and premium programming
from a number of suppliers, usually pursuant to a written
contract. Our programming contracts generally continue for a
fixed period of time, usually from three to ten years, and are
subject to negotiated renewal. Some program suppliers offer
financial incentives to support the launch of a channel and
ongoing marketing support or launch fees. We also negotiate
volume discount pricing structures. Programming costs are
usually payable each month based on calculations performed by us
and are subject to adjustment based on the results of periodic
audits by the programmers.
</FONT>

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    <B><I><FONT size="2">Costs</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Programming tends to be made available to us for
a license fee, which is generally paid based on the number of
customers to whom we make such programming available. Such
license fees may include &#147;volume&#148; discounts available
for higher numbers of customers, as well as discounts for
channel placement or service penetration. Some channels are
available without cost to us for a limited period of time, after
which we pay for the programming. For home shopping channels, we
receive a percentage of the amount our customers spend on home
shopping purchases.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable programming costs have increased, in
every year we have operated, in excess of customary inflationary
and cost-of-living type increases. We expect them to continue to
increase due to a variety of factors, including:
</FONT>
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    <FONT size="2">annual increases imposed by programmers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">additional programming being provided to
    customers as a result of system rebuilds and bandwidth
    reallocation, both of which increase channel capacity;&nbsp;and
    </FONT></TD>
</TR>

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</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increased cost for certain previously discounted
    programming.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In particular, sports programming costs have
increased significantly over the past several years. In
addition, contracts to purchase sports programming sometimes
contain built-in cost increases for programming added during the
term of the contract.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, we have been able to absorb
increased programming costs through increased prices to our
customers. However, with the impact of competition and other
marketplace factors, there is no assurance that we will be able
to continue to do so. In order to maintain or mitigate reduction
of margins despite increasing programming costs, we plan to
continue to migrate certain program services from our analog
level of service to our digital tiers. We expect that this
migration will result in enhanced quality of programming offered
on digital tiers and provide our video customers more value and
more choice. Additionally, as we migrate our programming to our
digital tier packages certain programming that was previously
available to all of our customers via an analog signal, may be
part of an elective digital tier package. As a result, the
customer base upon which we pay programming fees will
proportionately decrease, and the overall expense for providing
that service would likewise decrease. Reductions in the size of
certain programming customer bases may result in the loss of
specific volume discount benefits. We
</FONT>

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<DIV align="left">
<FONT size="2">plan to seek to renegotiate the terms of our
agreements with certain programmers as these agreements come due
for renewal.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As measured by programming costs, and excluding
premium services (substantially all of which were renegotiated
and renewed in 2003), as of September&nbsp;30, 2004
approximately 33% of our current programming contracts are
scheduled to expire by the end of 2004, and approximately
another 12% by the end of 2005. There can be no assurance that
these agreements will be renewed on favorable or comparable
terms. To the extent that we are unable to reach agreement with
certain programmers on terms that we believe are reasonable, we
may be forced to remove such programming channels from our
line-up by the programmers, which could result in a further loss
of customers. In addition, our inability to fully pass these
programming cost increases on to our customers would have an
adverse impact on our cash flow and operating margins.
</FONT>

<P align="left">
<B><FONT size="2">Franchises</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, our systems
operated pursuant to a total of approximately 4,200 franchises,
permits and similar authorizations issued by local and state
governmental authorities. Each franchise is awarded by a
governmental authority and such governmental authority often
must approve a transfer to another party. Most franchises are
subject to termination proceedings in the event of a material
breach. In addition, most franchises require us to pay the
granting authority a franchise fee of up to 5.0% of revenues as
defined in the various agreements, provided that revenue is
derived from a &#147;cable service,&#148; which is the maximum
amount that may be charged under the applicable federal law. We
are entitled to and generally do pass this fee through to the
customer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the scheduled expiration of most
franchises, we initiate renewal proceedings with the granting
authorities. This process usually takes three years but can take
a longer period of time. The Communications Act provides for an
orderly franchise renewal process in which granting authorities
may not unreasonably withhold renewals. In connection with the
franchise renewal process, many governmental authorities require
the cable operator to make certain commitments. Historically we
have been able to renew our franchises without incurring
significant costs, although any particular franchise may not be
renewed on commercially favorable terms or otherwise. Our
failure to obtain renewals of our franchises, especially those
in the major metropolitan areas where we have the most
customers, would have a material adverse effect on our
consolidated financial condition, results of operations or our
liquidity, including our ability to comply with our debt
covenants. Approximately 28% of our franchises covering
approximately 30% of our video customers expire on or before
December&nbsp;31, 2006. We expect to renew substantially all of
these franchises.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Telecommunications Act of 1996 (the
&#147;1996 Telecom Act&#148;), state and local authorities are
prohibited from limiting, restricting or conditioning the
provision of telecommunications services. They may, however,
impose &#147;competitively neutral&#148; requirements and manage
the public rights-of-way. Granting authorities may not require a
cable operator to provide telecommunications services or
facilities, other than institutional networks, as a condition of
an initial franchise grant, a franchise renewal, or a franchise
transfer. The 1996 Telecom Act also limits franchise fees to an
operator&#146;s cable-related revenues and clarifies that they
do not apply to revenues that a cable operator derives from
providing new telecommunications services. In a March 2002
decision, the Federal Communications Commission
(&#147;FCC&#148;) held that revenue derived from the provision
of cable modem service should not be added to franchise fee
payments already limited by federal law to 5% of traditional
cable service revenue. The same decision tentatively limited
local franchising authority regulation of cable modem service.
On October&nbsp;6, 2003, the United States Court of Appeals for
the Ninth Circuit vacated in part the FCC&#146;s March 2002
decision and remanded for further proceedings. The Ninth Circuit
affirmed the portion of the FCC&#146;s March 2002 decision
holding that cable modem service is not a &#147;cable
service.&#148; Although the Ninth Circuit&#146;s decision should
not subject cable operators to additional cable franchise fee
requirements for the provision of cable modem service, it could
possibly result in other telecommunications regulation.
</FONT>

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<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We face competition in the areas of price,
services, and service reliability. We compete with other
providers of television signals and other sources of home
entertainment. In addition, as we continue to expand into
additional services such as high-speed Internet access and
telephony, we face competition from other providers of each type
of service. We operate in a very competitive business
environment, which can adversely affect our business and
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In terms of competition for customers, we view
ourselves as a member of the broadband communications industry,
which encompasses multi-channel video for television and related
broadband services, such as high-speed data and other
interactive video services. In the broadband industry, our
principal competitor for video services throughout our territory
is direct broadcast satellite (&#147;DBS&#148;), and, in markets
where it is available, our principal competitor for data
services is digital subscriber line (&#147;DSL&#148;). We do not
consider other cable operators to be significant one-on-one
competitors in the market overall, as traditional overbuilds are
infrequent and spotty geographically (although in a particular
market, a cable operator overbuilder would likely be a
significant competitor at the local level). As of
September&nbsp;30, 2004, we are aware of traditional overbuild
situations impacting approximately 5% of our total homes passed
and potential overbuilds in areas servicing approximately 2% of
our total homes passed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although cable operators tend not to be direct
competitors for customers, their relative size may affect the
competitive landscape in terms of how a cable company competes
against non-cable competitors in the marketplace as well as in
relationships with vendors who deal with cable operators. For
example, a larger cable operator might have better access to and
pricing for the multiple types of services cable companies
offer. Also, a larger entity might have different access to
financial resources and acquisition opportunities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our key competitors include:
</FONT>

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    <B><I><FONT size="2">Direct Broadcast Satellite</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Direct broadcast satellite (DBS) is a significant
competitor to cable systems. The DBS industry has grown rapidly
over the last several years, far exceeding the growth rate of
the cable television industry, and now serves approximately
24&nbsp;million subscribers nationwide. DBS service allows the
subscriber to receive video and high-speed Internet access
services directly via satellite using a relatively small dish
antenna, although DBS providers have indicated that they may not
continue to promote their high-speed Internet services on a
going forward basis. Consistent with increasing consolidation in
the communications industry, News Corp., one of the world&#146;s
largest media companies, recently acquired a controlling
interest in DIRECTV, Inc. (&#147;DirecTV&#148;), the largest
domestic DBS company. This business combination could
significantly strengthen DirecTV&#146;s competitive posture,
particularly through favorable programming arrangements with
various News Corp. affiliates and subsidiaries, such as the Fox
television network. In addition to the two established DBS
providers, DirecTV and EchoStar Communications Corporation
(&#147;EchoStar&#148;), a third DBS provider, Rainbow DBS, a
division of Cablevision Systems Corp., commenced offering
service in the fall of 2003. Additionally, EchoStar and DirecTV
both have entered into joint marketing agreements with major
telecommunications companies to offer bundled packages combining
phone service, DSL and DBS services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Video compression technology and high powered
satellites allow DBS providers to offer more than 200 digital
channels from a single 32 transponder satellite, thereby
surpassing the typical analog cable system. In 2003, major DBS
competitors offered a greater variety of channel packages, and
were especially competitive at the lower end pricing, such as a
monthly price of approximately $30 for 75 channels compared to
approximately $40 for the closest comparable package in most of
our markets. In addition, while we continue to believe that the
initial investment by a DBS customer exceeds that of a cable
customer, the initial equipment cost for DBS has decreased
substantially, as the DBS providers have aggressively marketed
offers to new customers of incentives for discounted or free
equipment, installation and multiple units. DBS providers are
able to offer service nationwide and are able to establish a
national image and branding with standardized offerings, which
together with their ability to avoid franchise fees of
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<DIV align="left">
<FONT size="2">up to 5% of revenues and property tax, leads to
greater efficiencies and lower costs in the lower tiers of
service. However, we believe that most consumers continue to
prefer our stronger local presence in our markets. We believe
that cable-delivered VOD and SVOD service are superior to DBS
service because cable headends can store thousands of titles
which customers can access and control independently, whereas
DBS technology can only make available a much smaller number of
titles with DVR-like customer control. We also believe that our
higher tier products, particularly our bundled premium packages,
are price-competitive with DBS packages and that many consumers
prefer our ability to economically bundle video packages with
data packages. Further, cable providers have the potential in
some areas to provide a more complete &#147;whole house&#148;
communications package when combining video, high-speed data and
voice. We believe that this ability to bundle, combined with the
introduction of more new products that DBS cannot readily offer
(local high definition television and local interactive
television) differentiates us from DBS competitors and could
enable us to win back some of our former customers who migrated
to satellite. However, joint marketing arrangements between DBS
providers and telecommunications carriers allow similar bundling
of services in certain areas.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">DBS companies historically were prohibited from
retransmitting popular local broadcast programming. However, a
change to the copyright laws in 1999 eliminated this legal
impediment. As a result, DBS companies now may retransmit such
programming, once they have secured retransmission consent from
the popular broadcast stations they wish to carry, and honor
mandatory carriage obligations of less popular broadcast
stations in the same television markets. In response to the
legislation, DirecTV and EchoStar have begun carrying the major
network stations in the nation&#146;s top television markets.
DBS, however, is limited in the local programming it can provide
because of the current capacity limitations of satellite
technology. DBS companies do not offer local broadcast
programming in every U.S.&nbsp;market, although the number of
markets covered is increasing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">DirecTV (through an affiliate) is now providing
two-way high-speed Internet access services in some areas.
Another satellite company called WildBlue Communications, Inc.
(formerly iSKY, Inc.) reports that it plans to deliver two-way
high-speed Internet access to residential and small business
markets in the contiguous United States and portions of Canada
in early 2005 using the Ka-band and spot beam technology.
EchoStar is offering its video programming services with the
Internet services provided by EarthLink, an Internet service
provider, using digital subscriber line technology. In addition,
EchoStar may expand into dish-based broadband service offerings.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">DSL and Other Broadband
    Services</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The deployment of DSL allows Internet access to
subscribers at data transmission speeds greater than those
available over conventional telephone lines. DSL service
therefore is competitive with high-speed Internet access over
cable systems. Most telephone companies which already have
plant, an existing customer base, and other operational
functions in place (such as, billing, service personnel, etc.)
offer DSL service. DSL actively markets its service, and many
providers have offered promotional pricing with a one-year
service agreement. The FCC has initiated a rulemaking proceeding
that could materially reduce existing regulation of DSL service,
essentially freeing such service from traditional
telecommunications regulation. It is also possible that federal
legislation could reduce regulation of Internet services offered
by incumbent telephone companies. Legislative action and the
FCC&#146;s decisions and policies in this area are subject to
change. We expect DSL to remain a significant competitor to our
data services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">DSL and other forms of high-speed Internet access
provide competition to our own provision of Internet access. For
example, as discussed above, satellite-based delivery options
are available. In addition, local wireless Internet services
have recently begun to operate in many markets using available
unlicensed radio spectrum. This service option, popularly known
as &#147;wi-fi&#148;, offers another alternative to cable-based
Internet access.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">High-speed Internet access facilitates the
streaming of video into homes and businesses. As the quality and
availability of video streaming over the Internet improves,
video streaming likely will compete with the traditional
delivery of video programming services over cable systems. It is
possible that
</FONT>

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<DIV align="left">
<FONT size="2">programming suppliers will consider bypassing
cable operators and market their services directly to the
consumer through video streaming over the Internet.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that pricing for residential and
commercial data services on our system is generally comparable
to that for similar DSL services and that some residential
customers prefer our ability to bundle data services with video
services. However, DSL providers may currently be in a better
position to offer data services to businesses since their
networks tend to be more complete in commercial areas. They also
have the ability to bundle telephony with data services for a
higher percentage of their customers, and that ability is
appealing to many consumers. Joint marketing arrangements
between DSL providers and DBS providers may allow some
additional bundling of services. Moreover, major telephone
companies, such as SBC and Verizon, are now deploying fiber deep
into their networks that will enable them to offer video
services over their networks, in addition to established voice
and Internet services.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">Broadcast Television</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable television has long competed with broadcast
television, which consists of television signals that the viewer
is able to receive without charge using an &#147;off-air&#148;
antenna. The extent of such competition is dependent upon the
quality and quantity of broadcast signals available through
&#147;off-air&#148; reception compared to the services provided
by the local cable system. Traditionally, cable television has
provided a higher picture quality and more channel offerings
than broadcast television. However, the recent licensing of
digital spectrum by the FCC will provide traditional
broadcasters with the ability to deliver high definition
television pictures and multiple digital-quality program
streams, as well as advanced digital services such as
subscription video and data transmission. Walt Disney Co. has
deployed a movie service that bypasses cable through direct
access to homes by data streams sent over the television
broadcast spectrum.
</FONT>

<DIV>&nbsp;</DIV>

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<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Traditional Overbuilds</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable systems are operated under non-exclusive
franchises granted by local authorities. More than one cable
system may legally be built in the same area. It is possible
that a franchising authority might grant a second franchise to
another cable operator and that such a franchise might contain
terms and conditions more favorable than those afforded us. In
addition, entities willing to establish an open video system,
under which they offer unaffiliated programmers
non-discriminatory access to a portion of the system&#146;s
cable system, may be able to avoid local franchising
requirements. Well-financed businesses from outside the cable
industry, such as public utilities that already possess fiber
optic and other transmission lines in the areas they serve, may
over time become competitors. There are a number of cities that
have constructed their own cable systems, in a manner similar to
city-provided utility services. There also has been interest in
traditional overbuilds by private companies. Constructing a
competing cable system is a capital intensive process which
involves a high degree of risk. We believe that in order to be
successful, a competitor&#146;s overbuild would need to be able
to serve the homes and businesses in the overbuilt area on a
more cost-effective basis than we can. Any such overbuild
operation would require either significant access to capital or
access to facilities already in place that are capable of
delivering cable television programming.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, we are aware of
overbuild situations impacting approximately 5% of our total
homes passed and potential overbuild situations in areas
servicing approximately 2% of our total homes passed, together
representing a total of approximately 7% of our homes passed.
Additional overbuild situations may occur in other systems. In
response to such overbuilds, these systems have been designated
priorities for the upgrade of cable plant and the launch of new
and enhanced services. As of September&nbsp;30, 2004, we have
upgraded many of these systems to at least 750 megahertz two-way
HFC architecture.
</FONT>

<DIV>&nbsp;</DIV>

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<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Telephone Companies and
    Utilities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The competitive environment has been
significantly affected by technological developments and
regulatory changes enacted under the 1996 Telecom Act, which was
designed to enhance competition in the cable television and
local telephone markets. Federal cross-ownership restrictions
historically limited entry by local telephone companies into the
cable business. The 1996 Telecom Act modified this cross-
</FONT>

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<FONT size="2">ownership restriction, making it possible for
local exchange carriers, who have considerable resources, to
provide a wide variety of video services competitive with
services offered by cable systems.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Telephone companies can lawfully enter the cable
television business, and although activity in this area
historically has been quite limited, recent announcements by
telephone companies indicate a growing interest in offering a
video product. Local exchange carriers do already provide
facilities for the transmission and distribution of voice and
data services, including Internet services, in competition with
our existing or potential interactive services ventures and
businesses. In addition, major telephone companies, such as SBC
and Verizon, are now deploying fiber into their networks that
will enable them to offer video services over their networks, in
addition to established voice and Internet services. We cannot
predict the likelihood of success of the broadband services
offered by our competitors or the impact on us of such
competitive ventures. The large scale entry of major telephone
companies as direct competitors in the video marketplace could
adversely affect the profitability and valuation of established
cable systems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As we expand our offerings to include Internet
access and other telecommunications services, we will be subject
to competition from other telecommunications providers. The
telecommunications industry is highly competitive and includes
competitors with greater financial and personnel resources, who
have brand name recognition and long-standing relationships with
regulatory authorities and customers. Moreover, mergers, joint
ventures and alliances among franchises, wireless or private
cable operators, local exchange carriers and others may result
in providers capable of offering cable television, Internet, and
telecommunications services in direct competition with us. For
example, major local exchange carriers have entered into
arrangements with EchoStar and DirecTV in which they will market
packages combining phone service, DSL and DBS services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, we are subject to competition from
utilities which possess fiber optic transmission lines capable
of transmitting signals with minimal signal distortion.
Utilities are also developing broadband over power line
technology, which will allow the provision of Internet and other
broadband services to homes and offices.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Private Cable</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional competition is posed by satellite
master antenna television systems, or SMATV systems, serving
multiple dwelling units, or MDUs, such as condominiums,
apartment complexes, and private residential communities. These
private cable systems may enter into exclusive agreements with
such MDUs, which may preclude operators of franchise systems
from serving residents of such private complexes. Private cable
systems can offer both improved reception of local television
stations and many of the same satellite-delivered program
services that are offered by cable systems. SMATV systems
currently benefit from operating advantages not available to
franchised cable systems, including fewer regulatory burdens and
no requirement to service low density or economically depressed
communities. Exemption from regulation may provide a competitive
advantage to certain of our current and potential competitors.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Wireless Distribution</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable systems also compete with wireless program
distribution services such as multi-channel multipoint
distribution systems or &#147;wireless cable,&#148; known as
MMDS, which uses low-power microwave frequencies to transmit
television programming over-the-air to paying customers.
Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital
compression technology increases significantly the channel
capacity of their systems. Both analog and digital MMDS
services, however, require unobstructed &#147;line of
sight&#148; transmission paths and MMDS ventures have been quite
limited to date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC has completed its auction of Multichannel
Video Distribution&nbsp;&#38; Data Service (&#147;MVDDS&#148;)
licenses. MVDDS is a new terrestrial video and data fixed
wireless service that the FCC hopes will spur competition in the
cable and DBS industries.
</FONT>

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<P align="left">
<B><FONT size="2">Properties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal physical assets consist of cable
distribution plant and equipment, including signal receiving,
encoding and decoding devices, headend reception facilities,
distribution systems and customer drop equipment for each of our
cable systems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cable plant and related equipment are
generally attached to utility poles under pole rental agreements
with local public utilities and telephone companies, and in
certain locations are buried in underground ducts or trenches.
We own or lease real property for signal reception sites and own
most of our service vehicles.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically our subsidiaries have owned the real
property and buildings for our data centers, customer contact
centers and our divisional administrative offices. Since early
2003 we have reduced our total real estate portfolio square
footage by approximately 17% and have decreased our operating
annual lease costs by approximately 30%. We plan to continue
reducing our number of administrative offices and lease the
space, where possible, while attempting to sell those existing
locations that we believe are no longer required. Our
subsidiaries generally have leased space for business offices
throughout our operating divisions. Our headend and tower
locations are located on owned or leased parcels of land, and we
generally own the towers on which our equipment is located.
Charter Holdco owns the real property and building for our
principal executive offices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The physical components of our cable systems
require maintenance as well as periodic upgrades to support the
new services and products we introduce. See
&#147;Business&nbsp;&#151; Our Network Technology.&#148; We
believe that our properties are generally in good operating
condition and are suitable for our business operations.
</FONT>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, we had
approximately 15,550&nbsp;full-time equivalent employees. At
September&nbsp;30, 2004, approximately 100 of our employees were
represented by collective bargaining agreements. We have never
experienced a work stoppage.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The corporate office, which includes employees of
Charter and Charter Holdco, is responsible for coordinating and
overseeing our operations. The corporate office performs certain
financial and administrative functions on a centralized basis
such as accounting, billing, finance and acquisitions, payroll
and benefit administration, information system design and
support, internal audit, purchasing, marketing and programming
contract administration. The corporate office performs these
services on a cost reimbursement basis pursuant to a management
services agreement. See &#147;Certain Relationships and Related
Transactions&nbsp;&#151; Transactions Arising Out of Our
Organizational Structure and Mr.&nbsp;Allen&#146;s Investment in
Charter and Its Subsidiaries&nbsp;&#151; Intercompany Management
Arrangements.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Legal Proceedings</FONT></B>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Securities Class Actions and Derivative
    Suits</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fourteen putative federal class action lawsuits
(the &#147;Federal Class&nbsp;Actions&#148;) were filed against
Charter and certain of its former and present officers and
directors in various jurisdictions allegedly on behalf of all
purchasers of Charter&#146;s securities during the period from
either November 8 or November&nbsp;9, 1999 through July&nbsp;17
or July&nbsp;18, 2002. Unspecified damages were sought by the
plaintiffs. In general, the lawsuits alleged that Charter
utilized misleading accounting practices and failed to disclose
these accounting practices and/or issued false and misleading
financial statements and press releases concerning
Charter&#146;s operations and prospects. The Federal
Class&nbsp;Actions were specifically and individually identified
in public filings made by Charter prior to the date of this
prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2002, Charter filed a motion with the
Judicial Panel on Multidistrict Litigation (the
&#147;Panel&#148;) to transfer the Federal Class Actions to the
Eastern District of Missouri. On March&nbsp;12, 2003, the Panel
transferred the six Federal Class&nbsp;Actions not filed in the
Eastern District of Missouri to that
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<DIV align="left">
<FONT size="2">district for coordinated or consolidated pretrial
proceedings with the eight Federal Class&nbsp;Actions already
pending there. The Panel&#146;s transfer order assigned the
Federal Class&nbsp;Actions to Judge Charles A. Shaw. By virtue
of a prior court order, StoneRidge Investment Partners LLC
became lead plaintiff upon entry of the Panel&#146;s transfer
order. StoneRidge subsequently filed a Consolidated Amended
Complaint. The Court subsequently consolidated the Federal
Class&nbsp;Actions into a single action (the &#147;Consolidated
Federal Class&nbsp;Action&#148;) for pretrial purposes. On
June&nbsp;19, 2003, following a status and scheduling conference
with the parties, the Court issued a Case Management Order
setting forth a schedule for the pretrial phase of the
Consolidated Federal Class&nbsp;Action. Motions to dismiss the
Consolidated Amended Complaint were filed. On February&nbsp;10,
2004, in response to a joint motion made by StoneRidge and
Defendants Charter, Vogel and Allen, the Court entered an order
providing, among other things, that: (1)&nbsp;the parties who
filed such motion, engage in a mediation within ninety
(90)&nbsp;days; and (2)&nbsp;all proceedings in the Consolidated
Federal Class&nbsp;Actions were stayed until May&nbsp;10, 2004.
On May&nbsp;11, 2004, the Court extended the stay in the
Consolidated Federal Class&nbsp;Action for an additional sixty
(60)&nbsp;days. On July&nbsp;12, 2004, the parties submitted a
joint motion to again extend the stay, this time until
September&nbsp;10, 2004. The Court granted that extension on
July&nbsp;20, 2004. On August&nbsp;5, 2004, Stoneridge, Charter
and the individual defendants who were the subject of the suit
entered into a Memorandum of Understanding (described more fully
below) setting forth agreements in principle to settle the
Consolidated Federal Class&nbsp;Action.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Consolidated Federal Class&nbsp;Action is
entitled:
</FONT>
<P>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In re Charter Communications, Inc. Securities
    Litigation, MDL Docket No.&nbsp;1506 (All Cases), StoneRidge
    Investments Partners, LLC, Individually and On Behalf of All
    Others Similarly Situated,&nbsp;v. Charter Communications, Inc.,
    Paul Allen, Jerald L. Kent, Carl E. Vogel, Kent Kalkwarf, David
    G. Barford, Paul E. Martin, David L. McCall, Bill Shreffler,
    Chris Fenger, James H. Smith,&nbsp;III, Scientific-Atlanta,
    Inc., Motorola, Inc. and Arthur Andersen, LLP, Consolidated Case
    No.&nbsp;4:02-CV-1186-CAS.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;12, 2002, a shareholders
derivative suit (the &#147;State Derivative Action&#148;) was
filed in the Circuit Court of the City of St.&nbsp;Louis, State
of Missouri (the &#147;Missouri State Court&#148;), against
Charter and its then current directors, as well as its former
auditors. A substantively identical derivative action was later
filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their
fiduciary duties by failing to establish and maintain adequate
internal controls and procedures. Unspecified damages, allegedly
on Charter&#146;s behalf, are sought by the plaintiffs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated State Derivative Action is
entitled:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Kenneth Stacey, Derivatively on behalf of Nominal
    Defendant Charter Communications, Inc.,&nbsp;v. Ronald L.
    Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William Savoy, John H. Tory, Carl E. Vogel, Larry W. Wangberg,
    Arthur Andersen, LLP and Charter Communications, Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;12, 2004, an action substantively
identical to the State Derivative Action was filed in the
Missouri State Court, against Charter and certain of its current
and former directors, as well as its former auditors. The
plaintiffs in that case alleged that the individual defendants
breached their fiduciary duties by failing to establish and
maintain adequate internal controls and procedures. Unspecified
damages, allegedly on Charter&#146;s behalf, were sought by
plaintiffs. On July&nbsp;14, 2004, the Court consolidated this
case with the State Derivative Action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This action is entitled:
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Thomas Schimmel, Derivatively on behalf on
    Nominal Defendant Charter Communications, Inc.,&nbsp;v. Ronald
    L. Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William D. Savoy, John H. Tory, Carl E. Vogel, Larry W.
    Wangberg, and Arthur Andersen, LLP, and Charter Communications,
    Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Separately, on February&nbsp;12, 2003, a
shareholders derivative suit (the &#147;Federal Derivative
Action&#148;), was filed against Charter and its then current
directors in the United States District Court for the Eastern
</FONT>

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<DIV align="left">
<FONT size="2">District of Missouri. The plaintiff in that suit
alleged that the individual defendants breached their fiduciary
duties and grossly mismanaged Charter by failing to establish
and maintain adequate internal controls and procedures.
Unspecified damages, allegedly on Charter&#146;s behalf, were
sought by the plaintiffs.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Federal Derivative Action is entitled:
</FONT>
<P>

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    <TD width="1%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Arthur Cohn, Derivatively on behalf of Nominal
    Defendant Charter Communications, Inc.,&nbsp;v. Ronald L.
    Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William Savoy, John H. Tory, Carl E. Vogel, Larry W. Wangberg,
    and Charter Communications, Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;5, 2004, Charter entered into
Memoranda of Understanding setting forth agreements in principle
regarding settlement of the Consolidated Federal
Class&nbsp;Action, the State Derivative Action(s) and the
Federal Derivative Action (the &#147;Actions&#148;). In exchange
for a release of all claims by plaintiffs against Charter and
its former and present officers and directors named in the
Actions, Charter will pay to the plaintiffs a combination of
cash and equity collectively valued at $144&nbsp;million, which
will include the fees and expenses of plaintiffs&#146; counsel.
Of this amount, $64&nbsp;million will be paid in cash (by
Charter&#146;s insurance carriers) and the balance will be paid
in shares of Charter Class&nbsp;A common stock having an
aggregate value of $40&nbsp;million and ten-year warrants to
purchase shares of Charter Class&nbsp;A common stock having an
aggregate warrant value of $40&nbsp;million. The warrants would
have an exercise price equal to 150% of the fair market value
(as defined) of Charter Class&nbsp;A common stock as of the date
of the entry of the order of final judgment approving the
settlement. In addition, Charter expects to issue additional
shares of its Class&nbsp;A common stock to its insurance carrier
having an aggregate value of $5&nbsp;million. As part of the
settlements, Charter will also commit to a variety of corporate
governance changes, internal practices and public disclosures,
some of which have already been undertaken and none of which are
inconsistent with measures Charter is taking in connection with
the recent conclusion of the SEC investigation described below.
The settlement of each of the lawsuits is conditioned upon,
among other things, the parties&#146; approval and execution of
definitive settlement agreements with respect to the matters
described above, judicial approval of the settlements by the
Court following notice to the class, and dismissal of the
consolidated derivative actions now pending in Missouri State
Court, which are related to the Federal Derivative Action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the Federal Class&nbsp;Actions,
the State Derivative Action, the new Missouri State Court
derivative action and the Federal Derivative Action, six
putative class action lawsuits were filed against Charter and
certain of its then current directors and officers in the Court
of Chancery of the State of Delaware (the &#147;Delaware
Class&nbsp;Actions&#148;). The lawsuits were filed after the
filing of a Schedule&nbsp;13D amendment by Mr.&nbsp;Allen
indicating that he was exploring a number of possible
alternatives with respect to restructuring or expanding his
ownership interest in Charter. We believe the plaintiffs
speculated that Mr.&nbsp;Allen might have been contemplating an
unfair bid for shares of Charter or some other sort of going
private transaction on unfair terms and generally alleged that
the defendants breached their fiduciary duties by participating
in or acquiescing to such a transaction. The lawsuits, which are
substantively identical, were brought on behalf of
Charter&#146;s securities holders as of July&nbsp;29, 2002, and
sought unspecified damages and possible injunctive relief.
However, no such transaction by Mr.&nbsp;Allen has been
presented. On April&nbsp;30, 2004, orders of dismissal without
prejudice were entered in each of the Delaware
Class&nbsp;Actions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Delaware Class&nbsp;Actions consist of:
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Eleanor Leonard, v.&nbsp;Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August&nbsp;12, 2002;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Helene Giarraputo, on behalf of herself and all
    others similarly situated,&nbsp;v. Paul G. Allen, Carl E. Vogel,
    Marc B. Nathanson, Ronald L. Nelson, Nancy B. Peretsman, William
    Savoy, John H. Tory, Larry W. Wangberg, and Charter
    Communications, Inc., filed on August&nbsp;13, 2002;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ronald D. Wells, Whitney Counsil and Manny
    Varghese, on behalf of themselves and all others similarly
    situated,&nbsp;v. Charter Communications, Inc., Ronald L.
    Nelson, Paul G. Allen, Marc B.
    </FONT></TD>
</TR>

</TABLE>

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    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">Nathanson, Nancy B. Peretsman, William Savoy,
    John H. Tory, Carl E. Vogel, Larry W. Wangberg, filed on
    August&nbsp;13, 2002;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Gilbert Herman, on behalf of himself and all
    others similarly situated,&nbsp;v. Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August&nbsp;14, 2002;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Stephen Noteboom, on behalf of himself and all
    others similarly situated,&nbsp;v. Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August&nbsp;16, 2002;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">John Fillmore on behalf of himself and all others
    similarly situated,&nbsp;v. Paul G. Allen, Larry W. Wangberg,
    John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy B.
    Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on October&nbsp;18, 2002.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Government Investigations</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2002, Charter became aware of a grand
jury investigation being conducted by the
U.S.&nbsp;Attorney&#146;s Office for the Eastern District of
Missouri into certain of its accounting and reporting practices,
focusing on how Charter reported customer numbers, and its
reporting of amounts received from digital set-top terminal
suppliers for advertising. The U.S.&nbsp;Attorney&#146;s Office
has publicly stated that Charter is not a target of the
investigation. Charter has also been advised by the
U.S.&nbsp;Attorney&#146;s office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July&nbsp;24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July&nbsp;25, 2003, one of the former officers who was indicted
entered a guilty plea. The trial for the other three former
officers is scheduled to begin on February&nbsp;7, 2005. Charter
is fully cooperating with the investigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;4, 2002, Charter received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January&nbsp;23,
2003, and subsequently served document and testimony subpoenas
on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charter&#146;s
prior reports with respect to its determination of the number of
customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings
with certain vendors, including programmers and digital set-top
terminal suppliers. On July&nbsp;27, 2004, the SEC and Charter
reached a final agreement to settle the investigation. In the
Settlement Agreement and Cease and Desist Order, Charter agreed
to entry of an administrative order prohibiting any future
violations of United States securities laws and requiring
certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing,
and the SEC assessed no fine against Charter.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Indemnification</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is generally required to indemnify each
of the named individual defendants in connection with the
matters described above pursuant to the terms of its bylaws and
(where applicable) such individual defendants&#146; employment
agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC
investigation and the above described lawsuits, some of
Charter&#146;s current and former directors and current and
former officers have been advanced certain costs and expenses
incurred in connection with their defense.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Other Litigation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina Court of Common Pleas (the
&#147;South Carolina Class&nbsp;Action&#148;), purportedly on
behalf of a class of Charter Holdco&#146;s customers, alleging
that Charter Holdco improperly charged them a wire maintenance
fee without request or permission. They also claimed that Charter
</FONT>

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<FONT size="2">Holdco improperly required them to rent analog
and/or digital set-top terminals even though their television
sets were &#147;cable ready.&#148; A substantively identical
case was filed in the Superior Court of Athens&nbsp;&#151;
Clarke County, Georgia by Emma S. Tobar on March&nbsp;26, 2002
(the &#147;Georgia Class&nbsp;Action&#148;), alleging a
nationwide class for these claims. Charter Holdco removed the
South Carolina Class&nbsp;Action to the United States District
Court for the District of South Carolina in November 2001, and
moved to dismiss the suit in December 2001. The federal judge
remanded the case to the South Carolina Court of Common Pleas in
August 2002 without ruling on the motion to dismiss. The
plaintiffs subsequently moved for a default judgment, arguing
that upon return to state court, Charter Holdco should have, but
did not file a new motion to dismiss. The state court judge
granted the plaintiff&#146;s motion over Charter Holdco&#146;s
objection in September 2002. Charter Holdco immediately appealed
that decision to the South Carolina Court of Appeals and the
South Carolina Supreme Court, but those courts ruled that until
a final judgment was entered against Charter Holdco, they lacked
jurisdiction to hear the appeal.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2003, the Court of Common Pleas
granted the plaintiffs&#146; motion for class certification. In
October and November 2003, Charter Holdco filed motions
(a)&nbsp;asking that court to set aside the default judgment,
and (b)&nbsp;seeking dismissal of plaintiffs&#146; suit for
failure to state a claim. In January 2004, the Court of Common
Pleas granted in part and denied in part Charter Holdco&#146;s
motion to dismiss for failure to state a claim. It also took
under advisement Charter Holdco&#146;s motion to set aside the
default judgment. In April 2004, the parties to both the Georgia
and South Carolina Class&nbsp;Actions participated in a
mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the
mediator&#146;s proposal and reached a tentative settlement,
subject to final documentation and court approval. As a result
of the tentative settlement, we recorded a special charge of
$9&nbsp;million in our consolidated statement of operations in
the first quarter of 2004. On July&nbsp;8, 2004, the Superior
Court of Athens&nbsp;&#151; Clarke County, Georgia granted a
motion to amend the Tobar complaint to add Nicholls, Barber and
April Jones as plaintiffs in the Georgia Class&nbsp;Action and
to add any potential class members in South Carolina. The court
also granted preliminary approval of the proposed settlement on
that date. On August&nbsp;2, 2004, the parties submitted a joint
request to the South Carolina Court of Common Pleas to stay the
South Carolina Class&nbsp;Action pending final approval of the
settlement and on August&nbsp;17, 2004, that court granted the
parties&#146; request. On November&nbsp;10, 2004, the court
granted final approval of the settlement, rejecting positions
advanced by two objectors to the settlement. One of the
objectors had recently filed a similar, but not identical,
lawsuit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The South Carolina Class&nbsp;Action was entitled:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Nikki Nicholls and Geraldine M. Barber, on behalf
    of themselves and all others similarly situated&nbsp;v. Charter
    Communications Holding Company, LLC and City of Spartanburg
    filed on October&nbsp;29, 2001.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Georgia Class&nbsp;Action is now entitled:
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Emma S. Tobar, Nikki Nicholls, Geraldine M.
    Barber and April Jones, on behalf of themselves and all others
    similarly situated&nbsp;v. Charter Communications Holding
    Company, LLC, et&nbsp;al, originally filed on March&nbsp;26,
    2002.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Outcome</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims are not expected
to have a material adverse effect on our consolidated financial
condition, results of operations or our liquidity.
</FONT>

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<DIV align="left">
<A name='113'></A>
</DIV>

<!-- link1 "REGULATION AND LEGISLATION" -->

<P align="center">
<B><FONT size="2">REGULATION AND LEGISLATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary addresses the key
regulatory and legislative developments affecting the cable
industry. Cable system operations are extensively regulated by
the FCC, some state governments and most local governments. A
failure to comply with these regulations could subject us to
substantial penalties. Our business can be dramatically impacted
by changes to the existing regulatory framework, whether
triggered by legislative, administrative, or judicial rulings.
Congress and the FCC have expressed a particular interest in
increasing competition in the communications field generally and
in the cable television field specifically. The 1996 Telecom Act
altered the regulatory structure governing the nation&#146;s
communications providers. It removed barriers to competition in
both the cable television market and the local telephone market.
At the same time, the FCC has pursued spectrum licensing options
designed to increase competition to the cable industry by
wireless multichannel video programming distributors. We could
be materially disadvantaged in the future if we are subject to
new regulations that do not equally impact our key competitors.
Congress and the FCC have frequently revisited the subject of
communications regulation, and they are likely to do so in the
future. In addition, franchise agreements with local governments
must be periodically renewed, and new operating terms may be
imposed. Future legislative, regulatory, or judicial changes
could adversely affect our operations. We can provide no
assurance that the already extensive regulation of our business
will not be expanded in the future.
</FONT>

<P align="left">
<B><FONT size="2">Cable Rate Regulation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cable industry has operated under a federal
rate regulation regime for more than a decade. The regulations
currently restrict the prices that cable systems charge for
basic service and associated equipment. All other cable
offerings are now universally exempt from rate regulation.
Although rate regulation operates pursuant to a federal formula,
local governments, commonly referred to as local franchising
authorities, are primarily responsible for administering this
regulation. The majority of our local franchising authorities
have never certified to regulate basic cable rates, but they
retain the right to do so (and order rate reductions and
refunds), except in those specific communities facing
&#147;effective competition.&#148; Federal law defines effective
competition as existing in a variety of circumstances that
historically were rarely satisfied, but are increasingly likely
to be satisfied with the recent increase in DBS&nbsp;competition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There have been frequent calls to impose expanded
rate regulation on the cable industry. Confronted with rapidly
increasing cable programming costs, it is possible that Congress
may adopt new constraints on the retail pricing or packaging of
cable programming. Such constraints could adversely affect our
operations. In response to Congressional sensitivity to the
cable industry&#146;s practice of bundling programming into
large tiers, the FCC recently conduced an inquiry into the
advisability of mandating the a la carte offering of programming
services. Although the FCC recommended against an a la carte
mandate, it is still possible that new marketing restrictions
could be adopted in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The federal rate regulations also require cable
operators to maintain a &#147;geographically uniform&#148; rate
within each community, except in those communities facing
effective competition. As we attempt to respond to a changing
marketplace with competitive pricing practices, we may face
legal restraints and challenges that impede our ability to
compete.
</FONT>

<P align="left">
<B><FONT size="2">Must Carry/ Retransmission Consent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Federal law currently includes &#147;must
carry&#148; regulations, which require cable systems to carry
certain local broadcast television stations that the cable
operator would not select voluntarily. Alternatively, popular
commercial television stations can prohibit cable carriage
unless the cable operator first negotiates for
&#147;retransmission consent,&#148; which may be conditioned on
significant payments or other concessions. Either option has a
potentially adverse effect on our business. The burden
associated with must carry could increase significantly if the
FCC requires cable systems to simultaneously carry both the
analog and digital signals of each television station, as the
broadcast industry transitions from an analog to a digital
format.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The burden could also increase significantly if
the FCC requires cable systems to carry multiple program streams
included within a single digital broadcast transmission.
Although the FCC tentatively ruled against this expansion in a
2001 ruling, it is reviewing the issue and could reach a
contrary result in the near future. If these expanded must-carry
requirements were adopted, we would have less freedom over our
distribution capacity.
</FONT>

<P align="left">
<B><FONT size="2">Access Channels</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Local franchise agreements often require cable
operators to set aside certain channels for public, educational
and governmental access programming. Federal law also requires
cable systems to designate a portion of their channel capacity
for commercial leased access by unaffiliated third parties.
Increased activity in this area could further burden the channel
capacity of our cable systems.
</FONT>

<P align="left">
<B><FONT size="2">Access to Programming</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC recently extended a regulation
prohibiting video programmers affiliated with cable companies
from favoring cable operators over new competitors and requiring
such programmers to sell their satellite-delivered programming
to other multichannel video distributors. This provision limits
the ability of vertically integrated cable programmers to offer
exclusive programming arrangements to cable companies. DBS
providers traditionally had no similar restriction on exclusive
programming, but the FCC recently imposed that restriction as
part of its approval of the DirecTV-News Corp. merger. The FCC
has also adopted regulations to avoid unreasonable conduct in
retransmission consent negotiations between broadcasters and
multichannel video programming distributors, including cable and
DBS. It imposed special conditions on the DirectTV-News Corp.
merger, including a requirement that Fox affiliated broadcast
stations enter into commercial arbitration for disputes over
retransmission consent. Given the heightened competition and
media consolidation that Charter faces, it is possible that we
will find it increasingly difficult to gain access to popular
programming at favorable terms. Such difficulty could adversely
impact our business.
</FONT>

<P align="left">
<B><FONT size="2">Ownership Restrictions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Federal regulation of the communications field
traditionally included a host of ownership restrictions, which
limited the size of certain media entities and restricted their
ability to enter into competing enterprises. Through a series of
legislative, regulatory, and judicial actions, most of these
restrictions recently were eliminated or substantially relaxed.
For example, historic restrictions on local exchange carriers
offering cable service within their telephone service area, as
well as those prohibiting broadcast stations from owning cable
systems within their broadcast service area, no longer exist.
Changes in this regulatory area, including some still subject to
judicial review, could alter the business landscape in which we
operate, as formidable new competitors (including electric
utilities, local exchange carriers, and broadcast/media
companies) may increasingly choose to offer cable services. The
relaxation of ownership restrictions could, for example,
simplify transactions such as the one that would have resulted
from Comcast Corporation&#146;s bid for Walt Disney Company had
it been accepted, notwithstanding overlapping cable and
broadcast properties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC previously adopted regulations precluding
any cable operator from serving more than 30% of all domestic
multichannel video subscribers and from devoting more than 40%
of the activated channel capacity of any cable system to the
carriage of affiliated national video programming services.
These cable ownership restrictions were invalidated by the
courts, and the FCC is now considering adoption of replacement
regulations.
</FONT>

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<P align="left">
<B><FONT size="2">Internet Service</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Over the past several years, proposals have been
advanced at the FCC and Congress that would require cable
operators offering Internet service to provide
non-discriminatory access to unaffiliated Internet service
providers. Several local franchising authorities actually
adopted mandatory &#147;open access&#148; requirements, but
various federal courts rejected each of these actions, relying
on different legal theories. It remains unclear today precisely
what regulatory regime ultimately will be applied to the cable
industry&#146;s high-speed Internet service. The FCC has ruled
that cable modem service is an interstate information service,
rather than a cable or telecommunications service. This
classification left cable modem service exempt from the burdens
associated with traditional cable and telecommunications
regulation. The United States Court of Appeals for the Ninth
Circuit however, vacated in part the FCC&#146;s ruling and
remanded for further proceedings. The Ninth Circuit held that
cable modem service is not &#147;cable service,&#148; but is
part &#147;telecommunications service&#148; and part
&#147;information service.&#148; That decision has been appealed
to the Supreme Court, which has agreed to hear the case. The
Ninth Circuit decision, if not overturned, could potentially
result in adverse regulatory treatment, including the imposition
of &#147;open access&#148; requirements on the cable
industry&#146;s Internet access service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although the FCC previously suggested that
regulatory forbearance of cable modem service would be
appropriate, regardless of the technical classification
ultimately assigned to it, a number of technology companies
continue to press the FCC to subject cable modem service to
certain &#147;nondiscrimination principles.&#148; The final
regulatory status of cable modem service remains uncertain. Its
outcome could materially affect our business. It could also
affect whether local franchising authorities can collect
franchise fees on cable modem service and whether cable systems
will have any payment obligations to the federal
government&#146;s universal service fund.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As the Internet has matured, it has become the
subject of increasing regulatory interest. There is now a host
of federal laws affecting Internet service, including the
Digital Millennium Copyright Act, which affords copyright owners
certain rights against us that could adversely affect our
relationship with any customer accused of violating copyright
laws. Recently enacted Anti-Spam legislation also imposes new
obligations on our operations. The adoption of new Internet
regulations could adversely affect our business.
</FONT>

<P align="left">
<B><FONT size="2">Phone Service</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1996 Telecom Act created a more favorable
regulatory environment for us to provide telecommunications
services. In particular, it limited the regulatory role of local
franchising authorities and established requirements ensuring
that we could interconnect with other telephone companies to
provide a viable service. Many implementation details remain
unresolved, and there are substantial regulatory changes being
considered that could impact, in both positive and negative
ways, our primary telecommunications competitors and our own
entry into the field of phone service. The FCC and state
regulatory authorities are considering, for example, whether
common carrier regulation traditionally applied to incumbent
local exchange carriers should be modified. The FCC recently
decided that alternative voice technologies, like certain types
of VOIP, should be regulated only at the federal level, rather
than by individual states. As the FCC generally does not favor
extensive regulation of such services, this decision appears to
be a positive development for VOIP offerings. It is unclear how
these regulatory matters ultimately will be resolved and how
they will affect our potential expansion into phone service.
</FONT>

<P align="left">
<B><FONT size="2">Pole Attachments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Communications Act requires most utilities to
provide cable systems with access to poles and conduits and
simultaneously regulates the rates charged for this access. The
Act specific that significantly higher rates apply if the cable
plant is providing telecommunications service, as well as
traditional cable service. The FCC has clarified that a cable
operator&#146;s favorable pole rates are not endangered by the
provision of Internet access. Although that determination was
upheld by the United States Supreme Court, a subsequent decision
by the United States Court of Appeals for the Ninth Circuit
regarding the proper
</FONT>

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<DIV align="left">
<FONT size="2">regulatory classification of Internet service has
once again created controversy in this area. The U.S. Supreme
Court has agreed to hear an appeal of that decision. It remains
possible that the underlying pole attachment formula, or its
application to Internet and telecommunications offerings, will
be modified in a manner that substantially increases our pole
attachment costs.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Cable Equipment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC has undertaken several steps to promote
competition in the delivery of cable equipment and compatibility
with new digital technology. The FCC has expressly ruled that
cable customers must be allowed to purchase set-top terminals
from third parties and established a multi-year phase-in during
which security functions (which would remain in the
operator&#146;s exclusive control) would be unbundled from the
basic converter functions, which could then be provided by third
party vendors. The first phase of implementation has already
passed. A prohibition on cable operators leasing digital set-top
terminals that integrate security and basic navigation functions
is currently scheduled to go into effect as of July&nbsp;1, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC recently adopted rules implementing an
agreement between major cable operators and manufacturers of
consumer electronics on &#147;plug and play&#148; specifications
for one-way digital televisions. The rules require cable
operators to provide &#147;CableCard&#148; security modules and
support to customer owned digital televisions and similar
devices already equipped with built-in set-top terminal
functionality. Cable operators must support basic home recording
rights and copy protection rules for digital programming
content. The FCC has adopted companion &#147;broadcast
flag&#148; rules, requiring cable carriage of a code embedded in
digital broadcast programming that will regulate the further use
of copyright programming.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC is conducting additional related
rulemakings, and the cable and consumer electronics industries
are currently negotiating an agreement that would establish
additional &#147;plug and play&#148; specifications for two-way
digital televisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FCC rules are subject to challenge and
inter-industry negotiations are ongoing. It is unclear how this
process will develop and how it will affect our offering of
cable equipment and our relationship with our customers.
</FONT>

<P align="left">
<B><FONT size="2">Other Communications Act Provisions and FCC
Regulatory Matters</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the Communications Act provisions
and FCC regulations noted above, there are other statutory
provisions and FCC regulations affecting our business. The
Communications Act, for example, includes cable-specific privacy
obligations. The Act carefully limits our ability to collect and
disclose personal information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">FCC regulations include a variety of additional
areas, including, among other things: (1)&nbsp;equal employment
opportunity obligations; (2)&nbsp;customer service standards;
(3)&nbsp;technical service standards; (4)&nbsp;mandatory
blackouts of certain network, syndicated and sports programming;
(5)&nbsp;restrictions on political advertising;
(6)&nbsp;restrictions on advertising in children&#146;s
programming; (7)&nbsp;restrictions on origination cablecasting;
(8)&nbsp;restrictions on carriage of lottery programming;
(9)&nbsp;sponsorship identification obligations;
(10)&nbsp;closed captioning of video programming;
(11)&nbsp;licensing of systems and facilities;
(12)&nbsp;maintenance of public files; and (13)&nbsp;emergency
alert systems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is possible that Congress or the FCC will
expand or modify its regulation of cable systems in the future,
and we cannot predict at this time how that might impact our
business. For example, there have been recent discussions about
imposing &#147;indecency&#148; restrictions directly on cable
programming.
</FONT>

<P align="left">
<B><FONT size="2">Copyright</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable systems are subject to federal copyright
licensing covering carriage of television and radio broadcast
signals. The possible modification or elimination of this
compulsory copyright license is the
</FONT>

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<DIV align="left">
<FONT size="2">subject of continuing legislative review and
could adversely affect our ability to obtain desired broadcast
programming. We cannot predict the outcome of this legislative
activity. Moreover, the Copyright Office has not yet provided
any guidance as to the how the compulsory copyright license
should apply to newly offered digital broadcast signals.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Copyright clearances for non-broadcast
programming services are arranged through private negotiations.
Cable operators also must obtain music rights for locally
originated programming and advertising from the major music
performing rights organizations. These licensing fees have been
the source of litigation in the past, and we cannot predict with
certainty whether license fee disputes may arise in the future.
</FONT>

<P align="left">
<B><FONT size="2">Franchise Matters</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cable systems generally are operated pursuant to
nonexclusive franchises granted by a municipality or other state
or local government entity in order to cross public
rights-of-way. Cable franchises generally are granted for fixed
terms and in many cases include monetary penalties for
noncompliance and may be terminable if the franchisee fails to
comply with material provisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The specific terms and conditions of cable
franchises vary materially between jurisdictions. Each franchise
generally contains provisions governing cable operations,
franchise fees, system construction, maintenance, technical
performance, and customer service standards. A number of states
subject cable systems to the jurisdiction of centralized state
government agencies, such as public utility commissions.
Although local franchising authorities have considerable
discretion in establishing franchise terms, there are certain
federal protections. For example, federal law caps local
franchise fees and includes renewal procedures designed to
protect incumbent franchisees from arbitrary denials of renewal.
Even if a franchise is renewed, however, the local franchising
authority may seek to impose new and more onerous requirements
as a condition of renewal. Similarly, if a local franchising
authority&#146;s consent is required for the purchase or sale of
a cable system, the local franchising authority may attempt to
impose more burdensome requirements as a condition for providing
its consent.
</FONT>

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<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "MANAGEMENT" -->

<P align="center">
<B><FONT size="2">MANAGEMENT</FONT></B>

<P align="left">
<B><FONT size="2">Directors and Executive Officers of
Registrant</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The persons listed below are directors of Charter.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Directors</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position(s)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Paul G. Allen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman of the board of directors
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W. Lance Conn
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan L. Dolgen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charles M. Lillis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert P. May
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David C. Merritt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marc B. Nathanson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jo Allen Patton
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John H. Tory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carl E. Vogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director, President and Chief Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Larry W. Wangberg
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following sets forth certain biographical
information as of September&nbsp;30, 2004 with respect to the
directors listed above, except in the case Mr.&nbsp;May and
Mr.&nbsp;Dolgen, whose biographical information is set forth as
of October&nbsp;21, 2004, the date that each was elected to our
board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Paul G. Allen</FONT></I><FONT size="2">, 51,
has been Chairman of our Board of Directors since July 1999, and
Chairman of the Board of Directors of Charter Investment, Inc.
(a predecessor to, and currently an affiliate of, Charter) since
December 1998. Mr.&nbsp;Allen, co-founder of Microsoft
Corporation, has been a private investor for more than
15&nbsp;years, with interests in over 50 technology,
telecommunications, content and biotech companies.
Mr.&nbsp;Allen&#146;s investments include Vulcan Inc., Vulcan
Productions, Inc., the Portland Trail Blazers NBA and Seattle
Seahawks NFL franchises, and investments in DreamWorks LLC and
Oxygen Media. In addition, Mr.&nbsp;Allen is a director of
Vulcan Programming Inc., Vulcan Ventures, Vulcan Inc., Vulcan
Cable&nbsp;III Inc., numerous privately held companies and,
until its sale in May 2004 to an unrelated third party, TechTV
L.L.C.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">W.&nbsp;Lance Conn</FONT></I><FONT size="2">,
36, was elected to our Board of Directors in September 2004.
Since July 2004, Mr.&nbsp;Conn has served as Executive Vice
President, Investment Management for Vulcan Inc., the investment
and project management company that oversees a diverse
multi-billion dollar portfolio of investments by Paul G. Allen.
Prior to joining Vulcan Inc., Mr.&nbsp;Conn was employed by
America Online, Inc., an interactive online services company,
from March 1996 to May 2003. From 1997 to 2000, Mr.&nbsp;Conn
served in various senior business development roles at America
Online. In 2000, Mr.&nbsp;Conn began supervising all of America
Online&#146;s European investments, alliances and business
initiatives. In 2002 he became Senior Vice President of American
Online U.S. where he led a company-wide effort to restructure
and optimize America Online&#146;s operations. From September
1994 until February 1996, Mr.&nbsp;Conn was an attorney with the
Shaw Pittman law firm in Washington,&nbsp;D.C. Mr.&nbsp;Conn
holds a J.D. degree from the University of Virginia, a
master&#146;s degree in history from the University of
Mississippi and an A.B. in history from Princeton University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jonathan L. Dolgen</FONT></I><FONT size="2">,
59, was elected to our Board of Directors in October 2004. Since
July 2004, Mr.&nbsp;Dolgen has been a Senior Advisor to Viacom,
Inc. (&#147;Viacom&#148;) a worldwide entertainment and media
company, where he provides advisory services to the current
Chairman and Chief Executive of Viacom, or others designated by
him, on an as requested basis. From April 1994 to July 2004,
Mr.&nbsp;Dolgen served as Chairman and Chief Executive Officer
of the Viacom Entertainment Group, a unit of Viacom, where he
oversaw various operations of Viacom&#146;s businesses, which
during 2003 and 2004 primarily included the operations engaged
in motion picture production and distribution, television
production and distribution, regional theme parks, theatrical
exhibition and publishing. Mr.&nbsp;Dolgen began his career in
the
</FONT>

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<DIV align="left">
<FONT size="2">entertainment industry in 1976 and until joining
the Viacom Entertainment Group, served in executive positions at
Columbia Pictures Industries, Inc., Twentieth Century Fox and
Fox, Inc., and Sony Pictures Entertainment. Mr.&nbsp;Dolgen
holds a B.S. degree from Cornell University and a J.D. degree
from New York University.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Charles M. Lillis</FONT></I><FONT size="2">,
62, was elected to our Board of Directors in October 2003.
Presently, he is the Managing Partner of Lone Tree Capital, a
private equity partnership he co-founded in 2002.
Mr.&nbsp;Lillis served as Chairman and Chief Executive Officer
of MediaOne Group, Inc. from June 1998 to May 2000. He served as
Chief Executive Officer of MediaOne while it was a tracking
stock company from November 1995 to May 1997. Prior to that, he
held various senior management positions at US WEST,
MediaOne&#146;s predecessor. Before joining US WEST, he served
as Dean of the University of Colorado&#146;s College of Business
and as a professor at Washington State University. In addition,
he is a director and serves on the audit committees of
SuperValu, Inc. and Williams Companies. Mr.&nbsp;Lillis is also
Chairman of the University of Washington Business Advisory
Board, a member of the University of Washington Foundation
Board, and a former member of the University of Colorado
Foundation Board. Mr.&nbsp;Lillis is a graduate of the
University of Washington, Seattle, with an M.B.A., and he holds
a doctorate of Philosophy in Business from the University of
Oregon, in Eugene.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert P. May</FONT></I><FONT size="2">, 55,
was elected to our Board of Directors in October 2004.
Mr.&nbsp;May has served on the Board of Directors of HealthSouth
Corporation, a national provider of healthcare services since
October 2002, and has been its Chairman since July 2004.
Mr.&nbsp;May also served as HealthSouth Corporation&#146;s
Interim Chief Executive Officer from March 2003 until May of
2004, and as Interim President of its Outpatient and Diagnostic
Division from August 2003 to January 2004. From March 2001 until
March 2003, Mr.&nbsp;May was principal of RPM Systems, a
strategic and private investing consulting firm. From March 1999
to March 2001, Mr.&nbsp;May served on the Board of Directors and
was Chief Executive Officer of PNV Inc., a national
telecommunications company. PNV Inc. filed for bankruptcy in
December 2000. Prior to his employment at PNV Inc., Mr.&nbsp;May
was Chief Operating Officer and a member of the Board of
Directors of Cablevision Systems Corporation from 1996 to 1998,
and from 1973 to 1993 he held several senior executive positions
with Federal Express Corporation, including President, Business
Logistics Services. Mr.&nbsp;May was educated at Curry College
and Boston College and attended Harvard Business School&#146;s
Program for Management Development.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">David C. Merritt</FONT></I><FONT size="2">,
50, was elected to our Board of Directors in July 2003, and was
also appointed as Chairman of the Audit Committee at that time.
Since October 2003, Mr.&nbsp;Merritt has been a Managing
Director of Salem Partners, LLC, an investment banking firm. He
was a Managing Director in the Entertainment Media Advisory
Group at Gerard Klauer Mattison&nbsp;&#38; Co., Inc., a company
that provides financial advisory services to the entertainment
and media industries from January 2001 through April 2003. Prior
to that, he served as Chief Financial Officer of CKE Associates,
Ltd., a privately held company with interests in talent
management, film production, television production, music and
new media from July 1999 to November 2001. He also served as a
director of Laser-Pacific Media Corporation from January 2001
until October 2003 and served as Chairman of its audit
committee. During December 2003, he became a director of Outdoor
Channel Holdings, Inc. Mr.&nbsp;Merritt joined KPMG LLP in 1975
and served in a variety of capacities during his years with the
firm, including national partner in charge of the media and
entertainment practice and before joining CKE Associates,
Mr.&nbsp;Merritt was an audit and consulting partner of KPMG LLP
for 14&nbsp;years. Mr.&nbsp;Merritt holds a B.S. degree in
Business and Accounting from California State
University&nbsp;&#151; Northridge.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Marc B. Nathanson</FONT></I><FONT size="2">,
59, has been a director of Charter since January 2000.
Mr.&nbsp;Nathanson is the Chairman of Mapleton Investments LLC,
an investment vehicle formed in 1999. He also founded and served
as Chairman and Chief Executive Officer of Falcon Holding Group,
Inc., a cable operator, and its predecessors, from 1975 until
1999. He served as Chairman and Chief Executive Officer of
Enstar Communications Corporation, a cable operator, from 1988
until November 1999. Prior to 1975, Mr.&nbsp;Nathanson held
executive positions with Teleprompter Corporation, Warner Cable
and Cypress Communications Corporation. In 1995, he was
appointed by the President of the United States to the
Broadcasting Board of Governors, and from 1998 through September
2002, served as its Chairman.
</FONT>

<P align="center"><FONT size="2">105
</FONT>

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<DIV align="left">
<FONT size="2">Mr.&nbsp;Nathanson holds a Bachelors degree in
Mass Communications from the University of Denver and a Masters
degree in Political Science from University of California/
Santa&nbsp;Barbara.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jo Allen Patton</FONT></I><FONT size="2">, 46,
has been a director of Charter since April 2004. Ms.&nbsp;Patton
joined Vulcan Inc. as Vice President in 1993, and since that
time has served as an officer and director of many affiliates of
Mr.&nbsp;Allen, including in her current position as President
and Chief Executive Officer of Vulcan Inc. since July 2001.
Vulcan Inc. is the investment and project management company
founded by Mr.&nbsp;Allen to oversee a diverse multi-billion
dollar portfolio of investments, real estate, sports teams,
entertainment and charitable projects. Ms.&nbsp;Patton is also
President of Vulcan Productions, an independent feature film and
documentary production company, Vice Chair of First&nbsp;&#38;
Goal, Inc., which developed and operates the Seattle Seahawks
NFL stadium, and serves as Executive Director of the six Paul G.
Allen Foundations. Ms.&nbsp;Patton is a co-founder of the
Experience Music Project museum, as well as the Science Fiction
Museum and Hall of Fame. Ms.&nbsp;Patton is the sister of
Mr.&nbsp;Allen.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">John H. Tory</FONT></I><FONT size="2">, 50,
has been a director of Charter since December 2001.
Mr.&nbsp;Tory served as the Chief Executive Officer of Rogers
Cable Inc., Canada&#146;s largest broadband cable operator, from
1999 until 2003. From 1995 to 1999 Mr.&nbsp;Tory was President
and Chief Executive Officer of Rogers Media Inc., a broadcasting
and publishing company. Prior to joining Rogers, Mr.&nbsp;Tory
was a Managing Partner and member of the executive committee at
Tory Tory DesLauriers&nbsp;&#38; Binnington, one of
Canada&#146;s largest law firms. Mr.&nbsp;Tory serves on the
Board of Directors of a number of Canadian companies, including
Cara Operations Limited. Mr.&nbsp;Tory was educated at
University of Toronto Schools, Trinity College (University of
Toronto) and Osgoode Hall Law School.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Carl E. Vogel</FONT></I><FONT size="2">, 46,
has been a director of Charter and its President and Chief
Executive Officer since October 2001. Mr.&nbsp;Vogel has more
than 20&nbsp;years experience in telecommunications and the
subscription television business. He was a Senior Vice President
of Liberty Media Corp. from November 1999 until October 2001,
and Chief Executive Officer of Liberty Satellite and Technology,
a distributor of Internet data and other content via satellite,
from April 2000 until October 2001. Prior to joining Liberty,
Mr.&nbsp;Vogel was an Executive Vice President and Chief
Operating Officer of Field Operations for AT&#38;T Broadband and
Internet Services with responsibility for managing operations of
all of AT&#38;T&#146;s cable broadband properties from June 1999
until November 1999. From June 1998 to June 1999, when the
business of Primestar Inc. was sold, Mr.&nbsp;Vogel served as
Chief Executive Officer of Primestar Inc., a national provider
of subscription television services, and from 1997 to 1998, he
served as Chief Executive Officer of Star Choice Communications.
From 1994 through 1997, Mr.&nbsp;Vogel served as the President
and Chief Operating Officer of EchoStar Communications. He began
his career at Jones Intercable in 1983. Mr.&nbsp;Vogel serves as
a director and member of the Executive Committee of the National
Cable&nbsp;&#38; Telecommunications Association, CableLabs and
Digeo, Inc. and serves as a director of Women in Cable and
Telecommunications. Mr.&nbsp;Vogel holds a B.S. degree in
Finance and Accounting from St. Norbert College. His employment
agreement provides that he will serve on our Board of Directors.
See &#147;&#151;&nbsp;Employment Arrangements.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Larry W. Wangberg</FONT></I><FONT size="2">,
62, has been a director of Charter since January 2002. From
August 1997 to May 2004, Mr.&nbsp;Wangberg was a director of
TechTV L.L.C., a cable television network controlled by Paul
Allen. He also served as its Chairman and Chief Executive
Officer from August 1997 through July 2002. In May 2004, TechTV
was sold to an unrelated third party. Prior to joining TechTV
L.L.C., Mr.&nbsp;Wangberg was Chairman and Chief Executive
Officer of StarSight Telecast Inc., an interactive navigation
and program guide company, which later merged with Gemstar
International, from 1994 to 1997. Mr.&nbsp;Wangberg was Chairman
and Chief Executive Officer of Times Mirror Cable Television and
Senior Vice President of its corporate parent, Times Mirror Co.,
from 1983 to 1994. He currently serves on the boards of Autodesk
Inc., and ADC Telecommunications. Mr.&nbsp;Wangberg holds a
bachelor&#146;s degree in Mechanical Engineering and a
master&#146;s degree in Industrial Engineering, both from the
University of Minnesota.
</FONT>

<P align="center"><FONT size="2">106
</FONT>

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<P align="left">
<B><FONT size="2">Director Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing in July 2003, each member of our Board
receives an annual retainer of $40,000 in cash plus restricted
stock, vesting one year after the date of grant, with a value on
the date of grant of $50,000. In addition, the Audit Committee
chair receives $25,000 per year, and the chair of each other
committee receives $10,000 per year. All committee members also
receive $1,000 for attendance at each committee meeting. Each of
our directors is entitled to reimbursement for costs incurred in
connection with attendance at Board and Committee meetings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except for Mr.&nbsp;Nathanson, directors who were
not employees did not receive additional compensation in 2002 or
the first half of 2003. Mr.&nbsp;Vogel, who was our President
and Chief Executive Officer in 2003, was the only director who
was also an employee during 2003. Mr.&nbsp;Vogel is party to an
employment agreement with Charter, which is summarized in
&#147;&#151;&nbsp;Employment Agreements.&#148; He did not
receive any additional compensation for serving as a director or
attending any meeting of the Board of Directors during 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marc B. Nathanson entered into a letter agreement
with Charter for a term that expired in November 2002. Under
this agreement, Mr.&nbsp;Nathanson served as Vice-Chairman and
as a director of Charter. During the term of this agreement,
Mr.&nbsp;Nathanson received a benefit equal to approximately
$200,000 per year, which Charter paid to a company controlled by
Mr.&nbsp;Nathanson Mr.&nbsp;Nathanson continues to hold the
title of Vice Chairman, a non-salaried non-executive position
with Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Bylaws provide that all directors are
entitled to indemnification to the maximum extent permitted by
law from and against any claims, damages, liabilities, losses,
costs or expenses incurred in connection with or arising out of
the performance by them of their duties for us or our
subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following persons are executive officers of
Charter Communications, Inc.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Executive Officers</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Paul G. Allen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carl E. Vogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Derek Chang
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President of Finance and Strategy
    and interim co-Chief Financial Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thomas A. Cullen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President of Advanced Services and
    Business Development
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wayne H. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President and Chief Technical
    Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Lovett
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President, Operations and Customer
    Care
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Paul E. Martin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Principal Accounting
    Officer and interim co-Chief Financial Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven A. Schumm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President&nbsp;&#151; Chief
    Administrative Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtis S. Shaw
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President, General Counsel and
    Secretary
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information regarding our executive officers who
do not serve as directors is set forth below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Derek Chang</FONT></I><FONT size="2">, 36,
Executive Vice President of Finance and Strategy and interim
co-Chief Financial Officer. Mr.&nbsp;Chang joined Charter in
December 2003 as Executive Vice President of Finance and
Strategy and was appointed interim co-Chief Financial Officer in
August 2004. Prior to joining us, Mr.&nbsp;Chang was Executive
Vice President of the Yankees Entertainment and Sports (YES)
Network, a regional sports programming network in New York where
he headed corporate development and financing activities from
the company&#146;s inception in 2001 until January 2003. Prior
to joining YES, he was the Chief Financial Officer and Co-Chief
Operating Officer of GlobalCenter, the web hosting subsidiary of
Global Crossing. Mr.&nbsp;Chang worked for TCI Communications/
AT&#38;T Broadband in Denver from 1997 to 2000, ultimately as
Executive Vice President of Corporate Development, where he
directed mergers and acquisitions
</FONT>

<P align="center"><FONT size="2">107
</FONT>

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<DIV align="left">
<FONT size="2">activities and managed a multi-billion dollar
portfolio of cable joint ventures. He was with InterMedia
Partners in San&nbsp;Francisco from 1994 to 1997 where he held a
number of positions and was ultimately Treasurer. Mr.&nbsp;Chang
received a B.A. degree from Yale University and an M.B.A. from
the Stanford University Graduate School of Business.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Thomas A. Cullen</FONT></I><FONT size="2">,
45, Executive Vice President of Advanced Services and Business
Development. Mr.&nbsp;Cullen joined Charter as Senior Vice
President of Advanced Services and Business Development in
August 2003 and was promoted to Executive Vice President in
August 2004. From January 2001 to October 2002, Mr.&nbsp;Cullen
was General Partner of Lone Tree Capital, a private equity
partnership focused on investment opportunities in the
technology and communications sector. From March 1997 to June
2000, Mr.&nbsp;Cullen was President of MediaOne Ventures. Prior
to that, Mr.&nbsp;Cullen served in several capacities with
MediaOne Internet Services including Vice President from April
1998 to June 2000 and Vice President of Business Development
from September 1995 to March 1997. Mr.&nbsp;Cullen is a member
of the Colorado State University Global Leadership Council. He
is also a member of the board of directors of the Cable &#38;
Telecommunications Association for Marketing (CTAM).
Mr.&nbsp;Cullen is a graduate of Northern Arizona University
with a B.S. degree in Business Administration. He earned a
Master of Business Administration from the University of
Colorado.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Wayne H. Davis</FONT></I><FONT size="2">, 50,
Executive Vice President and Chief Technical Officer. Prior to
his current position, Mr.&nbsp;Davis served as Senior Vice
President, Engineering and Technical Operations, and as
Assistant to the President/ Vice President of Management
Services, prior to that, he was Vice President of Engineering/
Operations for our National Region from December 2001. Before
joining Charter, Mr.&nbsp;Davis held the position of Vice
President of Engineering for Comcast Corporation, Inc. Prior to
that, he held various engineering positions including Vice
President of Engineering for Jones Intercable Inc. He began his
career in the cable industry in 1980. He attended the State
University of New York at Albany. Mr.&nbsp;Davis serves as an
advisory board member of Cedar Point Communications, and as a
board member of @Security Broadband Corp., a company in which
Charter owns an equity investment interest. Mr.&nbsp;Davis is
also a member of the Society of Cable Telecommunications
Engineers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael J. Lovett</FONT></I><FONT size="2">,
43, Executive Vice President, Operations and Customer Care.
Mr.&nbsp;Lovett was promoted to his current position in
September 2004. Prior to that he served as Senior Vice
President, Midwest Division Operations and as Senior Vice
President of Operations Support, since joining Charter in August
2003. Mr.&nbsp;Lovett was Chief Operating Officer of Voyant
Technologies, Inc., a voice conferencing hardware/ software
solutions provider, from December 2001 to August 2003. From
November 2000 to December 2001, he was Executive Vice President
of Operations for OneSource, Inc., a startup delivering
management/ monitoring of firewalls and virtual private
networks. Prior to that, Mr.&nbsp;Lovett was Regional Vice
President at AT&#38;T from June 1999 to November 2000 where he
was responsible for operations. Mr.&nbsp;Lovett was Senior Vice
President at Jones Intercable from October 1989 to June 1999
where he was responsible for operations in nine states.
Mr.&nbsp;Lovett began his career in cable television at Centel
Corporation where he held a number of positions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Paul E. Martin</FONT></I><FONT size="2">, 44,
Senior Vice President, Interim Co-Chief Financial Officer and
Principal Accounting Officer. Mr.&nbsp;Martin has been employed
by Charter since March 2000, when he joined the Company as Vice
President and Corporate Controller. In April 2002,
Mr.&nbsp;Martin was promoted to Senior Vice President and
Principal Accounting Officer and in August 2004 was named
interim co-Chief Financial Officer. Prior to joining us in March
2000, Mr.&nbsp;Martin was Vice President and Controller for
Operations and Logistics for Fort&nbsp;James Corporation, a
manufacturer of paper products. From 1995 to February 1999,
Mr.&nbsp;Martin was Chief Financial Officer of Rawlings Sporting
Goods Company, Inc. Mr.&nbsp;Martin received a B.S. degree with
honors in Accounting from the University of Missouri&nbsp;&#151;
St.&nbsp;Louis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Steven A. Schumm</FONT></I><FONT size="2">,
51, Executive Vice President&nbsp;&#151; Chief Administrative
Officer. Prior to joining Charter Investment, Inc. in 1998,
Mr.&nbsp;Schumm was a partner of Ernst&nbsp;&#38; Young LLP for
14&nbsp;years where he was Managing Partner of Ernst&nbsp;&#38;
Young&#146;s St.&nbsp;Louis office and a member of the
Ernst&nbsp;&#38; Young National Tax Committee. Mr.&nbsp;Schumm
joined Ernst&nbsp;&#38; Young in 1974 and served in a variety of
</FONT>

<P align="center"><FONT size="2">108
</FONT>

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<DIV align="left">
<FONT size="2">capacities during his years with the firm.
Mr.&nbsp;Schumm earned a B.S. degree in Business Administration
from Saint Louis University. Mr.&nbsp;Schumm served as our
Interim Chief Financial Officer from December 2002 to January
2004.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Curtis S. Shaw</FONT></I><FONT size="2">, 56,
Executive Vice President, General Counsel and Secretary.
Mr.&nbsp;Shaw was promoted to Executive Vice President in
October 2003. Prior to joining Charter Investment as Senior Vice
President, General Counsel and Secretary in 1997, Mr.&nbsp;Shaw
served as corporate counsel to NYNEX from 1988 through 1996.
Since 1973, Mr.&nbsp;Shaw has practiced as a corporate lawyer,
specializing in mergers and acquisitions, joint ventures, public
offerings, financings, and federal securities and antitrust law.
Mr.&nbsp;Shaw received a B.A. degree with honors in Economics
from Trinity College and a J.D. degree from Columbia University
School of Law.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Committee Interlocks and Insider
Participation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until April&nbsp;27, 2004, when Mr.&nbsp;Savoy
resigned from the board, our Compensation Committee was
comprised of Messrs.&nbsp;Allen, Savoy and Nathanson. In 2003,
Nancy Peretsman and Ronald Nelson served as the Option Plan
Committee that administered the 1999 Charter Communications
Option Plan and the Charter Communications, Inc. 2001 Stock
Incentive Plan until July 2003 when Mr.&nbsp;Nelson resigned and
was replaced by Mr.&nbsp;Merritt. Mr.&nbsp;Lillis replaced
Ms.&nbsp;Peretsman on the Option Plan Committee in July 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No member of the Compensation Committee or the
Option Plan Committee was an officer or employee of the Company
or any of its subsidiaries during 2003, except for
Mr.&nbsp;Allen who served as a non-employee chairman of the
Compensation Committee. Also, Mr.&nbsp;Nathanson was an officer
of certain of our subsidiaries prior to their acquisition by the
Company in 1999 and held the title of Vice-Chairman of the
Compensation Committee, a non-executive, non-salaried position,
in 2003. Mr.&nbsp;Allen is the 100% owner and a director of
Vulcan Inc. and certain of its affiliates, which employed
Mr.&nbsp;Savoy, one of our directors until April&nbsp;27, 2004,
as an executive officer in the past. Mr.&nbsp;Allen also was a
director of and indirectly owned 98% of TechTV, of which
Mr.&nbsp;Wangberg, one of our directors, was a director until
the sale of TechTV to an unrelated third party in May 2004.
Transactions between us and members of the Compensation
Committee are more fully described in &#147;&#151;&nbsp;Director
Compensation&#148; and in &#147;Certain Relationships and
Related Transactions&nbsp;&#151; Other Miscellaneous
Relationships.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2003, (1)&nbsp;none of our executive
officers served on the compensation committee of any other
company that has an executive officer currently serving on our
board of directors, Compensation Committee or Option Plan
Committee and (2)&nbsp;except for Carl Vogel who serves as a
director of Digeo, Inc., an entity of which Paul Allen is a
director and by virtue of his position as Chairman of the board
of directors of Digeo, Inc. is also a non-employee executive
officer, none of our executive officers served as a director of
another entity, one of whose executive officers served on our
Compensation Committee or Option Plan Committee.
</FONT>

<P align="center"><FONT size="2">109
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Executive Compensation</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;Summary Compensation
Table</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
regarding the compensation to those executive officers listed
below for services rendered for the fiscal years ended
December&nbsp;31, 2001, 2002 and 2003. These officers consist of
the Chief Executive Officer, each of the other four most highly
compensated executive officers as of December&nbsp;31, 2003, and
one other highly compensated executive officer who served during
2003 but was not an executive officer on December&nbsp;31, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Long-Term</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Compensation Award</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec. 31</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus($)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(3)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carl E. Vogel(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,345</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(14)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,639</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(16)</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">980,769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,961</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(14)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,255</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(16)</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">546,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(9)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">513,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,996</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(16)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven A. Schumm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">448,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">436,058</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">and Chief Administrative
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">402,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(10)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">165,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtis S. Shaw(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">275,782</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(17)</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President,
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">281,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">General Counsel and Secretary
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">245,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">236,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(11)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wayne H. Davis(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">581</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(18)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President,
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Engineering and Chief Technical Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Margaret A. Bellville(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">581,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">203,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,810</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(15)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,139</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(19)</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Former Executive Vice
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(12)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, Chief Operating Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stephen E. Silva(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,345</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(20)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Former Executive Vice
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(13)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President Corporate
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235,385</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">380,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(13)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347,760</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Development and Chief Technology Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes senior management bonuses for 2003 under
    the 2003 senior management incentive plan. Mr.&nbsp;Vogel&#146;s
    and Ms.&nbsp;Bellville&#146;s bonuses were determined in
    accordance with the terms of their respective employment
    agreements. The bonus amounts for Messrs.&nbsp;Vogel and Silva
    for 2001 include the value of the vested portion of grants of
    restricted stock during 2001 under our 2001 Stock Incentive
    Plan, calculated based on the fair market values of the vested
    shares on the grant date, which pursuant to the terms of the
    plan is the average of the high and low trading price on the
    grant date. These restricted stock grants made in 2001
    immediately vested as to twenty-five percent (25%) of the
    shares, with the remaining shares vesting in 36 equal monthly
    installments commencing approximately 15&nbsp;months from the
    grant date. Also, where indicated in the footnotes below, the
    bonuses for 2002 and 2001 include &#147;stay&#148; bonuses in
    the form of principal and interest forgiven under the
    employee&#146;s promissory note. In 2002, all the remaining
    principal and accrued interest on these notes was forgiven as
    provided by the terms of the notes, so that at December&nbsp;31,
    2002, these notes were no longer outstanding.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes the grants of restricted stock made
    during 2001 under the Charter Communications, Inc. 2001 Stock
    Incentive Plan, as described above. The total grant amounts
    were: (i)&nbsp;Carl E. Vogel, 50,000&nbsp;shares as of
    October&nbsp;8, 2001 and (ii)&nbsp;Stephen E. Silva,
    36,000&nbsp;shares as of October&nbsp;18, 2001. Under the terms
    of the restricted stock agreement, the employee is entitled to
    any cash and/or stock
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">110
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">dividends on the unvested restricted shares. The
    value as of the date of grant based on the closing market price
    of those shares vested immediately is disclosed in the
    &#147;Bonus&#148; column of the table. At December&nbsp;31,
    2003, based on a per share closing market price of $4.02 for
    Class&nbsp;A common stock, the total number (and value) of
    Mr.&nbsp;Vogel&#146;s outstanding unvested restricted stock was
    23,959&nbsp;shares ($96,315). Mr.&nbsp;Silva&#146;s shares of
    unvested restricted stock were cancelled upon his resignation,
    effective July&nbsp;1, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Except as noted for Mr.&nbsp;Vogel,
    Ms.&nbsp;Bellville, Mr.&nbsp;Shaw, Mr.&nbsp;Davis and
    Mr.&nbsp;Silva in notes&nbsp;16, 17,&nbsp;18, 19 and 20 below
    respectively, these amounts consist of matching contributions
    under our 401(k) plan. The 2002 amounts also include premiums
    for supplemental life insurance available to executives, and the
    2003 amounts include long-term disability available to
    executives.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Vogel became the Chief Executive Officer
    of Charter in October 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Shaw was promoted to Executive Vice
    President in October 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Davis was promoted to Senior Vice
    President, Engineering and Technical Operations in March 2003
    and to Executive Vice President and Chief Technical Officer in
    August 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Bellville became the Chief Operating
    Officer of Charter in December 2002 and terminated her
    employment, effective September&nbsp;30, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Silva terminated his employment,
    effective July&nbsp;1, 2003. See &#147;&#151;&nbsp;Employment
    Arrangements&#148; for additional information.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes: (i)&nbsp;for 2001, $171,000,
    representing the value based on the fair market value on
    October&nbsp;8, 2001, the original grant date, of
    12,500&nbsp;shares of Class&nbsp;A common stock, the vested
    portion of Mr.&nbsp;Vogel&#146;s restricted stock grant;
    (ii)&nbsp;for 2001, a one-time signing bonus of $250,000; and
    (iii)&nbsp;$330,000 and $125,000 awarded as a bonus for services
    performed in 2002 and 2001, respectively.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes a &#147;stay&#148; bonus representing
    the principal and interest forgiven under employee&#146;s
    promissory note, amounting to $363,000 and $342,000,
    respectively, for 2002 and 2001; and $225,000 and $60,000
    awarded as a bonus for services performed in 2002 and 2001,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes a &#147;stay&#148; bonus representing
    the principal and interest forgiven under employee&#146;s
    promissory note, amounting to $181,500 and $171,000,
    respectively, for 2002 and 2001; and $100,000 and $65,000
    awarded as a bonus for services performed in 2002 and 2001,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes a one-time signing bonus of $150,000
    pursuant to an employment agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes: (i)&nbsp;$116,000 for 2001,
    representing the value based on the fair market value on
    October&nbsp;18, 2001, the original grant date, of
    9,000&nbsp;shares of Class&nbsp;A common stock, the vested
    portion of Mr.&nbsp;Silva&#146;s restricted stock grant;
    (ii)&nbsp;a &#147;stay&#148; bonus representing the principal
    and interest forgiven under employee&#146;s promissory note,
    amounting to $121,000 and $114,000, respectively for 2002 and
    2001; and (iii)&nbsp;$75,000 and $150,000 awarded as a bonus for
    services performed in 2002 and 2001, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amount attributed to personal use of the
    corporate airplane in 2003 and $100,000 attributed to personal
    use and commuting in the corporate airplane in 2002 and $114,961
    for purchase of a car in 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(15)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes $26,010 attributed to personal use of
    the corporate airplane and $4,800 for car allowance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(16)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes (i)&nbsp;for 2003, $2,639 paid as
    premium for long-term disability available for executives and
    $10,000 as reimbursement for tax advisory services;
    (ii)&nbsp;for 2002, $255 paid as premiums for supplemental life
    insurance available for executives and $10,000 as reimbursement
    for tax advisory services; and (iii)&nbsp;for 2001, $7,500 as
    reimbursement for legal expenses and $1,496 for COBRA expenses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(17)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes for 2003, $2,287 attributed to personal
    use of the corporate airplane.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(18)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes for 2003, $581 attributed to personal
    use of the corporate airplane.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">111
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(19)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes for 2003, $2,955 paid as premium for
    long-term disability insurance available to executives, $5,000
    as reimbursement for tax advisory services, $7,500 for legal
    services and $93,684 paid in relation to relocation expenses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(20)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes for 2003, $128,769 paid in severance,
    $5,000 paid in matching contributions under our 401(k) plan,
    $576 paid as premium for long-term disability insurance
    available to executives.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;2003 Option
Grants</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows individual grants of
options made to individuals named in the Summary Compensation
Table during 2003. All such grants were made under the 2001
Stock Incentive Plan and the exercise price was based upon the
fair market value of the Class&nbsp;A common stock on the
respective grant dates.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Potential Realizable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value at Assumed</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Annual Rate of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Appreciation For</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Option Term(2)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted(#)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">In 2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price ($/Sh)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5%($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10%($)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carl E. Vogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10/28/13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,025,827</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,133,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Margaret A. Bellville(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven A. Schumm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12/19/13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">648,548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,643,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtis S. Shaw
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10/28/13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,711,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wayne H. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">04/29/13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571,954</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stephen E. Silva(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Options are transferable under limited
    conditions, primarily to accommodate estate planning purposes.
    These options generally vest in four equal installments
    commencing on the first anniversary following the grant date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This column shows the hypothetical gains on the
    options granted based on assumed annual compound price
    appreciation of 5% and 10% over the full ten-year term of the
    options. The assumed rates of 5% and 10% appreciation are
    mandated by the SEC and do not represent our estimate or
    projection of future prices.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Bellville&#146;s employment terminated
    on September&nbsp;30, 2004 and she received no options in 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Silva&#146;s employment terminated in
    2003 and he received no options in 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">112
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;2003 Aggregated Option
Exercises and Option Value</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for the
individuals named in the Summary Compensation Table,
(i)&nbsp;information concerning options exercised during 2003,
(ii)&nbsp;the number of shares of our Class&nbsp;A common stock
underlying unexercised options at year-end 2003, and
(iii)&nbsp;the value of unexercised &#147;in-the-money&#148;
options (i.e., the positive spread between the exercise price of
outstanding options and the market value of our Class&nbsp;A
common stock) on December&nbsp;31, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised In-the-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options at December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Money Options at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003 (#)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003 ($)(2)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise (#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carl E. Vogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,970,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,179,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">234,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">936,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Margaret A. Bellville
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">611,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">611,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven A. Schumm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">912,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">585,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtis S. Shaw
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">413,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wayne H. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">592,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stephen E. Silva
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">367,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Options granted prior to 2001 and under the 1999
    Charter Communications Option Plan, when vested, are exercisable
    for membership units of Charter Holdco which are immediately
    exchanged on a one-for-one basis for shares of our Class&nbsp;A
    common stock upon exercise of the option. Options granted under
    the 2001 Stock Incentive Plan and after 2000 are exercisable for
    shares of our Class&nbsp;A common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based on a per share market value (closing price)
    of $4.02 as of December&nbsp;31, 2003 for our Class&nbsp;A
    common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;Option/ Stock Incentive
Plans</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The Plans.</FONT></I><FONT size="2"> We have
granted stock options, restricted stock and other incentive
compensation pursuant to two plans&nbsp;&#151; the 1999 Charter
Communications Option Plan and the 2001 Stock Incentive Plan.
The 1999 Charter Communications Option Plan provided for the
grant of options to purchase membership units in Charter Holdco
to current and prospective employees and consultants of Charter
Holdco and its affiliates and to our current and prospective
non-employee directors. Membership units received upon exercise
of any options are immediately exchanged for shares of our
Class&nbsp;A common stock on a one-for-one basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2001 Stock Incentive Plan provides for the
grant of non-qualified stock options, stock appreciation rights,
dividend equivalent rights, performance units and performance
shares, share awards, phantom stock and/or shares of restricted
stock (not to exceed 3,000,000&nbsp;shares) as each term is
defined in the 2001 Stock Incentive Plan. Employees, officers,
consultants and directors of the Company and its subsidiaries
and affiliates are eligible to receive grants under the 2001
Stock Incentive Plan. Generally, options expire 10&nbsp;years
from the grant date. Unless sooner terminated by our board of
directors, the 2001 Stock Incentive Plan will terminate on
February&nbsp;12, 2011, and no option or award can be granted
thereafter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Together, the plans allow for the issuance of up
to a total of 90,000,000&nbsp;shares of our Class&nbsp;A common
stock (or units exchangeable for our Class&nbsp;A common stock).
Any shares covered by options that are terminated under the 1999
Charter Communications Option Plan will be transferred to the
2001 Stock Incentive Plan, and no new options will be granted
under the 1999 Charter Communications Option Plan. At
September&nbsp;30, 2004, 903,970&nbsp;shares had been issued
under the plans upon exercise of options, 160,645 had been
issued upon vesting of restricted stock granted under the plans,
and 2,104,978&nbsp;shares were subject to future vesting under
restricted stock agreements. Of the remaining
86,830,407&nbsp;shares covered by the plans, as of
September&nbsp;30, 2004, 28,213,409 were subject to outstanding
options (34% of which were vested) and 58,616,998 remained
eligible for future grant. Of the 58,616,998&nbsp;shares
remaining there are 6,663,600
</FONT>

<P align="center"><FONT size="2">113
</FONT>

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<DIV align="left">
<FONT size="2">performance units granted under Charter&#146;s
Long-Term Incentive Program as of September&nbsp;30, 2004, which
will be issued on the third anniversary of the date of grant
conditional upon Charter&#146;s performance against certain
financial targets approved by Charter&#146;s Board of Directors
at the time of the award.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2003, we amended the plans to authorize
the repricing of options, which could include reducing the
exercise price per share of any outstanding option, permitting
the cancellation, forfeiture or tender of outstanding options in
exchange for other awards or for new options with a lower
exercise price per share, or repricing or replacing any
outstanding options by any other method.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, the Compensation Committee of
our board of directors approved our Long-Term Incentive Program,
or LTIP, which is a program administered under the 2001 Stock
Incentive Plan. Employees of the Company and its subsidiaries
whose pay classifications exceeded a certain level were eligible
to receive stock options, and more senior level employees were
eligible to receive stock options and performance shares. Under
the LTIP, the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance units vest
on the third anniversary of the grant date and shares of
Class&nbsp;A common stock are issued, conditional upon our
performance against financial performance measures targets
established by our management and approved by the board of
directors as of the time of the award. No awards were made under
the LTIP in 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Option Plan Committee of our board of
directors administers and authorizes grants and awards under the
2001 Stock Incentive Plan to any eligible individuals. The
Option Plan Committee determines the terms of each stock option
grant, restricted stock grant or other award at the time of
grant, including the exercise price to be paid for the shares,
the vesting schedule for each option, the price, if any, to be
paid by the grantee for the restricted stock, the restrictions
placed on the shares, and the time or times when the
restrictions will lapse. The Option Plan Committee also has the
power to accelerate the vesting of any grant or extend the term
thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon a change of control of the Company, the
Option Plan Committee can shorten the exercise period of any
option, have the survivor or successor entity assume the options
with appropriate adjustments, or cancel options and pay out in
cash. If an optionee&#146;s or grantee&#146;s employment is
terminated without &#147;cause&#148; or for &#147;good
reason&#148; following a &#147;change in control&#148; (as those
terms are defined in the plans), unless otherwise provided in an
agreement, with respect to such optionee&#146;s or
grantee&#146;s awards under the plans, all outstanding options
will become immediately and fully exercisable, all outstanding
stock appreciation rights will become immediately and fully
exercisable, the restrictions on the outstanding restricted
stock will lapse, and all of the outstanding performance shares
will vest and the restrictions on all of the outstanding
performance shares will lapse as if all performance objectives
had been satisfied at the maximum level.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">February 2004 Option
Exchange.</FONT></I><FONT size="2"> In January 2004, we began an
option exchange program in which we offered employees of the
Company and its subsidiaries the right to exchange all stock
options (vested and unvested) under the 1999 Charter
Communications Option Plan and 2001 Stock Incentive Plan that
had an exercise price over $10&nbsp;per share for shares of
restricted Class&nbsp;A common stock or, in some instances,
cash. Based on a sliding exchange ratio, which varied depending
on the exercise price of an employee&#146;s outstanding options,
if exchange for tendered options, we issued to that employee
shares of restricted stock in the exchange. If, based on the
exchange ratios, an employee would have received 400 or fewer
shares of restricted stock in exchange for tendered options, we
instead paid to the employee cash in an amount equal to the
number of shares the employee would have received multiplied by
$5.00. The offer applied to options to purchase a total of
22,929,573&nbsp;shares of Class&nbsp;A common stock, or
approximately 48% of our 47,882,365 total options (vested and
unvested) issued and outstanding as of December&nbsp;31, 2003.
Participation by employees was voluntary. Those members of our
board of directors who were not also employees of the Company or
any of its subsidiaries were not eligible to participate in the
exchange offer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the closing of the exchange offer on
February&nbsp;20, 2004, we accepted for cancellation eligible
options to purchase approximately 18,137,664&nbsp;shares of our
Class&nbsp;A common stock. In exchange, we granted approximately
1,966,686&nbsp;shares of restricted stock, including 460,777
performance shares to eligible employees of the rank of senior
vice president and above, and paid a total cash amount of
approximately $4&nbsp;million (which amount includes applicable
withholding taxes) to those employees who
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">received cash rather than shares of restricted
stock. The restricted stock was granted on February&nbsp;25,
2004. Employees tendered approximately 79% of the options
eligible to be exchanged under the program.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of the stock option exchange program was
approximately $12&nbsp;million, with a 2004 cash compensation
expense of approximately $4&nbsp;million and a non-cash
compensation expense of approximately $8&nbsp;million to be
expensed ratably over the three-year vesting period of the
restricted stock issued in the exchange.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;Employment
Arrangements</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Vogel is currently employed under an
employment agreement that was signed in 2001 and terminates on
December&nbsp;31, 2005. Of the other individuals named in the
Summary Compensation Table, Ms.&nbsp;Bellville is no longer an
employee, but served until September&nbsp;30, 2004 under the
terms of an employment agreement signed in April 2003 and
Mr.&nbsp;Silva is no longer an employee, but served until July
of 2003 under the terms of an employment agreement signed in
2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Vogel is employed as President and Chief
Executive Officer, earning a base annual salary of $1,000,000
and is eligible to receive an annual bonus of up to $500,000, a
portion based on personal performance goals and a portion based
on company performance measured against criteria established by
the board with Mr.&nbsp;Vogel. Pursuant to his employment
agreement, Mr.&nbsp;Vogel was granted 3,400,000 options to
purchase Class&nbsp;A common stock and 50,000&nbsp;shares of
restricted stock under our 2001 Stock Incentive Plan. In the
February 2004 option exchange Mr. Vogel exchanged his 3,400,000
options for 340,000 shares of restricted stock and 340,000
performance shares. Mr Vogel&#146;s 50,000 restricted shares
vested 25% on the grant date, with the remainder vesting in 36
equal monthly installments beginning December 2002. The 340,000
shares of restricted stock vest over a three-year period, with
one-third of the shares vesting on each of the first three
anniversaries of the grant date. The 340,000 performance shares
vest at the end of a three-year period if certain financial
criteria are met. Mr.&nbsp;Vogel&#146;s agreement provides that
if Mr.&nbsp;Vogel is terminated without cause or if
Mr.&nbsp;Vogel terminates the agreement for good reason
(including, in the event Mr.&nbsp;Vogel is required to report,
directly or indirectly, to persons other than the board), he is
entitled to his aggregate base salary due during the remainder
of the term and full prorated benefits and bonus for the year in
which termination occurs. Mr.&nbsp;Vogel&#146;s agreement
includes a covenant not to compete for the balance of the
initial term or any renewal term, but no more than one year in
the event of termination without cause or by Mr.&nbsp;Vogel with
good reason. Mr.&nbsp;Vogel&#146;s agreement entitles him to
participate in any disability insurance, pensions or other
benefit plans afforded to employees generally or to our
executives, including our LTIP. We agreed to reimburse
Mr.&nbsp;Vogel annually for the cost of term life insurance in
the amount of $5&nbsp;million, although he declined this
reimbursement in 2001, 2002 and 2003. Mr.&nbsp;Vogel is entitled
to reimbursement of fees and dues for his membership in a
country club of his choice, which he declined in 2001, 2002 and
2003 and reimbursement for up to $10,000&nbsp;per year for tax,
legal and financial planning services. His agreement also
provides for a car and associated expenses for
Mr.&nbsp;Vogel&#146;s use. Mr.&nbsp;Vogel&#146;s agreement
provides for automatic one-year renewals and also provides that
we will cause him to be elected to our board of directors
without any additional compensation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ms.&nbsp;Bellville was employed as Executive Vice
President, Chief Operating Officer. Until her resignation in
September 2004, she was employed under an employment agreement
entered into as of April&nbsp;27, 2003, that would have
terminated on September&nbsp;1, 2007. Her annual base salary was
$625,000 and she was eligible to receive an annual bonus in an
amount to be determined by our board of directors, with a
contractual minimum for 2003 of $203,125. Commencing in 2004,
Ms.&nbsp;Bellville would have been eligible to receive a target
annual bonus equal to 100% of her base salary for the applicable
year at the discretion of the board of directors, 50% to be
based on personal performance goals and 50% to be based on
overall company performance. Under a prior offer letter dated
December&nbsp;3, 2002, Ms.&nbsp;Bellville was granted 500,000
options to purchase shares of our Class&nbsp;A common stock,
which vested 25% on the date of the grant (December&nbsp;9,
2002), with the balance to vest in 36 equal installments
commencing January 2003. Ms.&nbsp;Bellville&#146;s employment
agreement provided that if she was terminated without cause or
if she terminated the agreement for good reason (including due
to a change in control or if Ms.&nbsp;Bellville was required to
report, directly or indirectly, to persons other than the Chief
Executive Officer), we would pay
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">Ms.&nbsp;Bellville an amount equal to the
aggregate base salary due to Ms.&nbsp;Bellville during the
remainder of the term, or renewal term and a full prorated bonus
for the year in which the termination occurs, within thirty days
of termination. Ms.&nbsp;Bellville&#146;s agreement included a
covenant not to compete for the balance of the initial term or
any renewal term, but no more than one year, in the event of
termination without cause or by her with good reason. Her
agreement further provided that she was entitled to participate
in any disability insurance, pension or other benefit plan
afforded to employees generally or to our executives, including
our LTIP. Ms.&nbsp;Bellville was entitled to a monthly car
allowance and reimbursement for all business expenses associated
with the use of such car. Ms.&nbsp;Bellville&#146;s agreement
provided that she was entitled to the reimbursement of dues for
her membership in a country club of her choice, and
reimbursement for up to $5,000&nbsp;per year for tax, legal and
financial planning services. Her base salary may have been
increased at the discretion of our board of directors.
Ms.&nbsp;Bellville&#146;s agreement provided for automatic
one-year renewals.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;16, 2004, Charter entered into
an agreement with Ms.&nbsp;Bellville governing the terms and
conditions of her resignation as an officer and employee of the
Company. Under the terms of this agreement, Ms.&nbsp;Bellville
will have the right to receive 65&nbsp;weeks of base pay based
on an annual base of $625,000, plus usual compensation for all
accrued vacation and other leave time. Her options to purchase
700,000&nbsp;shares of Class&nbsp;A common stock will continue
to vest during the salary continuation period.
Ms.&nbsp;Bellville will have 60&nbsp;days after the expiration
of the salary continuation period to exercise any outstanding
vested options at the applicable exercise prices established at
each grant date. To date, Ms.&nbsp;Bellville has exercised her
options to purchase 350,000&nbsp;shares. Ms.&nbsp;Bellville is
entitled to receive relocation benefits under the Company&#146;s
current relocation policy with respect to a move to a specified
geographic area and will be provided outplacement assistance for
6&nbsp;months following the date of her separation from the
Company. Her resignation was effective September&nbsp;30, 2004.
The Agreement provided that the previously existing Employment
Agreement would terminate, except for certain ongoing
obligations on Ms.&nbsp;Bellville&#146;s part concerning
confidentiality, non-solicitation and non-disparagement. The
contractual restriction on her ability to solicit current
Charter employees does not apply to persons who, at the time of
solicitation, have not worked for Charter in the prior
6&nbsp;months and are not receiving severance from Charter. In
addition, the non-competition provisions of her Employment
Agreement were waived. Under the Agreement, Ms.&nbsp;Bellville
waived a right to any bonus or incentive plan and released the
Company from any claims arising out of or based upon any facts
occurring prior to the date of the Agreement, but the Company
will continue to provide Ms.&nbsp;Bellville certain
indemnification rights for that period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Silva was employed as Executive Vice
President&nbsp;&#151; Corporate Development and Chief Technology
Officer. Until his resignation in July 2003, he received a base
salary of $300,000 and was eligible to receive an annual bonus
of up to 50% of base, according to our Executive Bonus Policy in
accordance with past practices, and additional bonuses at the
discretion of the board. Pursuant to his employment agreement,
Mr.&nbsp;Silva received 36,000&nbsp;shares of restricted stock
under our 2001 Stock Incentive Plan. Under his agreement,
Mr.&nbsp;Silva&#146;s restricted shares vested 25% on the grant
date, with the remainder to vest in 36 equal monthly
installments beginning December 2002. Mr.&nbsp;Silva&#146;s
agreement provided that he was eligible for any disability
insurance, pension or other benefit plan offered to employees
generally or to our executives. Mr.&nbsp;Silva&#146;s agreement
also provided that, to the extent we did not provide life
insurance in an amount at least equal to the unpaid amount of
his base salary through the end of the term of his agreement, we
would continue to pay his estate an amount equal to his base
salary in installments through the end of the term.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the indemnification provisions
which apply to all employees under our bylaws, each of these
agreements provides that we will indemnify and hold harmless
each employee to the maximum extent permitted by law from and
against any claims, damages, liabilities, losses, costs or
expenses in connection with or arising out of the performance by
the applicable employee of his or her duties. Each of the above
agreements also contains confidentiality and non-solicitation
provisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Chang is employed under the terms
contained in an offer letter effective December&nbsp;2, 2003
providing for an annual base salary of $400,000 and eligibility
for an annual incentive target of 100% of the
</FONT>

<P align="center"><FONT size="2">116
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">base salary (based on a combination of personal
performance goals and overall company performance).
Mr.&nbsp;Chang is also eligible to participate in our 2001 Stock
Incentive Plan. Under this plan, Mr.&nbsp;Chang was granted
350,000 options to purchase Class&nbsp;A common stock and 50,000
restricted shares on December&nbsp;9, 2003. Mr.&nbsp;Chang is
also entitled to participate in our LTIP. Mr.&nbsp;Chang&#146;s
agreement provides that one half of each of his unvested
restricted shares would immediately vest, and one half of his
unvested options of the initial option grant would vest if
(1)&nbsp;there is a change in our current Chief Executive
Officer, (2)&nbsp;there is a change in reporting relationship to
anyone other than the Chief Executive Officer, (3)&nbsp;there is
a requirement that the employee relocate, (4)&nbsp;there is a
change of control of the Company or (5)&nbsp;if terminated
without cause. In addition, Mr.&nbsp;Chang would be entitled to
eighteen months of full severance benefits at his current
compensation rate, plus the pro rata portion of his bonus
amounts within thirty days after termination because of any of
these events.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From January&nbsp;5, 2004 until his resignation
in August 2004, Michael P. Huseby was employed as Charter&#146;s
Chief Financial Officer under the terms of a letter agreement
dated January&nbsp;5, 2004. The terms contained in such letter
agreement were essentially the same as those contained in
Mr.&nbsp;Chang&#146;s letter agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have established separation guidelines which
generally apply to all employees in situations where management
determines that an employee is entitled to severance benefits.
Severance benefits are granted solely in management&#146;s
discretion and are not an employee entitlement or guaranteed
benefit. The guidelines provide that persons employed at the
level of Senior Vice President may be eligible to receive
between six and fifteen months of severance benefits and persons
employed at the level of Executive Vice President may be
eligible to receive between nine and eighteen months of
severance benefits in the event of separation under certain
circumstances generally including the elimination of a position,
work unit or general staff reduction. Separation benefits are
contingent upon the signing of a separation agreement containing
certain provisions including a release of all claims against us.
Severance amounts paid under these guidelines are distinct and
separate from any one-time, special or enhanced severance
programs that may be approved by us from time to time.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;Limitation of Directors&#146;
Liability and Indemnification Matters</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation limits the
liability of directors to the maximum extent permitted by
Delaware law. The Delaware General Corporation Law provides that
a corporation may eliminate or limit the personal liability of a
director for monetary damages for breach of fiduciary duty as a
director, except for liability for:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;any breach of the director&#146;s duty
    of loyalty to the corporation and its stockholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;acts or omissions not in good faith or
    which involve intentional misconduct or a knowing violation of
    law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;unlawful payments of dividends or
    unlawful stock purchases or redemptions;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(4)&nbsp;any transaction from which the director
    derived an improper personal benefit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our bylaws provide that we will indemnify all
persons whom we may indemnify pursuant thereto to the fullest
extent permitted by law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the
SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have reimbursed certain of our current and
former directors, officers and employees in connection with
their defense of certain legal actions. See &#147;Certain
Relationships and Related Transactions&nbsp;&#151; Other
Miscellaneous Relationships&nbsp;&#151; Indemnification
Advances.&#148;
</FONT>

<P align="center"><FONT size="2">117
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information regarding beneficial ownership of the Company&#146;s
Class&nbsp;A common stock as of October&nbsp;31, 2004 by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each person serving as a director of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the current chief executive officer and the other
    individuals named in the Summary Compensation Table;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all persons serving as directors and officers of
    the Company, as a group;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each person known by us to own beneficially 5% or
    more of the outstanding Class&nbsp;A common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">With respect to the percentage of voting power
set forth in the following table:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each holder of Class&nbsp;A common stock is
    entitled to one vote per share;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each holder of Class&nbsp;B common stock is
    entitled to (i)&nbsp;ten votes per share of Class&nbsp;B common
    stock held by such holder and its affiliates and (ii)&nbsp;ten
    votes per share of Class&nbsp;B Common Stock for which
    membership units in Charter Holdco held by such holder and its
    affiliates are exchangeable.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unvested</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Receivable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">on Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Vested</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Issuable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Receivable on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">upon</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Voting and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Voting</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exchange or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Voting</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Power</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Convertible</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Convertible</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Conversion of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Power</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Power)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Only)(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sr. Notes</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Owned</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Units(4)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(4)(5)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(5)(6)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Paul G. Allen(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">29,126,463</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">15,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">10,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">50,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">368,318,494</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">57.18</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">92.54</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Charter Investment, Inc.(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">222,818,858</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">42.22</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Vulcan Cable&nbsp;III Inc.(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">116,313,173</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">27.61</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Carl E. Vogel
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">88,541</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">691,459</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">34,786</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">John H. Tory
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">14,182</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">15,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">40,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Marc B. Nathanson
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">389,882</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">15,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">50,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">46,382</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Charles M. Lillis(10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">11,429</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">18,416</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">David C. Merritt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">9,882</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">15,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Jo Allen Patton(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">10,977</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">W. Lance Conn(12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">19,231</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Robert P. May(13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">19,685</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Jonathan L. Dolgen(13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">19,685</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Larry W. Wangberg
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">12,882</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">15,823</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">40,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Curtis S. Shaw
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">5,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">438,416</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Steven A. Schumm(14)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">12,440</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">108,768</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">182,500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">4,638</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Wayne H. Davis
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">8,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">76,250</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">All current directors and executive officers as a
    group (17&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">29,706,951</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">1,030,050</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">1,400,916</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">88,125</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">50,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">339,132,031</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">57.51</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">92.54</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Margaret A. Bellville(15)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">375,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Stephen E. Silva(16)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">479,833</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Mark Cuban(17)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">19,000,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">6.23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Wallace R. Weitz&nbsp;&#38; Company(18)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">32,549,600</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">10.67</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">UBS Americas Inc.(19)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">19,520,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">6.4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="1">*</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares for which the named person has
    sole voting and investment power; or shared voting and
    investment power with a spouse. Does not include shares that may
    be acquired through exercise of options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes unvested shares of restricted stock
    issued under the Charter Communications, Inc. 2001 Stock
    Incentive Plan (including those issued in the February 2004
    option exchange for those eligible
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">118
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">employees who elected to participate), as to
    which the applicable director or employee has sole voting power
    but not investment power.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares of Class&nbsp;A common stock
    issuable upon exercise of options that have vested or will vest
    on or before December&nbsp;30, 2004 under the 1999 Charter
    Communications Option Plan and the 2001 Stock Incentive Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Beneficial ownership is determined in accordance
    with Rule&nbsp;13d-3 under the Exchange Act. The beneficial
    owners at September&nbsp;30, 2004 of Class&nbsp;B common stock,
    Charter Holdco membership units and convertible senior notes of
    Charter are deemed to be beneficial owners of an equal number of
    shares of Class&nbsp;A common stock because such holdings are
    either convertible into Class&nbsp;A shares (in the case of
    Class&nbsp;B shares and convertible senior notes) or
    exchangeable (directly or indirectly) for Class&nbsp;A shares
    (in the case of the membership units) on a one-for-one basis.
    Unless otherwise noted, the named holders have sole investment
    and voting power with respect to the shares listed as
    beneficially owned. An issue has arisen as to whether the
    documentation for the Bresnan transaction was correct and
    complete with regard to the ultimate ownership of the CC VIII,
    LLC membership interests following the consummation of the
    Bresnan put transaction on June&nbsp;6, 2003. See &#147;Certain
    Relationships and Related Party Transactions&nbsp;&#151;
    Transactions Arising Out of Our Organizational Structure and
    Mr.&nbsp;Allen&#146;s Investment in Charter and Its
    Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151;
    CC&nbsp;VIII.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The calculation of this percentage assumes for
    each person that:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">304,890,987&nbsp;shares of Class&nbsp;A common
    stock are issued and outstanding as of October&nbsp;31, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">50,000&nbsp;shares of Class&nbsp;B common stock
    held by Mr.&nbsp;Allen have been converted into shares of
    Class&nbsp;A common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the acquisition by such person of all shares of
    Class&nbsp;A common stock that such person or affiliates of such
    person has the right to acquire upon exchange of membership
    units in subsidiaries or conversion of Series&nbsp;A Convertible
    Redeemable Preferred Stock or 5.75% or 4.75%&nbsp;convertible
    senior notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the acquisition by such person of all shares that
    may be acquired upon exercise of options to purchase shares or
    exchangeable membership units that have vested or will vest by
    December&nbsp;30, 2004;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that none of the other listed persons or entities
    has received any shares of Class&nbsp;A common stock that are
    issuable to any of such persons pursuant to the exercise of
    options or otherwise.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;
<FONT size="2">A person is deemed to have the right to acquire
shares of Class&nbsp;A common stock with respect to options
vested under the 1999 Charter Communications Option Plan. When
vested, these options are exercisable for membership units of
Charter Holdco, which are immediately exchanged on a one-for-one
basis for shares of Class&nbsp;A common stock. A person is also
deemed to have the right to acquire shares of Class&nbsp;A
common stock issuable upon the exercise of vested options under
the 2001 Stock Incentive Plan.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The calculation of this percentage assumes that
    Mr.&nbsp;Allen&#146;s equity interests are retained in the form
    that maximizes voting power (i.e., the 50,000&nbsp;shares of
    Class&nbsp;B common stock held by Mr.&nbsp;Allen have not been
    converted into shares of Class&nbsp;A common stock; that the
    membership units of Charter Holdco owned by each of Vulcan
    Cable&nbsp;III Inc. and Charter Investment, Inc. have not been
    exchanged for shares of Class&nbsp;A common stock).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The total listed includes:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">222,818,858 membership units in Charter Holdco
    held by Charter Investment, Inc.;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">116,313,173 membership units in Charter Holdco
    held by Vulcan Cable&nbsp;III Inc.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">The listed total excludes 24,273,943&nbsp;shares
    of Class&nbsp;A common stock issuable upon exchange of units of
    Charter Holdco, which may be issuable to Charter Investment,
    Inc. (which is owned by Mr.&nbsp;Allen) as a consequence of the
    closing of his purchase of the membership interests in CC VIII,
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">119
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">LLC that were put to Mr.&nbsp;Allen and were
    purchased by him on June&nbsp;6, 2003. An issue has arisen
    regarding the ultimate ownership of such CC VIII, LLC membership
    interests following the consummation of such put transaction.
    See &#147;Certain Relationships and Related Party
    Transactions&nbsp;&#151; Transactions Arising Out of Our
    Organizational Structure and Mr.&nbsp;Allen&#146;s Investment in
    Charter and Its Subsidiaries&nbsp;&#151; Equity Put
    Rights&nbsp;&#151; CC VIII.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">The address of this person is: 505 Fifth Avenue
    South, Suite&nbsp;900, Seattle, WA 98104.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 222,818,858 membership units in Charter
    Holdco which are exchangeable for shares of Class&nbsp;B common
    stock on a one-for-one basis, which are convertible to shares of
    Class&nbsp;A common stock on a one-for-one basis. The address of
    this person is Charter Plaza, 12405 Powerscourt Drive,
    St.&nbsp;Louis, MO 63131.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 116,313,173 membership units in Charter
    Holdco which are exchangeable for shares of Class&nbsp;B common
    stock on a one-for-one basis, which are convertible to shares of
    Class&nbsp;A common stock on a one-for-one basis. The address of
    this person is: 505 Fifth Avenue South, Suite&nbsp;900, Seattle,
    WA 98104.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Lillis was granted 11,429&nbsp;shares of
    restricted Class&nbsp;A common stock on October&nbsp;3, 2003,
    which vested fully on October&nbsp;3, 2004. He was granted
    18,416&nbsp;shares of restricted Class&nbsp;A common stock on
    October&nbsp;3, 2004, which will vest fully on October&nbsp;3,
    2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Patton was appointed to the board of
    directors of the Company on April&nbsp;27, 2004 and was granted
    10,997&nbsp;shares on that date which will vest fully on
    April&nbsp;27, 2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Conn was elected to the Board of
    Directors of the Company on September&nbsp;24, 2004 and was
    granted 19,231&nbsp;shares on September&nbsp;30, 2004, which
    will vest fully on September&nbsp;30, 2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;May and Mr.&nbsp;Dolgen were elected to
    the Board of Directors of the Company on October&nbsp;21, 2004
    and were granted 19,685 shares on October&nbsp;21, 2004 which
    will fully vest on October&nbsp;21, 2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 1,000&nbsp;shares for which
    Mr.&nbsp;Schumm has shared investment and voting power.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(15)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms.&nbsp;Bellville resigned from the Company
    effective September&nbsp;30, 2004. Under the terms of her
    separation agreement, her options will continue to vest until
    December&nbsp;31, 2005, and all vested options are exercisable
    until sixty (60)&nbsp;days thereafter.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(16)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Silva&#146;s 21,000&nbsp;shares of
    unvested restricted stock were cancelled upon his resignation,
    effective July&nbsp;1, 2003. Under the terms of his severance,
    his options will continue to vest until October&nbsp;15, 2004,
    and all vested options will be exercisable until sixty
    (60)&nbsp;days thereafter.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(17)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The equity ownership reported in this table is
    based upon holder&#146;s Schedule&nbsp;13G filed with the SEC
    May&nbsp;19, 2003. The address of this person is: 5424 Deloache,
    Dallas, Texas 75220.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(18)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The equity ownership reported in this table, for
    both the named holder and its president and primary owner,
    Wallace R. Weitz, is based upon holders&#146; Schedule&nbsp;13F
    filed with the SEC on November&nbsp;5, 2004, and reflects the
    holders&#146; ownership in its capacity as an investment advisor
    and not ownership for its own account. The address of this
    person is: 1125 South 103rd&nbsp;Street, Suite&nbsp;600, Omaha,
    Nebraska 68124-6008.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(19)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The equity ownership reported in this table is
    based upon holder&#146;s Schedule&nbsp;13G filed with the SEC
    February&nbsp;19, 2004. The address of this person is: 677
    Washington Blvd., Stamford, Connecticut 06901. This person
    disclaims beneficial ownership of all of these shares. In
    addition, these shares include all of the shares described in
    footnote&nbsp;18 above.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">120
</FONT>

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<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following sets forth certain transactions in
which we are involved and in which the directors, executive
officers and affiliates of Charter or us have or may have a
material interest. The transactions fall generally into three
broad categories:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Transactions in which Mr.&nbsp;Allen has an
    interest that arise directly out of Mr.&nbsp;Allen&#146;s
    investment in Charter and Charter
    Holdco.</FONT></I><FONT size="2"> A large number of the
    transactions described below arise out of Mr.&nbsp;Allen&#146;s
    direct and indirect (through Charter Investment, Inc., or the
    Vulcan entities, each of which Mr.&nbsp;Allen controls)
    investment in Charter and its subsidiaries, as well as
    commitments made as consideration for the investments themselves.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Transactions with third party providers of
    products, services and content in which Mr.&nbsp;Allen has a
    material interest.</FONT></I><FONT size="2"> Mr.&nbsp;Allen has
    numerous investments in the areas of technology and media. We
    have a number of commercial relationships with third parties in
    which Mr.&nbsp;Allen has an interest.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Other Miscellaneous
    Transactions.</FONT></I><FONT size="2"> We have a limited number
    of transactions in which certain of the officers, directors and
    principal shareholders of Charter and its subsidiaries, other
    than Mr.&nbsp;Allen, have an interest.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A number of our debt instruments and those of our
subsidiaries require delivery of fairness opinions for
transactions with Mr.&nbsp;Allen or his affiliates involving
more than $50&nbsp;million. Such fairness opinions have been
obtained whenever required. All of our transactions with
Mr.&nbsp;Allen or his affiliates have been considered for
approval either by the board of directors of Charter or a
committee of the board of directors and, in compliance with
corporate governance requirements, all related party
transactions are considered by Charter&#146;s Audit Committee
comprised entirely of independent directors. All of our
transactions with Mr.&nbsp;Allen or his affiliates have been
deemed by the board of directors or a committee of the board of
directors to be in our best interest. Except where noted below,
we do not believe that these transactions present any unusual
risks for us that would not be present in any similar commercial
transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The chart below summarizes certain information
with respect to these transactions. Additional information
regarding these transactions is provided following the chart.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intercompany Management Arrangements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Our subsidiaries of Charter Holdco paid Charter
    approximately $69&nbsp;million, $79&nbsp;million,
    $84&nbsp;million and $65&nbsp;million for management services
    rendered in 2001, 2002 and 2003 and the nine months ended
    September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mutual Services Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter paid Charter Holdco approximately
    $51&nbsp;million, $70&nbsp;million, $73&nbsp;million and
    $54&nbsp;million for services rendered in 2001, 2002, 2003 and
    the nine months ended September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No fees were paid in 2001, 2002, 2003 or 2004,
    although total management fees payable to Charter Investment,
    Inc., exclusive of interest, were approximately $14&nbsp;million
    at December&nbsp;31, 2001 and 2002, 2003 and September&nbsp;30,
    2004.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">121
</FONT>
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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax Provisions of Charter Holdco&#146;s Operating
    Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In 2001 and 2002, the operating agreement of
    Charter Holdco allocated certain of our tax losses to entities
    controlled by Paul Allen.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Channel Access Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">At Vulcan Ventures&#146; request, we will provide
    Vulcan Ventures with exclusive rights for carriage on eight of
    our digital cable channels as partial consideration for a prior
    capital contribution of $1.3&nbsp;billion.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity Put Rights
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certain sellers of cable systems that we acquired
    were granted, or previously had, the right, as described below,
    to put to Paul Allen equity in us (in the case of Rifkin and
    Falcon), Charter Holdco (in the case of Rifkin) and CC VIII, LLC
    (in the case of Bresnan) issued to such sellers in connection
    with such acquisitions.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Funding Commitment of Vulcan Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Pursuant to a commitment letter dated
    April&nbsp;14, 2003, Vulcan Inc., which is an affiliate of Paul
    Allen, agreed to lend, under certain circumstances, or cause an
    affiliate to lend to Charter Holdings or any of its subsidiaries
    a total amount of up to $300&nbsp;million, which amount includes
    a subfacility of up to $100&nbsp;million for the issuance of
    letters of credit. In November 2003, the commitment was
    terminated. We incurred expenses to Vulcan Inc. totaling
    $5&nbsp;million in connection with the commitment prior to
    termination.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High Speed Access Corp. Asset Purchase Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In February 2002, our subsidiary purchased
    certain assets of High Speed Access for $78&nbsp;million, plus
    the delivery of 37,000&nbsp;shares of High Speed Access
    Series&nbsp;D preferred stock and certain warrants. In
    connection with the transaction, High Speed Access also
    purchased 38,000&nbsp;shares of its Series&nbsp;D preferred
    stock from Vulcan Ventures for approximately $8&nbsp;million,
    and all of Vulcan Ventures&#146; shares of High Speed Access
    common stock.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High Speed Access Corp.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In January 2002, we granted a royalty free right
    to use intellectual property purchased by Charter Communications
    Holding Company, LLC, received approximately $4&nbsp;million in
    management fees and approximately $17&nbsp;million in revenues
    and paid approximately $2&nbsp;million under agreements that
    have terminated.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">122
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">TechTV Carriage Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen William D. Savoy Larry W. Wangberg
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We recorded approximately $9&nbsp;million,
    $4&nbsp;million, $1&nbsp;million and $5&nbsp;million from TechTV
    under the Carriage Agreement in 2001, 2002, 2003 and the nine
    months ended September&nbsp;30, 2004, respectively, related to
    launch incentives as a reduction of programming expense. We paid
    TechTV approximately $0, $0.2&nbsp;million, $80,600 and
    $1&nbsp;million in 2001, 2002, 2003 and the nine months ended
    September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Oxygen Media Corporation Carriage Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid Oxygen Media approximately
    $3&nbsp;million, $6&nbsp;million, $9&nbsp;million and
    $10&nbsp;million under a carriage agreement in exchange for
    programming in 2001, 2002, 2003 and the nine months ended
    September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We recorded approximately $2&nbsp;million,
    $1&nbsp;million and $1&nbsp;million in 2002, 2003 and the nine
    months ended September&nbsp;30, 2004, respectively, from Oxygen
    Media related to launch incentives as a reduction of programming
    expense.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We hold warrants to
    purchase&nbsp;2.4&nbsp;million shares of Oxygen Media common
    stock and received the rights to receive unregistered shares of
    Oxygen Media common stock to be issued on or prior to
    February&nbsp;2, 2005 at a guaranteed fair market value of
    $34&nbsp;million. We recognized approximately $3&nbsp;million,
    $6&nbsp;million, $9&nbsp;million and $10&nbsp;million as a
    reduction of programming expense in 2001, 2002, 2003 and the
    nine months ended September&nbsp;30, 2004, respectively, in
    recognition of the guaranteed value of the investment.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Portland Trail Blazers Carriage Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid approximately $1&nbsp;million for rights
    to carry the cable broadcast of certain Trail Blazers basketball
    games in both 2001 and 2002, and approximately $135,200 in 2003
    and $73,500 for the nine months ended September&nbsp;30, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Action Sports Cable Network Carriage Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid approximately $0.4&nbsp;million and
    $1&nbsp;million for rights to carry its programming in 2001 and
    2002, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Click2learn, Inc. Software License Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid approximately $250,000, $57,100 and $0
    under the Software License Agreement in 2002, 2003 and the nine
    months ended September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">123
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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Digeo, Inc. Broadband Carriage Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen William D. Savoy Carl E. Vogel
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid Digeo approximately $0, $3&nbsp;million,
    $4&nbsp;million and $2&nbsp;million for customized development
    of the i-channels and the local content tool kit in 2001, 2002,
    2003 and the nine months ended September&nbsp;30, 2004,
    respectively. We entered into a license agreement in 2004 for
    the Digeo software that runs DVR units purchased from a third
    party. We executed a binding term sheet in 2004 for the purchase
    of up to 70,000 DVR units and a related software license, both
    subject to satisfaction of certain conditions.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">USA Networks/ Home Shopping Network
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen William D. Savoy
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">For the year ended December&nbsp;31, 2001, we
    received approximately $12&nbsp;million from USA Networks under
    the affiliation agreement and for commissions from USA Networks
    for home shopping sales generated by its customers and/or
    promotion of the Home Shopping Network. For the year ended
    December&nbsp;31, 2001, we paid USA Networks approximately
    $39&nbsp;million for cable television programming.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Viacom Networks
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Jonathan&nbsp;L. Dolgen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We are party to certain affiliation agreements
    with networks of Viacom, pursuant to which Viacom provides
    Charter with programming for distribution via our cable systems.
    For the years ended December&nbsp;31, 2001, 2002&nbsp;and
    2003&nbsp;and for the nine months ended September&nbsp;30, 2004,
    Charter paid Viacom approximately $147&nbsp;million,
    $177&nbsp;million, $188&nbsp;million and $146&nbsp;million,
    respectively, for programming, and Charter recorded as
    receivables approximately $11&nbsp;million, $5&nbsp;million,
    $5&nbsp;million and $2&nbsp;million from Viacom for launch
    incentives and marketing support for the years ended
    December&nbsp;31, 2001, 2002 and 2003 and the nine months ended
    September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ADC Telecommunications Inc
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Larry W. Wangberg
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid $759,600 and $60,100 and $263,900 to
    purchase certain access/network equipment in 2002, 2003 and the
    nine months ended September&nbsp;30, 2004, respectively.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">124
</FONT>
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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">HDNet and HDNet Movies Network
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Mark Cuban
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter Holdco is party to an agreement to carry
    two around-the-clock, high-definition networks, HDNet and HDNet
    Movies. We paid HDNet and HDNet Movies approximately $21,900 in
    2003 and $323,900 in the nine months ended September&nbsp;30,
    2004.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Office lease agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">David L. McCall
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid $117,600, $117,600, $189,200 and $43,400
    in 2001, 2002, 2003 and the nine months ended September&nbsp;30,
    2004, respectively, under an office lease agreement to a
    partnership controlled by Mr.&nbsp;McCall.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Construction Services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">David L. McCall
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In 2001, 2002 and 2003, we paid $571,600,
    $644,800 and $381,300, respectively, to a construction company
    controlled by Mr.&nbsp;McCall&#146;s brother and $462,100,
    $3&nbsp;million and $373,800, respectively, to a construction
    company controlled by Mr.&nbsp;McCall&#146;s son.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease Arrangements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Marc B. Nathanson
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">We paid approximately $127,000, $76,000 and
    $16,600 in 2001, 2002 and 2003, respectively, to companies
    controlled by Mr. Nathanson under a warehouse lease agreement
    and in 2001 we paid approximately $204,000 in rent under an
    office lease agreement and a payment of $639,000 to terminate
    such lease.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter airplane
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Howard L. Wood
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In 2001, Mr.&nbsp;Wood received a benefit of
    $118,500 for the cost of two individuals to operate an airplane
    for a company controlled by Mr.&nbsp;Wood. In addition,
    Mr.&nbsp;Wood also used Charter&#146;s airplane for occasional
    personal use in 2001, a benefit valued at $12,500 for the year
    ended December&nbsp;31, 2001.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">125
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Transaction</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Interested Related Party</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Transaction</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payment for relatives&#146; services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Howard L. Wood Jerald R. Kent Carl E. Vogel
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In 1999, one of Mr.&nbsp;Wood&#146;s daughters,
    received a bonus in the form of a three- year promissory note
    bearing interest at 7%&nbsp;per year. The amount of principal
    and interest forgiven on this note for the year ended
    December&nbsp;31, 2001, was $85,500, and the outstanding balance
    on the note was forgiven effective as of February&nbsp;22, 2002.
    Another daughter of Mr.&nbsp;Wood received approximately $70,200
    during the year ended December&nbsp;31, 2001 for event planning
    services performed by her company. In 2001, a travel agency
    owned and operated by Mr.&nbsp;Kent&#146;s mother-in-law
    received approximately $132,000 for travel arrangements made for
    Charter by her company. Since June 2003, Mr.&nbsp;Vogel&#146;s
    brother-in-law has been an employee of Charter Holdco and has
    received a salary commensurate with his position in the
    engineering department.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Replay TV Joint Venture
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter Communications Ventures received
    management fees of $1&nbsp;million for the year ended
    December&nbsp;31, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enstar Limited Partnership Systems Purchase and
    Management Services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Charter officers who were appointed by a Charter
    subsidiary (as general partner) to serve as officers of Enstar
    limited partnerships
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certain of our subsidiaries purchased certain
    assets of the Enstar Limited Partnerships for approximately
    $63&nbsp;million. We also earned approximately $2&nbsp;million,
    $1&nbsp;million, $469,300 and $0 in 2001, 2002, 2003, and the
    nine months ended September&nbsp;30, 2004, respectively, by
    providing management services to the Enstar Limited Partnerships.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Indemnification Advances
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Directors and current and former officers named
    in certain legal proceedings
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter has reimbursed certain of its current and
    former directors and executive officers a total of approximately
    $3&nbsp;million, $8&nbsp;million and $2.6&nbsp;million for costs
    incurred in connection with certain litigation matters in 2002,
    2003 and the nine months ended September&nbsp;30, 2004,
    respectively.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The following sets forth additional information
regarding the transactions summarized above.
</FONT>

<P align="left">
<B><FONT size="2">Transactions Arising Out of Our Organizational
Structure and Mr.&nbsp;Allen&#146;s Investment in Charter and
Its Subsidiaries</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As noted above, a number of our related party
transactions arise out of Mr.&nbsp;Allen&#146;s investment in
Charter and its subsidiaries, including us. Some of these
transactions are with Charter Investment, Inc. and Vulcan
Ventures (both owned 100% by Mr.&nbsp;Allen), Charter
(controlled by Mr.&nbsp;Allen) and Charter
</FONT>

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<DIV align="left">
<FONT size="2">Holdco (approximately 47% owned by us and 53%
owned by other affiliates of Mr.&nbsp;Allen). See
&#147;Summary&nbsp;&#151; Organizational Structure&#148; for
more information regarding the ownership by Mr.&nbsp;Allen and
certain of his affiliates.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Intercompany Management
    Arrangements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is a party to management arrangements
with Charter Holdco and certain of its subsidiaries. Under these
agreements, Charter provides management services for the cable
systems owned or operated by its subsidiaries. These management
agreements provide for reimbursement to Charter for all costs
and expenses incurred by it attributable to the ownership and
operation of the managed cable systems (referred to as
&#147;company expenses&#148;), plus an additional management fee
to cover additional costs incurred by Charter that are not in
the nature of company expenses (such as corporate overhead,
administration and salary expense). The management agreements
covering the CC VI and CC VII companies limit the management fee
portion payable to Charter to 5% of their respective gross
revenues. Under the arrangement covering all of our other
operating subsidiaries, there is no limit on the dollar amount
or percentage of revenues payable as management fees, except for
CC VIII, LLC, where the operating agreement limits management
fees payable to amounts allowed under the CC VIII Credit
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, the total amount paid by Charter Holdco
and all of its subsidiaries is limited to the amount necessary
to reimburse Charter for all of its expenses, costs, losses,
liabilities and damages paid or incurred by it in connection
with the performance of its services under the various
management agreements and in connection with its corporate
overhead, administration, salary expense and similar items. The
expenses subject to reimbursement include fees Charter is
obligated to pay under the mutual services agreement with
Charter Investment, Inc. Payment of management fees by
Charter&#146;s operating subsidiaries is subject to certain
restrictions under the credit facilities and indentures of such
subsidiaries and the indentures governing the Charter Holdings
public debt. If any portion of the management fee due and
payable is not paid, it is deferred by Charter and accrued as a
liability of such subsidiaries. Any deferred amount of the
management fee will bear interest at the rate of 10%&nbsp;per
year, compounded annually, from the date it was due and payable
until the date it is paid. For the years ended December&nbsp;31,
2001, 2002 and 2003 and the nine months ended September&nbsp;30,
2004, the subsidiaries of Charter Holdings paid approximately
$69&nbsp;million, $79&nbsp;million, $84&nbsp;million and
$65&nbsp;million, respectively, in management fees to Charter.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Mutual Services Agreement</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter, Charter Holdco and Charter Investment,
Inc. are parties to a mutual services agreement whereby each
party shall provide rights and services to the other parties as
may be reasonably requested for the management of the entities
involved and their subsidiaries, including the cable systems
owned by their subsidiaries all on a cost-reimbursement basis.
The officers and employees of each party are available to the
other parties to provide these rights and services, and all
expenses and costs incurred in providing these rights and
services are paid by Charter. Each of the parties will indemnify
and hold harmless the other parties and their directors,
officers and employees from and against any and all claims that
may be made against any of them in connection with the mutual
services agreement except due to its or their gross negligence
or willful misconduct. The mutual services agreement expires on
November&nbsp;12, 2009, and may be terminated at any time by any
party upon thirty days&#146; written notice to the other. For
the years ended December&nbsp;31, 2001, 2002 and 2003 and the
nine months ended September&nbsp;30, 2004, Charter paid
approximately $51&nbsp;million, $70&nbsp;million,
$73&nbsp;million and $54&nbsp;million to Charter Holdco for
services rendered pursuant to the mutual services agreement. All
such amounts are reimbursable to Charter pursuant to a
management arrangement with our subsidiaries. See
&#147;&#151;&nbsp;Intercompany Management Arrangements.&#148;
The accounts and balances related to these services eliminate in
consolidation. Charter Investment, Inc. no longer provides
services pursuant to this agreement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Previous Management Agreement with Charter
    Investment, Inc.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to November&nbsp;12, 1999, Charter
Investment, Inc. provided management and consulting services to
our operating subsidiaries for a fee equal to 3.5% of the gross
revenues of the systems then owned, plus
</FONT>

<P align="center"><FONT size="2">127
</FONT>

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<DIV align="left">
<FONT size="2">reimbursement of expenses. The balance of
management fees payable under the previous management agreement
was accrued with payment at the discretion of Charter
Investment, Inc., with interest payable on unpaid amounts. For
the years ended December&nbsp;31, 2001, 2002 and 2003, and the
nine months ended September&nbsp;30, 2004, Charter&#146;s
subsidiaries did not pay any fees to Charter Investment, Inc. to
reduce management fees payable. As of December&nbsp;31, 2001,
2002 and 2003 and September&nbsp;30, 2004, total management fees
payable by our subsidiaries to Charter Investment, Inc. were
approximately $14&nbsp;million, exclusive of any interest that
may be charged.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Charter Communications Holding Company, LLC
    Limited Liability Agreement&nbsp;&#151; Taxes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limited liability company agreement of
Charter Holdco contains special provisions regarding the
allocation of tax losses and profits among its
members&nbsp;&#151; Vulcan Cable&nbsp;III Inc., Charter
Investment, Inc. and us. In some situations, these provisions
may cause us to pay more tax than would otherwise be due if
Charter Holdco had allocated profits and losses among its
members based generally on the number of common membership
units. See &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations&nbsp;&#151;
Critical Accounting Policies and Estimates&nbsp;&#151; Income
Taxes.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Vulcan Ventures Channel Access
    Agreement</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Vulcan Ventures, an entity controlled by
Mr.&nbsp;Allen, Charter, Charter Investment and Charter Holdco
are parties to an agreement dated September&nbsp;21, 1999
granting to Vulcan Ventures the right to use up to eight of our
digital cable channels as partial consideration for a prior
capital contribution of $1.325&nbsp;billion. Specifically, at
Vulcan Ventures&#146; request, we will provide Vulcan Ventures
with exclusive rights for carriage of up to eight digital cable
television programming services or channels on each of the
digital cable systems with local and to the extent available,
national control of the digital product owned, operated,
controlled or managed by Charter or its subsidiaries now or in
the future of 550 megahertz or more. If the system offers
digital services but has less than 550 megahertz of capacity,
then the programming services will be equitably reduced. Upon
request of Vulcan Ventures, we will attempt to reach a
comprehensive programming agreement pursuant to which it will
pay the programmer, if possible, a fee per digital video
customer. If such fee arrangement is not achieved, then we and
the programmer shall enter into a standard programming
agreement. The initial term of the channel access agreement was
10&nbsp;years, and the term extends by one additional year (such
that the remaining term continues to be 10&nbsp;years) on each
anniversary date of the agreement unless either party provides
the other with notice to the contrary at least 60&nbsp;days
prior to such anniversary date. To date, Vulcan Ventures has not
requested to use any of these channels. However, in the future
it is possible that Vulcan Ventures could require us to carry
programming that is less profitable to us than the programming
that we would otherwise carry and our results would suffer
accordingly.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Equity Put Rights</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CC VIII.</FONT></I><FONT size="2"> As part of
the acquisition of the cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000, CC
VIII, Charter&#146;s indirect limited liability company
subsidiary, issued, after adjustments, 24,273,943 Class&nbsp;A
preferred membership units (collectively, the &#147;CC VIII
interest&#148;) with a value and an initial capital account of
approximately $630&nbsp;million to certain sellers affiliated
with AT&#38;T Broadband, subsequently owned by Comcast
Corporation (the &#147;Comcast sellers&#148;). While held by the
Comcast sellers, the CC VIII interest was entitled to a 2%
priority return on its initial capital account and such priority
return was entitled to preferential distributions from available
cash and upon liquidation of CC VIII. While held by the Comcast
sellers, the CC VIII interest generally did not share in the
profits and losses of CC VIII. Mr.&nbsp;Allen granted the
Comcast sellers the right to sell to him the CC VIII interest
for approximately $630&nbsp;million plus 4.5% interest annually
from February 2000 (the &#147;Comcast put right&#148;). In April
2002, the Comcast sellers exercised the Comcast put right in
full, and this transaction was consummated on June&nbsp;6, 2003.
Accordingly, Mr.&nbsp;Allen has become the holder of the CC VIII
interest, indirectly through an affiliate. Consequently, subject
to the matters referenced in the next paragraph, Mr.&nbsp;Allen
generally thereafter will be allocated his pro rata share (based
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<DIV align="left">
<FONT size="2">on number of membership interests outstanding) of
profits or losses of CC VIII. In the event of a liquidation of
CC VIII, Mr.&nbsp;Allen would be entitled to a priority
distribution with respect to the 2% priority return (which will
continue to accrete). Any remaining distributions in liquidation
would be distributed to CC V Holdings, LLC and Mr.&nbsp;Allen in
proportion to CC V Holdings, LLC&#146;s capital account and
Mr.&nbsp;Allen&#146;s capital account (which will equal the
initial capital account of the Comcast sellers of approximately
$630&nbsp;million, increased or decreased by
Mr.&nbsp;Allen&#146;s pro rata share of CC VIII&#146;s profits
or losses (as computed for capital account purposes) after
June&nbsp;6, 2003). The limited liability company agreement of
CC VIII does not provide for a mandatory redemption of the CC
VIII interest.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the CC VIII
interest following consummation of the Comcast put right.
Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead would receive the preferred equity
interests in CC VIII represented by the CC VIII interest. As
part of the last-minute changes to the Bresnan transaction
documents, a draft amended version of the Charter Holdco limited
liability company agreement was prepared, and contract
provisions were drafted for that agreement that would have
required an automatic exchange of the CC&nbsp;VIII interest for
24,273,943 Charter Holdco membership units if the Comcast
sellers exercised the Comcast put right and sold the
CC&nbsp;VIII interest to Mr.&nbsp;Allen or his affiliates.
However, the provisions that would have required this automatic
exchange did not appear in the final version of the Charter
Holdco limited liability company agreement that was delivered
and executed at the closing of the Bresnan transaction. The law
firm that prepared the documents for the Bresnan transaction
brought this matter to the attention of Charter and
representatives of Mr.&nbsp;Allen in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs.&nbsp;Merritt, Tory and Wangberg) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a &#147;scrivener&#146;s
error&#148; had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC&nbsp;VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr.&nbsp;Allen should be required to
contribute the CC&nbsp;VIII interest to Charter Holdco in
exchange for 24,273,943 Charter Holdco membership units. The
Special Committee also recommended to the board of directors of
Charter that, to the extent the contract reformation is
achieved, the board of directors should consider whether the
CC&nbsp;VIII interest should ultimately be held by Charter
Holdco or Charter Holdings or another entity owned directly or
indirectly by them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen disagrees with the Special
Committee&#146;s determinations described above and has so
notified the Special Committee. Mr.&nbsp;Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days&#146; prior notice to the other.
In addition, the Special Committee and Mr.&nbsp;Allen have
determined to utilize the Delaware Court of Chancery&#146;s
program for mediation of complex business disputes in an effort
to resolve the CC&nbsp;VIII interest dispute. If the Special
Committee and Mr.&nbsp;Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr.&nbsp;Allen and his
affiliates seeking contract reformation,
</FONT>

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<DIV align="left">
<FONT size="2">declaratory relief as to the respective rights of
the parties regarding this dispute and alternative forms of
legal and equitable relief. The ultimate resolution and
financial impact of the dispute are not determinable at this
time.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Rifkin.</FONT></I><FONT size="2"> On
September&nbsp;14, 1999, Mr.&nbsp;Allen and Charter Holdco
entered into a put agreement with certain sellers of the Rifkin
cable systems that received a portion of their purchase price in
the form of 3,006,202 Class&nbsp;A preferred membership units of
Charter Holdco. This put agreement allowed these holders to
compel Charter Holdco to redeem their Class&nbsp;A preferred
membership units at any time before September&nbsp;14, 2004 at
$1.00&nbsp;per unit, plus accretion thereon at 8%&nbsp;per year
from September&nbsp;14, 1999. Mr.&nbsp;Allen had guaranteed the
redemption obligation of Charter Holdco. These units were put to
Charter Holdco for redemption, and were redeemed on
April&nbsp;18, 2003 for a total price of approximately
$3.9&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen also was a party to a put
agreement with certain sellers of the Rifkin cable systems that
received a portion of their purchase price in the form of shares
of Class&nbsp;A common stock of Charter. Under this put
agreement, such holders have the right to sell to Mr.&nbsp;Allen
any or all of such shares of Charter&#146;s Class&nbsp;A common
stock at $19&nbsp;per share (subject to adjustments for stock
splits, reorganizations and similar events), plus interest at a
rate of 4.5%&nbsp;per year, compounded annually from
November&nbsp;12, 1999. Approximately 4.6&nbsp;million shares
were put to Mr.&nbsp;Allen under these agreements prior to their
expiration on November&nbsp;12, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Falcon.</FONT></I><FONT size="2">
Mr.&nbsp;Allen also was a party to a put agreement with certain
sellers of the Falcon cable systems (including
Mr.&nbsp;Nathanson, one of our directors) that received a
portion of their purchase price in the form of shares of
Class&nbsp;A common stock of Charter. Under the Falcon put
agreement, such holders had the right to sell to Mr.&nbsp;Allen
any or all shares of Class&nbsp;A common stock received in the
Falcon acquisition at $25.8548&nbsp;per share (subject to
adjustments for stock splits, reorganizations and similar
events), plus interest at a rate of 4.5%&nbsp;per year,
compounded annually from November&nbsp;12, 1999. Approximately
19.4&nbsp;million shares were put to Mr.&nbsp;Allen under these
agreements prior to their expiration on November&nbsp;12, 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Previous Funding Commitment of Vulcan
    Inc.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective April&nbsp;14, 2003, our subsidiary,
Charter Communications VII, LLC entered into a commitment letter
with Vulcan Inc., which is an affiliate of Paul Allen, under
which Vulcan Inc. agreed to lend, under certain circumstances,
or cause an affiliate to lend initially to Charter
Communications VII, LLC, or another subsidiary of Charter
Holdings, up to $300&nbsp;million, which amount included a
subfacility of up to $100&nbsp;million for the issuance of
letters of credit. No amounts were ever drawn under the
commitment letter. In November 2003, the commitment was
terminated. We incurred expenses to Vulcan Inc. totaling
$5&nbsp;million in connection with the commitment (including an
extension fee) prior to termination.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Allocation of Business Opportunities with
    Mr.&nbsp;Allen</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described under &#147;&#151;&nbsp;Third Party
Business Relationships in which Mr.&nbsp;Allen has an
Interest&#148; in this section, Mr.&nbsp;Allen and a number of
his affiliates have interests in various entities that provide
services or programming to our subsidiaries. Given the diverse
nature of Mr.&nbsp;Allen&#146;s investment activities and
interests, and to avoid the possibility of future disputes as to
potential business, Charter and Charter Holdco, under the terms
of their respective organizational documents, may not, and may
not allow their subsidiaries, to engage in any business
transaction outside the cable transmission business except for
the Digeo, Inc. joint venture; a joint venture to develop a
digital video recorder set-top terminal; an existing investment
in Cable Sports Southeast, LLC, a provider of regional sports
programming; as an owner of the business of Interactive
Broadcaster Services Corporation or, Chat TV, an investment in
@Security Broadband Corp., a company developing broadband
security applications; and incidental businesses engaged in as
of the closing of Charter&#146;s initial public offering in
November 1999. This restriction will remain in effect until all
of the shares of Charter&#146;s high-vote&nbsp;Class&nbsp;B
common stock have been converted
</FONT>

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<DIV align="left">
<FONT size="2">into shares of Charter Class&nbsp;A common stock
due to Mr.&nbsp;Allen&#146;s equity ownership falling below
specified thresholds.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Should Charter or Charter Holdco or any of their
subsidiaries wish to pursue, or allow their subsidiaries to
pursue, a business transaction outside of this scope, it must
first offer Mr.&nbsp;Allen the opportunity to pursue the
particular business transaction. If he decides not to pursue the
business transaction and consents to Charter or its subsidiaries
engaging in the business transaction, they will be able to do
so. In any such case, the restated certificate of incorporation
of Charter and the limited liability company agreement of
Charter Holdco would need to be amended accordingly to modify
the current restrictions on the ability of such entities to
engage in any business other than the cable transmission
business. The cable transmission business means the business of
transmitting video, audio, including telephony, and data over
cable systems owned, operated or managed by Charter, Charter
Holdco or any of their subsidiaries from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Delaware corporate law, each director of
Charter, including Mr.&nbsp;Allen, is generally required to
present to Charter, any opportunity he or she may have to
acquire any cable transmission business or any company whose
principal business is the ownership, operation or management of
cable transmission businesses, so that we may determine whether
we wish to pursue such opportunities. However, Mr.&nbsp;Allen
and the other directors generally will not have an obligation to
present other types of business opportunities to Charter and
they may exploit such opportunities for their own account.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also, conflicts could arise with respect to the
allocation of corporate opportunities between us and
Mr.&nbsp;Allen and his affiliates in connection with his
investments in businesses in which we are permitted to engage
under Charter&#146;s restated certificate of incorporation and
our limited liability company agreement. Certain of the
indentures of Charter and its subsidiaries, including the
indenture governing the original notes and the new notes,
require the applicable issuer of notes to obtain, under certain
circumstances, approval of the board of directors of Charter
and, where a transaction is valued at or in excess of
$50&nbsp;million, a fairness opinion with respect to
transactions in which Mr.&nbsp;Allen has an interest. We have
not instituted any other formal plan or arrangement to address
potential conflicts of interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restrictive provisions of the organizational
documents described above may limit our ability to take
advantage of attractive business opportunities. Consequently,
our ability to offer new products and services outside of the
cable transmission business and enter into new businesses could
be adversely affected, resulting in an adverse effect on our
growth, financial condition and results of operations.
</FONT>

<DIV>&nbsp;</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Mirror Notes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is a holding company and its principal
assets are its equity interest in Charter Holdco and certain
mirror notes payable by Charter Holdco to Charter, which have
the same principal amount and terms as those of Charter&#146;s
convertible senior notes. In 2003, Charter Holdco paid to
Charter $68&nbsp;million related to interest on the mirror
notes. In connection with our repurchase of approximately
$477&nbsp;million of our outstanding 4.75%&nbsp;senior
convertible notes due 2006 and approximately $132&nbsp;million
of our outstanding 5.75%&nbsp;senior convertible notes due 2005,
$520&nbsp;million of CCH&nbsp;II 10.25%&nbsp;senior notes were
transferred (through a series of distributions) by CCH&nbsp;II
to Charter Holdco, which in turn assigned those CCH&nbsp;II
senior notes to us in exchange for the cancellation of mirror
notes of each series having a principal amount equal to the
amount of convertible notes of that series repurchased by us. As
part of the closing of that transaction, Charter Holdco also
paid to Charter cash in the amount of $10&nbsp;million, which
represented the sum of (a)&nbsp;all accrued and unpaid interest
on the portions of the mirror notes transferred by Charter to
Charter Holdco, to, but not including, the date of the closing,
on the basis set forth in the mirror notes, (b)&nbsp;an amount
equal to the total amount of cash payable by Charter in lieu of
fractional interests in the 10.25% CCH&nbsp;II senior notes
which would have otherwise been due to the holders as a
consequence of the exchange and (c)&nbsp;the costs and expenses
relating to such transactions. In addition, in connection with
our recent sale of $862.5&nbsp;million principal amount of
5.875% convertible senior notes due 2009, Charter Holdco issued
to us mirror notes in identical principal amount in exchange for
the proceeds of that offering, purchased and pledged certain
U.S. government securities to us as security for the mirror
</FONT>

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<FONT size="2">notes (which were in turn repledged by us to the
trustee of for the benefit of holders of our 5.875% convertible
notes and which we expect to use to fund the first six interest
payments on the notes), agreed to lend common units to us, the
terms of which will, to the extent practicable, mirror the terms
of the shares offered hereby, and agreed to redeem the remaining
$588&nbsp;million principal amount of the mirror notes in
respect of our 5.75% convertible senior notes due 2005
concurrently with our December&nbsp;23, 2004 redemption of our
5.75% convertible senior notes.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Third Party Business Relationships in Which
Mr.&nbsp;Allen has an Interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As previously noted, Mr.&nbsp;Allen has extensive
investments in the areas of media and technology. We have a
number of commercial relationships with third parties in which
Mr.&nbsp;Allen has an interest. Mr.&nbsp;Allen or his affiliates
own equity interests or warrants to purchase equity interests in
various entities with which we do business or which provide us
with products, services or programming. Mr.&nbsp;Allen owns 100%
of the equity of Vulcan Ventures Incorporated and Vulcan Inc.
and is the president of Vulcan Ventures. Mr.&nbsp;Savoy serves
as a consultant to, and is a former vice president and director
of Vulcan Ventures. The various cable, media, Internet and
telephony companies in which Mr.&nbsp;Allen has invested may
mutually benefit one another. We can give no assurance, nor
should you expect, that any of these business relationships will
be successful, that we will realize any benefits from these
relationships or that we will enter into any business
relationships in the future with Mr.&nbsp;Allen&#146;s
affiliated companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen and his affiliates have made, and
in the future likely will make, numerous investments outside of
us and our business. We cannot assure you that, in the event
that we or any of our subsidiaries enter into transactions in
the future with any affiliate of Mr.&nbsp;Allen, such
transactions will be on terms as favorable to us as terms we
might have obtained from an unrelated third party.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001, Charter entered into certain of
the purchase agreements related to the AT&#38;T transactions and
in June 2001, it assigned its rights and obligations under these
contracts to certain of its subsidiaries which purchased the
assets from AT&#38;T. In August 2001, the systems acquired in
the Cable USA transaction by Charter and Charter Holdco, were
contributed through Charter Holdings to certain of its
subsidiaries, which are now our subsidiaries and which own and
operate these systems.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">High Speed Access</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">High Speed Access Corp. has been a provider of
high-speed Internet access services over cable modems. During
the period from 1997 to 2000, certain Charter entities entered
into Internet-access related service agreements, and both Vulcan
Ventures, an entity owned by Mr.&nbsp;Allen, and Charter Holdco
made equity investments in High Speed Access.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2002, our subsidiary, CC
Systems, purchased from High Speed Access the contracts and
associated assets, and assumed related liabilities, that served
our customers, including a customer contact center, network
operations center and provisioning software. At the closing,
certain of our subsidiaries paid $78&nbsp;million to High Speed
Access and delivered 37,000&nbsp;shares of High Speed
Access&#146;s Series&nbsp;D convertible preferred stock and all
of the warrants to buy High Speed Access common stock owned by
Charter Holdco (which had been acquired pursuant to two network
services agreements which were cancelled in connection with this
transaction, as described below), and High Speed Access
purchased 38,000&nbsp;shares of its Series&nbsp;D Preferred
Stock from Vulcan Ventures for $8&nbsp;million. Additional
purchase price adjustments were made as provided in the asset
purchase agreement. Charter Holdco obtained a fairness opinion
from a qualified investment-banking firm regarding the valuation
of the assets purchased. Concurrently with the closing of the
transaction, High Speed Access also purchased all of its common
stock held by Vulcan Ventures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In conjunction with the High Speed Access asset
purchase, on February&nbsp;28, 2002, Charter Communications
Holding Company granted High Speed Access the right to use
certain intellectual property sold by High Speed Access to
Charter Holdco. High Speed Access does not pay any fees under
the agreement. The domestic portion of the license terminated on
June&nbsp;30, 2002, and the international portion of the license
will expire on February&nbsp;2, 2005. Prior to closing the asset
purchase, Charter
</FONT>

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<FONT size="2">performed certain management services formerly
performed by High Speed Access, for which it received
approximately $4&nbsp;million in January and February 2002.
Concurrently with the asset purchase, all of the other
agreements between Charter Holdco and High Speed Access Corp.
(other than the license agreement described above), namely the
programming content agreement, the services agreement, the
systems access agreement, the 1998&nbsp;network services
agreement and the May 2000&nbsp;network services agreement, were
terminated. The revenues we earned from High Speed Access for
the year ended December&nbsp;31, 2002 were approximately
$17&nbsp;million. In addition, for the year ended
December&nbsp;31, 2002, we paid High Speed Access approximately
$2&nbsp;million under the 1998&nbsp;network services agreement
and the 2000&nbsp;network services agreement, representing a per
customer fee to High Speed Access according to agreed pricing
terms and compensation for services exceeding certain minimum
thresholds.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately prior to the asset purchase, Vulcan
Ventures beneficially owned approximately 37%, and Charter
Holdco and its subsidiaries beneficially owned approximately
13%, of the common stock of High Speed Access (including the
shares of common stock which could be acquired upon conversion
of the Series&nbsp;D preferred stock, and upon exercise of the
warrants owned by Charter Holdco). Following the consummation of
the asset purchase, neither Charter Holdco nor Vulcan Ventures
beneficially owned any securities of, or were otherwise
affiliated with, High Speed Access.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;12, 2000, Charter entered into a
five-year network services agreement with High Speed Access,
which was assigned by Charter Communications, Inc. to Charter
Holdco on August&nbsp;1, 2000. With respect to each system
launched or intended to be launched, we paid a per customer fee
to High Speed Access according to agreed pricing terms. In
addition, we compensated High Speed Access for services
exceeding certain minimum thresholds. For the year ended
December&nbsp;31, 2001, we paid High Speed Access approximately
$13&nbsp;million under this agreement and a 1998&nbsp;network
services agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, Charter Holdco was a party to a systems
access and investment agreement with Vulcan Ventures and High
Speed Access and a related network services agreement with High
Speed Access. These agreements provided High Speed Access with
exclusive access to certain of our homes passed. The term of the
network services agreement was, as to a particular cable system,
five years from the date revenue billing commenced for that
cable system. The programming content agreement provided each of
Vulcan Ventures and High Speed Access with a license to use
certain content and materials of the other on a non-exclusive,
royalty-free basis. The revenues we earned from High Speed
Access for the year ended December&nbsp;31, 2001 were
approximately $8&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the above described transactions, we also
earned certain warrants to purchase High Speed Access stock.
These warrants were cancelled in February 2002 in connection
with the asset purchase described above. As a result of the
transaction with High Speed Access described above, we neither
paid to, nor received, any amounts from High Speed Access in
2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">TechTV, Inc.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TechTV, Inc. (&#147;TechTV&#148;) operated a
cable television network that offered programming mostly related
to technology. Pursuant to an affiliation agreement that
originated in 1998 and that terminates in 2008, TechTV has
provided us with programming for distribution via its cable
systems. The affiliation agreement provides, among other things,
that TechTV must offer Charter certain terms and conditions that
are no less favorable in the affiliation agreement than are
given to any other distributor that serves the same number of or
fewer TechTV viewing customers. Additionally, pursuant to the
affiliation agreement, we were entitled to incentive payments
for channel launches through December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2004, Charter Holdco entered into
agreements with Vulcan Programming and TechTV, which provide for
(i)&nbsp;Charter Holdco and TechTV to amend the affiliation
agreement which, among other things, revises the description of
the TechTV network content, provides for Charter Holdco to waive
certain claims against TechTV relating to alleged breaches of
the affiliation agreement and provides for TechTV to make
payment of outstanding launch receivables due to Charter Holdco
under the affiliation agreement, (ii)&nbsp;Vulcan Programming to
pay approximately $10&nbsp;million and purchase over a 24-month
period, at fair market rates, $2&nbsp;million of advertising
time across various cable networks on Charter cable
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">systems in consideration of the agreements,
obligations, releases and waivers under the agreements and in
settlement of the aforementioned claims and (iii)&nbsp;TechTV to
be a provider of content relating to technology and video gaming
for Charter&#146;s interactive television platforms through
December&nbsp;31, 2006 (exclusive for the first year). For the
years ended December&nbsp;31, 2001, 2002 and 2003 and the nine
months ended September&nbsp;30, 2004, we recognized
approximately $9&nbsp;million, $4&nbsp;million, $1&nbsp;million
and $5&nbsp;million, respectively, of the Vulcan Programming
payment as an offset to programming expense and paid
approximately $0, $0.2&nbsp;million, $80,600 and
$1&nbsp;million, respectively, to TechTV under the affiliation
agreement.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that Vulcan Programming, which is 100%
owned by Mr.&nbsp;Allen, owned an approximate 98% equity
interest in TechTV at the time of the transaction. Until
September 2003, Mr.&nbsp;Savoy, a former Charter director, was
the president and director of Vulcan Programming and was a
director of TechTV. Mr.&nbsp;Wangberg, one of Charter&#146;s
directors, was the chairman, chief executive officer and a
director of TechTV. Mr.&nbsp;Wangberg resigned as the chief
executive officer of TechTV in July 2002. He remained a director
of TechTV along with Mr.&nbsp;Allen until Vulcan Programming
sold TechTV to an unrelated third party in May 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Oxygen Media Corporation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Oxygen Media LLC (&#147;Oxygen&#148;) provides
programming content aimed at the female audience for
distribution over cable systems and satellite. On July&nbsp;22,
2002, Charter Holdco entered into a carriage agreement with
Oxygen, whereby we agreed to carry programming content from
Oxygen. Under the carriage agreement, we currently make Oxygen
programming available to approximately 5&nbsp;million of our
video customers. The term of the carriage agreement was
retroactive to February&nbsp;1, 2000, the date of launch of
Oxygen programming by us, and runs for a period of five years
from that date. For the years ended December&nbsp;31, 2001, 2002
and 2003 and the nine months ended September&nbsp;30, 2004, we
paid Oxygen approximately $3&nbsp;million, $6&nbsp;million,
$9&nbsp;million and $10&nbsp;million, respectively, for
programming content. In addition, Oxygen pays us marketing
support fees for customers launched after the first year of the
term of the carriage agreement up to a total of $4&nbsp;million.
We recorded approximately $2&nbsp;million, $1&nbsp;million and
$1&nbsp;million related to these launch incentives as a
reduction of programming expense for each of the years ended
December&nbsp;31, 2002 and 2003 and the nine months ended
September&nbsp;30, 2004, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Concurrently with the execution of the carriage
agreement, Charter Holdco entered into an equity issuance
agreement pursuant to which Oxygen&#146;s parent company, Oxygen
Media Corporation (&#147;Oxygen Media&#148;), granted a
subsidiary of Charter Holdco a warrant to
purchase&nbsp;2.4&nbsp;million shares of Oxygen Media common
stock for an exercise price of $22.00&nbsp;per share. Charter
Holdco was also to receive unregistered shares of Oxygen Media
common stock with a guaranteed fair market value on the date of
issuance of $34&nbsp;million, on or prior to February&nbsp;2,
2005, with the exact date to be determined by Oxygen Media.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recognize the guaranteed value of the
investment over the life of the carriage agreement as a
reduction of programming expense. For the years ended
December&nbsp;31, 2001, 2002 and 2003 and the nine months ended
September&nbsp;30, 2004, we recorded approximately
$3&nbsp;million, $6&nbsp;million, $9&nbsp;million and
$10&nbsp;million, respectively, as a reduction of programming
expense. The carrying value of our investment in Oxygen was
approximately $4&nbsp;million, $10&nbsp;million,
$19&nbsp;million and $29&nbsp;million as of December&nbsp;31,
2001, 2002, 2003 and September&nbsp;30, 2004, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, Charter Holdco and Oxygen entered
into agreements that amend and renew the carriage agreement. The
amendment to the carriage agreement (a)&nbsp;revises the number
of our customers to which Oxygen programming must be carried and
for which we must pay, (b)&nbsp;releases Charter Holdco from any
claims related to the failure to achieve distribution benchmarks
under the carriage agreement, (c)&nbsp;requires Oxygen to make
payment on outstanding receivables for marketing support fees
due to us under the affiliation agreement; and (d)&nbsp;requires
that Oxygen provide its programming content to us on economic
terms no less favorable than Oxygen provides to any other cable
or satellite operator having
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">fewer subscribers than us. The renewal of the
carriage agreement (a)&nbsp;extends the period that we will
carry Oxygen programming to our customers through
January&nbsp;31, 2008, and (b)&nbsp;requires license fees to be
paid based on customers receiving Oxygen programming, rather
than for specific customer benchmarks.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, Charter Holdco and Oxygen also
amended the equity issuance agreement to provide for the
issuance of 1&nbsp;million shares of Oxygen Preferred Stock with
a liquidation preference of $33.10&nbsp;per share plus accrued
dividends to Charter Holdco on February&nbsp;1, 2005 in place of
the $34&nbsp;million of unregistered shares of Oxygen Media
common stock. The preferred stock is convertible into common
stock after December&nbsp;31, 2007 at a conversion ratio, the
numerator of which is the liquidation preference and the
denominator which is the fair market value per share of Oxygen
Media common stock on the conversion date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, through Vulcan
Programming, Mr.&nbsp;Allen owned an approximate 31% interest in
Oxygen assuming no exercises of outstanding warrants or
conversion or exchange of convertible or exchangeable securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marc Nathanson has an indirect beneficial
interest of less than 1% in Oxygen.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Portland Trail Blazers and Action Sports
    Cable Network</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;7, 1996, the former owner of our
Falcon cable systems entered into a letter agreement and a cable
television agreement with Trail Blazers Inc. for the cable
broadcast in the metropolitan area surrounding Portland, Oregon
of pre-season, regular season and playoff basketball games of
the Portland Trail Blazers, a National Basketball Association
basketball team. Mr.&nbsp;Allen is the 100% owner of the
Portland Trail Blazers and Trail Blazers Inc. After the
acquisition of the Falcon cable systems in November 1999, we
continued to operate under the terms of these agreements until
their termination on September&nbsp;30, 2001. Under the letter
agreement, Trail Blazers Inc. was paid a fixed fee for each
customer in areas directly served by the Falcon cable systems.
Under the cable television agreement, we shared subscription
revenues with Trail Blazers Inc. For the years ended
December&nbsp;31, 2001, 2002 and 2003 and the nine months ended
September&nbsp;30, 2004, we paid approximately $1&nbsp;million,
$1&nbsp;million, $135,200 and $73,500, respectively, in
connection with the cable broadcast of Portland Trail Blazers
basketball games under the October 1996 cable television
agreement and subsequent local cable distribution agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;1, 2001, Charter Holdco and Action
Sports Cable Network (&#147;Action Sports&#148;), which is 100%
owned by Mr.&nbsp;Allen, entered into a new carriage agreement
for a five-year term, which became effective on October&nbsp;1,
2001 with the expiration of the previous agreement. Under the
July 2001 carriage agreement, Charter Holdco pays Action Sports
a fixed fee for each customer receiving the Action Sports
programming, which covers sporting events in the Pacific
Northwest, including the Portland Trail Blazers, the Seattle
Seahawks, a National Football League football team, and the
Portland Fire, a Women&#146;s National Basketball Association
basketball team. On November&nbsp;5, 2002, Action Sports, which
is 100% owned by Mr.&nbsp;Allen, announced that it was
discontinuing its business following its failure to obtain an
acceptable carriage agreement with AT&#38;T Cable, the cable
television provider in Portland, Oregon. Action Sports service
was terminated on November&nbsp;5, 2002 and Charter Holdco
ceased carriage of the service. For the years ended
December&nbsp;31, 2001 and 2002, we paid Action Sports
approximately $0.4&nbsp;million and $1&nbsp;million,
respectively, for rights to carry its programming. We believe
that the failure of this network will not materially affect our
business or results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Click2learn</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdco executed a Software License
Agreement with Click2learn, Inc. (&#147;Click2learn&#148;)
effective September&nbsp;30, 2002. Since October 1999, Charter
Holdco has purchased professional services, software and
maintenance from Click2learn, a company which provides
enterprise software for organizations seeking to capture, manage
and disseminate knowledge throughout their extended enterprise.
As of December&nbsp;31, 2003, Mr.&nbsp;Allen owned an
approximate 21% interest in Click2learn through
616,120&nbsp;shares held of record by Vulcan Ventures and
387,096&nbsp;shares issuable upon exercise of a warrant issued
to Vulcan Ventures. Mr.&nbsp;Allen owns 100% of Vulcan Ventures.
For the years ended December&nbsp;31,
</FONT>

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<DIV align="left">
<FONT size="2">2002 and 2003 and the nine months ended
September&nbsp;30, 2004, we paid approximately $250,000, $57,100
and $0, respectively, to Click2learn.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Digeo, Inc.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;2, 2001, a subsidiary of Charter,
Charter Communications Ventures, LLC (&#147;Charter
Ventures&#148;) entered into a broadband carriage agreement with
Digeo Interactive, LLC (&#147;Digeo Interactive&#148;), a wholly
owned subsidiary of Digeo, Inc. (&#147;Digeo&#148;), an entity
controlled by Paul Allen. The carriage agreement provided that
Digeo Interactive would provide to Charter a &#147;portal&#148;
product, which would function as the television-based Internet
portal (the initial point of entry to the Internet) for
Charter&#146;s customers who received Internet access from
Charter. The agreement term was for 25&nbsp;years and Charter
agreed to use the Digeo portal exclusively for six years. Before
the portal product was delivered to Charter, Digeo terminated
development of the portal product.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;27, 2001, Charter and Digeo
Interactive amended the broadband carriage agreement. According
to the amendment, Digeo Interactive would provide to Charter the
content for enhanced &#147;Wink&#148; interactive television
services, known as Charter Interactive Channels
(&#147;i-channels&#148;). In order to provide the i-channels,
Digeo Interactive sublicensed certain Wink technologies to
Charter. Charter is entitled to share in the revenues generated
by the i-channels. Currently, our digital video customers who
receive i-channels receive the service at no additional charge.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;28, 2002, Charter entered into
a second amendment to its broadband carriage agreement with
Digeo Interactive. This amendment supersedes the amendment of
September&nbsp;27, 2001. It provides for the development by
Digeo Interactive of future features to be included in the Basic
i-TV service provided by Digeo and for Digeo&#146;s development
of an interactive &#147;toolkit&#148; to enable Charter to
develop interactive local content. Furthermore, Charter may
request that Digeo Interactive manage local content for a fee.
The amendment provides for Charter to pay for development of the
Basic i-TV service as well as license fees for customers who
receive the service, and for Charter and Digeo to split certain
revenues earned from the service. In 2001, 2002, 2003 and the
nine months ended September&nbsp;30, 2004, we paid Digeo
Interactive approximately $0, $3&nbsp;million, $4&nbsp;million
and $2&nbsp;million, respectively, for customized development of
the i-channels and the local content tool kit. We received no
revenues under the broadband carriage agreement in 2003. This
amendment expired pursuant to its terms on December&nbsp;31,
2003. Digeo Interactive is continuing to provide the Basic i-TV
service on a month-to-month basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2003, Charter Holdco entered
into an agreement with Motorola, Inc. for the purchase of
100,000 digital video recorder (&#147;DVR&#148;) units. The
software for these DVR units is being supplied by Digeo
Interactive, LLC (&#147;Digeo Interactive&#148;), a wholly owned
subsidiary of Digeo, Inc. (&#147;Digeo&#148;), under a license
agreement entered into in April 2004. Under the license
agreement Digeo Interactive granted to Charter Holdco the right
to use Digeo&#146;s proprietary software for the number of DVR
units that Charter deploys from a maximum of 10 headends through
year-end 2004. This maximum number of headends was increased
from 10 to 15 pursuant to a letter agreement executed on
June&nbsp;11, 2004 and was increased again from 15 to 20
pursuant to a second letter agreement dated August&nbsp;4, 2004.
The license granted for each unit deployed under the agreement
is valid for five years. In addition, Charter will pay certain
other fees including a per-headend license fee and maintenance
fees. Total license and maintenance fees during the term of the
agreement are expected to be approximately $3&nbsp;million. The
agreement provides that Charter is entitled to receive contract
terms, considered on the whole, and license fees, considered
apart from other contract terms, no less favorable than those
accorded to any other Digeo customer. In April 2004, the Company
launched DVR service utilizing the Digeo proprietary software in
its Rochester, Minnesota market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2004, Charter Holdco entered into a
binding term sheet with Digeo Interactive for the purchase of
70,000 Digeo PowerKey DVR units. The term sheet provides that
the parties will proceed in good faith to negotiate, prior to
year-end 2004, definitive agreements for the purchase of the DVR
units and that the parties will enter into a license agreement
for Digeo&#146;s proprietary software on terms substantially
similar to the terms of the license agreement described above.
Total purchase price and
</FONT>

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<DIV align="left">
<FONT size="2">license and maintenance fees during the term of
the definitive agreements are expected to be approximately
$40&nbsp;million. The term sheet and any definitive agreements
will be terminable at no penalty to Charter in certain
circumstances.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2004, we launched DVR service in our
Rochester, Minnesota market using a broadband media center that
is an integrated set-top terminal with a cable converter, DVR
hard drive and connectivity to other consumer electronics
devices (such as stereos, MP3 players, and digital cameras).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter and Digeo entered into a letter agreement
effective September&nbsp;28, 2004 amending the April 2004
license agreement to reduce certain fees payable to Digeo by
Charter and to increase the maximum number of headends in which
Charter has the right to deploy the DVR units from a maximum of
20 by year end 2004, to a maximum of 30 by June&nbsp;30, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, Charter Ventures and Vulcan
Ventures Incorporated formed DBroadband Holdings, LLC for the
sole purpose of purchasing equity interests in Digeo. In
connection with the execution of the broadband carriage
agreement, DBroadband Holdings, LLC purchased an equity interest
in Digeo funded by contributions from Vulcan Ventures
Incorporated. The equity interest is subject to a priority
return of capital to Vulcan Ventures up to the amount
contributed by Vulcan Ventures on Charter Ventures&#146; behalf.
Charter Ventures has a 100% profit interest in DBroadband
Holdings, LLC. Vulcan Ventures also agreed to make, through
January&nbsp;24, 2004, certain additional contributions through
DBroadband Holdings, LLC to acquire additional equity in Digeo
as necessary to maintain Charter Ventures&#146; pro rata
interest in Digeo in the event of certain future Digeo equity
financings by the founders of Digeo. These additional equity
interests are also subject to a priority return of capital to
Vulcan Ventures up to amounts contributed by Vulcan Ventures on
Charter Ventures&#146; behalf. DBroadband Holdings, LLC is
therefore not included in our consolidated financial statements.
Pursuant to an amended version of this arrangement, in 2003,
Vulcan Ventures contributed a total of $29&nbsp;million to
Digeo, $7&nbsp;million of which was contributed on Charter
Ventures&#146; behalf, subject to Vulcan Ventures&#146;
aforementioned priority return. Since the formation of
DBroadband Holdings, LLC, Vulcan Ventures has contributed
approximately $224&nbsp;million to Digeo, of which approximately
$56&nbsp;million was contributed on Charter Ventures&#146;
behalf.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that Vulcan Ventures, an entity
controlled by Mr.&nbsp;Allen, owns an approximate 67% equity
interest in Digeo, Inc., on a fully-converted basis.
Messrs.&nbsp;Allen and Vogel are directors of Digeo.
Mr.&nbsp;Vogel owns options to purchase&nbsp;10,000&nbsp;shares
of Digeo common stock.
</FONT>

<P align="left">
<B><FONT size="2">Other Miscellaneous Relationships</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Viacom Networks</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to certain affiliation agreements with
networks of Viacom,&nbsp;Inc. (&#145;Viacom&#145;), including
MTV, MTV2, Nickelodeon, VH1, TVLand, CMT, Spike&nbsp;TV, Comedy
Central, Viacom Digital Suite, CBS-owned and operated broadcast
stations, Showtime, The Movie Channel, and Flix, Viacom provides
Charter with programming for distribution via our cable systems.
The affiliation agreements provide for, among other things,
rates and terms of carriage, advertising on the Viacom networks,
which Charter can sell to local advertisers and marketing
support. For the years ended December&nbsp;31, 2001, 2002 and
2003 and the nine months ended September&nbsp;30, 2004, Charter
paid Viacom approximately $147&nbsp;million, $177&nbsp;million,
$188&nbsp;million and $146&nbsp;million, respectively, for
programming. Charter recorded approximately $11&nbsp;million,
$5&nbsp;million, $5&nbsp;million and $2&nbsp;million as
receivables from Viacom networks related to launch incentives
for certain channels and marketing support, respectively, for
the years ended December&nbsp;31, 2001, 2002 and 2003 and the
nine months ended September&nbsp;30, 2004. Mr.&nbsp;Dolgen is a
Senior Advisor to Viacom, and from April&nbsp;1994 to
July&nbsp;2004, served as Chairman and Chief Executive Officer
of the Viacom Entertainment Group.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">ADC Telecommunications Inc.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter and Charter Holdco purchase certain
equipment for use in our business from ADC Telecommunications,
which provides broadband access and network equipment.
Mr.&nbsp;Wangberg serves as a
</FONT>

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<DIV align="left">
<FONT size="2">director for ADC Telecommunications. For the
years ended December&nbsp;31, 2002 and 2003 and the nine months
ended September&nbsp;30, 2004, we paid $759,600, $60,100 and
$263,900, respectively, to ADC Telecommunications under this
arrangement.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">HDNet and HDNet Movies
    Network</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;10, 2003 we signed an agreement
to carry two around-the-clock, high-definition networks, HDNet
and HDNet Movies. HDNet Movies delivers a commercial-free
schedule of full-length feature &#209;lms converted from 35mm to
high-definition, including titles from an extensive library of
Warner Bros. Films. HDNet Movies will feature a mix of
theatrical releases, made-for-TV movies, independent films and
shorts. The HDNet channel features a variety of HDTV
programming, including live sports, sitcoms, dramas, action
series, documentaries, travel programs, music concerts and
shows, special events, and news features including the popular
HDNet World Report. HDNet also offers a selection of classic and
recent television series. We paid HDNet and HDNet Movies
approximately $21,900 in 2003 and $323,900 for the nine months
ended September&nbsp;30, 2004. We believe that entities
controlled by Mr.&nbsp;Cuban owned approximately 81% of HDNet as
of September&nbsp;30, 2004. As of September&nbsp;30, 2004, we
believe that Mark Cuban, co-founder and president of HDNet,
owned approximately 19,000,000 shares, or 6.2% of the total
common equity in Charter based on a Schedule&nbsp;13G filed with
the SEC on May&nbsp;19, 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Affiliate Leases and
    Agreements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">David L. McCall, who served as Senior Vice
President&nbsp;&#151; Operations&nbsp;&#151; Eastern Division
during 2002 and January 2003, is a partner in a partnership that
leases office space to us under a lease agreement, which expires
December&nbsp;31, 2010. The partnership received approximately
$117,600, $117,600, $189,200 and $43,400 pursuant to such lease
and related agreements for the years ended December&nbsp;31,
2001, 2002, 2003 and the nine months ended September&nbsp;30,
2004, respectively. In addition, during 2001, 2002 and 2003, we
paid approximately $571,600, $644,800 and $381,300,
respectively, for construction services to a construction
company controlled by Mr.&nbsp;McCall&#146;s brother under a
construction agreement that expired on December&nbsp;31, 2003.
We also paid approximately $462,100, $3&nbsp;million and
$373,800 during 2001, 2002 and 2003, respectively, for
construction services to a construction company controlled by
Mr.&nbsp;McCall&#146;s son under several agreements, the last of
which expired January&nbsp;31, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Companies controlled by Mr.&nbsp;Nathanson, a
director of Charter, leased certain office space in Pasadena,
California, and warehouse space in Riverside, California, to our
subsidiaries. For the Pasadena office lease, which Charter
terminated in April 2001 in exchange for a payment of $639,000,
total rent of $204,000 was paid from January&nbsp;1, 2001 to
April 2001. For the years ended December&nbsp;31, 2001, 2002 and
2003, total rent paid for the Riverside warehouse space was
approximately $127,000, $76,000 and $16,600, respectively, under
a lease agreement which expired March&nbsp;15, 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Charter Airplane</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Howard L. Wood resigned as a director of Charter
in December 2001. In 2001, the benefit to a company controlled
by Mr.&nbsp;Wood that owned an airplane for the full annual cost
of two individuals qualified to operate the plane, who were
otherwise available to Charter in connection with its own flight
operations, was approximately $118,500 for annual compensation
to the pilots. Charter was entitled to reimbursement for these
amounts. In addition, Mr.&nbsp;Wood also used Charter&#146;s
airplane for occasional personal use in 2001, a benefit valued
at $12,500 for the year ended December&nbsp;31, 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Payments for Relative&#146;s
    Services</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, in 1999, one of
Mr.&nbsp;Wood&#146;s daughters, who resigned as a Vice President
of Charter Holdco in February 2002, received a bonus in the form
of a three-year promissory note bearing interest at 7%&nbsp;per
year. One-third of the original outstanding principal amount of
the note and interest were forgiven as long as she remained
employed by Charter Holdco at the end of each of the first three
anniversaries of the issue date in February 1999. The amount of
principal and interest forgiven on this note for the year
</FONT>

<P align="center"><FONT size="2">138
</FONT>

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<DIV align="left">
<FONT size="2">ended December&nbsp;31, 2001, was $85,500, and
the outstanding balance on the note was forgiven effective as of
February&nbsp;22, 2002. Another daughter of Mr.&nbsp;Wood
received approximately $70,200 during the year ended
December&nbsp;31, 2001 for event planning services performed by
her company.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since June 2003, Charter Holdco has employed the
brother-in-law of Carl E. Vogel, Charter&#146;s President, Chief
Executive Officer and a director. Mr.&nbsp;Vogel&#146;s
brother-in-law receives a salary commensurate with his position
in our engineering department.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Travel Service</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Jerald L. Kent resigned as President, Chief
Executive Officer and a director of Charter in September 2001.
In 2001 a travel agency owned and operated by
Mr.&nbsp;Kent&#146;s mother-in-law received approximately
$132,000 during the year ended 2001 for travel arrangements made
for Charter by her company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Replay TV Joint Venture</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Communications Ventures was party to a
joint venture with General Instrument Corporation (doing
business as Broadband Communications Sector of Motorola, Inc.),
Replay TV Inc. and Interval Research Corporation, an entity
controlled by Mr.&nbsp;Allen, to develop and integrate digital
video recording capabilities in advanced digital set-top
terminals. The joint venture focused on creating a set-top based
digital recording platform designed for storing video, audio and
Internet content. Prior to the dissolution of the joint venture
in 2001, Charter Communications Ventures received management
fees of approximately $1&nbsp;million for the year ended
December&nbsp;31, 2001, which is included in other revenues in
the accompanying consolidated statement of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Purchase of Certain Enstar Limited
    Partnership Systems; Management Fees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, Interlink Communications Partners,
LLC, Rifkin Acquisition Partners, LLC and Charter Communications
Entertainment&nbsp;I, LLC, each an indirect, wholly owned
subsidiary of Charter Holdings, completed the cash purchase of
certain assets of Enstar Income Program&nbsp;II-2, L.P., Enstar
Income/ Growth Program Six-A, L.P., Enstar Income Program IV-1,
L.P., Enstar Income Program IV-2, L.P., and Enstar Income
Program IV-3, L.P., serving approximately 21,600 customers, for
a total cash sale price of approximately $48&nbsp;million. In
September 2002, Charter Communications Entertainment&nbsp;I, LLC
purchased all of Enstar Income Program&nbsp;II-1, L.P.&#146;s
Illinois cable television systems, serving approximately 6,400
customers, for a cash sale price of $15&nbsp;million. Enstar
Communications Corporation, a direct subsidiary of Charter
Holdco is a general partner of the Enstar limited partnerships
but does not exercise control over them. The purchase prices
were allocated to assets acquired based on fair values,
including approximately $41&nbsp;million assigned to franchises
and $4&nbsp;million assigned to other intangible assets
amortized over a useful life of three years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Enstar Cable Corporation, the
manager of the Enstar limited partnerships through a management
agreement, engaged Holdco to manage the Enstar limited
partnerships. Pursuant to the management agreement, Charter
Holdco provides management services to the Enstar limited
partnerships in exchange for management fees. The Enstar limited
partnerships also purchase basic and premium programming for
their systems at cost from Charter Communications Holding
Company, LLC. For the years ended December&nbsp;31, 2001, 2002,
2003 and the nine months ended September&nbsp;30, 2004, Charter
Holdco earned approximately $2&nbsp;million, $1&nbsp;million,
$469,300 and $0, respectively, by providing management services
to the Enstar limited partnerships. In September 2003 the Enstar
limited partnerships completed sales of all their remaining
assets, and as a result no further management fees were paid in
2004. In November 2004, the Enstar limited partnerships were
dissolved.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the executive officers of Charter (with
the exception of Mr.&nbsp;Allen), Charter Holdco and Charter
Holdings act as officers of Enstar Communications Corporation.
</FONT>

<P align="center"><FONT size="2">139
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Indemnification Advances</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to Charter&#146;s bylaws (and the
employment agreements of certain of our current and former
officers), Charter is obligated (subject to certain limitations)
to indemnify and hold harmless, to the fullest extent permitted
by law, any officer, director or employee against all expense,
liability and loss (including, among other things,
attorneys&#146; fees) reasonably incurred or suffered by such
officer, director or employee as a result of the fact that he or
she is a party or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding by reason
of the fact that he or she is or was a director, officer or
employee of Charter. In addition, Charter is obligated to pay,
as an advancement of its indemnification obligation, the
expenses (including attorneys&#146; fees) incurred by any
officer, director or employee in defending any such action, suit
or proceeding in advance of its final disposition, subject to an
obligation to repay those amounts under certain circumstances.
Pursuant to these indemnification arrangements and as an
advancement of costs, Charter has reimbursed certain of its
current and former directors and executive officers a total of
approximately $3&nbsp;million, $8&nbsp;million and
$2.6&nbsp;million in respect of invoices received in 2002, 2003
and the nine months ended September&nbsp;30, 2004, respectively,
in connection with their defense of certain legal actions
described herein. See &#147;Business&nbsp;&#151; Legal
Proceedings.&#148; Those current and former directors and
officers include: Paul G. Allen, David C. Andersen, David G.
Barford, Mary Pat Blake, J. Christian Fenger, Kent D. Kalkwarf,
Ralph G. Kelly, Jerald L. Kent, Paul E. Martin, David L. McCall,
Ronald L. Nelson, Nancy B. Peretsman, John C. Pietri, William D.
Savoy, Steven A. Schumm, Curtis S. Shaw, William J. Shreffer,
Stephen E. Silva, James Trey Smith and Carl E. Vogel. These
amounts have been submitted to Charter&#146;s director and
officer insurance carrier for reimbursement. The carrier has
raised various objections to portions of these amounts, and
Charter is in negotiations with the carrier regarding their
reimbursement.
</FONT>

<P align="center"><FONT size="2">140
</FONT>

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<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "DESCRIPTION OF CERTAIN INDEBTEDNESS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF CERTAIN INDEBTEDNESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, our total debt was approximately
$18.5&nbsp;billion and $18.6&nbsp;billion, respectively. A table
of our other indebtedness as of September&nbsp;30, 2004 is
summarized below (dollars in millions):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
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    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Start date for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">cash interest</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">payment on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">payment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">discount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Maturity</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">value(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">dates</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">notes</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">date(b)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
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    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Charter Communications, Inc.:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">5.750%&nbsp;convertible senior notes due 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">588</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">588</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/15 &#38; 10/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10/15/05</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">4.750%&nbsp;convertible senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">156</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">156</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">156</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">156</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12/1 &#38; 6/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/1/06</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">5.875%&nbsp;convertible senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">863</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">829</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/16 &#38; 11/16</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11/16/09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Charter Holdings:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">8.250%&nbsp;senior notes due 2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">451</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">451</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">451</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">451</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1 &#38; 10/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1/07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">8.625%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,244</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,242</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,244</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,242</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1 &#38; 10/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1/09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">9.920%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1 &#38; 10/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10/1/04</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1/11</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.000%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1 &#38; 10/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1/09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15 &#38; 7/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15/10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">11.750%&nbsp;senior discount notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">450</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">435</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">450</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">435</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15 &#38; 7/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7/15/05</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15/10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.750%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">874</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">874</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">874</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">874</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/1 &#38; 10/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10/1/09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">11.125%&nbsp;senior notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15 &#38; 7/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15/11</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">13.500%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">571</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">571</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15 &#38; 7/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7/15/06</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15/11</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">9.625%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">638</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">638</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15 &#38; 11/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11/15/09</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.000%&nbsp;senior notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">710</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">708</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">710</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">708</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15 &#38; 11/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15/11</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">11.750%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">939</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">780</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">939</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">780</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15 &#38; 11/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11/15/06</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15/11</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">12.125%&nbsp;senior discount notes due 2012
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">330</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">252</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">330</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">252</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15 &#38; 7/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7/15/07</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1/15/12</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">CCH&nbsp;II:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,601</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3/15 &#38; 9/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9/15/10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">CCO Holdings:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">8.750%&nbsp;senior notes due 2013
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5/15 &#38; 11/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11/15/13</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Senior floating rate notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">550</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">550</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3" align="right" valign="bottom"><FONT size="1">3/15, 6/15, 9/15 &#38; 12/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12/15/10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Charter Operating:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">8%&nbsp;senior second lien notes due 2012
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,100</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/30 &#38; 10/30</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/30/12</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">8&nbsp;3/8%&nbsp;senior second lien notes due 2014
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/30 &#38; 10/30</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/30/14</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Renaissance:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">10.000%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">114</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">116</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">114</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">116</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/15 &#38; 10/15</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10/15/03</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4/15/08</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">CC V Holdings:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">11.875%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">113</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">113</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">113</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">113</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/1 &#38; 12/1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6/1/04</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12/1/08</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Credit Facilities</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Charter Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,393</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,393</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,993</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,993</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,844</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,484</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,269</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,875</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(a)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The accreted value presented above represents the
    face value of the notes less the original issue discount at the
    time of sale plus the accretion to the balance sheet date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">(b)
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">In general, the obligors have the right to redeem
    all of the notes set forth in the above table (except with
    respect to the 5.875% convertible senior notes due 2009 and the
    Charter Holdings notes with terms of eight years) in whole or
    part at their option, beginning at various times prior to their
    stated maturity dates, subject to certain conditions, upon the
    payment of the outstanding principal amount (plus a specified
    redemption premium) and all accrued and unpaid interest. We have
    called for redemption the remaining 5.75% convertible senior
    notes due 2005, and expect to consummate that redemption on
    December&nbsp;23, 2004. While we are required to redeem the
    CC&nbsp;V&nbsp;Holdings notes under the circumstances described
    in &#147;&#151; Outstanding Notes&nbsp;&#151;
    CC&nbsp;V&nbsp;Holdings, LLC Notes&#148; and &#147;Charter
    Communications Operating, LLC Notes,&#148; we are not required
    to redeem any of the other notes described above prior to their
    stated maturity dates. For additional information, see
    Note&nbsp;9 to our consolidated financial statements as of
    December&nbsp;31, 2003 and 2002 and for each of the three years
    in the period ended December&nbsp;31, 2003 included elsewhere in
    this prospectus.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">141
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, long-term debt totaled approximately
$18.5&nbsp;billion and $18.6&nbsp;billion, respectively. This
debt was comprised of approximately $5.4&nbsp;billion and
$7.2&nbsp;billion of credit facility debt, $12.3&nbsp;billion
and $10.6&nbsp;billion principal amount of high-yield notes and
$744&nbsp;million and $774&nbsp;million principal amount of
convertible senior notes at September&nbsp;30, 2004 and
December&nbsp;31, 2003, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, the weighted average interest rate on
the credit facility debt was approximately 6.6% and 5.4%,
respectively, the weighted average interest rate on the
high-yield notes was approximately 10.3%, and the weighted
average interest rate on the convertible senior notes was
approximately 5.5%, resulting in a blended weighted average
interest rate of 8.8% and 8.2%, respectively. The interest rate
on approximately 85% and 80% of the total principal amount of
our debt was effectively fixed, including the effects of our
interest rate hedge agreements as of September&nbsp;30, 2004 and
December&nbsp;31, 2003, respectively. The fair value of our
credit facility debt was approximately $5.3&nbsp;billion and
$6.9&nbsp;billion at September&nbsp;30, 2004 and
December&nbsp;31, 2003, respectively. The fair value of our
high-yield notes was $10.6&nbsp;billion and $9.9&nbsp;billion at
September&nbsp;30, 2004 and December&nbsp;31, 2003,
respectively. The fair value of our convertible senior notes was
$651&nbsp;million and $732&nbsp;million at September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively. The fair value of
high-yield notes is based on quoted market prices, and the fair
value of the credit facilities is based on dealer quotations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description is merely a summary of
certain material provisions of the amended and restated Charter
Operating credit facilities and the public notes of our
subsidiaries (collectively, the &#147;Debt Agreements&#148;).
The summary does not restate the terms of the Debt Agreements in
their entirety, nor does it describe all terms of the Debt
Agreements. The agreements and instruments governing each of the
Debt Agreements are complicated and you should consult such
agreements and instruments for more detailed information
regarding the Debt Agreements.
</FONT>

<P align="left">
<B><FONT size="2">Credit Facilities</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Amended and Restated Charter Operating
    Credit Facilities&nbsp;&#151; General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating credit facilities were
amended and restated concurrently with the sale of
$1.5&nbsp;billion senior second lien notes in April&nbsp;2004,
among other things, to defer maturities and increase
availability under these facilities and to enable Charter
Operating to acquire the interests of the lenders under the
CC&nbsp;VI&nbsp;Operating, CC&nbsp;VIII&nbsp;Operating and
Falcon credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended and restated Charter Operating credit
facilities:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase the availability thereunder from
    $5.1&nbsp;billion to $6.5&nbsp;billion;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide for two term facilities:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;a Term&nbsp;A facility with a total
    principal amount of $2.0&nbsp;billion, of which 12.5% matures in
    2007, 30% matures in 2008, 37.5% matures in 2009 and 20% matures
    in 2010;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;a Term&nbsp;B facility with a total
    principal amount of $3.0&nbsp;billion, which shall be repayable
    in 27&nbsp;equal quarterly installments aggregating in each loan
    year to 1% of the original amount of the Term&nbsp;B facility,
    with the remaining balance due at final maturity in
    2011;&nbsp;and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide for a revolving credit facility, in a
    total amount of $1.5&nbsp;billion, with a maturity date in 2010.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amounts under the amended and restated Charter
Operating credit facilities bear interest, at Charter
Operating&#146;s election, at a base rate or the Eurodollar
rate, as defined, plus a margin for Eurodollar loans of up to
3.00% for the Term&nbsp;A facility and revolving credit
facility, and up to 3.25% for the Term&nbsp;B facility, and for
base rate loans of up to 2.00% for the Term&nbsp;A facility and
revolving credit facility, and up to 2.25% for the Term&nbsp;B
facility. A quarterly commitment fee of up to .75% is payable on
the average daily unborrowed balance of the revolving credit
facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Obligations arising under the original
$5.1&nbsp;billion commitment amount (the &#147;Original
Obligations&#148;) continue to be guaranteed by
CCO&nbsp;Holdings and by Charter Operating&#146;s domestic
subsidiaries, other than
</FONT>

<P align="center"><FONT size="2">142
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">the non-guarantor subsidiaries (defined below),
existing subsidiaries of Charter Operating precluded from so
guaranteeing by reason of the provisions of other indebtedness
to which they are subject and immaterial subsidiaries. The
&#147;non-guarantor subsidiaries,&#148; include
CCO&nbsp;NR&nbsp;Holdings, LLC, and subsidiaries contributed to
CCO&nbsp;NR&nbsp;Holdings, LLC by Charter Holdings in the
organizational restructuring that occurred in June of 2003,
including CC&nbsp;VI&nbsp;Operating, CC&nbsp;VIII&nbsp;Operating
and Falcon and their respective subsidiaries. The Original
Obligations continue to be secured by a pledge of the equity
interests owned by the subsidiary guarantors, as well as a
pledge of CCO&nbsp;Holdings&#146; equity interests in Charter
Operating and its subsidiaries, and intercompany obligations
owing to CCO&nbsp;Holdings by Charter Operating and its
subsidiaries, and intercompany obligations owing to the
subsidiary guarantors. Obligations arising under the amended
commitment amount of $6.5&nbsp;billion (the &#147;Amended
Obligations&#148;) are secured by a lien on all assets of
Charter Operating, to the extent such lien can be perfected
under the Uniform Commercial Code by filing a financing
statement, which assets include capital stock owned by Charter
Operating and intercompany obligations owing to it from its
subsidiaries, CC&nbsp;VI&nbsp;Operating,
CC&nbsp;VIII&nbsp;Operating and Falcon.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At such time as the Charter Holdings Leverage
Ratio, as defined in the indentures governing the Charter
Holdings senior notes and senior discount notes and as certified
by an officer of Charter Holdings, is below 8.75 to 1.0:
(i)&nbsp;the guarantors&#146; guarantees will be amended to
increase the amount guaranteed to include all of the Amended
Obligations; (ii)&nbsp;most of the non-guarantor subsidiaries
will become additional subsidiary guarantors of the Amended
Obligations; and (iii)&nbsp;the guarantees of the Amended
Obligations will be secured by a lien on all assets of the
subsidiary guarantors (including the additional subsidiary
guarantors), to the extent such lien can be perfected under the
Uniform Commercial Code by filing a financing statement;
provided that the guarantee and pledge of such interests by
CC&nbsp;V&nbsp;Holdings, LLC and its subsidiaries will not occur
until the notes issued by CC&nbsp;V&nbsp;Holdings, LLC are
redeemed. The CC&nbsp;V&nbsp;Holdings notes are required to be
redeemed within 45&nbsp;days after the Charter Holdings leverage
ratio is below 8.75 to 1.0, provided that such ratio remains
below such leverage ratio for the entire 45&nbsp;day period.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Amended and Restated Charter Operating
    Credit Facilities&nbsp;&#151; Restrictive
    Covenants</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating credit facilities contain
representations and warranties, and affirmative and negative
covenants customary for financings of this type. The financial
covenants measure performance against standards set for
leverage, debt service coverage, and interest coverage, tested
as of the end of each quarter. The maximum allowable leverage
ratio is 4.25 to 1.0 until maturity, tested as of the end of
each quarter beginning September&nbsp;30, 2004. Additionally,
the Charter Operating credit facilities contain provisions
requiring mandatory loan prepayments under specific
circumstances, including when significant amounts of assets are
sold and the proceeds are not reinvested in assets useful in the
business of the borrower within a specified period, and upon the
incurrence of certain indebtedness when the ratio of senior
first lien debt to operating cash flow is greater than 2.0 to
1.0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating credit facilities permit
Charter Operating and its subsidiaries to make distributions to
pay interest on the Charter Operating senior second lien notes,
the CCH&nbsp;II senior notes, the CCO&nbsp;Holdings senior
notes, the Charter convertible senior notes and the Charter
Holdings senior notes, provided that, among other things, no
default has occurred and is continuing under the amended and
restated Charter Operating credit facilities. Conditions to
future borrowings include absence of a default or an event of
default under the amended and restated Charter Operating credit
facilities and the continued accuracy in all material respects
of the representations and warranties, including the absence
since December&nbsp;31, 2003 of any event, development or
circumstance that has had or could reasonably be expected to
have a material adverse effect on our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The events of default under the Charter Operating
credit facilities include, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;the failure to make payments when due or
    within the applicable grace period,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the failure to comply with specified
    covenants, including but not limited to a covenant to deliver
    audited financial statements with an unqualified opinion from
    our independent auditors,
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">143
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;the failure to pay or the occurrence
    of events that cause or permit the acceleration of other
    indebtedness owing by CCO&nbsp;Holdings, Charter Operating or
    Charter Operating&#146;s subsidiaries in amounts in excess of
    $50&nbsp;million in aggregate principal amount,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;the failure to pay or the occurrence of
    events that result in the acceleration of other indebtedness
    owing by certain of CCO&nbsp;Holdings&#146; direct and indirect
    parent companies in amounts in excess of $200&nbsp;million in
    aggregate principal amount,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(v)&nbsp;Paul Allen and/or certain of his family
    members and/or their exclusively owned entities (collectively,
    the &#147;Paul Allen Group&#148;) ceasing to have the power,
    directly or indirectly, to vote at least 35% of the ordinary
    voting power of Charter Operating,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(vi)&nbsp;the consummation of any transaction
    resulting in any person or group (other than the Paul Allen
    Group) having power, directly or indirectly, to vote more than
    35% of the ordinary voting power of Charter Operating, unless
    the Paul Allen Group holds a greater share of ordinary voting
    power of Charter Operating,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(vii)&nbsp;certain of Charter Operating&#146;s
    indirect or direct parent companies having indebtedness in
    excess of $500&nbsp;million aggregate principal amount which
    remains undefeased three months prior to the final maturity of
    such indebtedness,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(viii)&nbsp;Charter Operating ceasing to be a
    wholly-owned direct subsidiary of CCO&nbsp;Holdings, except in
    certain very limited circumstances.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Outstanding Notes</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Charter Communications, Inc.
    Notes</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Charter 5.875% Convertible Senior Notes due
    2009</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2004, Charter issued 5.875%
convertible senior notes due 2009 with a total original
principal amount of $862.5&nbsp;million. The 5.875% convertible
senior notes are unsecured (except with respect to the
collateral as described below) and rank equally with our
existing and future unsubordinated and unsecured indebtedness
(except with respect to the collateral described below), but are
structurally subordinated to all existing and future
indebtedness and other liabilities of our subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 5.875% convertible senior notes are
convertible at any time at the option of the holder into shares
of Class&nbsp;A common stock at an initial conversion rate of
413.2231 shares per $1,000 principal amount of notes, which is
equivalent to a conversion price of approximately $2.42 per
share, subject to certain adjustments. Specifically, the
adjustments include anti-dilutive provisions, which cause
adjustments to occur automatically based on the occurrence of
specified events to provide protection rights to holders of the
notes. The conversion rate may also be increased (but not to
exceed 462 shares per $1,000 principal amount of notes) upon a
specified change of control transaction. Additionally, Charter
may elect to increase the conversion rate under certain
circumstances when deemed appropriate and subject to applicable
limitations of the Nasdaq stock market. Holders who convert
their notes prior to November&nbsp;16, 2007 will receive an
early conversion make whole amount in respect of their notes
based on a proportional share of the portfolio of pledged
securities described below, with specified adjustments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No holder of notes will be entitled to receive
shares of our Class&nbsp;A common stock on conversion to the
extent that receipt of the shares would cause the converting
holder to become, directly or indirectly, a &#147;beneficial
holder&#148; (within the meaning of Section&nbsp;13(d) of the
Exchange Act and the rules and regulations promulgated
thereunder) of more than 4.9% of the outstanding shares of our
Class&nbsp;A common stock if such conversion would take place
prior to November&nbsp;16, 2008, or more than 9.9% thereafter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may direct holders to deliver notes tendered
for conversion, unless we have called those notes for
redemption, to a financial institution designated by us for
exchange with that financial institution in lieu of conversion,
on substantially the same terms that the holder would have
received on conversion, but if any
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">such financial institution does not accept such
notes or does not deliver the required conversion consideration,
we remain obligated to convert the notes.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest is payable semi-annually in arrears.
Charter Holdco used a portion of the proceeds from the sale of
the notes to purchase a portfolio of U.S. government securities
in an amount which we believe will be sufficient to make the
first six interest payments on the notes, which were pledged to
us as security for a mirror note and which we have pledged to
the trustee under the indenture governing the notes as security
for our obligations thereunder. We expect to use such securities
to fund the first six interest payments under the notes. Any
holder that converts its notes prior to the third anniversary of
the issue date will be entitled to receive, in addition to the
requisite number of shares upon conversion, an interest make
whole payment equal to the cash proceeds from the sale by the
trustee of that portion of the remaining pledged U.S. government
securities which secure interest payments on the notes so
converted, subject to certain limitations with respect to notes
that have not been sold pursuant to an effective registration
statement under the Securities Act of 1933.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon a change of control and certain other
fundamental changes, subject to certain conditions and
restrictions, Charter may be required to repurchase the notes,
in whole or in part, at 100% of their principal amount plus
accrued interest at the repurchase date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are required to file with the SEC within
30&nbsp;days after the issuance of the notes and use our best
efforts to have declared effective within 150&nbsp;days after
the issuance of the notes, a shelf registration statement for
resale of the notes. We are also obligated to use our reasonable
best efforts to have the registration statement of which this
prospectus forms a part declared effective within 130 days after
the issuance of the notes. In the event we are unable to satisfy
these requirements within specified time periods, liquidated
damages will accrue in respect of the notes. Charter may elect
to accrete the principal amount of the notes in lieu of paying
cash with respect to any liquidated damages that accrue, and may
also elect to defer any interest accruing in respect of any
accreted portion exceeding the original principal amount of the
notes. We will pay no interest on any such deferred interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the earlier of the sale of the notes
pursuant to an effective registration statement or the date two
years following the issue date, we may redeem the notes in whole
or in part for cash at any time at a redemption price equal to
100% of the aggregate principal amount plus accrued and unpaid
interest, deferred interest and liquidated damages, if any, but
only if for any 20 trading days in any 30 consecutive trading
day period the closing price has exceeded (x)&nbsp;180% of the
conversion price, if such 30 trading day period begins prior to
November&nbsp;16, 2007 or (y)&nbsp;150% of the conversion price,
if such 30 trading period begins thereafter. Holders who convert
notes that we have called for redemption shall receive, in
addition to the early conversion make whole amount, if
applicable, the present value of the interest on the notes
converted that would have been payable for the period from the
later of November&nbsp;17, 2007 and the redemption date through
the scheduled maturity date for the notes, plus any accrued
deferred interest.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">5.75% Convertible Senior Notes due
    2005</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October and November&nbsp;2000, Charter issued
5.75%&nbsp;convertible senior notes with a total principal
amount at maturity of $750&nbsp;million. As of
September&nbsp;30, 2004, there was $588&nbsp;million in total
principal amount of these notes outstanding. The 5.75%
convertible notes rank equally with any of our future
unsubordinated and unsecured indebtedness, but are structurally
subordinated to all existing and future indebtedness and other
liabilities of our subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 5.75% convertible notes are convertible at
the option of the holder into shares of Class&nbsp;A common
stock at a conversion rate of 46.3822&nbsp;shares per $1,000
principal amount of notes, which is equivalent to a price of
$21.56&nbsp;per share, subject to certain adjustments.
Specifically, the adjustments include anti-dilutive provisions,
which cause adjustments to occur automatically based on the
occurrence of specified events to provide protection rights to
holders of the notes. Additionally, Charter may adjust the
conversion ratio under certain circumstances when deemed
appropriate.
</FONT>

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</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These notes have been called for redemption at a
price of 101.15% of the outstanding principal amount plus
accrued and unpaid interest through the redemption date, which
is expected to be December&nbsp;23, 2004.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">4.75% Convertible Senior Notes due
    2006</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2001, Charter issued
4.75%&nbsp;convertible senior notes with a total principal
amount at maturity of $633&nbsp;million. As of December&nbsp;31,
2003, there was $156&nbsp;million in total principal amount of
these notes outstanding. The 4.75% convertible notes rank
equally with any of our future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of our
subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 4.75% convertible notes are convertible at
the option of the holder into shares of Class&nbsp;A common
stock at a conversion rate of 38.0952&nbsp;shares per $1,000
principal amount of notes, which is equivalent to a price of
$26.25&nbsp;per share, subject to certain adjustments.
Specifically, the adjustments include anti-dilutive provisions,
which automatically occur based on the occurrence of specified
events to provide protection rights to holders of the notes.
Additionally, Charter may adjust the conversion ratio under
certain circumstances when deemed appropriate. These notes are
redeemable at our option at amounts decreasing from 101.9% to
100% of the principal amount, plus accrued and unpaid interest
beginning on June&nbsp;4, 2004, to the date of redemption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Charter Communications Holdings, LLC
    Notes</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">March 1999 Charter Holdings Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The March 1999 Charter Holdings notes were issued
under three separate indentures, each dated as of March&nbsp;17,
1999, among Charter Holdings and Charter Capital, as the
issuers, and BNY Midwest Trust Company, as trustee. Charter
Holdings and Charter Capital exchanged these notes for new March
1999 Charter Holdings notes with substantially similar terms,
except that the new March 1999 Charter Holdings notes are
registered under the Securities Act and, therefore, do not bear
legends restricting their transfer and are not subject to
further registration or special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The March 1999 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
Cash interest on the March 1999 9.920% Charter Holdings notes
did not accrue prior to April&nbsp;1, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The March 1999 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the January
2000, January 2001, May 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings&#146; subsidiaries, including the CCH&nbsp;II
notes, the CCO Holdings notes, the Renaissance notes, the CC V
Holdings notes, the Charter Operating notes and the amended and
restated Charter Operating credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the March 1999 8.250% Charter Holdings
notes prior to their maturity date on April&nbsp;1, 2007. On or
after April&nbsp;1, 2004, Charter Holdings and Charter Capital
may redeem some or all of the March 1999 8.625% Charter Holdings
notes and the March 1999 9.920% Charter Holdings notes at any
time, in each case, at a premium. The optional redemption price
declines to 100% of the principal amount of March 1999 Charter
Holdings notes redeemed, plus accrued and unpaid interest, if
any, for redemption on or after April&nbsp;1, 2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding March 1999 Charter Holdings
notes at 101% of their principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
</FONT>

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</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the March 1999 Charter
Holdings senior notes contain restrictive covenants that limit
certain transactions or activities by Charter Holdings and its
restricted subsidiaries. All but two of Charter Holdings&#146;
direct and indirect subsidiaries are currently restricted
subsidiaries.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">January 2000 Charter Holdings Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2000 Charter Holdings notes were
issued under three separate indentures, each dated as of
January&nbsp;12, 2000, among Charter Holdings and Charter
Capital, as the issuers, and BNY Midwest Trust Company, as
trustee. In June 2000, Charter Holdings and Charter Capital
exchanged these notes for new January 2000 Charter Holdings
notes, with substantially similar terms, except that the new
January 2000 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer and are not subject to further registration or
special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2000 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2000 11.75% Charter
Holdings notes will not accrue prior to January&nbsp;15, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2000 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2001, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings&#146; subsidiaries, including
the CCH&nbsp;II notes, the CCO Holdings notes, the Renaissance
notes, the CC V Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the January 2000 10.00% Charter
Holdings notes prior to their maturity date on April&nbsp;1,
2009. On or after January&nbsp;15, 2005, Charter Holdings and
Charter Capital may redeem some or all of the January 2000
10.25% Charter Holdings notes and the January 2000 11.75%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2000 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January&nbsp;15, 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2000 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2000 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 Charter
Holdings notes. See &#147;&#151;&nbsp;Summary of restrictive
covenants under the Charter Holdings high-yield note
indentures.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">January 2001 Charter Holdings Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2001 Charter Holdings notes were
issued under three separate indentures, each dated as of
January&nbsp;10, 2001, each among Charter Holdings and Charter
Capital, as the issuers, and BNY Midwest Trust Company, as
trustee. In March 2001, Charter Holdings and Charter Capital
exchanged these notes for new January 2001 Charter Holdings
notes, with substantially similar terms, except that the new
January 2001 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer, and are not subject to further registration or
special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2001 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2001 13.500% Charter
Holdings notes will not accrue prior to January&nbsp;15, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2001 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2000, May 2001 and January 2002 Charter
Holdings
</FONT>

<P align="center"><FONT size="2">147
</FONT>

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<DIV align="left">
<FONT size="2">notes. They are structurally subordinated to the
obligations of Charter Holdings&#146; subsidiaries, including
the CCH&nbsp;II notes, the CCO Holdings notes, the Renaissance
notes, the CC V Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the January 2001 10.750% Charter
Holdings notes prior to their maturity date on October&nbsp;1,
2009. On or after January&nbsp;15, 2006, Charter Holdings and
Charter Capital may redeem some or all of the January 2001
11.125% Charter Holdings notes and the January 2001 13.500%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January&nbsp;15, 2009.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2001 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 and January
2000 Charter Holdings notes. See &#147;&#151;&nbsp;Summary of
restrictive covenants under the Charter Holdings high-yield note
indentures.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">May 2001 Charter Holdings Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The May 2001 Charter Holdings notes were issued
under three separate indentures, each among Charter Holdings and
Charter Capital, as the issuers, and BNY Midwest Trust Company,
as trustee. In September 2001, Charter Holdings and Charter
Capital exchanged substantially all of these notes for new May
2001 Charter Holdings notes, with substantially similar terms,
except that the new May 2001 Charter Holdings notes are
registered under the Securities Act and, therefore, do not bear
legends restricting their transfer, and are not subject to
further registration or special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The May 2001 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
Cash interest on the May 2001 11.750% Charter Holdings notes
will not accrue prior to May&nbsp;15, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The May 2001 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the March 1999,
January 2000, January 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings&#146; subsidiaries, including the CCH&nbsp;II
notes, the CCO Holdings notes, the Renaissance notes, the
CC&nbsp;V&nbsp;Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the May 2001 9.625% Charter Holdings
notes prior to their maturity date on November&nbsp;15, 2009.
Before May&nbsp;15, 2004, Charter Holdings and Charter Capital
may redeem up to 35% of the May 2001 10.000% Charter Holdings
notes and the May 2001 11.750% Charter Holdings notes, in each
case, at a premium with proceeds of certain offerings of equity
securities. In addition, on or after May&nbsp;15, 2006, Charter
Holdings and Charter Capital may redeem some or all of the May
2001 10.000% Charter Holdings notes and the May 2001 11.750%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the May 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
May&nbsp;15, 2009.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding May 2001 Charter Holdings notes
at 101% of their total principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the May 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the
</FONT>

<P align="center"><FONT size="2">148
</FONT>

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<DIV align="left">
<FONT size="2">March 1999, January 2000 and January 2001 Charter
Holdings notes. See &#147;&#151;&nbsp;Summary of restrictive
covenants under the Charter Holdings high-yield note
indentures.&#148;
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">January 2002 Charter Holdings Notes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 Charter Holdings notes were
issued under three separate indentures, each among Charter
Holdings and Charter Capital, as the issuers, and BNY Midwest
Trust Company, as trustee, two of which were supplements to the
indentures for the May 2001 Charter Holdings notes. In July
2002, Charter Holdings and Charter Capital exchanged
substantially all of these notes for new January 2002 Charter
Holdings notes, with substantially similar terms, except that
the new January 2002 notes are registered under the Securities
Act and, therefore, do not bear legends restricting their
transfer and are not subject to further registration or special
interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2002 12.125% Charter
Holdings notes will not accrue prior to January&nbsp;15, 2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with the current and future unsecured and unsubordinated
debt of Charter Holdings, including the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. They are
structurally subordinated to the obligations of Charter
Holdings&#146; subsidiaries, including the CCH&nbsp;II notes,
the CCO Holdings notes, the Renaissance notes, the CC V Holdings
notes, the Charter Operating amended and restated credit
facilities and the Charter Operating notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Holdings 12.125%&nbsp;senior discount
notes are redeemable at the option of the issuers at amounts
decreasing from 106.063% to 100% of accreted value beginning
January&nbsp;15, 2007. At any time prior to January&nbsp;15,
2005, the issuers may redeem up to 35% of the total principal
amount of the 12.125%&nbsp;senior discount notes at a redemption
price of 112.125% of the accreted value under certain conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2002 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2002 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. See
&#147;&#151;&nbsp;Summary of restrictive covenants under the
Charter Holdings high-yield note indentures.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Summary of Restrictive Covenants Under the
    Charter Holdings High-Yield Note&nbsp;Indentures</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limitations on incurrence of debt and
issuance of preferred stock contained in Charter Holdings&#146;
indentures permit Charter Holdings and its subsidiaries to incur
additional debt or issue preferred stock, so long as there is no
default under the Charter Holdings indentures. These limitations
restrict the incurrence of debt unless, after giving pro forma
effect to the incurrence, the Charter Holdings Leverage Ratio
would be below 8.75 to 1.0. In addition, regardless of whether
that leverage ratio test could be met, so long as no default
exists or would result from the incurrence or issuance, Charter
Holdings and its restricted subsidiaries are permitted to issue:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $3.5&nbsp;billion of debt under credit
    facilities,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $75&nbsp;million of debt incurred to
    finance the purchase or capital lease of new assets,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $300&nbsp;million of additional debt for
    any purpose,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">additional debt in an amount equal to 200% of new
    cash equity proceeds received by Charter Holdings and its
    restricted subsidiaries since March 1999, the date of our first
    indenture, and not allocated for restricted payments or
    permitted investments,&nbsp;and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">149
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of Charter Holdings
are generally not permitted to issue debt securities
contractually subordinated in right of payment to other debt of
the issuing subsidiary or preferred stock, in either case in any
public or Rule&nbsp;144A offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Holdings indentures permit Charter
Holdings and its restricted subsidiaries to incur debt under one
category, and later reclassify that debt into another category.
The Charter Operating credit facilities generally impose more
restrictive limitations on incurring new debt than Charter
Holdings&#146; indentures, so our subsidiaries that are subject
to the Charter Operating credit facilities may not be permitted
to utilize the full debt incurrence that would otherwise be
available under the Charter Holdings indenture covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, under Charter Holdings&#146;
high-yield indentures:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Charter Holdings and its restricted subsidiaries
    are generally permitted to pay dividends on equity interests,
    repurchase interests, or make other specified restricted
    payments only if, after giving pro forma effect to the
    transaction, the Charter Holdings Leverage Ratio would be below
    8.75 to 1.0 and if no default exists or would exist as a
    consequence of such incurrence. If those conditions are met,
    restricted payments in a total amount of up to 100% of Charter
    Holdings&#146; consolidated EBITDA, as defined, minus 1.2 times
    its consolidated interest expense, plus 100% of new cash and
    non-cash equity proceeds received by Charter Holdings and not
    allocated to the debt incurrence covenant or to permitted
    investments, all cumulatively from March 1999, the date of the
    first Charter Holdings indenture, plus $100&nbsp;million.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Charter Holdings may make
distributions or restricted payments, so long as no default
exists or would be caused by transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to repurchase management equity interests in
    amounts not to exceed $10&nbsp;million per fiscal year,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in Charter Holdings or its restricted
    subsidiaries,&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and its restricted subsidiaries
may not make investments except permitted investments if there
is a default under the indentures or if, after giving effect to
the transaction, the Charter Holdings Leverage Ratio would be
below 8.75 to 1.0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Permitted investments include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments by Charter Holdings in restricted
    subsidiaries or by restricted subsidiaries in Charter Holdings,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments in productive assets (including
    through equity investments) aggregating up to $150&nbsp;million
    since March 1999,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments aggregating up to 100% of new cash
    equity proceeds received by Charter Holdings since March 1999
    and not allocated to the debt incurrence or restricted payments
    covenant,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other investments aggregating up to
    $50&nbsp;million since March 1999.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings is not permitted to grant liens
on its assets other than specified permitted liens. Permitted
liens include liens securing debt and other obligations incurred
under our and our subsidiaries&#146; credit facilities, liens
securing the purchase price of new assets, and liens of up to
$50&nbsp;million incurred in the ordinary course of business.
The lien covenant does not restrict liens on assets of
subsidiaries of Charter Holdings.
</FONT>

<P align="center"><FONT size="2">150
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital, its
co-issuer, are generally not permitted to sell all or
substantially all of their assets or merge with or into other
companies unless their leverage ratio after any such transaction
would be no greater than their leverage ratio immediately prior
to the transaction, or unless after giving effect to the
transaction, the Charter Holdings Leverage Ratio would be below
8.75 to 1.0, no default exists, and the surviving entity is a
U.S.&nbsp;entity that assumes the Charter Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and its restricted subsidiaries
may generally not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60&nbsp;days or productive assets. Charter Holdings and
its restricted subsidiaries are then required within
365&nbsp;days after any asset sale either to commit to use the
net cash proceeds over a specified threshold to acquire assets,
including current assets, used or useful in their businesses or
use the net cash proceeds to repay debt, or to offer to
repurchase the Charter Holdings notes with any remaining
proceeds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and its restricted subsidiaries
may generally not engage in sale and leaseback transactions
unless, at the time of the transaction, Charter Holdings could
have incurred secured indebtedness in an amount equal to the
present value of the net rental payments to be made under the
lease, and the sale of the assets and application of proceeds is
permitted by the covenant restricting asset sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings&#146; restricted subsidiaries
may generally not enter into restrictions on their ability to
make dividends or distributions or transfer assets to Charter
Holdings on terms that are materially more restrictive than
those governing their debt, lien, asset sale, lease and similar
agreements existing when they entered into the indentures,
unless those restrictions are on customary terms that will not
materially impair Charter Holdings&#146; ability to repay the
high-yield notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of Charter Holdings
are generally not permitted to guarantee or pledge assets to
secure debt of Charter Holdings, unless the guarantying
subsidiary issues a guarantee of the notes of comparable
priority and tenor, and waives any rights of reimbursement,
indemnity or subrogation arising from the guarantee transaction
for at least one year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures also restrict the ability of
Charter Holdings and its restricted subsidiaries to enter into
certain transactions with affiliates involving consideration in
excess of $15&nbsp;million without a determination by the board
of directors of Charter Holdings that the transaction is on
terms no less favorable than arms length, or transactions with
affiliates involving over $50&nbsp;million without receiving an
independent opinion as to the fairness of the transaction
addressed to the holders of the Charter Holdings notes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">CCH&nbsp;II, LLC Notes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2003, CCH&nbsp;II and CCH&nbsp;II
Capital Corp. jointly issued approximately $1.6&nbsp;billion
total principal amount of 10.25%&nbsp;senior notes due 2010. The
CCH&nbsp;II notes are general unsecured obligations of
CCH&nbsp;II and CCH&nbsp;II Capital Corp. They rank equally with
all other current or future unsubordinated obligations of
CCH&nbsp;II and CCH&nbsp;II Capital Corp. The CCH&nbsp;II notes
are structurally subordinated to all obligations of subsidiaries
of CCH&nbsp;II, including the CCO Holdings notes, the
Renaissance notes, the CC V Holdings notes, the amended and
restated CCO credit facilities and the notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the CCH&nbsp;II notes accrues at
10.25%&nbsp;per annum, from September&nbsp;23, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each March&nbsp;15 and September&nbsp;15, commencing on
March&nbsp;15, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to September&nbsp;15, 2006, the
issuers of the CCH&nbsp;II notes may redeem up to 35% of the
total principal amount of the CCH&nbsp;II notes on a pro rata
basis at a redemption price equal to 110.25% of the principal
amount of CCH&nbsp;II notes redeemed, plus any accrued and
unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or after September&nbsp;15, 2008, the issuers
of the CCH&nbsp;II notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 105.125% to a
</FONT>

<P align="center"><FONT size="2">151
</FONT>

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<DIV align="left">
<FONT size="2">redemption price on or after September&nbsp;15,
2009 of 100.0% of the principal amount of the CCH&nbsp;II notes
redeemed, plus, in each case, any accrued and unpaid interest.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, CCH&nbsp;II must offer to purchase the outstanding
CCH&nbsp;II notes from the holders at a purchase price equal to
101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the CCH&nbsp;II notes
contains restrictive covenants that limit certain transactions
or activities by CCH&nbsp;II and its restricted subsidiaries,
including the covenants summarized below. As of the issue date,
all but two of CCH&nbsp;II&#146;s direct and indirect
subsidiaries were restricted subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The covenant in the indenture governing the
CCH&nbsp;II notes that restricts incurrence of debt and issuance
of preferred stock permits CCH&nbsp;II and its subsidiaries to
incur or issue specified amounts of debt or preferred stock, if,
after giving effect to the incurrence, CCH&nbsp;II could meet a
leverage ratio (ratio of consolidated debt to four times EBITDA
from the most recent fiscal quarter for which internal financial
reports are available) of 5.5&nbsp;to&nbsp;1.0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, regardless of whether the leverage
ratio could be met, so long as no default exists or would result
from the incurrence or issuance, CCH&nbsp;II and its restricted
subsidiaries are permitted to incur or issue:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $9.75&nbsp;billion of debt under credit
    facilities, including debt under credit facilities outstanding
    on the issue date of the CCH&nbsp;II notes,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $75&nbsp;million of debt incurred to
    finance the purchase or capital lease of new assets,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $300&nbsp;million of additional debt for
    any purpose,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of CCH&nbsp;II are
generally not permitted to issue debt securities contractually
subordinated to other debt of the issuing subsidiary or
preferred stock, in either case in any public or Rule&nbsp;144A
offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CCH&nbsp;II indenture permits CCH&nbsp;II and
its restricted subsidiaries to incur debt under one category,
and later reclassify that debt into another category. Our and
our subsidiaries&#146; credit agreements generally impose more
restrictive limitations on incurring new debt than the
CCH&nbsp;II indenture, so we and our subsidiaries that are
subject to credit agreements are not permitted to utilize the
full debt incurrence that would otherwise be available under the
CCH&nbsp;II indenture covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, under the CCH&nbsp;II indenture,
CCH&nbsp;II and its restricted subsidiaries are permitted to pay
dividends on equity interests, repurchase interests, or make
other specified restricted payments only if CCH&nbsp;II can
incur $1.00 of new debt under the leverage ratio test, which
requires that CCH&nbsp;II meet a 5.5 to 1.0 leverage ratio after
giving effect to the transaction, and if no default exists or
would exist as a consequence of such incurrence. If those
conditions are met, restricted payments in a total amount of up
to 100% of CCH II&#146;s consolidated EBITDA, as defined, minus
1.3 times its consolidated interest expense, plus 100% of new
cash and non-cash equity proceeds received by CCH&nbsp;II and
not allocated to the debt incurrence covenants, all cumulatively
from the fiscal quarter commenced July&nbsp;1, 2003, plus
$100&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, CCH&nbsp;II may make distributions
or restricted payments, so long as no default exists or would be
caused by transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to repurchase management equity interests in
    amounts not to exceed $10&nbsp;million per fiscal year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in CCH&nbsp;II or its restricted subsidiaries;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">152
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">regardless of the existence of any default, to
    pay interest when due on Charter Holdings notes, to pay, so long
    as there is no default, interest on the convertible senior notes
    (including the notes) of Charter, to purchase, redeem or
    refinance, so long as CCH&nbsp;II could incur $1.00 of
    indebtedness under the 5.5 to 1.0 leverage ratio test referred
    to above and there is no default, Charter Holdings notes,
    Charter notes, and other direct or indirect parent company notes
    (including the CCH&nbsp;II notes);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make distributions in connection with the
    private exchanges pursuant to which the CCH&nbsp;II notes were
    issued;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other specified restricted payments including
    merger fees up to 1.25% of the transaction value, repurchases
    using concurrent new issuances, and certain dividends on
    existing subsidiary preferred equity interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the CCH&nbsp;II notes
restricts CCH&nbsp;II and its restricted subsidiaries from
making investments, except specified permitted investments, or
creating new unrestricted subsidiaries, if there is a default
under the indenture or if CCH&nbsp;II could not incur $1.00 of
new debt under the 5.5&nbsp;to&nbsp;1.0 leverage ratio test
described above after giving effect to the transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Permitted investments include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments by CCH&nbsp;II and its restricted
    subsidiaries in CCH&nbsp;II and in other restricted
    subsidiaries, or entities that become restricted subsidiaries as
    a result of the investment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments aggregating up to 100% of new cash
    equity proceeds received by CCH&nbsp;II since September&nbsp;23,
    2003 to the extent the proceeds have not been allocated to the
    restricted payments covenant described above;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments resulting from the private exchanges
    pursuant to which the CCH&nbsp;II notes were issued;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other investments up to $750&nbsp;million
    outstanding at any time;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCH&nbsp;II is not permitted to grant liens on
its assets other than specified permitted liens. Permitted liens
include liens securing debt and other obligations incurred under
our amended and restated CCO credit facilities, liens securing
the purchase price of new assets, and liens up to
$50&nbsp;million incurred in the ordinary course of business.
The lien covenant does not restrict liens on assets of
subsidiaries of CCH&nbsp;II.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">CCO Holdings, LLC Notes</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">8&nbsp;3/4% Senior Notes due 2013</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2003, CCO Holdings and CCO Holdings
Capital Corp. jointly issued $500&nbsp;million total principal
amount of 8&nbsp;3/4%&nbsp;senior notes due 2013. The CCO
Holdings notes are general unsecured obligations of CCO Holdings
and CCO Holdings Capital Corp. They rank equally with all other
current or future unsubordinated obligations of CCO Holdings and
CCO Holdings Capital Corp. The CCO Holdings notes are
structurally subordinated to all obligations of subsidiaries of
CCO Holdings, including the Renaissance notes, the
CC&nbsp;V&nbsp;Holdings notes, the Charter Operating senior
second lien notes and the amended and restated Charter Operating
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the CCO Holdings senior notes accrues
at 8&nbsp;3/4%&nbsp;per year, from November&nbsp;10, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each May&nbsp;15 and November&nbsp;15, commencing on
May&nbsp;15, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to November&nbsp;15, 2006, the
issuers of the CCO Holdings senior notes may redeem up to 35% of
the total principal amount of the CCO Holdings senior notes to
the extent of public equity proceeds they have received on a pro
rata basis at a redemption price equal to 108.75% of the
principal amount of CCO Holdings senior notes redeemed, plus any
accrued and unpaid interest.
</FONT>

<P align="center"><FONT size="2">153
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or after November&nbsp;15, 2008, the issuers
of the CCO Holdings notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 104.375% to a redemption price on or after
November&nbsp;15, 2011 of 100.0% of the principal amount of the
CCO Holdings senior notes redeemed, plus, in each case, any
accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, CCO Holdings senior must offer to purchase the
outstanding CCO Holdings senior notes from the holders at a
purchase price equal to 101% of the total principal amount of
the notes, plus any accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the CCO Holdings senior
notes contains restrictive covenants that limit certain
transactions or activities by CCO Holdings and its restricted
subsidiaries, including the covenants summarized below. As of
the issue date, all but two of CCO Holdings&#146; direct and
indirect subsidiaries were restricted subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The covenant in the indenture governing the CCO
Holdings senior notes that restricts incurrence of debt and
issuance of preferred stock permits CCO Holdings and its
subsidiaries to incur or issue specified amounts of debt or
preferred stock, if, after giving pro forma effect to the
incurrence or issuance, CCO Holdings could meet a leverage ratio
(ratio of consolidated debt to four times EBITDA, as defined,
from the most recent fiscal quarter for which internal financial
reports are available) of 4.5 to 1.0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, regardless of whether the leverage
ratio could be met, so long as no default exists or would result
from the incurrence or issuance, CCO Holdings and its restricted
subsidiaries are permitted to incur or issue:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $9.75&nbsp;billion of debt under credit
    facilities, including debt under credit facilities outstanding
    on the issue date of the CCO Holdings senior notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $75&nbsp;million of debt incurred to
    finance the purchase or capital lease of new assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $300&nbsp;million of additional debt for
    any purpose;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of CCO Holdings are
generally not permitted to issue debt securities contractually
subordinated to other debt of the issuing subsidiary or
preferred stock, in either case in any public or Rule&nbsp;144A
offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CCO Holdings indenture permits CCO Holdings
and its restricted subsidiaries to incur debt under one
category, and later reclassify that debt into another category.
The amended and restated Charter Operating credit facilities
generally impose more restrictive limitations on incurring new
debt than CCO Holdings&#146; indenture, so our subsidiaries that
are subject to credit facilities are not permitted to utilize
the full debt incurrence that would otherwise be available under
the CCO Holdings indenture covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, under CCO Holdings&#146; indenture:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CCO Holdings and its restricted subsidiaries are
    permitted to pay dividends on equity interests, repurchase
    interests, or make other specified restricted payments only if
    CCO Holdings can incur $1.00 of new debt under the leverage
    ratio test, which requires that CCO Holdings meet a 4.5 to 1.0
    leverage ratio after giving effect to the transaction, and if no
    default exists or would exist as a consequence of such
    incurrence. If those conditions are met, restricted payments are
    permitted in a total amount of up to 100% of CCO Holdings&#146;
    consolidated EBITDA, as defined, minus 1.3 times its
    consolidated interest expense, plus 100% of new cash and
    appraised non-cash equity proceeds received by CCO Holdings and
    not allocated to the debt incurrence covenant, all cumulatively
    from the fiscal quarter commenced on October&nbsp;1, 2003, plus
    $100&nbsp;million.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">154
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, CCO Holdings may make distributions
or restricted payments, so long as no default exists or would be
caused by the transaction:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to repurchase management equity interests in
    amounts not to exceed $10&nbsp;million per fiscal year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay, regardless of the existence of any
    default, pass-through tax liabilities in respect of ownership of
    equity interests in Charter Holdings or its restricted
    subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay, regardless of the existence of any
    default, interest when due on Charter Holdings notes and our
    notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay, so long as there is no default, interest
    on the Charter convertible notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to purchase, redeem or refinance Charter Holdings
    notes, our notes, Charter notes, and other direct or indirect
    parent company notes, so long as CCO Holdings could incur $1.00
    of indebtedness under the 4.5 to 1.0 leverage ratio test
    referred to above and there is no default;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the CCO Holdings senior
notes restricts CCO Holdings and its restricted subsidiaries
from making investments, except specified permitted investments,
or creating new unrestricted subsidiaries, if there is a default
under the indenture or if CCO Holdings could not incur $1.00 of
new debt under the 4.5 to 1.0 leverage ratio test described
above after giving effect to the transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Permitted investments include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments by CCO Holdings and its restricted
    subsidiaries in CCO Holdings and in other restricted
    subsidiaries, or entities that become restricted subsidiaries as
    a result of the investment,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments aggregating up to 100% of new cash
    equity proceeds received by CCO Holdings since November&nbsp;10,
    2003 to the extent the proceeds have not been allocated to the
    restricted payments covenant described above,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other investments up to $750&nbsp;million
    outstanding at any time,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCO Holdings is not permitted to grant liens on
its assets other than specified permitted liens. Permitted liens
include liens securing debt and other obligations incurred under
our subsidiaries&#146; credit facilities, liens securing the
purchase price of new assets, liens up to $50&nbsp;million and
liens incurred in the ordinary course of business. The lien
covenant does not restrict liens on assets of subsidiaries of
CCO Holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCO Holdings and CCO Holdings Capital, its
co-issuer, are generally not permitted to sell all or
substantially all of their assets or merge with or into other
companies unless their leverage ratio after any such transaction
would be no greater than their leverage ratio immediately prior
to the transaction, or unless CCO Holdings and its subsidiaries
could incur $1.00 of new debt under the 4.50 to 1.0 leverage
ratio test described above after giving effect to the
transaction, no default exists, and the surviving entity is a
U.S.&nbsp;entity that assumes the CCO Holdings senior notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCO Holdings and its restricted subsidiaries may
generally not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60&nbsp;days or productive assets. CCO Holdings and its
restricted subsidiaries are then required within 365&nbsp;days
after any asset sale either to commit to use the net cash
proceeds over a specified threshold to acquire assets, including
current assets, used or useful in their
</FONT>

<P align="center"><FONT size="2">155
</FONT>

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<DIV align="left">
<FONT size="2">businesses or use the net cash proceeds to repay
debt, or to offer to repurchase the CCO Holdings senior notes
with any remaining proceeds.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCO Holdings and its restricted subsidiaries may
generally not engage in sale and leaseback transactions unless,
at the time of the transaction, CCO Holdings could have incurred
secured indebtedness in an amount equal to the present value of
the net rental payments to be made under the lease, and the sale
of the assets and application of proceeds is permitted by the
covenant restricting asset sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCO Holdings&#146; restricted subsidiaries may
generally not enter into restrictions on their ability to make
dividends or distributions or transfer assets to CCO Holdings on
terms that are materially more restrictive than those governing
their debt, lien, asset sale, lease and similar agreements
existing when they entered into the indenture, unless those
restrictions are on customary terms that will not materially
impair CCO Holdings&#146; ability to repay the high-yield notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of CCO Holdings are
generally not permitted to guarantee or pledge assets to secure
debt of CCO Holdings, unless the guarantying subsidiary issues a
guarantee of the notes of comparable priority and tenor, and
waives any rights of reimbursement, indemnity or subrogation
arising from the guarantee transaction for at least one year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture also restricts the ability of CCO
Holdings and its restricted subsidiaries to enter into certain
transactions with affiliates involving consideration in excess
of $15&nbsp;million without a determination by the board of
directors that the transaction is on terms no less favorable
than arms-length, or transactions with affiliates involving over
$50&nbsp;million without receiving an independent opinion as to
the fairness of the transaction to the holders of the CCO
Holdings notes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Senior Floating Rate Notes due
    2010</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;1, 2004, our subsidiaries, CCO
Holdings and CCO Holdings Capital Corp., agreed to issue and
sell $550&nbsp;million senior floating rate notes due 2010 in a
private transaction. The notes are expected to be issued on
December&nbsp;15, 2004, and will have an annual interest rate of
LIBOR plus 4.125%, payable quarterly, and will otherwise have
terms substantially consistent with the CCO Holdings 8&nbsp;3/4%
senior notes due 2010 described above.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Charter Communications Operating, LLC
    Notes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;27, 2004, Charter Operating and
Charter Communications Operating Capital Corp. jointly issued
$1.1&nbsp;billion of 8%&nbsp;senior second lien notes due 2012
and $400&nbsp;million of 8&nbsp;3/8%&nbsp;senior second lien
notes due 2014, for total gross proceeds of $1.5&nbsp;billion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating notes were sold in a
private transaction that was not subject to the registration
requirements of the Securities Act of 1933. The Charter
Operating notes are not expected to have the benefit of any
exchange or other registration rights, except in specified
limited circumstances.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the issue date of the Charter Operating notes,
because of restrictions contained in the Charter Holdings
indentures, there were no Charter Operating note guarantees,
even though Charter Operating&#146;s immediate parent, CCO
Holdings, and certain of our subsidiaries were obligors and/or
guarantors under the amended and restated Charter Operating
credit facilities. Upon the occurrence of the guarantee and
pledge date (generally, the fifth business day after the Charter
Holdings leverage ratio is certified to be below 8.75 to 1.0),
CCO Holdings and those subsidiaries of Charter Operating that
are then guarantors of, or otherwise obligors with respect to,
indebtedness under the amended and restated Charter Operating
credit facilities and related obligations will be required to
guarantee the Charter Operating notes. The note guarantee of
each such guarantor will be:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a senior obligation of such guarantor;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">structurally senior to the outstanding senior
    notes of CCO Holdings and CCO Holdings Capital Corp. (except in
    the case of CCO Holdings&#146; note guarantee, which is
    structurally <I>pari passu </I>with
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">156
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">such senior notes), the outstanding senior notes
    of CCH&nbsp;II and CCH&nbsp;II Capital Corp., the outstanding
    senior notes and senior discount notes of Charter Holdings and
    the outstanding convertible senior notes of Charter (but subject
    to provisions in the Charter Operating indenture that permit
    interest and, subject to meeting the 4.25 to 1.0 leverage ratio
    test, principal payments to be made thereon);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">senior in right of payment to any future
    subordinated indebtedness of such guarantor.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All the subsidiaries of Charter Operating (except
CCO NR Sub, LLC, and certain other subsidiaries that are not
deemed material and are designated as nonrecourse subsidiaries
under the amended and restated Charter Operating credit
facilities) are restricted subsidiaries of Charter Operating
under the Charter Operating notes. Unrestricted subsidiaries
generally will not be subject to the restrictive covenants in
the Charter Operating indenture.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, Charter Operating must offer to purchase the Charter
Operating notes at a purchase price equal to 101% of the total
principal amount of the Charter Operating notes repurchased plus
any accrued and unpaid interest thereon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limitations on incurrence of debt contained
in the indenture governing the Charter Operating notes permit
Charter Operating and its restricted subsidiaries that are
guarantors of the Charter Operating notes to incur additional
debt or issue shares of preferred stock if, after giving pro
forma effect to the incurrence, Charter Operating could meet a
leverage ratio test (ratio of consolidated debt to four times
EBITDA, as defined, from the most recent fiscal quarter for
which internal financial reports are available) of
4.25&nbsp;to&nbsp;1.0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, regardless of whether the leverage
ratio test could be met, so long as no default exists or would
result from the incurrence or issuance, Charter Operating and
its restricted subsidiaries are permitted to incur or issue:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $6.5&nbsp;billion of debt under credit
    facilities (but such incurrence is permitted only by Charter
    Operating and its restricted subsidiaries that are guarantors of
    the Charter Operating notes, so long as there are such
    guarantors), including debt under credit facilities outstanding
    on the issue date of the Charter Operating notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $75&nbsp;million of debt incurred to
    finance the purchase or capital lease of assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $300&nbsp;million of additional debt for
    any purpose,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as refinancing of existing debt and interest rate swaps to
    provide protection against fluctuation in interest rates and,
    subject to meeting the leverage ratio test, debt existing at the
    time of acquisition of a restricted subsidiary.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating indenture provides that
Charter Operating will not pay, or permit its subsidiaries to
pay, any interest or principal on $361&nbsp;million of
intercompany loans received by it and its subsidiaries in
November 2003 from CCO Holdings, all of which shall become a
common equity capital contribution to Charter Operating on the
guarantee and pledge date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the Charter Operating
notes permits Charter Operating to incur debt under one of the
categories above, and later reclassify the debt into a different
category. The amended and restated Charter Operating credit
facilities generally impose more restrictive limitations on
incurring new debt than the Charter Operating indenture, so our
subsidiaries that are subject to the amended and restated
Charter Operating credit facilities are not permitted to utilize
the full debt incurrence that would otherwise be available under
the Charter Operating indenture covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, under Charter Operating&#146;s
indenture Charter Operating and its restricted subsidiaries are
permitted to pay dividends on equity interests, repurchase
interests, or make other specified restricted payments only if
Charter Operating could incur $1.00 of new debt under the
leverage ratio test, which requires that Charter Operating meet
a 4.25 to 1.0 leverage ratio after giving effect to the
transaction, and if no default exists or would exist as a
consequence of such incurrence. If those conditions are met,
</FONT>

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<DIV align="left">
<FONT size="2">restricted payments are permitted in a total
amount of up to 100% of Charter Operating&#146;s consolidated
EBITDA, as defined, minus 1.3 times its consolidated interest
expense, plus 100% of new cash and appraised non-cash equity
proceeds received by Charter Operating and not allocated to the
debt incurrence covenant, all cumulatively from the fiscal
quarter commenced April&nbsp;1, 2004, plus $100&nbsp;million.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Charter Operating may make
distributions or restricted payments, so long as no default
exists or would be caused by the transaction:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to repurchase management equity interests in
    amounts not to exceed $10&nbsp;million per fiscal year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in Charter Operating or its restricted
    subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay, regardless of the existence of any
    default, interest when due on the Charter Holdings notes, the
    CCO Holdings notes, and our notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay, so long as there is no default, interest
    on the Charter convertible notes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to purchase, redeem or refinance the Charter
    Holdings notes, our notes, the CCO Holdings notes, the Charter
    notes, and other direct or indirect parent company notes, so
    long as Charter Operating could incur $1.00 of indebtedness
    under the 4.25 to 1.0 leverage ratio test referred to above and
    there is no default,&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the Charter Operating
notes restricts Charter Operating and its restricted
subsidiaries from making investments, except specified permitted
investments, or creating new unrestricted subsidiaries, if there
is a default under the indenture or if Charter Operating could
not incur $1.00 of new debt under the 4.25 to 1.0 leverage ratio
test described above after giving effect to the transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Permitted investments include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments by Charter Operating and its
    restricted subsidiaries in Charter Operating and in other
    restricted subsidiaries, or entities that become restricted
    subsidiaries as a result of the investment,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">investments aggregating up to 100% of new cash
    equity proceeds received by Charter Operating since
    April&nbsp;27, 2004 to the extent the proceeds have not been
    allocated to the restricted payments covenant described above,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other investments up to $750&nbsp;million
    outstanding at any time,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating and its restricted subsidiaries
are not permitted to grant liens senior to the liens securing
the Charter Operating notes, other than permitted liens, on
their assets to secure indebtedness or other obligations, if,
after giving effect to such incurrence, the senior secured
leverage ratio (generally, the ratio of obligations secured by
first priority liens to four times EBITDA, as defined, from the
most recent fiscal quarter for which internal financial reports
are available) would exceed 3.75 to 1.0. Permitted liens include
liens securing indebtedness and other obligations under
permitted credit facilities, liens securing the purchase price
of new assets, liens securing amounts up to $50&nbsp;million,
and liens incurred in the ordinary course of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating and Charter Communications
Operating Capital Corp., its co-issuer, are generally not
permitted to sell all or substantially all of their assets or
merge with or into other companies unless their leverage ratio
after any such transaction would be no greater than their
leverage ratio immediately prior to the transaction, or unless
Charter Operating and its subsidiaries could incur $1.00 of new
debt
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">under the 4.25 to 1.0 leverage ratio test
described above after giving effect to the transaction, no
default exists, and the surviving entity is a U.S.&nbsp;entity
that assumes the Charter Operating notes.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating and its restricted subsidiaries
generally may not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60&nbsp;days or productive assets. Charter Operating and
its restricted subsidiaries are then required within
365&nbsp;days after any asset sale either to commit to use the
net cash proceeds over a specified threshold to acquire assets,
including current assets, used or useful in their businesses or
use the net cash proceeds to repay debt, or to offer to
repurchase the Charter Operating notes with any remaining
proceeds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating and its restricted subsidiaries
may generally not engage in sale and leaseback transactions
unless, at the time of the transaction, Charter Operating could
have incurred secured indebtedness in an amount equal to the
present value of the net rental payments to be made under the
lease, and the sale of the assets and application of proceeds is
permitted by the covenant restricting asset sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating&#146;s restricted subsidiaries
may generally not enter into restrictions on their ability to
make dividends or distributions or transfer assets to Charter
Operating on terms that are materially more restrictive than
those governing their debt, lien, asset sale, lease and similar
agreements existing when Charter Operating entered into the
indenture governing the Charter Operating Senior second lien
notes unless those restrictions are on customary terms that will
not materially impair Charter Operating&#146;s ability to repay
the Charter Operating notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restricted subsidiaries of Charter Operating
are generally not permitted to guarantee or pledge assets to
secure debt of Charter Operating, unless the guarantying
subsidiary issues a guarantee of the notes of comparable
priority and tenor, and waives any rights of reimbursement,
indemnity or subrogation arising from the guarantee transaction
for at least one year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture also restricts the ability of
Charter Operating and its restricted subsidiaries to enter into
certain transactions with affiliates involving consideration in
excess of $15&nbsp;million without a determination by the board
of directors that the transaction is on terms no less favorable
than arms-length, or transactions with affiliates involving over
$50&nbsp;million without receiving an independent opinion as to
the fairness of the transaction to the holders of the Charter
Operating notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Operating and its restricted subsidiaries
are generally not permitted to transfer equity interests in
restricted subsidiaries unless the transfer is of all of the
equity interests in the restricted subsidiary or the restricted
subsidiary remains a restricted subsidiary and net proceeds of
the equity sale are applied in accordance with the asset sales
covenant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until the guarantee and pledge date, the Charter
Operating notes are secured by a second-priority lien on all of
Charter Operating&#146;s assets that secure the obligations of
Charter Operating under the Charter Operating credit facility
and specified related obligations. The collateral secures the
obligations of Charter Operating with respect to the
8%&nbsp;senior second lien notes due 2012 and the
8&nbsp;3/8%&nbsp;senior second lien notes due 2014 on a ratable
basis. The collateral consists of substantially all of Charter
Operating&#146;s assets in which security interests may be
perfected under the Uniform Commercial Code by filing a
financing statement (including capital stock and intercompany
obligations), including, but not limited to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all of the capital stock of all of Charter
    Operating&#146;s direct subsidiaries, including, but not limited
    to, CCO NR Holdings, LLC;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all intercompany obligations owing to Charter
    Operating including, but not limited to, intercompany notes from
    CC VI Operating, CC VIII Operating and Falcon, which notes are
    supported by the same guarantees and collateral that supported
    these subsidiaries&#146; credit facilities prior to the
    amendment and restatement of the Charter Operating credit
    facilities.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">159
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On and after the guarantee and pledge date, the
collateral for the Charter Operating notes will consist of all
of Charter Operating&#146;s and its subsidiaries&#146; assets
that secure the obligations of Charter Operating or any
subsidiary of Charter Operating with respect to the Charter
Operating credit facility and the related obligations or certain
other indebtedness on such date. It is currently contemplated
that, as of the guarantee and pledge date, such collateral will
consist of the capital stock of Charter Operating held by
CCO&nbsp;Holdings, all of the intercompany obligations owing to
CCO Holdings by Charter Operating or any subsidiary of Charter
Operating, and substantially all of Charter Operating&#146;s and
the guarantors&#146; assets (other than the assets of
CCO&nbsp;Holdings) in which security interests may be perfected
under the Uniform Commercial Code by filing a financing
statement (including capital stock and intercompany
obligations), including, but not limited to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">with certain exceptions, all capital stock
    (limited in the case of capital stock of foreign subsidiaries,
    if any, to 66% of the capital stock of first tier foreign
    Subsidiaries) held by Charter Operating or any
    guarantor;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">with certain exceptions, all intercompany
    obligations owing to Charter Operating or any guarantor.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, within a time frame specified under
the Charter Operating credit facility (45&nbsp;days after
Charter Holdings satisfies the Leverage Condition, as defined),
Charter Operating will be required to redeem, or cause to be
redeemed, in full the notes outstanding under the
CC&nbsp;V&nbsp;indenture. Within five business days after the
redemption, and provided that such Leverage Condition remains
satisfied, CC&nbsp;V&nbsp;Holdings, LLC and its subsidiaries
will be required to guarantee the Charter Operating credit
facility and the related obligations and to secure those
guarantees with first-priority liens, and to guarantee the notes
and to secure the Charter Operating senior second lien notes
with second-priority liens, on substantially all of their assets
in which security interests may be perfected under the Uniform
Commercial Code by filing a financing statement (including
capital stock and intercompany obligations). In addition, if
Charter Operating or its subsidiaries exercise any option to
redeem in full the notes outstanding under the Renaissance
indenture, then, provided that the Leverage Condition remains
satisfied, the Renaissance entities will be required to provide
corresponding guarantees of the amended and restated Charter
Operating credit facilities and related obligations and note
guarantees and to secure the Charter Operating notes and the
amended and restated Charter Operating credit facilities and
related obligations with corresponding liens.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that additional liens are granted by
Charter Operating or its subsidiaries to secure obligations
under the amended and restated Charter Operating credit
facilities or the related obligations, second priority liens on
the same assets will be granted to secure the Charter Operating
notes, which liens will be subject to the provisions of an
intercreditor agreement. Notwithstanding the foregoing sentence,
no such second priority liens need be provided if the time such
lien would otherwise be granted is not during a guarantee and
pledge availability period (when the Leverage Condition is
satisfied), but such second priority lien will be required to be
provided in accordance with the foregoing sentence on or prior
to the fifth business day of the commencement of the next
succeeding guarantee and pledge availability period.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">CC V Holdings, LLC Notes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;10, 1998, CC V Holdings, LLC,
formerly known as Avalon Cable&nbsp;LLC, and
CC&nbsp;V&nbsp;Holdings Finance, Inc. (formerly Avalon Cable
Holdings Finance, Inc.) (collectively the
&#147;CC&nbsp;V&nbsp;Issuers&#148;) jointly issued
$196.0&nbsp;million total principal amount at maturity of
11.875%&nbsp;senior discount notes due 2008. On July&nbsp;22,
1999, the issuers exchanged $196.0&nbsp;million of the original
issued and outstanding CC&nbsp;V&nbsp;Holdings notes for an
equivalent amount of new CC&nbsp;V&nbsp;Holdings notes. The form
and terms of the new CC&nbsp;V Holdings notes are substantially
identical to the original CC&nbsp;V&nbsp;Holdings notes except
that they are registered under the Securities Act and,
therefore, are not subject to the same transfer restrictions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CC V Holdings notes are guaranteed by certain
subsidiaries of CC&nbsp;V&nbsp;Holdings. The Charter Operating
credit facilities require us to redeem the
CC&nbsp;V&nbsp;Holdings notes within 45&nbsp;days after the
first date that the Charter Holdings leverage ratio is less than
8.75 to 1.0.
</FONT>

<P align="center"><FONT size="2">160
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, holders of the CC&nbsp;V&nbsp;Holdings notes have the
right to sell their CC V Holdings notes to the issuers of the CC
V Holdings notes at 101% of the total principal amount of the
CC&nbsp;V&nbsp;Holdings notes, plus accrued and unpaid interest,
if any, to the date of purchase.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our acquisition of Avalon triggered this right.
In January 2000, we completed change of control offers in which
we repurchased $16.3&nbsp;million total accreted value of the
11.875%&nbsp;notes at a purchase price of 101% of accreted value
as of January&nbsp;28, 2000. The repurchase price of
$11&nbsp;million was funded with proceeds of the sale of the
January 2000 Charter Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;1, 2003, the issuers redeemed at
par value an amount equal to $369.79&nbsp;per $1,000 in
principal amount at maturity of each senior discount note then
outstanding. Based on the amount outstanding on December&nbsp;1,
2003, the redemption amount was $67&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There were no current payments of cash interest
on the CC V Holdings notes before December&nbsp;1, 2003. The
CC&nbsp;V&nbsp;Holdings notes accreted in value at a rate of
11.875%&nbsp;per year, compounded semi-annually, to a total
principal amount of $180&nbsp;million on December&nbsp;1, 2003.
At December&nbsp;31, 2003, after principal repayments in the
fourth quarter of 2003, the total principal amount outstanding
was $113&nbsp;million. Since December&nbsp;1, 2003, cash
interest on the CC&nbsp;V&nbsp;Holdings notes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accrues at the rate of 11.875%&nbsp;per year on
    the principal amount at maturity;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">is payable semi-annually in arrears on
    June&nbsp;1 and December&nbsp;1 of each year, commencing
    June&nbsp;1, 2004.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After December&nbsp;1, 2003, the issuers of the
CC&nbsp;V&nbsp;Holdings notes may redeem the
CC&nbsp;V&nbsp;Holdings notes, in whole or in part, at a
specified premium. The optional redemption price declines to
100% of the principal amount of the CC&nbsp;V&nbsp;Holdings
notes redeemed, plus accrued and unpaid interest, if any, for
redemptions on or after December&nbsp;1, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limitations on incurrence of debt contained
in the indenture governing the CC&nbsp;V&nbsp;Holdings notes
permit the CC&nbsp;V&nbsp;Issuers and their restricted
subsidiaries to incur additional debt or issue shares of
preferred stock, so long as we are not in default under the
CC&nbsp;V&nbsp;Holdings indenture:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if, after giving effect to the incurrence, the
    CC&nbsp;V&nbsp;Issuers could meet a leverage ratio (ratio of
    consolidated debt to four times consolidated cash flow from the
    most recent quarter) of 6.5 to 1.0, and, regardless of whether
    the leverage ratio could be met,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to approximately $346&nbsp;million of debt
    under a credit facility,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $10&nbsp;million of debt incurred to
    finance the purchase of new assets,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to $15&nbsp;million of additional
    debt,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the CC V Holdings notes
permits the CC&nbsp;V&nbsp;Issuers to incur debt under one of
the categories above, and reclassify the debt into a different
category.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Under the indenture governing the CC V Holdings
    notes, the CC&nbsp;V&nbsp;Issuers and their restricted
    subsidiaries are permitted to pay dividends on equity interests,
    repurchase interests, make restricted investments, or make other
    specified restricted payments only if CC V Holdings could, after
    giving effect thereto, incur $1.00 of additional debt under the
    leverage ratio test, which would require that the CC V Issuers
    meet the 6.5 to 1.0 leverage ratio of the indebtedness covenant
    and no default would exist or result as a consequence thereof.
    If those conditions are met, the CC V Issuers and their
    restricted subsidiaries are permitted to make restricted
    payments in a total amount not to exceed the result of 100% of
    the CC V Issuers&#146; consolidated cash flow, minus 1.4 times
    their consolidated interest expense, plus 100% of new equity
    proceeds received by the CC V Issuers, plus returns on certain
    investments, all cumulatively from January&nbsp;1, 1999. The CC
    V Issuers and their restricted subsidiaries may make permitted
    investments up to $10&nbsp;million and other specified
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">161
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">permitted investments, restricted payments up to
    $5&nbsp;million, and other specified restricted payments without
    meeting the foregoing test.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers and their restricted
    subsidiaries are not permitted to grant liens on their assets
    other than specified permitted liens. Permitted liens include
    liens securing debt permitted by the covenant limiting
    incurrence of debt, liens securing amounts up to the greater of
    $15&nbsp;million or 5% of total assets, certain existing liens
    and specified liens incurred in the ordinary course of business.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers are generally not permitted to
    sell or otherwise dispose of all or substantially all of their
    assets or merge with or into other companies unless the CC V
    Issuers and their subsidiaries could incur $1.00 of additional
    debt under the leverage ratio test described above, after giving
    effect to the transaction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers and their subsidiaries may
    generally not otherwise sell assets or, in the case of
    restricted subsidiaries, equity interests, unless they receive
    consideration at least equal to the fair market value of the
    assets or equity interests, with at least 75% of the
    consideration for such sale consisting of a controlling interest
    in a permitted business or assets useful in a permitted business
    or cash, assumption of liabilities or securities promptly
    converted into cash. The CC V Issuers and their restricted
    subsidiaries are then required within 360&nbsp;days after any
    asset sale either to commit to use the net cash proceeds over a
    specified threshold either to acquire assets, including
    controlling assets in permitted businesses, make capital
    expenditures or use the net cash proceeds to repay debt, or to
    offer to repurchase the CC V Holdings notes with any remaining
    proceeds.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers and their restricted
    subsidiaries may not engage in sale and leaseback transactions
    unless, at the time of the transaction, the applicable CC V
    Issuer or restricted subsidiary could have incurred indebtedness
    under the leverage ratio test described above in an amount equal
    to the present value of the net rental payments to be made under
    the lease, the gross proceeds of the sale are at least equal to
    the fair market value of the subject property, and the sale of
    the assets and application of proceeds is permitted by the
    covenant restricting asset sales.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers&#146; restricted subsidiaries
    may not enter into restrictions on their abilities to make
    dividends or distributions or transfer assets to the CC V
    Issuers except under documents governing debt, asset sales,
    leases and like transactions permitted by the indenture.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The restricted subsidiaries of the CC V Issuers
    are generally not permitted to guarantee or pledge assets to
    secure debt of the CC&nbsp;V&nbsp;Issuers, unless the
    guarantying subsidiary issues a guarantee of the
    CC&nbsp;V&nbsp;Holdings notes, and waives any rights of
    reimbursement, indemnity or subrogation arising from the
    guarantee transaction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The CC V Issuers and their restricted
    subsidiaries are generally not permitted to transfer equity
    interests in restricted subsidiaries unless the transfer is of
    all of the equity interests in the restricted subsidiary or the
    restricted subsidiary remains a restricted subsidiary and net
    proceeds of the equity sale are applied in accordance with the
    asset sales covenant. Restricted subsidiaries of the
    CC&nbsp;V&nbsp;Issuers are not permitted to issue equity
    interests if as a result, the issuing subsidiary would no longer
    be a restricted subsidiary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The indenture governing the CC V Holdings notes
    also restricts the ability of the CC V Issuers and their
    restricted subsidiaries to enter into certain transactions with
    affiliates involving over $2.5&nbsp;million without a
    determination by the board of directors that the transaction is
    on terms no less favorable than arms-length, or transactions
    with affiliates involving consideration in excess of
    $10&nbsp;million with affiliates without receiving an
    independent opinion as to the fairness of the transaction to the
    holders of the CC V Holdings notes.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Renaissance Media Notes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 10%&nbsp;senior discount notes due 2008 were
issued by Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Holdings Capital
Corporation, with
</FONT>

<P align="center"><FONT size="2">162
</FONT>

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<DIV align="left">
<FONT size="2">Renaissance Media Group LLC as guarantor and the
United States Trust Company of New York as trustee. Renaissance
Media Group LLC, which is the direct or indirect parent company
of these issuers, is now a subsidiary of Charter Operating. The
Renaissance 10%&nbsp;notes and the Renaissance guarantee are
unsecured, unsubordinated debt of the issuers and the guarantor,
respectively. In October 1998, the issuers of the Renaissance
notes exchanged $163&nbsp;million of the original issued and
outstanding Renaissance notes for an equivalent value of new
Renaissance notes. The form and terms of the new Renaissance
notes are the same in all material respects as the form and
terms of the original Renaissance notes except that the issuance
of the new Renaissance notes was registered under the Securities
Act.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There was no payment of any interest in respect
of the Renaissance notes prior to October&nbsp;15, 2003. Since
October&nbsp;15, 2003, interest on the Renaissance notes is
payable semi-annually in arrears in cash at a rate of
10%&nbsp;per year. On April&nbsp;15, 2003, the Renaissance notes
became redeemable at the option of the issuers thereof, in whole
or in part, initially at 105% of their principal amount at
maturity, plus accrued interest, declining to 100% of the
principal amount at maturity, plus accrued interest, on or after
April&nbsp;15, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our acquisition of Renaissance triggered change
of control provisions of the Renaissance notes that required us
to offer to purchase the Renaissance notes at a purchase price
equal to 101% of their accreted value on the date of the
purchase, plus accrued interest, if any. In May 1999, we made an
offer to repurchase the Renaissance notes, and holders of
Renaissance notes representing 30% of the total principal amount
outstanding at maturity tendered their Renaissance notes for
repurchase.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limitations on incurrence of debt contained
in the indenture governing the Renaissance notes permit
Renaissance Media Group and its restricted subsidiaries to incur
additional debt, so long as they are not in default under the
indenture:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if, after giving effect to the incurrence,
    Renaissance Media Group could meet a leverage ratio (ratio of
    consolidated debt to four times consolidated EBITDA, as defined,
    from the most recent quarter) of 6.75 to 1.0, and, regardless of
    whether the leverage ratio could be met,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to the greater of $200&nbsp;million or 4.5
    times Renaissance Media Group&#146;s consolidated annualized
    EBITDA, as defined,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to an amount equal to 5% of Renaissance Media
    Group&#146;s consolidated total assets to finance the purchase
    of new assets,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">up to two times the sum of (a)&nbsp;the net cash
    proceeds of new equity issuances and capital contributions, and
    (b)&nbsp;80% of the fair market value of property received by
    Renaissance Media Group or an issuer as a capital contribution,
    in each case received after the issue date of the Renaissance
    notes and not allocated to make restricted payments,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture governing the Renaissance notes
permits us to incur debt under one of the categories above, and
reclassify the debt into a different category.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Under the indenture governing the Renaissance
    notes, Renaissance Media Group and its restricted subsidiaries
    are permitted to pay dividends on equity interests, repurchase
    interests, make restricted investments, or make other specified
    restricted payments only if Renaissance Media Group could incur
    $1.00 of additional debt under the debt incurrence test, which
    requires that Renaissance Media Group meet the 6.75 to 1.0
    leverage ratio after giving effect to the transaction of the
    indebtedness covenant and that no default exists or would occur
    as a consequence thereof. If those conditions are met,
    Renaissance Media Group and its restricted subsidiaries are
    permitted to make restricted payments in a total amount not to
    exceed the result of 100% of Renaissance Media Group&#146;s
    consolidated EBITDA, as defined, minus 130% of its consolidated
    interest expense, plus 100% of new cash equity proceeds received
    by Renaissance Media Group and not allocated to the indebtedness
    covenant, plus returns on certain investments, all cumulatively
    from June 1998.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">163
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and its restricted
    subsidiaries may make permitted investments up to
    $2&nbsp;million in related businesses and other specified
    permitted investments, restricted payments up to
    $10&nbsp;million, dividends up to 6% each year of the net cash
    proceeds of public equity offerings, and other specified
    restricted payments without meeting the foregoing test.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and its restricted
    subsidiaries are not permitted to grant liens on their assets
    other than specified permitted liens, unless corresponding liens
    are granted to secure the Renaissance notes. Permitted liens
    include liens securing debt permitted to be incurred under
    credit facilities, liens securing debt incurred under the
    incurrence of indebtedness test, in amounts up to the greater of
    $200&nbsp;million or 4.5 times Renaissance Media Group&#146;s
    consolidated EBITDA, as defined, liens as deposits for
    acquisitions up to 10% of the estimated purchase price, liens
    securing permitted financings of new assets, liens securing debt
    permitted to be incurred by restricted subsidiaries, and
    specified liens incurred in the ordinary course of business.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and the issuers of the
    Renaissance notes are generally not permitted to sell or
    otherwise dispose of all or substantially all of their assets or
    merge with or into other companies unless their consolidated net
    worth after any such transaction would be equal to or greater
    than their consolidated net worth immediately prior to the
    transaction, or unless Renaissance Media Group could incur $1.00
    of additional debt under the debt incurrence test, which would
    require them to meet a leverage ratio of 6.75 to 1.00 after
    giving effect to the transaction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and its subsidiaries may
    generally not otherwise sell assets or, in the case of
    subsidiaries, equity interests, unless they receive
    consideration at least equal to the fair market value of the
    assets, consisting of at least 75% cash, temporary cash
    investments or assumption of debt. Charter Holdings and its
    restricted subsidiaries are then required within 12&nbsp;months
    after any asset sale either to commit to use the net cash
    proceeds over a specified threshold either to acquire assets
    used in their own or related businesses or use the net cash
    proceeds to repay debt, or to offer to repurchase the
    Renaissance notes with any remaining proceeds.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and its restricted
    subsidiaries may generally not engage in sale and leaseback
    transactions unless the lease term does not exceed three years
    or the proceeds are applied in accordance with the covenant
    limiting asset sales.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group&#146;s restricted
    subsidiaries may generally not enter into restrictions on their
    abilities to make dividends or distributions or transfer assets
    to Renaissance Media Group except those not more restrictive
    than is customary in comparable financings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The restricted subsidiaries of Renaissance Media
    Group are not permitted to guarantee or pledge assets to secure
    debt of the Renaissance Media Group or its restricted
    subsidiaries, unless the guarantying subsidiary issues a
    guarantee of the Renaissance notes of comparable priority and
    tenor, and waives any rights of reimbursement, indemnity or
    subrogation arising from the guarantee transaction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Renaissance Media Group and its restricted
    subsidiaries are generally not permitted to issue or sell equity
    interests in restricted subsidiaries, except sales of common
    stock of restricted subsidiaries so long as the proceeds of the
    sale are applied in accordance with the asset sale covenant, and
    issuances as a result of which the restricted subsidiary is no
    longer a restricted subsidiary and any remaining investment in
    that subsidiary is permitted by the covenant limiting restricted
    payments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The indenture governing the Renaissance Notes
    also restricts the ability of Renaissance Media Group and its
    restricted subsidiaries to enter into certain transactions with
    affiliates involving consideration in excess of $2&nbsp;million
    without a determination by the disinterested members of the
    board of directors that the transaction is on terms no less
    favorable than arms length, or transactions with affiliates
    involving over $4&nbsp;million with affiliates without receiving
    an independent opinion as to the fairness of the transaction to
    Renaissance Media Group.
    </FONT></TD>
</TR>

</TABLE>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of these covenants are subject to additional
specified exceptions. In general, the covenants of the amended
and restated Charter Operating credit facilities are more
restrictive than those of our indentures.
</FONT>

<P align="left">
<B><FONT size="2">Cross-Defaults</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our indentures and those of certain of our
subsidiaries include various events of default, including
cross-default provisions. Under these provisions, a failure by
any of the issuers or any of their restricted subsidiaries to
pay at the final maturity thereof the principal amount of other
indebtedness having a principal amount of $100&nbsp;million or
more (or any other default under any such indebtedness resulting
in its acceleration) would result in an event of default under
the indenture governing the applicable notes. The
CC&nbsp;V&nbsp;Holdings indenture contains events of default
that include a cross-default in the event of acceleration of, or
failure to make payments when due or within the applicable grace
period, by the CC&nbsp;V&nbsp;Issuers or any of their restricted
subsidiaries, on any indebtedness of $5&nbsp;million or more.
The Renaissance indenture contains a similar cross-default
provision with a $10&nbsp;million threshold that applies to the
issuers of the Renaissance notes and their restricted
subsidiaries. As a result, an event of default related to the
failure to repay principal at maturity or the acceleration of
the indebtedness under the Charter Holdings notes, Charter
Operating notes, the Charter Operating credit facilities or the
CC&nbsp;V&nbsp;Holdings or Renaissance indentures could cause a
cross-default under our subsidiaries&#146; indentures.
</FONT>

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<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "DESCRIPTION OF CAPITAL STOCK AND MEMBERSHIP UNITS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK AND MEMBERSHIP
UNITS</FONT></B>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our capital stock and the provisions of our
restated certificate of incorporation and bylaws are as
described below. These summaries are qualified by reference to
the restated certificate of incorporation and the bylaws, copies
of which have been filed with the Securities and Exchange
Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our authorized capital stock consists of
1.750&nbsp;billion shares of Class&nbsp;A common stock, par
value $.001&nbsp;per share, 750&nbsp;million shares of
Class&nbsp;B common stock, par value $.001&nbsp;per share, and
250&nbsp;million shares of preferred stock, par value
$.001&nbsp;per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our restated certificate of incorporation and
Charter Communications Holding Company, LLC&#146;s amended and
restated limited liability company agreement contain provisions
that are designed to cause the number of shares of our common
stock that are outstanding to equal the number of common
membership units of Charter Communications Holding Company, LLC
owned by Charter and to cause the value of a share of common
stock to be equal to the value of a common membership unit.
These provisions are meant to allow a holder of our common stock
to easily understand the economic interest that such
holder&#146;s common shares represent of Charter Communications
Holding Company, LLC&#146;s business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In particular, provisions in our restated
certificate of incorporation provide that:
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;at all times the number of shares of our
    common stock outstanding will be equal to the number of Charter
    Communications Holding Company, LLC common membership units
    owned by Charter.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;Charter will not hold any assets other
    than, among other allowable assets:
    </FONT></TD>
</TR>

</TABLE>
<P>

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<TR>
    <TD width="10%"></TD>
    <TD width="1%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">working capital and cash held for the payment of
    current obligations and receivables from Charter Communications
    Holding Company, LLC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">common membership units of Charter Communications
    Holding Company, LLC;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">obligations and equity interests of Charter
    Communications Holding Company, LLC that correspond to
    obligations and equity interests issued by Charter;
    </FONT></TD>
</TR>

</TABLE>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;Charter will not borrow any money or
    enter into any capital lease unless Charter Communications
    Holding Company, LLC enters into the same arrangements with
    Charter so that Charter&#146;s liability flows through to
    Charter Communications Holding Company, LLC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Provisions in Charter Communications Holding
Company, LLC&#146;s amended and restated limited liability
company agreement provide that, upon the contribution by Charter
of assets acquired through the issuance of common stock by
Charter, Charter Communications Holding Company, LLC will issue
to Charter that number of common membership units as equals the
number of shares of common stock issued by Charter. In the event
of the contribution by Charter of assets acquired through the
issuance of indebtedness or preferred interests of Charter,
Charter Communications Holding Company, LLC will issue to
Charter a corresponding obligation or interest, respectively to
allow Charter to pass through to Charter Communications Holding
Company, LLC these liabilities or preferred interests. Such
liabilities or preferred interest of Charter Communication
Holding Company, LLC will be assets of Charter, in addition to
the Class&nbsp;B common units of Charter Communications Holding
Company, LLC that are held by Charter.
</FONT>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, there were
304,803,455&nbsp;shares of Class&nbsp;A common stock issued and
outstanding and 50,000&nbsp;shares of Class&nbsp;B common stock
issued and outstanding. If, as described below, all shares of
Class&nbsp;B common stock convert to shares of Class&nbsp;A
common stock as a result of dispositions by Mr.&nbsp;Allen and
his affiliates, the holders of Class&nbsp;A common stock will be
entitled to elect all members of the board of directors, other
than any members elected separately by the holders of any
preferred shares with the right to vote, of which there are
currently none outstanding.
</FONT>

<P align="center"><FONT size="2">166
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Voting
Rights.</FONT></I></B><FONT size="2"> The holders of
Class&nbsp;A common stock and Class&nbsp;B common stock
generally have identical rights, except:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each Class&nbsp;A common shareholder is entitled
    to one vote per share; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each Class&nbsp;B common shareholder is entitled
    to a number of votes based on the number of outstanding
    Class&nbsp;B common stock and Charter Communications Holding
    Company, LLC membership units exchangeable for Class&nbsp;B
    common stock. For example, Mr.&nbsp;Allen is entitled to ten
    votes for each share of Class&nbsp;B common stock held by him or
    his affiliates and ten votes for each membership unit held by
    him or his affiliates;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the Class&nbsp;B common shareholders have the
    sole power to vote to amend or repeal the provisions of our
    restated certificate of incorporation relating to:
    </FONT></TD>
</TR>

</TABLE>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;the activities in which Charter may
    engage;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;the required ratio of outstanding shares
    of common stock to outstanding membership units owned by
    Charter;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;the restrictions on the assets and
    liabilities that Charter may hold.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of the provisions described in the
final bullet point is that holders of Class&nbsp;A common stock
have no right to vote on these matters. These provisions allow
Mr.&nbsp;Allen, for example, to amend the restated certificate
of incorporation to permit Charter to engage in currently
prohibited business activities without having to seek the
approval of holders of Class&nbsp;A common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The voting rights relating to the election of
Charter&#146;s board of directors are as follows:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Class&nbsp;B common shareholders, voting
    separately as a class, are entitled to elect all but one member
    of our board of directors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Class&nbsp;A and Class&nbsp;B common
    shareholders, voting together as one class, are entitled to
    elect the remaining member of our board of directors who is not
    elected by the Class&nbsp;B common shareholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Class&nbsp;A common shareholders and Class&nbsp;B
    common shareholders are not entitled to cumulate their votes in
    the election of directors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In addition, Charter may issue one or more series
    of preferred stock that entitle the holders of such preferred
    stock to elect directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other than the election of directors and any
matters where Delaware law or Charter&#146;s restated
certificate of incorporation or bylaws requires otherwise, all
matters to be voted on by shareholders must be approved by a
majority of the votes cast by the holders of shares of
Class&nbsp;A common stock and Class&nbsp;B common stock present
in person or represented by proxy, voting together as a single
class, subject to any voting rights granted to holders of any
preferred stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amendments to Charter&#146;s restated certificate
of incorporation that would adversely alter or change the
powers, preferences or special rights of the Class&nbsp;A common
stock or the Class&nbsp;B common stock must be approved by a
majority of the votes entitled to be cast by the holders of the
outstanding shares of the affected class, voting as a separate
class. In addition, the following actions by Charter must be
approved by the affirmative vote of the holders of at least a
majority of the voting power of the outstanding Class&nbsp;B
common stock, voting as a separate class:
</FONT>
<P>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance of any Class&nbsp;B common stock
    other than to Mr.&nbsp;Allen and his affiliates and other than
    pursuant to specified stock splits and dividends;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance of any stock other than Class&nbsp;A
    common stock (and other than Class&nbsp;B common stock as
    described above);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the amendment, modification or repeal of any
    provision of its restated certificate of incorporation relating
    to capital stock or the removal of directors.
    </FONT></TD>
</TR>

</TABLE>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter will lose its rights to manage the
business of Charter Communications Holding Company, LLC and
Charter Investment, Inc. will become the sole manager of Charter
Communications Holding Company, LLC if at any time a court holds
that the holders of the Class&nbsp;B common stock no longer:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">have the number of votes per share of
    Class&nbsp;B common stock described above;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">have the right to elect, voting separately as a
    class, all but one member of Charter&#146;s board of directors,
    except for any directors elected separately by the holders of
    preferred stock;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">have the right to vote as a separate class on
    matters that adversely affect the Class&nbsp;B common stock with
    respect to:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;the issuance of equity securities of
    Charter other than the Class&nbsp;A common stock;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;the voting power of the Class&nbsp;B
    common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions are contained in the amended and
restated limited liability company agreement of Charter
Communications Holding Company, LLC. The Class&nbsp;B common
stock could lose these rights if a holder of Class&nbsp;A common
stock successfully challenges in a court proceeding the voting
rights of the Class&nbsp;B common stock. In any of these
circumstances, Charter would also lose its 100% voting control
of Charter Communications Holding Company, LLC as provided in
Charter Communications Holding Company, LLC&#146;s amended and
restated limited liability company agreement. These provisions
exist to assure Mr.&nbsp;Allen that he will be able to control
Charter Communications Holding Company, LLC in the event he was
no longer able to control Charter through his ownership of
Class&nbsp;B common stock. These events could have a material
adverse impact on our business and the market price of the
Class&nbsp;A common stock and the Notes. See &#147;Risk
Factors&nbsp;&#151; Risks Related to Our Business.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Dividends.</FONT></I></B><FONT size="2">
Holders of Class&nbsp;A common stock and Class&nbsp;B common
stock will share ratably (based on the number of shares of
common stock held) in any dividend declared by our board of
directors, subject to any preferential rights of any outstanding
preferred stock. Dividends consisting of shares of Class&nbsp;A
common stock and Class&nbsp;B common stock may be paid only as
follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">shares of Class&nbsp;A common stock may be paid
    only to holders of Class&nbsp;A common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">shares of Class&nbsp;B common stock may be paid
    only to holders of Class&nbsp;B common stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of shares of each class of common
    stock payable per share of such class of common stock shall be
    equal in number.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our restated certificate of incorporation
provides that we may not pay a stock dividend unless the number
of outstanding Charter Communications Holding Company, LLC
common membership units are adjusted accordingly. This provision
is designed to maintain the equal value between shares of common
stock and membership units and the one-to-one exchange ratio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Conversion of Class&nbsp;B Common
Stock.</FONT></I></B><FONT size="2"> Each share of outstanding
Class&nbsp;B common stock will automatically convert into one
share of Class&nbsp;A common stock if, at any time,
Mr.&nbsp;Allen or any of his affiliates sells any shares of
common stock of Charter or membership units of Charter
Communications Holding Company, LLC and as a result of such
sale, Mr.&nbsp;Allen and his affiliates no longer own directly
and indirectly common stock and other equity interests in
Charter and membership units in Charter Communications Holding
Company, LLC that in total represent at least:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">20% of the sum of the values, calculated as of
    November&nbsp;12, 1999, of the shares of Class&nbsp;B common
    stock directly or indirectly owned by Mr.&nbsp;Allen and his
    affiliates and the shares of Class&nbsp;B common stock for which
    outstanding Charter Communications Holding Company, LLC
    membership units directly or indirectly owned by Mr.&nbsp;Allen
    and his affiliates were exchangeable on that date,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">5% of the sum of the values, calculated as of the
    measuring date, of shares of outstanding common stock and other
    equity interests in Charter and the shares of Charter common
    stock for which outstanding Charter Communications Holding
    Company, LLC membership units are exchangeable on such date.
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions exist to assure that
Mr.&nbsp;Allen will no longer be able to control Charter if
after sales of his equity interests he owns an insignificant
economic interest in our business. The conversion of all
Class&nbsp;B common stock in accordance with these provisions
would not trigger Charter Communications Holding Company,
LLC&#146;s limited liability company agreement provisions
described above whereby Charter would lose its management rights
and special voting rights relating to Charter Communications
Holding Company, LLC in the event of an adverse determination of
a court affecting the rights of the Class&nbsp;B common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of a share of Class&nbsp;B common
stock has the right to convert such share into one share of
Class&nbsp;A common stock at any time on a one-for-one basis. If
a Class&nbsp;B common shareholder transfers any shares of
Class&nbsp;B common stock to a person other than an authorized
Class&nbsp;B common shareholder, these shares of Class&nbsp;B
common stock will automatically convert into shares of
Class&nbsp;A common stock. Authorized Class&nbsp;B common
shareholders are Paul G. Allen entities controlled by
Mr.&nbsp;Allen, Mr.&nbsp;Allen&#146;s estate, any organization
qualified under Section&nbsp;501(c)(3) of the Internal Revenue
Code that is Mr.&nbsp;Allen&#146;s beneficiary upon his death
and certain trusts established by or for the benefit of
Mr.&nbsp;Allen. In this context &#147;controlled&#148; means the
ownership of more than 50% of the voting power and economic
interest of an entity and &#147;transfer&#148; means the
transfer of record or beneficial ownership of any such share of
Class&nbsp;B common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Other Rights.</FONT></I></B><FONT size="2">
Shares of Class&nbsp;A common stock will be treated equally in
the event of any merger or consolidation of Charter so that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each class of common shareholders will receive
    per share the same kind and amount of capital stock, securities,
    cash and/or other property received by any other class of common
    shareholders, provided that any shares of capital stock so
    received may differ in a manner similar to the manner in which
    the shares of Class&nbsp;A common stock and Class&nbsp;B common
    stock differ;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each class of common shareholders, to the extent
    they receive a different kind (other than as described above) or
    different amount of capital stock, securities, cash and/or other
    property than that received by any other class of common
    shareholders, will receive for each share of common stock they
    hold, stock, securities, cash and/or either property having a
    value substantially equivalent to that received by such other
    class of common shareholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon Charter&#146;s liquidation, dissolution or
winding up, after payment in full of the amounts required to be
paid to preferred shareholders, if any, all common shareholders,
regardless of class, are entitled to share ratably in any assets
and funds available for distribution to common shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No shares of any class of common stock are
subject to redemption or have preemptive right to purchase
additional shares of common stock.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter&#146;s board of directors is authorized,
subject to the approval of the holders of the Class&nbsp;B
common stock, to issue from time to time up to a total of
250&nbsp;million shares of preferred stock in one or more series
and to fix the numbers, powers, designations, preferences, and
any special rights of the shares of each such series thereof,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dividend rights and rates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conversion rights;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">voting rights;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">terms of redemption (including any sinking fund
    provisions) and redemption price or prices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">liquidation preferences;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of shares constituting and the
    designation of such series.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to their authority the board of
directors has designated 1&nbsp;million of the above-described
250&nbsp;million shares as Series&nbsp;A Convertible Redeemable
Preferred Stock (&#147;Series&nbsp;A Preferred Stock&#148;).
Holders of the Series&nbsp;A Preferred Stock have no voting
rights but are entitled to receive cumulative cash
</FONT>

<P align="center"><FONT size="2">169
</FONT>

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<DIV align="left">
<FONT size="2">dividends at an annual rate of 5.75%, payable
quarterly. If for any reason Charter fails to pay the dividends
on the Series&nbsp;A Preferred Stock on a timely basis, the
dividend rate on each share increases to an annual rate of 7.75%
until the payment is made. The Series&nbsp;A Preferred Stock is
redeemable by Charter at its option on or after August&nbsp;31,
2004 and must be redeemed by Charter at any time upon a change
of control, or if not previously redeemed or converted, on
August&nbsp;31, 2008. The Series&nbsp;A Preferred Stock is
convertible, in whole or in part, at the option of the holders
on or before August&nbsp;31, 2008, into shares of common stock
at an initial conversion rate equal to a conversion price of
$24.71&nbsp;per share of common stock, subject to certain
customary adjustments. The redemption price per share of
Series&nbsp;A Preferred Stock is the liquidation preference of
$100, subject to certain customary adjustments. At
September&nbsp;30, 2003, there were 545,259&nbsp;shares of
Series&nbsp;A Preferred Stock outstanding, with an aggregate
liquidation preference of approximately $54.5&nbsp;million.
These shares are convertible into approximately 2.2&nbsp;million
shares of Class&nbsp;A common stock.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter has no present plans to issue any other
shares of preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, options to
purchase a total of 2,863,779 membership units in Charter
Communications Holding Company, LLC were outstanding pursuant to
the 1999 Charter Communications Option Plan, and options to
purchase a total of 25,349,630&nbsp;shares of Class&nbsp;A
common stock were outstanding pursuant to Charter&#146;s 2001
Stock Incentive Plan. Of these options, 10,332,398 have vested.
The membership units received upon exercise of any of the
options under the 1999 Charter Communications Option Plan are
automatically exchanged for shares of our Class&nbsp;A common
stock on a one-for-one basis. In addition, a portion of the
unvested options will vest each month. There are also additional
options outstanding to purchase an aggregate of
289,268&nbsp;shares of Class&nbsp;A common stock, which were
issued to a consultant outside of the plan.
</FONT>

<P align="left">
<B><FONT size="2">Convertible Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have outstanding $862.5&nbsp;million principal
amount of our 5.875% convertible senior notes due 2009, which
are convertible (at approximately $2.42 per share) into a total
of approximately 356&nbsp;million shares of our Class&nbsp;A
common stock. We also have outstanding approximately
$588&nbsp;million principal amount of our 5.75% senior
convertible notes due 2005, which are convertible (at
approximately $21.56&nbsp;per share) into a total of
approximately 27.3&nbsp;million shares of Class&nbsp;A common
stock, and approximately $156&nbsp;million principal amount of
its 4.75% senior convertible notes due 2006, which are
convertible (at approximately $26.25&nbsp;per share) into a
total of approximately 5.9&nbsp;million shares of Class&nbsp;A
common stock. However, we have called for redemption all of the
5.75% convertible senior notes due 2005.
</FONT>

<P align="left">
<B><FONT size="2">Anti-takeover Effects of Provisions of
Charter&#146;s Restated Certificate of Incorporation and
Bylaws</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Provisions of Charter&#146;s restated certificate
of incorporation and bylaws may be deemed to have an
anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a shareholder might consider in
its best interest, including those attempts that might result in
a premium over the market price for the shares held by
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Special Meeting of
Shareholders.</FONT></I></B><FONT size="2"> Our bylaws provide
that, subject to the rights of holders of any series of
preferred stock, special meetings of our shareholders may be
called only by the chairman of our board of directors, our chief
executive officer or a majority of our board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Advance Notice Requirements For Shareholder
Proposals And Director
Nominations.</FONT></I></B><FONT size="2"> Our bylaws provide
that shareholders seeking to bring business before an annual
meeting of shareholders, or to nominate candidates for election
as directors at an annual meeting of shareholders, must provide
timely prior written notice of their proposals. To be timely, a
shareholder&#146;s notice must be received at our principal
executive offices not less than 45&nbsp;days nor more than
70&nbsp;days prior to the first anniversary of the date on which
we first mailed our proxy statement for the prior year&#146;s
annual meeting. If, however, the date of the annual meeting is
more than 30&nbsp;days before or after the anniversary date of
the prior year&#146;s annual meeting, notice by the shareholder
must be received not less than 90&nbsp;days prior to the annual
</FONT>

<P align="center"><FONT size="2">170
</FONT>

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<DIV align="left">
<FONT size="2">meeting or by the 10th day following the public
announcement of the date of the meeting, whichever occurs later,
and not more than 120&nbsp;days prior to the annual meeting. Our
bylaws specify requirements as to the form and content of a
shareholder&#146;s notice. These provisions may limit
shareholders in bringing matters before an annual meeting of
shareholders or in making nominations for directors at an annual
meeting of shareholders.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Authorized But Unissued
Shares.</FONT></I></B><FONT size="2"> The authorized but
unissued shares of Class&nbsp;A common stock are available for
future issuance without shareholder approval and, subject to
approval by the holders of the Class&nbsp;B common stock, the
authorized but unissued shares of Class&nbsp;B common stock and
preferred stock are available for future issuance. These
additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and
preferred stock could render more difficult or discourage an
attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
</FONT>

<P align="left">
<B><FONT size="2">Membership Units of Charter Communications
Holding Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Communications Holding Company, LLC
limited liability company agreement provides for three separate
classes of common membership units designed Class&nbsp;A,
Class&nbsp;B and Class&nbsp;C and one class of preferred
membership units designated Class&nbsp;A. As of
September&nbsp;30, 2004, there were 643,985,486 Charter
Communications Holding Company, LLC common membership units
issued and outstanding, 304,853,455 of which were held by
Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Class&nbsp;A Common Membership
Units.</FONT></I></B><FONT size="2"> As of September&nbsp;30,
2004, there were a total of 324,300,479 issued and outstanding
Class&nbsp;A common membership units, consisting of
217,585,246&nbsp;units owned by Charter Investment, Inc. and
106,715,233&nbsp;units owned by Vulcan Cable&nbsp;III Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Class&nbsp;B Common Membership
Units.</FONT></I></B><FONT size="2"> As of September&nbsp;30,
2004, there were a total of 304,853,455 issued and outstanding
Class&nbsp;B common membership units, all of which are owned by
Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Class&nbsp;C Common Membership
Units.</FONT></I></B><FONT size="2"> As of September&nbsp;30,
2004, there were a total of 14,831,552&nbsp;issued and
outstanding Class&nbsp;C common membership units, consisting of
5,233,612&nbsp;units owned by Charter Investment, Inc. and
9,597,940&nbsp;units owned by Vulcan Cable&nbsp;III Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Charter Investment, Inc., an
affiliate of Mr.&nbsp;Allen owns 24,273,943&nbsp;units of
CC&nbsp;VIII, LLC membership units. An issue has arisen
regarding the ultimate ownership of such CC&nbsp;VIII, LLC
membership interests following Mr.&nbsp;Allen&#146;s acquisition
of those interests on June&nbsp;6, 2003. See &#147;Certain
Relations and Related Transactions&nbsp;&#151; Transactions
Arising out of Our Organizational Structure and
Mr.&nbsp;Allen&#146;s Investment in Charter Communications, Inc.
and Its Subsidiaries&nbsp;&#151; Equity Put Rights&nbsp;&#151;
CC&nbsp;VIII.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Convertible Preferred Membership
Units.</FONT></I></B><FONT size="2"> As of September&nbsp;30,
2004, there were a total of 545,259 issued and outstanding
convertible preferred membership units. These units are owned by
Charter and mirror the terms of Charter&#146;s Series&nbsp;A
Preferred Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any matter requiring a vote of the members of
Charter Communications Holding Company, LLC requires the
affirmative vote of a majority of the Class&nbsp;B common
membership units. Charter owns all Class&nbsp;B common
membership units and therefore controls Charter Communications
Holding Company, LLC. Because Mr.&nbsp;Allen owns high
vote&nbsp;Class&nbsp;B common stock of Charter that entitles him
to approximately 93% of the voting power of the outstanding
common stock of Charter, Mr.&nbsp;Allen controls us and through
us has voting control of Charter Communications Holding Company,
LLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net cash proceeds that Charter receives from
any issuance of shares of common stock will be immediately
transferred to Charter Communications Holding Company, LLC in
exchange for membership units equal in number to the number of
shares of common stock issued by Charter.
</FONT>

<P align="left">
<B><FONT size="2">Exchange Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is a party to an agreement permitting
Vulcan Cable&nbsp;III Inc., Charter Investment, Inc. and any
other affiliate of Mr.&nbsp;Allen to exchange at any time on a
one-for-one basis any or all of their Charter
</FONT>

<P align="center"><FONT size="2">171
</FONT>

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<DIV align="left">
<FONT size="2">Holdco common membership units for shares of
Class&nbsp;B common stock. This exchange may occur directly or,
at the election of the exchanging holder, indirectly through a
tax-free reorganization such as a share exchange or a statutory
merger of any Allen-controlled entity with and into Charter or a
wholly owned subsidiary of Charter. In the case of an exchange
in connection with a tax-free share exchange or a statutory
merger, shares of Class&nbsp;A common stock held by
Mr.&nbsp;Allen or the Allen-controlled entity will also be
exchanged for Class&nbsp;B common stock. Mr.&nbsp;Allen
currently owns shares of Class&nbsp;A common stock as a result
of the exercise of put rights granted to sellers in the Falcon
acquisition and the Rifkin acquisition.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdco common membership units held by
Mr.&nbsp;Allen and his affiliates are exchangeable at any time
for shares of our Class&nbsp;B common stock, which is then
convertible into shares of Class&nbsp;A common stock. The
exchange agreement and the Charter Communications Option Plan
state that common membership units are exchangeable for shares
of common stock at a value equal to the fair market value of the
common membership units. The exchange ratio of common membership
units to shares of Class&nbsp;A common stock will be one to one
because Charter and Charter Holdco have been structured so that
the fair market value of a share of the Class&nbsp;A common
stock equals the fair market value of a common membership unit
owned by Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our organizational documents achieve this result
by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limiting the assets and liabilities that Charter
    may hold;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">requiring the number of shares of our common
    stock outstanding at any time to equal the number of common
    membership units owned by Charter.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we fail to comply with these provisions or
they are changed, the exchange ratio may vary from one to one
and will then be based on a pre-determined formula contained in
the exchange agreements and the 1999 Charter Communications
Option Plan. This formula will be based on the then current
relative fair market values of common membership units and
common stock.
</FONT>

<P align="left">
<B><FONT size="2">Special Tax Allocation Provisions.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Communications Holding Company,
LLC&#146;s amended and restated limited liability company
agreement contains a number of provisions affecting allocation
of net tax losses and net tax profits to its members. In some
situations, these provisions could result in Charter having to
pay income taxes in an amount that is more or less than it would
have had to pay if these provisions did not exist. For
additional information see &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations&nbsp;&#151; Critical Accounting Policies and
Estimates&nbsp;&#151; Income Taxes.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Other Material Terms of the Amended and
Restated Limited Company Agreement of Charter Communications
Holding Company, LLC</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">General.</FONT></I></B><FONT size="2">
Charter Communications Holding Company, LLC&#146;s amended and
restated limited liability company agreement contains provisions
that permit each member (and its officers, directors, agents,
shareholders, members, partners or affiliates) to engage in
businesses that may compete with the businesses of Charter
Communications Holding Company, LLC or any subsidiary. However,
the directors of Charter, including Mr.&nbsp;Allen, are subject
to fiduciary duties under Delaware corporate law that generally
require them to present business opportunities in the cable
transmission business to Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended and restated limited liability
company agreement restricts the business activities that Charter
Communications Holding Company, LLC may engage in.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Transfer
Restrictions.</FONT></I></B><FONT size="2"> The amended and
restated limited liability company agreement restricts the
ability of each member to transfer its membership interest
unless specified conditions have been met. These conditions
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the transfer will not result in the loss of any
    license or regulatory approval or exemption that has been
    obtained by Charter Communications Holding Company, LLC and is
    materially useful in its business as then conducted or proposed
    to be conducted;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">172
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the transfer will not result in a material and
    adverse limitation or restriction on the operations of Charter
    Communications Holding Company, LLC and its subsidiaries taken
    as a whole;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the proposed transferee agrees in writing to be
    bound by the limited liability company agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">except for a limited number of permitted
    transfers under the limited liability company agreement, the
    transfer has been approved by the manager in its sole discretion.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Amendments to the Limited Liability Company
Agreement.</FONT></I></B><FONT size="2"> Any amendment to the
limited liability company agreement generally may be adopted
only upon the approval of a majority of the Class&nbsp;B common
membership units. The agreement may not be amended in a manner
that adversely affects the rights of any class of common
membership units without the consent of holders holding a
majority of the membership units of that class.
</FONT>

<P align="left">
<B><FONT size="2">Registration Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Holders of Class&nbsp;B Common
Stock.</FONT></I></B><FONT size="2"> Charter, Mr.&nbsp;Allen,
Charter Investment, Inc. and Vulcan Cable&nbsp;III Inc., are
parties to a registration rights agreement. The agreement gives
Mr.&nbsp;Allen and his affiliates the right to cause us to
register the shares of Class&nbsp;A common stock issued to them
upon conversion of any shares of Class&nbsp;B common stock that
they may hold.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This registration rights agreement provides that
each eligible holder is entitled to unlimited
&#147;piggyback&#148; registration rights permitting them to
include their shares of Class&nbsp;A common stock in
registration statements filed by us. These holders may also
exercise their demand rights causing us, subject to specified
limitations, to register their Class&nbsp;A shares, provided
that the amount of shares subject to each demand has a market
value at least equal to $50&nbsp;million or, if the market value
is less than $50&nbsp;million, all of the Class&nbsp;A shares of
the holders participating in the offering are included in such
registration. We are obligated to pay the costs associated with
all such registrations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders may elect to have their shares registered
pursuant to a shelf registration statement if at the time of the
election, Charter is eligible to file a registration statement
on Form&nbsp;S-3 and the amount of shares to be registered has a
market value equal to at least $100&nbsp;million on the date of
the election.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares of Class&nbsp;A common stock issuable
to the registration rights holders in exchange for Charter
Communications Holding Company, LLC membership units and upon
conversion of outstanding Class&nbsp;B common stock and
conversion of Class&nbsp;B common stock issuable to the
registration rights holders upon exchange of Charter
Communications Holding Company, LLC membership units are subject
to the registration rights described above.
</FONT>

<P align="left">
<B><FONT size="2">Transfer Agent and Registrar</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transfer agent and registrar for our
Class&nbsp;A common stock is Mellon Investor Services, LLC.
</FONT>

<P align="center"><FONT size="2">173
</FONT>

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<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "SHARES ELIGIBLE FOR FUTURE SALE" -->

<P align="center">
<B><FONT size="2">SHARES ELIGIBLE FOR FUTURE SALE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the 150&nbsp;million shares of
Class&nbsp;A common stock offered hereby, as of
September&nbsp;30, 2004, we had 304,803,455&nbsp;shares of
Class&nbsp;A common stock issued and outstanding, all of which
are eligible for immediate resale (subject to limitations of
Rule&nbsp;144 in the case of shares held by affiliates).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, the following
additional shares of Class&nbsp;A common stock are or will be
issuable after giving effect to this offering and the
anticipated redemption of our 5.75% convertible senior notes due
2005:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">339,132,031&nbsp;shares of Class&nbsp;A common
    stock will be issuable upon conversion of Class&nbsp;B common
    stock issuable upon exchange of Charter Communications Holding
    Company, LLC membership units held by Vulcan Cable&nbsp;III Inc.
    and Charter Investment, Inc. These membership units are
    exchangeable for shares of Class&nbsp;B common stock on a
    one-for-one basis. Shares of Class&nbsp;B common stock are
    convertible into shares of Class&nbsp;A common stock on a
    one-for-one basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">24,273,943&nbsp;shares of Class&nbsp;A common
    stock may be issuable upon the exchange of Charter
    Communications Holding Company, LLC membership units potentially
    issuable in exchange for CC VIII, LLC membership units held by
    an affiliate of Mr.&nbsp;Allen. An issue has arisen regarding
    the ultimate ownership of such CC VIII, LLC membership interests
    following Mr.&nbsp;Allen&#146;s acquisition of those interests
    on June&nbsp;6, 2003. See&#147;Certain Relations and Related
    Transactions&nbsp;&#151; Transactions Arising out of Our
    Organizational Structure and Mr.&nbsp;Allen&#146;s Investment in
    Charter Communications, Inc. and Its Subsidiaries&nbsp;&#151;
    Equity Put Rights&nbsp;&#151; CC&nbsp;VIII.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">50,000&nbsp;shares of Class&nbsp;A common stock
    will be issuable upon conversion of outstanding Class&nbsp;B
    common stock on a one-for-one basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Up to 90,000,000&nbsp;shares of Class&nbsp;A
    common stock (or units exchangeable for Class&nbsp;A common
    stock) are authorized for issuance pursuant to Charter&#146;s
    2001 Stock Incentive Plan and 1999 Charter Communications Option
    Plan. At September&nbsp;30, 2004, 903,970&nbsp;shares had been
    issued under the plans upon exercise of options,
    160,645&nbsp;shares had been issued upon vesting of restricted
    stock grants, and 2,104,978&nbsp;shares are subject to future
    vesting under restricted stock agreements. Of the remaining
    86,830,407&nbsp;shares covered by the plans, as of
    September&nbsp;30, 2004, 28,213,409 were subject to outstanding
    options (34% of which were vested) and 58,616,998 remain
    eligible for future grant. Of the 58,616,998&nbsp;shares
    remaining there are 6,663,600 performance units granted under
    Charter&#146;s long-term incentive program as of
    September&nbsp;30, 2004, which will be issued on the third
    anniversary of the date of grant conditional upon Charter&#146;s
    performance against financial targets approved by the board of
    directors at the time of the awards.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">356,404,924&nbsp;shares of Class&nbsp;A common
    stock are issuable upon conversion of our 5.875% convertible
    senior notes due 2009.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">An aggregate of 8,145,909&nbsp;shares of
    Class&nbsp;A common stock would be issuable upon conversion of
    our 4.75% convertible senior notes due 2006 and our
    Series&nbsp;A convertible redeemable preferred stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Upon consummation of the settlement of our
    outstanding class action lawsuits as more fully described in
    &#147;Business&nbsp;&#151; Legal Proceedings&#148;, an as yet
    undetermined number of shares will issued to the claimants and
    carriers (having an aggregate value of $45&nbsp;million, as
    determined by the applicable formula), together with warrants to
    purchase an additional undetermined number of shares (which
    warrants will have a value of $40&nbsp;million, as determined by
    the applicable formula).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the shares of Class&nbsp;A common stock
issuable upon exchange of Charter Communications Holding
Company, LLC membership units and upon conversion of shares of
our Class&nbsp;B common stock are subject to demand and
piggyback registration rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the shares of Class&nbsp;A common stock
issuable upon conversion of outstanding convertible senior notes
due 2006 and convertible preferred stock would be eligible for
immediate resale. Shares issuable
</FONT>

<P align="center"><FONT size="2">174
</FONT>
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<DIV align="left">
<FONT size="2">upon conversion of the 5.875% Convertible Notes
due 2009 are expected to be eligible for resale pursuant to a
resale shelf registration statement required to become effective
on or before April&nbsp;21, 2005. All of the shares issuable to
claimants pursuant to the settlements will be eligible for
immediate resale and, upon filing of an anticipated shelf
registration statement for the issuance of warrant shares, all
of the shares issuable upon exercise of the warrants will also
be eligible for immediate resale.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A registration statement on Form&nbsp;S-8
covering the Class&nbsp;A common stock issuable pursuant to the
exercise of options under the 1999 Charter Communications Option
Plan was filed with the Securities and Exchange Commission in
May 2000 and registration statements on Form&nbsp;S-8 covering
shares issuable under the 2001 Stock Incentive Plan were filed
in May 2001 and November 2003. The shares of Class&nbsp;A common
stock covered by the Form&nbsp;S-8 registration statements
generally may be resold in the public market without restriction
or limitation, except in the case of our affiliates who
generally may only resell such shares in accordance with the
provisions of Rule&nbsp;144 of the Securities Act of 1933.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sale of a substantial number of shares of
Class&nbsp;A common stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for
the Class&nbsp;A common stock. In addition, any such sale or
perception could make it more difficult for us to sell equity
securities or equity related securities in the future at a time
and price that we deem appropriate.
</FONT>

<P align="center"><FONT size="2">175
</FONT>

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<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "CERTAIN UNITED STATES TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS" -->

<P align="center">
<B><FONT size="2">CERTAIN UNITED STATES TAX CONSIDERATIONS FOR
NON-UNITED STATES HOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general discussion of certain
U.S. federal income and estate tax consequences of the ownership
and disposition of our Class&nbsp;A common stock by a person
that is not a &#147;United States person&#148; for U.S. federal
income tax purposes (a &#147;non-U.S. holder&#148;). For this
purpose, a &#147;United States person&#148; is a citizen or
resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate,
the income of which is subject to U.S. federal income taxation
regardless of its source, or a trust the administration of which
is subject to the primary supervision of a U.S. court and which
has one or more United States persons who have the authority to
control all substantial decisions of the trust or that was in
existence on, August&nbsp;20, 1996, was treated as a United
States person under the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;), on that date and has made a
valid election to be treated as a United States person under the
Code. The discussion does not consider specific facts and
circumstances that may be relevant to a particular non-U.S.
holder&#146;s tax position. Special rules may apply to certain
non-U.S. holders, such as dealers in securities, banks,
insurance companies, tax-exempt organizations, persons holding
their shares as part of a &#147;straddle,&#148;
&#147;hedge,&#148; or &#147;conversion transaction,&#148;
persons who acquire shares as compensation, &#147;controlled
foreign corporations,&#148; &#147;passive foreign investment
companies,&#148; &#147;foreign personal holding companies,&#148;
and corporations that accumulate earnings to avoid U.S. federal
income tax, that are subject to special treatment under the
Code. This discussion is limited to beneficial owners of the
Class&nbsp;A common stock who hold the Class&nbsp;A common stock
as capital assets. It does not address any aspect of state,
local, or foreign law, persons who hold Class&nbsp;A common
stock through a partnership or other pass-through entity, or
persons who are former citizens or long-term residents of the
United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Accordingly, each non-U.S. holder is urged to
consult its own tax advisor with respect to the United States
tax consequences of the ownership and disposition of
Class&nbsp;A common stock, as well as any tax consequences that
may arise under the laws of any state, municipality, foreign
country or other taxing jurisdiction.</FONT></B>

<P align="left">
<B><FONT size="2">Dividends</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, distributions paid to a Non-U.S.
Holder of Class&nbsp;A common stock will constitute a dividend
for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits determined under
U.S. federal income tax principles. We do not anticipate paying
cash dividends on our capital stock in the foreseeable future.
See &#147;Dividend Policy.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends paid to a non-U.S. holder of our
Class&nbsp;A common stock ordinarily will be subject to
withholding of U.S. federal income tax at a 30&nbsp;percent
rate, or at a lower rate under an applicable income tax treaty
that provides for a reduced rate of withholding. To claim the
benefit of a lower treaty rate, a non-U.S. holder must properly
file with the payor an IRS Form&nbsp;W-8BEN, or successor form,
or, in the case of payments made outside the United States with
respect to an offshore account, comply with certain documentary
evidence procedures, directly, or under certain circumstances,
through an intermediary. If, however, the dividends are
effectively connected with the conduct by the non-U.S. holder of
a trade or business within the United States and, where a tax
treaty applies, are attributable to a United States permanent
establishment of the non-U.S. holder, then the dividends will be
exempt from the withholding tax described above, provided that
an IRS Form&nbsp;W-8ECI, or successor form, is furnished to the
payor. Such dividends will instead be taxed on a net basis at
applicable graduated individual or corporate rates. If, however,
the dividends are effectively connected with the conduct by the
non-U.S. holder of a trade or business within the United States,
but are not attributable to a United States permanent
establishment of the non-U.S. holder, a recipient will be
required to file a U.S. tax return and should file an IRS
Form&nbsp;8833 claiming benefits of the tax treaty with respect
to dividends not attributable to a United States permanent
establishment<B>.</B>
</FONT>

<P align="center"><FONT size="2">176
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effectively connected dividends received by a
foreign corporation may, under certain circumstances, be subject
as well to a &#147;branch profits&#148; tax at a rate of 30% or
a lower applicable treaty rate. A non-United States Holder who
furnished the payor with an IRS Form&nbsp;W-8ECI or successor
form must also provide a United States tax identification number.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S. holder of our Class&nbsp;A common
stock that is eligible for a reduced rate of U.S. withholding
tax pursuant to an income tax treaty may obtain a refund of any
amounts withheld in excess of the tax treaty rate by filing an
appropriate claim for a refund with the Internal Revenue
Services (the &#147;IRS&#148;).
</FONT>

<P align="left">
<B><FONT size="2">Gain on Disposition of Class&nbsp;A Common
Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S. holder generally will not be subject
to United States federal income tax in respect of a gain
realized on a disposition of our Class&nbsp;A common stock,
provided that (a)&nbsp;the gain is not effectively connected
with a trade or business conducted by the non-U.S. holder in the
United States, (b)&nbsp;in the case of a non-U.S. holder who is
an individual, such holder is present in the United States for
less than 183&nbsp;days in the taxable year of the sale and
other conditions are met, and (c)&nbsp;we are not nor have been
a &#147;United States real property holding corporation&#148;
for United States federal income tax purposes (a
&#147;USRPHC&#148;). We believe that we were not, are not
currently, and are not likely to become a USRPHC. If we were to
become a USRPHC, gain recognized on the sale or other
disposition of Class&nbsp;A common stock by a non-United States
holder generally would be subject to United States federal
income tax (and withholding) unless (i)&nbsp;our Class&nbsp;A
common stock continues to be &#147;regularly traded on an
established securities market&#148; at any time during the
calendar year of disposition within the meaning of the Code and
(ii)&nbsp;such non-United States holder does not actually or
constructively own more than 5% of the Class A common stock at
any time during the shorter of the five-year period preceding
the disposition or such non-United States holder&#146;s holding
period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a non-U.S. holder is engaged in the conduct of
a trade or business in the United States, gain on the
disposition of our Class&nbsp;A common stock that is effectively
connected with the conduct of such trade or business and, where
an income tax treaty applies, is attributable to a United States
permanent establishment, will be taxed on a net basis at
applicable graduated individual or corporate rates. Effectively
connected gain of a foreign corporation may, under certain
circumstances, be subject as well to a &#147;branch
profits&#148; tax at a rate of 30&nbsp;percent or a lower
applicable treaty rate.
</FONT>

<P align="left">
<B><FONT size="2">U.S. Information Reporting Requirements and
Backup Withholding Tax</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">U.S. information reporting on IRS Form&nbsp;1099
and backup withholding tax will not apply to dividends paid on
our Class&nbsp;A common stock to a non-U.S. holder, provided
that non-U.S. holder provides an IRS Form&nbsp;W-8BEN (or
satisfies certain certification documentary evidence
requirements for establishing that it is a non-United States
person under U.S. Treasury regulations) or otherwise establishes
an exemption. Distributions on our Class&nbsp;A common stock
will, however, be reported to the IRS and to the non-U.S. holder
on IRS Form&nbsp;1042-S.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information reporting and backup withholding also
generally will not apply to a payment of the proceeds of a sale
of our Class&nbsp;A common stock affected outside the United
States by a foreign office of a foreign broker. However,
information reporting requirements (but not backup withholding)
will apply to a payment of the proceeds of a sale of our
Class&nbsp;A common stock effected outside the United States by
a foreign office of a broker if the broker (i)&nbsp;is a United
States person, (ii)&nbsp;derives 50&nbsp;percent or more of its
gross income for certain periods from the conduct of a trade or
business in the United States, (iii)&nbsp;is a &#147;controlled
foreign corporation&#148; as to the United States, or
(iv)&nbsp;is a foreign partnership that, at any time during its
taxable year, is 50&nbsp;percent or more (by income or capital
interest) owned by United States persons or is engaged in the
conduct of a U.S. trade or business, unless in any such case the
broker has documentary evidence in its records that the holder
is a non-U.S. holder and certain conditions are met, or the
holder otherwise establishes an exemption. Payment by a United
States office of a broker of the
</FONT>

<P align="center"><FONT size="2">177
</FONT>

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<DIV align="left">
<FONT size="2">proceeds of a sale of our Class&nbsp;A common
stock will be subject to both backup withholding and information
reporting unless the holder certifies its non-U.S. status under
penalties of perjury or otherwise establishes an exemption.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any amounts withheld under the backup withholding
rules may be allowed as a refund or a credit against that
holder&#146;s U.S. federal income tax liability provided the
required information is furnished to the IRS.
</FONT>

<P align="center"><FONT size="2">178
</FONT>
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<DIV align="left">
<A name='121'></A>
</DIV>

<!-- link1 "SHARE LENDING AGREEMENT" -->

<P align="center">
<B><FONT size="2">SHARE LENDING AGREEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering of our Class&nbsp;A common
stock, we sold $862.5&nbsp;million in aggregate principal amount
of 5.875%&nbsp;convertible senior notes due 2009 in a private
placement pursuant to Rule 144A under the Securities Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To make the purchase of 5.875% convertible notes
more attractive to prospective investors, we entered into a
share lending agreement, dated November&nbsp;22, 2004, with
Citigroup Global Markets Inc. (&#147;Citigroup&#148;), as agent
for Citigroup Global Markets Limited (&#147;CGML&#148;), as
borrower, under which we agreed to loan to CGML up to
150,000,000&nbsp;shares of our Class&nbsp;A common stock on one
or more occasions prior to November&nbsp;16, 2006 or, if
earlier, the date as of which all of the 5.875% convertible
notes cease to be outstanding as the result of conversion,
repurchase, redemption or otherwise. We will receive a loan fee
of $.001&nbsp;per share for each share that we loan to CGML,
payable at the time such share is borrowed. Citigroup Global
Markets Holdings Inc. guaranteed the obligations of CGML under
the share lending agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the agreement, CGML agreed that it will not
transfer or dispose of the borrowed shares except for the
purpose of directly or indirectly facilitating the hedging of
the 5.875% convertible notes by holders. Except in limited
circumstances, any borrowed shares that are returned to us
cannot be reborrowed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Share loans under the agreement will terminate
and the borrowed shares must be returned to us:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if and when CGML in its discretion terminates all
    or any portion of a loan at any time;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if and when we terminate any or all of the
    outstanding loans upon a default by CGML under the share lending
    agreement, including a breach by CGML of any of its
    representations and warranties, covenants or agreements under
    such agreement or the bankruptcy of CGML;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on November&nbsp;16, 2009, the termination date
    for the share lending agreement or, sooner, if and when all of
    the 5.875% convertible senior notes have been converted, repaid,
    redeemed or are otherwise no longer outstanding.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">We will not otherwise have the right to terminate
any loan of borrowed shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any shares that we loan to CGML will be issued
and outstanding for corporate law purposes, and accordingly, the
holders of the borrowed shares will have all of the rights of a
holder of our outstanding shares of Class&nbsp;A common stock,
including the right to vote the shares on all matters submitted
to a vote of our stockholders and the right to receive any
dividends or other distributions that we may pay or make on our
outstanding shares of Class&nbsp;A common stock. However, under
the share lending agreement, CGML has agreed:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay to us an amount equal to any cash
    dividends that we pay on the borrowed shares,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to pay or deliver to us any other distribution,
    in liquidation or otherwise, that we make on the borrowed shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CGML has also agreed under the share lending
agreement that it will not vote any borrowed shares of which it
is the record owner, and it will not transfer or dispose of any
borrowed shares except pursuant to a registration statement that
is effective under the Securities Act of 1933, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the credit ratings of Citigroup Global Markets
Holdings Inc., the guarantor of CGML&#146;s obligations under
the share lending agreement, decline below a specified level,
CGML has agreed under the share lending agreement to post and
maintain with Citigroup, as collateral agent on our behalf,
collateral in the form of cash, government securities,
certificates of deposit, high grade commercial paper of
U.S.&nbsp;issuers or money market shares with a market value at
least equal to 100% of the market value of the borrowed shares
as security for the obligation of CGML to return the borrowed
shares to us when required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In view of the contractual undertakings of CGML
in the share lending agreement, which have the effect of
substantially eliminating the economic dilution that would
otherwise result from the issuance of the borrowed shares, we
believe that under U.S.&nbsp;generally accepted accounting
principles currently in
</FONT>

<P align="center"><FONT size="2">179
</FONT>
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<DIV align="left">
<FONT size="2">effect, the borrowed shares will not be
considered outstanding for the purpose of computing and
reporting our earnings per share.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CGML, through Citigroup as principal or agent, is
offering for sale pursuant to this prospectus the entire
150,000,000&nbsp;shares it is entitled to borrow under the share
lending agreement. We have been advised by CGML that it or its
affiliates intend to use the short sales of our Class&nbsp;A
common stock pursuant to this prospectus to facilitate the
establishment by the holders of our 5.875% convertible senior
notes of hedged positions with respect to the 5.875% convertible
senior notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed to use our reasonable best efforts
to cause the registration statement of which this prospectus
forms a part to become effective within 130&nbsp;days after
November&nbsp;22, 2004, the issue date of the convertible notes.
If on April&nbsp;1, 2005, such registration statement is not
declared effective, which we refer to as an effectiveness
default, liquidated damages will accrue on the 5.875%
convertible senior notes from and including the day following
such default, to but excluding the earlier of (i)&nbsp;the date
two years following the original issue date of the convertible
notes and (ii)&nbsp;the day on which the applicable default has
been cured. Upon the occurrence and during the continuance of an
effectiveness default, we will be required to pay liquidated
damages in cash to all holders of the convertible notes at a
rate per month equal to .50% of the accreted principal amount of
their convertible notes, such damages accruing daily and paid
monthly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The existence of the share lending agreement and
the short positions established in connection with facilitating
the hedging of the 5.875% convertible senior notes could have
the effect of causing the market price of our Class&nbsp;A
common stock to be lower over the term of the share lending
agreement than it would have been had we not entered into the
agreement, but we believe that entering into the share lending
agreement was in our best interests and the best interests of
our shareholders as it facilitated the sale of the convertible
notes on terms more favorable to us than we could have otherwise
obtained.
</FONT>

<P align="center"><FONT size="2">180
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='122'></A>
</DIV>

<!-- link1 "UNDERWRITING" -->

<P align="center">
<B><FONT size="2">UNDERWRITING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of our Class&nbsp;A common stock
offered by this prospectus are shares that we have agreed to
loan to CGML, an affiliate of Citigroup, pursuant to a share
lending agreement described in &#147;Share Lending
Agreement.&#148; Citigroup also acted as an initial purchaser
for the private placement pursuant to Rule&nbsp;144A under the
Securities Act of $862.5&nbsp;million in principal amount of our
5.875%&nbsp;convertible senior notes due 2009 issued on
November&nbsp;22, 2004. See &#147;Share Lending Agreement.&#148;
CGML, through Citigroup as principal or agent, is offering for
sale pursuant to this prospectus the entire
150,000,000&nbsp;shares CGML is entitled to borrow under the
share lending agreement. We have been advised by CGML that it or
its affiliates intends to use the short sales of our
Class&nbsp;A common stock pursuant to this prospectus to
facilitate transactions by which investors in such convertible
notes will hedge their investments in convertible notes. See
&#147;Share Lending Agreement.&#148; We will not receive any
proceeds from the sale of shares of our Class&nbsp;A common
stock pursuant to this prospectus, but will receive a loan fee
of $0.001 per share for each share loaned under the share
lending agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriting agreement provides that the
obligations of Citigroup to borrow the shares included in this
offering are subject to approval of legal matters by counsel and
to other customary conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriter proposes to offer the shares of
our Class&nbsp;A common stock initially at the public offering
price set forth on the cover page of this prospectus. If all of
the shares are not sold at the initial offering price, the
underwriter may change the public offering price and the other
selling terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Class&nbsp;A common stock is quoted on the
Nasdaq National Market under the symbol &#147;CHTR.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the compensation
that we are to pay to the underwriter in connection with this
offering.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting Discounts and Commissions paid by us
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses payable by us
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the offering, Citigroup as
underwriter may purchase and sell shares of Class&nbsp;A common
stock in the open market. These transactions may include
stabilizing transactions, which consist of bids for or purchases
of shares in the open market while the offering is in progress.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This activity may have the effect of preventing
or retarding a decline in the market price of the Class&nbsp;A
common stock. They may also cause the price of the Class&nbsp;A
common stock to be higher than the price that would otherwise
exist in the open market in the absence of these transactions.
The underwriter may conduct these transactions on the Nasdaq
National Market or in the over-the-counter market, or otherwise.
If the underwriter commences any of these transactions, it may
discontinue them at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that our portion of the total
expenses of this offering will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriter has performed investment banking
and advisory services for us from time to time for which it has
received customary fees and expenses. The underwriter may, from
time to time, engage in transactions with and perform services
for us in the ordinary course of its business. The underwriter
also was an initial purchaser of the convertible notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A prospectus in electronic format may be made
available on the website maintained by the underwriter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed to indemnify the underwriter
against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments the
underwriter may be required to make because of any of those
liabilities.
</FONT>

<P align="center"><FONT size="2">181
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='123'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The validity of the securities offered by this
prospectus will be passed upon for Charter Communications, Inc.
by Irell&nbsp;&#38; Manella, LLP. Weil, Gotshal&nbsp;&#38;
Manges LLP represented the underwriter in this offering.
</FONT>

<DIV align="left">
<A name='124'></A>
</DIV>

<!-- link1 "INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->

<P align="center">
<B><FONT size="2">INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of Charter
Communications, Inc. and subsidiaries as of December&nbsp;31,
2003 and 2002 and for the three year periods ended
December&nbsp;31, 2003, which are included in Charter
Communications, Inc.&#146;s Annual Report on Form&nbsp;10-K for
the year ended December&nbsp;31, 2003, have been audited by
KPMG&nbsp;LLP, an independent registered public accounting firm,
as stated in their report included in this prospectus, which
includes explanatory paragraphs regarding the adoption,
effective January&nbsp;1, 2002, of Statement of Financial
Accounting Standards No.&nbsp;142, &#147;Goodwill and Other
Intangible Assets&#148; and, effective January&nbsp;1, 2003, of
Statement of Financial Accounting Standards No.&nbsp;123,
&#147;Accounting for Stock-Based Compensation,&#148; as amended
by Statement of Financial Accounting Standards No.&nbsp;148,
&#147;Accounting for Stock-Based Compensation&nbsp;&#151;
Transition and Disclosure&nbsp;&#151; an amendment to FASB
Statement No.&nbsp;123.&#148; The consolidated financial
statements referred to above have been included in this
prospectus in reliance upon the authority of KPMG LLP as experts
in giving said report.
</FONT>

<P align="center"><FONT size="2">182
</FONT>
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<P align="center">
<B><FONT size="2">INDEX TO FINANCIAL STATEMENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audited Financial Statements:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Report of Independent Registered Public
    Accounting Firm
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets as of
    December&nbsp;31, 2003 and 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Operations for the
    Years Ended December&nbsp;31, 2003, 2002 and 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Changes in
    Shareholders&#146; Equity (Deficit) for the Years Ended
    December&nbsp;31, 2003, 2002 and 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Cash Flows for the
    Years Ended December&nbsp;31, 2003, 2002 and 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unaudited Financial Statements:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets as of
    September&nbsp;30, 2004 and December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Operations for the
    Three and Nine Months Ended September&nbsp;30, 2004 and 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Cash Flows for the
    Nine Months Ended September&nbsp;30, 2004 and 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors <BR>
 Charter Communications, Inc.:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheets of Charter Communications, Inc. and subsidiaries
(the &#147;Company&#148;) as of December&nbsp;31, 2003 and 2002,
and the related consolidated statements of operations, changes
in shareholders&#146; equity (deficit), and cash flows for each
of the three years in the period ended December&nbsp;31, 2003.
These consolidated financial statements are the responsibility
of the Company&#146;s management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Charter Communications, Inc.
and subsidiaries as of December&nbsp;31, 2003 and 2002, and the
results of their operations and their cash flows for each of the
three years in the period ended December&nbsp;31, 2003, in
conformity with accounting principles generally accepted in the
United States of America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;3 to the consolidated
financial statements, effective January&nbsp;1, 2002, the
Company adopted Statement of Financial Accounting Standards
No.&nbsp;142, <I>Goodwill and Other Intangible Assets.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;19 to the consolidated
financial statements, effective January&nbsp;1, 2003, the
Company adopted Statement of Financial Accounting Standards
No.&nbsp;123, <I>Accounting for Stock-Based Compensation,</I> as
amended by Statement of Financial Accounting Standards
No.&nbsp;148, <I>Accounting for Stock-Based
Compensation&nbsp;&#151; Transition and Disclosure&nbsp;&#151;
an amendment of FASB Statement No.&nbsp;123.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ KPMG LLP
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">St.&nbsp;Louis, Missouri
</FONT>

<DIV align="left">
<FONT size="2">March&nbsp;1, 2004
</FONT>
</DIV>

<P align="center"><FONT size="2">F-2
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except share
data)</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT ASSETS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, less allowance for doubtful
    accounts of $17 and $19, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">259</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables from related party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INVESTMENT IN CABLE PROPERTIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment, net of accumulated
    depreciation of $3,950 and $2,634, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises, net of accumulated amortization of
    $3,445 and $3,452, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,727</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total investment in cable properties, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER NONCURRENT ASSETS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND SHAREHOLDERS&#146; EQUITY
    (DEFICIT)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT LIABILITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LONG-TERM DEBT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">DEFERRED MANAGEMENT FEES&nbsp;&#151; RELATED PARTY
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER LONG-TERM LIABILITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">899</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MINORITY INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">PREFERRED STOCK&nbsp;&#151; REDEEMABLE;
    $.001&nbsp;par value; 1&nbsp;million shares authorized; 545,259
    and 505,664&nbsp;shares issued and outstanding, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SHAREHOLDERS&#146; EQUITY (DEFICIT):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A Common stock; $.001&nbsp;par value;
    1.75&nbsp;billion shares authorized; 295,038,606, and
    294,536,830&nbsp;shares issued and outstanding, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B Common stock; $.001&nbsp;par value;
    750&nbsp;million shares authorized; 50,000&nbsp;shares issued
    and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock; $.001&nbsp;par value;
    250&nbsp;million shares authorized; no non-redeemable shares
    issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,851</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,609</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; equity (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and shareholders&#146; equity
    (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share and
share data)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">REVENUES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">COSTS AND EXPENSES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on sale of system
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unfavorable contracts and other settlements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,322</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER INCOME AND EXPENSES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,310</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,241</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,622</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,419</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MINORITY INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,176</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes and cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(348</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,768</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,169</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INCOME TAX BENEFIT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,308</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(206</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;<FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LOSS PER COMMON SHARE, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;<FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,597,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,440,261</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,594,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS&#146; EQUITY (DEFICIT)</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class&nbsp;B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Additional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shareholders&#146;</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Paid-In</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deficit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income (Loss)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Deficit)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BALANCE, December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(924</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,767</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock related to acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net proceeds from issuance of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Redeemable securities reclassified as equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contributions from Charter Investment,
    Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on issuance of equity by subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(253</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(253</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stock options exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BALANCE, December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,092</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock related to acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on issuance of equity by subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BALANCE, December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,609</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock related to acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on issuance of equity by subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BALANCE, December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,851</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM OPERATING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net loss to net cash
    flows from operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense (income), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Noncash interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss (gain)&nbsp;on derivative instruments and
    hedging activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on sale of system
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(460</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unfavorable contracts and other settlements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities, net
    of effects from acquisitions:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued expenses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(69</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables from and payables to related party,
    including deferred management fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM INVESTING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(854</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,913</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in accounts payable and accrued expenses
    related to capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sale of system
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments for acquisitions, net of cash acquired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(139</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,755</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(817</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,363</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,774</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM FINANCING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Borrowings of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repayments of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,368</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,134</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,290</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">529</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments for debt issuance costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(87</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(142</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH
    EQUIVALENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(194</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(129</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH PAID FOR INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NONCASH TRANSACTIONS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of debt by CCH&nbsp;II, LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retirement of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassification of redeemable securities to
    equity and minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange of cable system for acquisition
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuances of preferred stock&nbsp;&#151;
    redeemable, as payment for acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuances of equity as partial payments for
    acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">1.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Organization and Basis of
    Presentation</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Communications, Inc.
(&#147;Charter&#148;) is a holding company whose principal
assets at December&nbsp;31, 2003 are the 46% controlling common
equity interest in Charter Communications Holding Company, LLC
(&#147;Charter Holdco&#148;) and &#147;mirror&#148; notes that
are payable by Charter Holdco to Charter which have the same
principal amount and terms as those of Charter&#146;s
convertible senior notes. Charter Holdco is the sole owner of
Charter Communications Holdings, LLC (&#147;Charter
Holdings&#148;). The consolidated financial statements include
the accounts of Charter, Charter Holdco, Charter Holdings and
all of their wholly owned subsidiaries where the underlying
operations reside, collectively referred to herein as the
&#147;Company.&#148; The Company consolidates Charter Holdco on
the basis of voting control. Charter Holdco&#146;s limited
liability agreement provides that so long as Charter&#146;s
Class&nbsp;B common stock retains its special voting rights,
Charter will maintain 100% voting interest in Charter Holdco.
Voting control gives Charter full authority and control over the
operations of Charter Holdco. All significant intercompany
accounts and transactions among consolidated entities have been
eliminated. The Company is a broadband communications company
operating in the United States. The Company offers its customers
traditional video programming (analog and digital video) as well
as high-speed data services and in some areas advanced broadband
services such as high definition television, video on demand,
telephony and interactive television. The Company sells its
video programming, high-speed data and advanced broadband
services on a subscription basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Areas
involving significant judgments and estimates include
capitalization of labor and overhead costs; depreciation and
amortization costs; impairments of property, plant and
equipment, franchises and goodwill; income taxes; and
contingencies. Actual results could differ from those estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restatement of 2001
Results.</FONT></I><FONT size="2"> In 2002, the Company restated
its consolidated financial statements for 2001 and prior. The
restatements were primarily related to the following categories:
(i)&nbsp;launch incentives from programmers; (ii)&nbsp;customer
incentives and inducements; (iii)&nbsp;capitalized labor and
overhead costs; (iv)&nbsp;customer acquisition costs;
(v)&nbsp;rebuild and upgrade of cable systems;
(vi)&nbsp;deferred tax liabilities/franchise assets; and
(vii)&nbsp;other adjustments. These adjustments reduced revenue
by $146&nbsp;million and decreased consolidated net loss by
$11&nbsp;million for the year ended December&nbsp;31, 2001 and
decreased shareholders&#146; equity by $356&nbsp;million as of
January&nbsp;1, 2001. In addition, as a result of certain of
these adjustments, the Company&#146;s statement of cash flow was
also restated at the time. Net cash flows from operating
activities for the year ended December&nbsp;31, 2001 was reduced
by $30&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Reclassifications.</FONT></I><FONT size="2">
Certain 2002 and 2001 amounts have been reclassified to conform
with the 2003 presentation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">2.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Liquidity and Capital Resources</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognized income from operations of
$516&nbsp;million in 2003 and incurred losses from operations of
$4.3&nbsp;billion and $1.2&nbsp;billion in 2002 and 2001,
respectively. The Company&#146;s net cash flows from operating
activities were $765&nbsp;million, $748&nbsp;million and
$489&nbsp;million for the years ending December&nbsp;31, 2003,
2002 and 2001, respectively. The Company has historically
required significant cash to fund capital expenditures and debt
service costs. Historically, the Company has funded these
requirements through cash flows from operating activities,
borrowing under the credit facilities of the Company&#146;s
subsidiaries, by issuances of debt and equity securities and by
cash on hand. The mix of funding sources
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">changes from period to period, but for the year
ended December&nbsp;31, 2003, approximately 80% of the
Company&#146;s funding requirements were satisfied from cash
flows from operating activities and 20% was from cash on hand.
For the year ended December&nbsp;31, 2003, the Company received
$91&nbsp;million from the sale of the Port Orchard, Washington
cable system. Additionally, the Company had net cash flows used
in financing activities of $142&nbsp;million, reflecting a net
repayment of debt, and reduced cash on hand by $194&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company expects that cash on hand, cash flows
from operating activities and the funds available under its
subsidiaries&#146; credit facilities will be adequate to meet
its 2004 cash needs. However, these credit facilities are
subject to certain restrictive covenants, portions of which are
subject to the operating results of the Company&#146;s
subsidiaries. The Company expects to maintain compliance with
these covenants in 2004. If the Company&#146;s actual operating
results do not result in compliance with these covenants, or if
other events of noncompliance occur, funding under the credit
facilities may not be available and defaults on some or
potentially all debt obligations could occur. Additionally, no
assurances can be given that the Company will not experience
liquidity problems because of adverse market conditions or other
unfavorable events. Further, cash flows from operating
activities and amounts available under credit facilities may not
be sufficient to permit the Company to satisfy its principal
repayment obligations that come due in 2005 and thereafter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions up to its
formulaic capacity to Charter Holdco for payment of interest on
the convertible senior notes, only if, after giving effect to
the distribution, Charter Holdings can incur additional debt
under the leverage ratio of 8.75 to 1.0, there is no default
under the indentures and other specified tests are met. However,
in the event that Charter Holdings could not incur any
additional debt under the 8.75 to 1.0 leverage ratio, the
indentures governing the Charter Holdings notes permit Charter
Holdings and its subsidiaries to make specified investments in
Charter Holdco or Charter, up to its formulaic capacity, if
there is no default under the indentures. There were no defaults
under the Charter Holdings indentures and other specified tests
were met for the quarter ended December&nbsp;31, 2003. However,
Charter Holdings did not meet the leverage ratio test at
December&nbsp;31, 2003, and as a result, distributions from
Charter Holdings to Charter will be restricted until that test
is met. Charter&#146;s ability to make payments on its
convertible senior notes is dependent on Charter Holdco&#146;s
liquidity or on the ability for it to obtain distributions from
Charter Holdings and the Company&#146;s other subsidiaries
making distributions, loans, or payments to Charter Holdco, and
on Charter Holdco paying or distributing such funds to Charter.
As of December&nbsp;31, 2003, Charter Holdco had
$41&nbsp;million in cash on hand and is owed $37&nbsp;million in
intercompany loans, which are available to Charter Holdco to
service interest on Charter&#146;s convertible senior notes,
which is scheduled to be approximately $43&nbsp;million in 2004.
Accordingly, Charter&#146;s ability to make interest payments,
or principal payments at maturity in 2005 and 2006, with respect
to its currently outstanding convertible senior notes is
contingent upon it obtaining additional financing or receiving
distributions or other payments from its subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;1, 2003 the Company closed on the
sale of its Port Orchard, Washington system for approximately
$91&nbsp;million, resulting in a $21&nbsp;million gain recorded
as gain on sale of system in the Company&#146;s consolidated
statement of operations. On March&nbsp;1, 2004, the Company
closed the sale of cable systems in Florida, Pennsylvania,
Maryland, Delaware and West Virginia with Atlantic Broadband
Finance, LLC. The Company anticipates that an additional closing
for a cable system in New York will occur during the first
quarter of 2004. After giving effect to the sale of the New York
system, net proceeds will be approximately $735&nbsp;million,
subject to post-closing adjustments. The Company will use these
proceeds to repay bank debt.
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s long-term financing structure
as of December&nbsp;31, 2003 includes $7.2&nbsp;billion of
credit facility debt, $10.6&nbsp;billion of high-yield notes and
$774&nbsp;million of convertible senior debentures.
Approximately $188&nbsp;million of this financing matures during
2004, and the Company expects to fund this through availability
under its credit facilities. Note&nbsp;9 summarizes the
Company&#146;s current availability under its credit facilities
and its long-term debt.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">3.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Summary of Significant Accounting
    Policies</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Cash Equivalents</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company considers all highly liquid
investments with original maturities of three months or less to
be cash equivalents. These investments are carried at cost,
which approximates market value.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Property, Plant and Equipment</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property, plant and equipment are recorded at
cost, including all material, labor and certain indirect costs
associated with the construction of cable transmission and
distribution facilities. Costs associated with initial customer
installations and the additions of network equipment necessary
to enable advanced services are capitalized. Costs capitalized
as part of initial customer installations include materials,
labor, and certain indirect costs. These indirect costs are
associated with the activities of the Company&#146;s personnel
who assist in connecting and activating the new service and
consist of compensation and overhead costs associated with these
support functions. Overhead costs primarily include employee
benefits and payroll taxes, direct variable costs associated
with capitalizable activities, consisting primarily of
installation and construction vehicle costs, the cost of
dispatch personnel and indirect costs directly attributable to
capitalizable activities. The costs of disconnecting service at
a customer&#146;s dwelling or reconnecting service to a
previously installed dwelling are charged to operating expense
in the period incurred. Costs for repairs and maintenance are
charged to operating expense as incurred, while equipment
replacement and betterments, including replacement of cable
drops from the pole to the dwelling, are capitalized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation is recorded using the straight-line
method over management&#146;s estimate of the useful lives of
the related assets as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cable distribution systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">7-15&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Customer equipment and installations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">3-5&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vehicles and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">1-5&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">5-15&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">5&nbsp;years
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Franchises</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Franchise rights represent the value attributed
to agreements with local authorities that allow access to homes
in cable service areas acquired through the purchase of cable
systems. Management estimates the fair value of franchise rights
at the date of acquisition and determines if the franchise has a
finite life or an indefinite life as defined by Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;142,
<I>Goodwill and Other Intangible Assets</I>. On January&nbsp;1,
2002, the Company adopted SFAS&nbsp;No.&nbsp;142, which
eliminates the amortization of goodwill and indefinite lived
intangible assets. Accordingly, beginning January&nbsp;1, 2002,
all franchises that qualify for indefinite life treatment under
SFAS&nbsp;No.&nbsp;142 are no longer amortized against earnings
but instead are tested for impairment annually as of
October&nbsp;1, or more frequently as warranted by events or
changes in circumstances (See Note&nbsp;7). The Company concluded
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">that 99% of its franchises qualify for
indefinite-life treatment; however, certain franchises did not
qualify for indefinite-life treatment due to technological or
operational factors that limit their lives. These franchise
costs are amortized on a straight-line basis over 10&nbsp;years.
Costs incurred in renewing cable franchises are deferred and
amortized over 10&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SFAS&nbsp;No.&nbsp;142,
costs incurred in obtaining and renewing cable franchises were
deferred and amortized using the straight-line method over a
period of 15&nbsp;years. Franchise rights acquired through the
purchase of cable systems were generally amortized using the
straight-line method over a period of 15&nbsp;years. The period
of 15&nbsp;years was management&#146;s best estimate of the
useful lives of the franchises and assumed that substantially
all of those franchises that expired during the period would be
renewed but not indefinitely. The Company evaluated the
recoverability of franchises for impairment when events or
changes in circumstances indicated that the carrying amount of
an asset may not be recoverable.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Other Noncurrent Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other noncurrent assets primarily include
goodwill, deferred financing costs and investments in equity
securities. Costs related to borrowings are deferred and
amortized to interest expense using the effective interest
method over the terms of the related borrowings. As of
December&nbsp;31, 2003 and 2002, other noncurrent assets include
$203&nbsp;million and $231&nbsp;million of deferred financing
costs, net of accumulated amortization of $128&nbsp;million and
$106&nbsp;million, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investments in equity securities are accounted
for at cost, under the equity method of accounting or in
accordance with SFAS&nbsp;No.&nbsp;115, <I>Accounting for
Certain Investments in Debt and Equity Securities</I>. Charter
recognizes losses for any decline in value considered to be
other than temporary. Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive income or loss.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summarizes investment information
as of and for the years ended December&nbsp;31, 2003 and 2002:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Gain (Loss)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">for the</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value at</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Years&nbsp;Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity investments, under the cost method
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity investments, under the equity method
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketable securities, at market value
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Valuation of Property, Plant and
    Equipment</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company evaluates the recoverability of
property, plant and equipment for impairment when events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Such events or changes in
circumstances could include such factors as changes in
technological advances, fluctuations in the fair value of such
assets, adverse changes in relationships with local franchise
authorities, adverse changes in market conditions or poor
operating results. If a review indicates that the carrying value
of such asset is not recoverable from estimated undiscounted
cash flows, the carrying value of such asset is reduced to its
estimated fair value. While the Company believes that its
estimates of future cash flows are reasonable, different
assumptions regarding such cash flows could materially affect its
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">evaluations of asset recoverability. No
impairment of property, plant and equipment occurred in 2003,
2002 and 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Derivative Financial
    Instruments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company accounts for derivative financial
instruments in accordance with SFAS&nbsp;No.&nbsp;133,
<I>Accounting for Derivative Instruments and Hedging
Activities,</I> as amended, which became effective for the
Company on January&nbsp;1, 2001. The Company uses interest rate
risk management derivative instruments, such as interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements (collectively referred to herein as interest
rate agreements) as required under the terms of the credit
facilities of the Company&#146;s subsidiaries. The
Company&#146;s policy is to manage interest costs using a mix of
fixed and variable rate debt. Using interest rate swap
agreements, the Company agrees to exchange, at specified
intervals, the difference between fixed and variable interest
amounts calculated by reference to an agreed-upon notional
principal amount. Interest rate cap agreements are used to lock
in a maximum interest rate should variable rates rise, but
enable the Company to otherwise pay lower market rates. Interest
rate collar agreements are used to limit exposure to and
benefits from interest rate fluctuations on variable rate debt
to within a certain range of rates. The Company does not hold or
issue any derivative financial instruments for trading purposes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Revenue Recognition</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues from residential and commercial video
and high-speed data services are recognized when the related
services are provided. Advertising sales are recognized at
estimated realizable values in the period that the
advertisements are broadcast. Local governmental authorities
impose franchise fees on the Company ranging up to a federally
mandated maximum of 5% of gross revenues as defined in the
franchise agreement. Such fees are collected on a monthly basis
from the Company&#146;s customers and are periodically remitted
to local franchise authorities. Franchise fees collected and
paid are reported as revenues on a gross basis with a
corresponding expense pursuant to Emerging Issues Task Force
(&#147;EITF&#148;) Issue No.&nbsp;01-14, <I>Income Statement
Characterization of Reimbursements Received for &#145;Out of
Pocket&#146; Expenses Incurred</I>.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Programming Costs</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has various contracts to obtain
analog, digital and premium video programming from program
suppliers whose compensation is typically based on a flat fee
per customer. The cost of the right to exhibit network
programming under such arrangements is recorded in operating
expenses in the month the programming is available for
exhibition. Programming costs are paid each month based on
calculations performed by the Company and are subject to
adjustment based on periodic audits performed by the
programmers. Additionally, certain programming contracts contain
launch incentives to be paid by the programmers. The Company
receives these payments related to the promotion and activation
of the programmer&#146;s cable television channel and recognizes
the launch incentives on a straight-line basis over the life of
the programming agreement as a reduction of programming expense.
This offset to programming expense was $62&nbsp;million,
$57&nbsp;million and $35&nbsp;million for the years ended
December&nbsp;31, 2003, 2002 and 2001, respectively. Programming
costs included in the accompanying statement of operations were
$1.2&nbsp;billion, $1.2&nbsp;billion and $963&nbsp;million for
the years ended December&nbsp;31, 2003, 2002 and 2001,
respectively. As of December&nbsp;31, 2003 and 2002, the
deferred amount of launch incentives, included in other
long-term liabilities, totaled $148&nbsp;million and
$210&nbsp;million, respectively.
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Advertising Costs</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising costs associated with marketing the
Company&#146;s products and services are generally expensed as
costs are incurred. Such advertising expense was
$62&nbsp;million, $60&nbsp;million and $43&nbsp;million for the
years ended December&nbsp;31, 2003, 2002 and 2001, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Stock-Based Compensation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has historically accounted for
stock-based compensation in accordance with Accounting
Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25,
<I>Accounting for Stock Issued to Employees</I>, and related
interpretations, as permitted by SFAS&nbsp;No.&nbsp;123,
<I>Accounting for Stock-Based Compensation</I>. On
January&nbsp;1, 2003, the Company adopted the fair value
measurement provisions of SFAS&nbsp;No.&nbsp;123 using the
prospective method under which the Company will recognize
compensation expense of a stock-based award to an employee over
the vesting period based on the fair value of the award on the
grant date consistent with the method described in Financial
Accounting Standards Board Interpretation (&#147;FIN&#148;)
No.&nbsp;28, <I>Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans</I>. Adoption of
these provisions resulted in utilizing a preferable accounting
method as the consolidated financial statements will present the
estimated fair value of stock-based compensation in expense
consistently with other forms of compensation and other expense
associated with goods and services received for equity
instruments. In accordance with SFAS&nbsp;No.&nbsp;148,
<I>Accounting for Stock-Based Compensation&nbsp;&#151;
Transition and Disclosure</I>, the fair value method will be
applied only to awards granted or modified after January&nbsp;1,
2003, whereas awards granted prior to such date will continue to
be accounted for under APB&nbsp;No.&nbsp;25, unless they are
modified or settled in cash. Management believes the adoption of
these provisions will not have a material impact on the
consolidated results of operations or financial condition of the
Company. The ongoing effect on consolidated results of
operations or financial condition will be dependent upon future
stock-based compensation awards granted by the Company.
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;No.&nbsp;123 requires pro forma
disclosure of the impact on earnings as if the compensation
expense for these plans had been determined using the fair value
method. The following table presents the Company&#146;s net loss
and loss per share as reported and the pro forma amounts that
would have been reported using the fair value method under
SFAS&nbsp;No.&nbsp;123 for the years presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add back stock-based compensation expense
    (income) related to stock options included in reported net loss
    (net of minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,571</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,226</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common shares, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add back stock-based compensation expense
    (income) related to stock options included in reported net loss
    (net of minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.05</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.86</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of each option granted is
estimated on the date of grant using the Black-Scholes
option-pricing model. The following weighted average assumptions
were used for grants during the years ended December&nbsp;31,
2003, 2002 and 2001, respectively: risk-free interest rates of
3.0%, 3.6%, and 4.7%; expected volatility of 93.6%, 64.2% and
56.2%; and expected lives of 3.5&nbsp;years, 3.3&nbsp;years and
3.7&nbsp;years, respectively. The valuations assume no dividends
are paid.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Unfavorable Contracts and Other
    Settlements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognized $72&nbsp;million of
benefit for the year ended December&nbsp;31, 2003 as a result of
the settlement of estimated liabilities recorded in connection
with prior business combinations. The majority of this benefit
(approximately $52&nbsp;million) is due to the renegotiation of
a major programming contract, for which a liability had been
recorded for the above market portion of the agreement in
conjunction with the Falcon acquisition in 1999 and the Bresnan
acquisition in 2000. The remaining benefit relates to the
reversal of previously recorded liabilities, which, based on an
evaluation of current facts and circumstances, are no longer
required.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Income Taxes</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognizes deferred tax assets and
liabilities for temporary differences between the financial
reporting basis and the tax basis of the Company&#146;s assets
and liabilities and expected benefits of utilizing net operating
loss carryforwards. The impact on deferred taxes of changes in
tax rates and tax law, if any, applied to the years during which
temporary differences are expected to be settled, are reflected
in the consolidated financial statements in the period of
enactment (see Note&nbsp;21).
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Minority Interest</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Minority interest on the consolidated balance
sheets represents the portion of members&#146; equity of Charter
Holdco not owned by Charter, plus preferred membership interests
in two indirect subsidiaries of Charter held by Mr.&nbsp;Paul G.
Allen and certain sellers of the Helicon systems. Minority
interest totaled $689&nbsp;million and $1.0&nbsp;billion as of
December&nbsp;31, 2003 and 2002, respectively, on the
accompanying consolidated balance sheets. Gains or losses
arising from issuances by Charter Holdco of its membership units
are recorded as capital transactions thereby increasing or
decreasing shareholders&#146; equity and decreasing or
increasing minority interest on the consolidated balance sheets.
These losses totaled $1&nbsp;million, $1&nbsp;million and
$253&nbsp;million for the years ended December&nbsp;31, 2003,
2002 and 2001, respectively, on the accompanying consolidated
statements of changes in shareholders&#146; equity. Operating
losses are allocated to the minority owners based on their
ownership percentage, thereby reducing the Company&#146;s net
loss.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Loss per Common Share</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic loss per common share is computed by
dividing the net loss applicable to common stock by
294,597,519&nbsp;shares, 294,440,261&nbsp;shares and
269,594,386&nbsp;shares for the years ended December&nbsp;31,
2003, 2002 and 2001, representing the weighted-average common
shares outstanding during the respective periods. Diluted loss
per common share equals basic loss per common share for the
periods presented, as the effect of stock options is
antidilutive because the Company incurred net losses. All
membership units of Charter Holdco are exchangeable on a
one-for-one basis into common stock of Charter at the option of
the holders. Should the holders exchange units for shares, the
effect would not be dilutive.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Segments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;No.&nbsp;131, <I>Disclosure about
Segments of an Enterprise and Related Information</I>,
established standards for reporting information about operating
segments in annual financial statements and in interim financial
reports issued to shareholders. Operating segments are defined
as components of an enterprise about which separate financial
information is available that is evaluated on a regular basis by
the chief operating decisionmaker, or decision making group, in
deciding how to allocate resources to an individual segment and
in assessing performance of the segment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s operations are managed on the
basis of geographic divisional operating segments. The Company
has evaluated the criteria for aggregation of the geographic
operating segments under paragraph&nbsp;17 of
SFAS&nbsp;No.&nbsp;131 and believes it meets each of the
respective criteria set forth. The Company delivers similar
products and services within each of its geographic divisional
operations. Each geographic and divisional service area utilizes
similar means for delivering the programming of the
Company&#146;s services; have similarity in the type or class of
customer receiving the products and services; distributes the
Company&#146;s services over a unified network; and operates
within a consistent regulatory environment. In addition, each of
the geographic divisional operating segments has similar
economic characteristics. In light of the Company&#146;s similar
services, means for delivery, similarity in type of customers,
the use of a unified network and other considerations across its
geographic divisional operating structure, management has
determined that the Company has one reportable segment,
broadband services.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">4.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Acquisitions</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2002, CC&nbsp;Systems, LLC,
a subsidiary of the Company, and High Speed Access Corp.
(&#147;HSA&#148;) closed the Company&#146;s acquisition from HSA
of the contracts and associated assets, and assumed related
liabilities, that served certain of the Company&#146;s
high-speed data customers. At closing, the
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Company paid approximately $78&nbsp;million in
cash and delivered 37,000&nbsp;shares of HSA&#146;s
Series&nbsp;D convertible preferred stock and all the warrants
to buy HSA common stock owned by the Company. An additional
$2&nbsp;million of purchase price was retained to secure
indemnity claims. The purchase price has been allocated to
assets acquired and liabilities assumed based on fair values as
determined in the fourth quarter of 2002 by a third-party
valuation expert, including approximately $8&nbsp;million
assigned to intangible assets and amortized over an average
useful life of three years and approximately $54&nbsp;million
assigned to goodwill. In 2003, as part of the finalization of
the HSA acquisition, goodwill was reduced to $52&nbsp;million.
The finalization of the purchase price did not have a material
effect on amortization expense previously reported. During the
period from 1997 to 2000, certain subsidiaries of the Company
entered into Internet-access related service agreements with
HSA, and both Vulcan Ventures and certain of the Company&#146;s
subsidiaries made equity investments in HSA. (See Note&nbsp;22
for additional information).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, Interlink Communications Partners,
LLC, Rifkin Acquisition Partners, LLC and Charter Communications
Entertainment&nbsp;I, LLC, each an indirect, wholly-owned
subsidiary of Charter Holdings, completed the purchase of
certain assets of Enstar Income Program&nbsp;II-2, L.P., Enstar
Income Program&nbsp;IV-3, L.P., Enstar Income/ Growth Program
Six-A, L.P., Enstar Cable of Macoupin County and Enstar IV/PBD
Systems Venture, serving approximately 21,600 (unaudited)
customers, for a total cash purchase price of $48&nbsp;million.
In September 2002, Charter Communications Entertainment&nbsp;I,
LLC purchased all of Enstar Income Program&nbsp;II-1,
L.P.&#146;s Illinois cable systems, serving approximately 6,400
(unaudited) customers, for a cash purchase price of
$15&nbsp;million. Enstar Communications Corporation, a direct
subsidiary of Charter Holdco, is a general partner of the Enstar
limited partnerships but does not exercise control over them.
The purchase prices were allocated to assets acquired based on
fair values, including $41&nbsp;million assigned to franchises
and $4&nbsp;million assigned to other intangible assets
amortized over a useful life of three years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2002 acquisitions were funded primarily from
borrowings under the credit facilities of the Company&#146;s
subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the second and third quarters in 2001, the
Company acquired cable systems in two separate transactions. In
connection with the acquisitions, the Company paid a total cash
consideration of $1.8&nbsp;billion, transferred a cable system
valued at $25&nbsp;million, issued 505,664&nbsp;shares of
Charter Series&nbsp;A Convertible Redeemable Preferred Stock
valued at $51&nbsp;million, and in the first quarter of 2003
issued 39,595 additional shares of Series&nbsp;A Convertible
Redeemable Preferred Stock to certain sellers subject to certain
holdback provisions of the acquisition agreement valued at
$4&nbsp;million. The purchase prices were allocated to assets
acquired and liabilities assumed based on fair values, including
amounts assigned to franchises of $1.5&nbsp;billion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transactions described above were accounted
for using the purchase method of accounting, and, accordingly,
the results of operations of the acquired assets and assumed
liabilities have been included in the consolidated financial
statements from their respective dates of acquisition. The
purchase prices were allocated to assets acquired and
liabilities assumed based on fair values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The summarized operating results of the Company
that follow are presented on a pro forma basis as if the
following had occurred on January&nbsp;1, 2001: all acquisitions
and dispositions completed during 2001; the issuance of Charter
Holdings senior notes and senior discount notes in January 2002
and 2001; the issuance of Charter Holdings senior notes and
senior discount notes in May 2001; and the issuance of and sale
by Charter of convertible senior notes and Class&nbsp;A common
stock in May 2001. Adjustments have been made to give effect to
amortization of franchises acquired prior to July&nbsp;1, 2001,
interest expense,
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">minority interest, and certain other adjustments.
Pro forma results for the year ended December&nbsp;31, 2003 and
2002 would not differ significantly from historical results.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,211</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,724</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,251</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per common share, basic and diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.64</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unaudited pro forma financial information has
been presented for comparative purposes and does not purport to
be indicative of the consolidated results of operations had
these transactions been completed as of the assumed date or
which may be obtained in the future.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">5.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Allowance for Doubtful Accounts</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Activity in the allowance for doubtful accounts
is summarized as follows for the years presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Acquisitions of cable systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charged to expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Uncollected balances written off, net of
    recoveries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(122</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">6.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Property, Plant and Equipment</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property, plant and equipment consists of the
following as of December&nbsp;31, 2003 and 2002:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cable distribution systems
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land, buildings and leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vehicles and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less: accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,950</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company periodically evaluates the estimated
useful lives used to depreciate its assets and the estimated
amount of assets that will be abandoned or have minimal use in
the future. A significant change in assumptions about the extent
or timing of future asset retirements, or in the Company&#146;s
use of new technology and upgrade programs, could materially
affect future depreciation expense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation expense for the years ended
December&nbsp;31, 2003, 2002 and 2001 was $1.5&nbsp;billion,
$1.4&nbsp;billion and $1.2&nbsp;billion, respectively.
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">7.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Franchises and Goodwill</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company constructs and operates its cable
systems under non-exclusive franchises that are granted by state
or local government authorities for varying lengths of time. As
of December&nbsp;31, 2003, the Company had approximately 4,400
franchises in areas located throughout the United States. The
Company obtained these franchises primarily through acquisitions
of cable systems accounted for as purchase business
combinations. These acquisitions have primarily been for the
purpose of acquiring existing franchises and related
infrastructure and, as such, the primary asset acquired by the
Company has historically been cable franchises.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2002, the Company adopted
SFAS&nbsp;No.&nbsp;142, which eliminates the amortization of
indefinite lived intangible assets. Accordingly, beginning
January&nbsp;1, 2002, all franchises that qualify for indefinite
life treatment under SFAS&nbsp;No.&nbsp;142 are no longer
amortized against earnings but instead will be tested for
impairment annually, or more frequently as warranted by events
or changes in circumstances. During the first quarter of 2002,
the Company had an independent appraiser perform valuations of
its franchises as of January&nbsp;1, 2002. Based on the guidance
prescribed in EITF Issue No.&nbsp;02-7, <I>Unit of Accounting
for Testing of Impairment of Indefinite-Lived Intangible
Assets</I>, franchises were aggregated into essentially
inseparable asset groups to conduct the valuations. The asset
groups generally represented geographic clusters of the
Company&#146;s cable systems, which management then believed
represented the highest and best use of those assets. Fair value
was determined based on estimated discounted future cash flows
using assumptions that are consistent with internal forecasts.
As a result, the Company determined that franchises were
impaired and recorded the cumulative effect of a change in
accounting principle of $206&nbsp;million (approximately
$572&nbsp;million before minority interest effects of
$306&nbsp;million and tax effects of $60&nbsp;million). The
effect of adoption was to increase net loss and loss per share
by $206&nbsp;million and $0.70, respectively. As required by
SFAS&nbsp;No.&nbsp;142, the standard has not been retroactively
applied to the results for the period prior to adoption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company performed its annual impairment
assessment as of October&nbsp;1, 2002 using an independent
third-party appraiser and following the guidance of EITF
Issue&nbsp;02-17, <I>Recognition of Customer Relationship
Intangible Assets Acquired in a Business Combination</I>, which
was issued in October 2002 and requires the consideration of
assumptions that marketplace participants would consider, such
as expectations of future contract renewals and other benefits
related to the intangible asset. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in the Company&#146;s valuation, led to recognition of a
$4.6&nbsp;billion impairment charge in the fourth quarter of
2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The independent third-party appraiser&#146;s
valuations as of January&nbsp;1, 2002, October&nbsp;1, 2002 and
October&nbsp;1, 2003 yielded total enterprise values of
approximately $30&nbsp;billion, $25&nbsp;billion and
$25&nbsp;billion, respectively, which included approximately
$2.4&nbsp;billion, $3.1&nbsp;billion and $3.2&nbsp;billion,
respectively, assigned to customer relationships.
SFAS&nbsp;No.&nbsp;142 does not permit the recognition of
intangible assets not previously recognized. Accordingly, the
impairment included approximately $572&nbsp;million and
$3.1&nbsp;billion, before tax effects, attributable to customer
relationships as of January&nbsp;1, 2002 and October&nbsp;1,
2002, respectively. The valuation completed at October&nbsp;1,
2003 showed franchise values in excess of book value and thus
resulted in no impairment. Additionally, as a result of the sale
of the Port Orchard, Washington cable system on October&nbsp;1,
2003, net carrying value of franchises were reduced by
$42&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In determining whether its franchises have an
indefinite life, the Company considered the exclusivity of the
franchise, its expected costs of franchise renewals, and the
technological state of the associated cable systems with a view
to whether or not the Company is in compliance with any
technology upgrading requirements. Certain franchises did not
qualify for indefinite-life treatment due to technological or
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">operational factors that limit their lives. These
franchise costs will be amortized on a straight-line basis over
10&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of the adoption of
SFAS&nbsp;No.&nbsp;142 as of December&nbsp;31, 2003 and 2002 is
presented in the following table:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amortization</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amortization</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Indefinite-lived intangible assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises with indefinite lives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,076</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,428</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,428</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Finite-lived intangible assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises with finite lives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Franchise amortization expense for each of the
years ended December&nbsp;31, 2003 and 2002 was $9&nbsp;million
which represents the amortization relating to franchises that
did not qualify for indefinite-life treatment under
SFAS&nbsp;No.&nbsp;142, including costs associated with
franchise renewals. The Company expects amortization expense on
franchise assets will decrease to approximately $4&nbsp;million
annually based on its ability in 2003 to renew franchise
agreements the Company previously classified as having finite
lives without substantial costs. Actual amortization expense to
be reported in future periods could differ from these estimates
as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant
factors. Franchise amortization expense for the year ended
December&nbsp;31, 2001 was $1.5&nbsp;billion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As required by SFAS&nbsp;No.&nbsp;142, the
standard has not been retroactively applied to the results for
the period prior to adoption. A reconciliation of net loss for
the years ended December&nbsp;31, 2003, 2002 and 2001, as if
SFAS&nbsp;No.&nbsp;142 had been adopted as of January&nbsp;1,
2001, is presented below:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET LOSS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reported net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add back: amortization of indefinite-lived
    franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less: minority interest impact
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(808</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjusted net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(523</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BASIC AND DILUTED LOSS PER COMMON SHARE:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reported net loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add back: amortization of indefinite-lived
    franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less: minority interest impact
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjusted net loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">8.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accounts Payable and Accrued
    Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounts payable and accrued expenses consist of
the following as of December&nbsp;31, 2003 and 2002:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchise related fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State sales tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">9.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Long-Term Debt</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term debt consists of the following as of
December&nbsp;31, 2003 and 2002:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Long-Term Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Communications, Inc.:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">October and November 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.75%&nbsp;convertible senior notes due 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.75%&nbsp;convertible senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">March 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.250%&nbsp;senior notes due 2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.625%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.920%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,082</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,475</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.000%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">532</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.750%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.125%&nbsp;senior notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">13.500%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.625%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(includes January 2002 additional bond issue)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.000%&nbsp;senior notes due 2011 (includes
    January 2002 additional bond issue)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">12.125%&nbsp;senior discount notes due 2012
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCH&nbsp;II:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCO Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8&nbsp;3/4%&nbsp;senior notes due 2013
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Renaissance:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.00%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC V Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.875%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Credit Facilities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC VI
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Falcon Cable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC VIII Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accreted values presented above represent the
face value of the notes less the original issue discount at the
time of sale plus the accretion to the balance sheet date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2003, Charter, Charter Holdings and
their indirect subsidiary, CCH&nbsp;II, LLC
(&#147;CCH&nbsp;II&#148;) purchased, in a non-monetary
transaction, a total of approximately $609&nbsp;million
principal amount of Charter&#146;s outstanding convertible
senior notes and approximately $1.3&nbsp;billion principal
amount of the senior notes and senior discount notes issued by
Charter Holdings from institutional investors in a small number
of privately negotiated transactions. As consideration for these
securities, CCH&nbsp;II issued approximately $1.6&nbsp;billion
principal amount of 10.25%&nbsp;notes due 2010, achieving
approximately $294&nbsp;million of debt discount. CCH&nbsp;II
also issued an additional $30&nbsp;million principal amount of
10.25%&nbsp;notes for an equivalent amount of cash and used the
proceeds for transaction costs and for general corporate
purposes. See discussion of the CCH&nbsp;II notes below for more
details.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">5.75% Charter Convertible
Notes.</FONT></I><FONT size="2"> In October and November 2000,
Charter issued 5.75%&nbsp;convertible senior notes with a total
principal amount at maturity of $750&nbsp;million. As of
December&nbsp;31, 2003, there was $618&nbsp;million in total
principal amount of these notes outstanding. The 5.75% Charter
convertible notes are convertible at the option of the holder
into shares of Class&nbsp;A common stock at a conversion rate of
46.3822&nbsp;shares per $1,000 principal amount of notes, which
is equivalent to a price of $21.56&nbsp;per share,
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">subject to certain adjustments. Specifically, the
adjustments include anti-dilutive provisions, which cause
adjustments to occur automatically based on the occurrence of
specified events to provide protection rights to holders of the
notes. Additionally, Charter may adjust the conversion ratio
under certain circumstances when deemed appropriate. These notes
are redeemable at Charter&#146;s option at amounts decreasing
from 102.3% to 100% of the principal amount plus accrued and
unpaid interest beginning on October&nbsp;15, 2003, to the date
of redemption. Interest is payable semiannually on April&nbsp;15
and October&nbsp;15, beginning April&nbsp;15, 2001, until
maturity on October&nbsp;15, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 5.75% Charter convertible notes rank equally
with any of Charter&#146;s future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of Charter&#146;s
subsidiaries. Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">4.75% Charter Convertible
Notes.</FONT></I><FONT size="2"> In May 2001, Charter issued
4.75%&nbsp;convertible senior notes with a total principal
amount at maturity of $633&nbsp;million. As of December&nbsp;31,
2003, there was $156&nbsp;million in total principal amount of
these notes outstanding. The 4.75% Charter convertible notes are
convertible at the option of the holder into shares of
Class&nbsp;A common stock at a conversion rate of
38.0952&nbsp;shares per $1,000 principal amount of notes, which
is equivalent to a price of $26.25&nbsp;per share, subject to
certain adjustments. Specifically, the adjustments include
anti-dilutive provisions, which automatically occur based on the
occurrence of specified events to provide protection rights to
holders of the notes. Additionally, Charter may adjust the
conversion ratio under certain circumstances when deemed
appropriate. These notes are redeemable at Charter&#146;s option
at amounts decreasing from 101.9% to 100% of the principal
amount, plus accrued and unpaid interest beginning on
June&nbsp;4, 2004, to the date of redemption. Interest is
payable semiannually on December&nbsp;1 and June&nbsp;1,
beginning December&nbsp;1, 2001, until maturity on June&nbsp;1,
2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 4.75% Charter convertible notes rank equally
with any of Charter&#146;s future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of Charter&#146;s
subsidiaries. Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">March 1999 Charter Holdings
Notes.</FONT></I><FONT size="2"> The March 1999 Charter Holdings
notes were issued under three separate indentures, each dated as
of March&nbsp;17, 1999, among Charter Holdings and Charter
Communications Capital Corporation (&#147;Charter
Capital&#148;), as the issuers, and BNY Midwest Trust Company,
as trustee. Charter Holdings and Charter Capital exchanged these
notes for new March 1999 Charter Holdings notes with
substantially similar terms, except that the new March 1999
Charter Holdings notes are registered under the Securities Act
and, therefore, do not bear legends restricting their transfer
and are not subject to further registration or special interest
obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The March 1999 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
The March 1999 8.250% Charter Holdings notes mature on
April&nbsp;1, 2007, and as of December&nbsp;31, 2003, there was
$451&nbsp;million in total principal amount outstanding. The
March 1999 8.625% Charter Holdings notes mature on April&nbsp;1,
2009 and as of December&nbsp;31, 2003, there was
$1.2&nbsp;billion in total principal amount outstanding. The
March 1999 9.920% Charter Holdings notes mature on April&nbsp;1,
2011 and as of December&nbsp;31, 2003, the total principal
amount outstanding and accreted value was $1.1&nbsp;billion.
Cash interest on the March 1999 9.920% Charter Holdings notes
will not accrue prior to April&nbsp;1, 2004.
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The March 1999 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the January
2000, January 2001, May 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings&#146; subsidiaries, including the CCH&nbsp;II
notes, the CCO&nbsp;Holdings, LLC
(&#147;CCO&nbsp;Holdings&#148;) notes, and the credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the March 1999 8.250% Charter Holdings
notes prior to their maturity date on April&nbsp;1, 2007. On or
after April&nbsp;1, 2004, Charter Holdings and Charter Capital
may redeem some or all of the March 1999 8.625% Charter Holdings
notes and the March 1999 9.920% Charter Holdings notes at any
time, in each case, at a premium. The optional redemption price
declines to 100% of the principal amount of March 1999 Charter
Holdings notes redeemed, plus accrued and unpaid interest, if
any, for redemption on or after April&nbsp;1, 2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding March 1999 Charter Holdings
notes at 101% of their principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the March 1999 Charter
Holdings senior notes contain restrictive covenants that limit
certain transactions or activities by Charter Holdings and its
restricted subsidiaries. All but two of Charter Holdings&#146;
direct and indirect subsidiaries are currently restricted
subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">January 2000 Charter Holdings
Notes.</FONT></I><FONT size="2"> The January 2000 Charter
Holdings notes were issued under three separate indentures, each
dated as of January&nbsp;12, 2000, among Charter Holdings and
Charter Capital, as the issuers, and BNY Midwest Trust Company,
as trustee. In June 2000, Charter Holdings and Charter Capital
exchanged these notes for new January 2000 Charter Holdings
notes, with substantially similar terms, except that the new
January 2000 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer and are not subject to further registration or
special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2000 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2000 10.00% Charter Holdings notes mature
on April&nbsp;1, 2009, and as of December&nbsp;31, 2003, there
was $640&nbsp;million in total principal amount of these notes
outstanding. The January 2000 10.25% Charter Holdings notes
mature on January&nbsp;15, 2010 and as of December&nbsp;31,
2003, there was $318&nbsp;million in total principal amount of
these notes outstanding. The January 2000 11.75% Charter
Holdings notes mature on January&nbsp;15, 2010 and as of
December&nbsp;31, 2003, the total principal amount outstanding
was $450&nbsp;million and the total accreted value of these
notes was approximately $400&nbsp;million. Cash interest on the
January 2000 11.75% Charter Holdings notes will not accrue prior
to January&nbsp;15, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2000 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2001, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings&#146; subsidiaries, including
the CCH&nbsp;II notes, the CCO&nbsp;Holdings notes, and the
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the January 2000 10.00% Charter
Holdings notes prior to their maturity date on April&nbsp;1,
2009. On or after January&nbsp;15, 2005, Charter Holdings and
Charter Capital may redeem some or all of the January 2000
10.25% Charter Holdings notes and the January 2000 11.75%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2000
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Charter Holdings notes redeemed, plus accrued and
unpaid interest, if any, for redemption on or after
January&nbsp;15, 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2000 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2000 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 Charter
Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">January 2001 Charter Holdings
Notes.</FONT></I><FONT size="2"> The January 2001 Charter
Holdings notes were issued under three separate indentures, each
dated as of January&nbsp;10, 2001, each among Charter Holdings
and Charter Capital, as the issuers, and BNY Midwest Trust
Company, as trustee. In March 2001, Charter Holdings and Charter
Capital exchanged these notes for new January 2001 Charter
Holdings notes, with substantially similar terms, except that
the new January 2001 Charter Holdings notes are registered under
the Securities Act and, therefore, do not bear legends
restricting their transfer, and are not subject to further
registration or special interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2001 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2001 10.750% Charter Holdings notes mature
on October&nbsp;1, 2009, and as of December&nbsp;31, 2003, there
was $874&nbsp;million in total principal amount of these notes
outstanding. The January 2001 11.125% Charter Holdings notes
mature on January&nbsp;15, 2011 and as of December&nbsp;31,
2003, there was $500&nbsp;million in total principal amount
outstanding. The January 2001 13.500% Charter Holdings notes
mature on January&nbsp;15, 2011 with a total principal amount at
maturity of $675&nbsp;million. As of December&nbsp;31, 2003, the
total accreted value of these 13.500%&nbsp;notes was
approximately $517&nbsp;million. Cash interest on the January
2001 13.500% Charter Holdings notes will not accrue prior to
January&nbsp;15, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2001 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2000, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings&#146; subsidiaries, including
the CCH&nbsp;II notes, the CCO&nbsp;Holdings notes, and the
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the January 2001 10.750% Charter
Holdings notes prior to their maturity date on October&nbsp;1,
2009. On or after January&nbsp;15, 2006, Charter Holdings and
Charter Capital may redeem some or all of the January 2001
11.125% Charter Holdings notes and the January 2001 13.500%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January&nbsp;15, 2009.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2001 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 and January
2000 Charter Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">May 2001 Charter Holdings
Notes.</FONT></I><FONT size="2"> The May 2001 Charter Holdings
notes were issued under three separate indentures, each among
Charter Holdings and Charter Capital, as the issuers, and BNY
Midwest
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Trust Company, as trustee. In September 2001,
Charter Holdings and Charter Capital exchanged substantially all
of these notes for new May 2001 Charter Holdings notes, with
substantially similar terms, except that the new May 2001
Charter Holdings notes are registered under the Securities Act
and, therefore, do not bear legends restricting their transfer,
and are not subject to further registration or special interest
obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The May 2001 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
The May 2001 9.625% Charter Holdings notes mature on
November&nbsp;15, 2009, and as of December&nbsp;31, 2003,
combined with the January 2002 additional bond issue discussed
below, there was $640&nbsp;million in total principal amount
outstanding. The May 2001 10.000% Charter Holdings notes mature
on May&nbsp;15, 2011 and as of December&nbsp;31, 2003, combined
with the January 2002 additional bond issue discussed below,
there was $710&nbsp;million in total principal amount
outstanding. The May 2001 11.750% Charter Holdings notes issued
in the total principal amount at maturity of $1.0&nbsp;billion
mature on May&nbsp;15, 2011 and as of December&nbsp;31, 2003,
the total principal amount outstanding was $939&nbsp;million and
the total accreted value of the 11.750%&nbsp;notes was
approximately $717&nbsp;million. Cash interest on the May 2001
11.750% Charter Holdings notes will not accrue prior to
May&nbsp;15, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The May 2001 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the March 1999,
January 2000, January 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings&#146; subsidiaries, including the CCH&nbsp;II
notes, the CCO Holdings notes, and the credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Holdings and Charter Capital will not
have the right to redeem the May 2001 9.625% Charter Holdings
notes prior to their maturity date on November&nbsp;15, 2009.
Before May&nbsp;15, 2004, Charter Holdings and Charter Capital
may redeem up to 35% of the May 2001 10.000% Charter Holdings
notes and the May 2001 11.750% Charter Holdings notes, in each
case, at a premium with proceeds of certain offerings of equity
securities. In addition, on or after May&nbsp;15, 2006, Charter
Holdings and Charter Capital may redeem some or all of the May
2001 10.000% Charter Holdings notes and the May 2001 11.750%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the May 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
May&nbsp;15, 2009.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding May 2001 Charter Holdings notes
at 101% of their total principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the May 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000 and January 2001 Charter Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">January 2002 Charter Holdings Notes.
</FONT></I><FONT size="2">The January 2002 Charter Holdings
notes were issued under three separate indentures, each among
Charter Holdings and Charter Capital, as the issuers, and BNY
Midwest Trust Company, as trustee, two of which were supplements
to the indentures for the May 2001 Charter Holdings notes. In
July 2002, Charter Holdings and Charter Capital exchanged
substantially all of these notes for new January 2002 Charter
Holdings notes, with substantially similar terms, except that
the new January 2002 notes are registered under the Securities
Act and, therefore, do not bear legends restricting their
transfer and are not subject to further registration or special
interest obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2002 Charter Holdings notes consisted of
$350&nbsp;million in total principal
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">amount of 9.625%&nbsp;senior notes due 2009,
$300&nbsp;million in total principal amount of
10.000%&nbsp;senior notes due 2011 (both combined with their
respective May 2001 issue in the tabular presentation above) and
$330&nbsp;million in total principal amount at maturity of
12.125%&nbsp;senior discount notes due 2012.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 12.125%&nbsp;senior discount
notes mature on January&nbsp;15, 2012, and as of
December&nbsp;31, 2003, the total principal amount outstanding
was $330&nbsp;million and the total accreted value of these
notes was approximately $231&nbsp;million. Cash interest on the
January 2002 12.125% Charter Holdings notes will not accrue
prior to January&nbsp;15, 2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The January 2002 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with the current and future unsecured and unsubordinated
debt of Charter Holdings, including the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. They are
structurally subordinated to the obligations of Charter
Holdings&#146; subsidiaries, including the CCH&nbsp;II notes,
the CCO Holdings notes, and the credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Holdings 12.125%&nbsp;senior discount
notes are redeemable at the option of the issuers at amounts
decreasing from 106.063% to 100% of accreted value beginning
January&nbsp;15, 2007. At any time prior to January&nbsp;15,
2005, the issuers may redeem up to 35% of the total principal
amount of the 12.125%&nbsp;senior discount notes at a redemption
price of 112.125% of the accreted value under certain conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2002 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the January 2002 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CCH&nbsp;II Notes.</FONT></I><FONT size="2">
In September 2003, CCH&nbsp;II and CCH&nbsp;II Capital Corp.
jointly issued $1.6&nbsp;billion total principal amount of
10.25%&nbsp;senior notes due 2010. The CCH&nbsp;II notes are
general unsecured obligations of CCH&nbsp;II and CCH&nbsp;II
Capital Corp. They rank equally with all other current or future
unsubordinated obligations of CCH II and CCH&nbsp;II Capital
Corp. The CCH&nbsp;II notes are structurally subordinated to all
obligations of subsidiaries of CCH&nbsp;II, including the CCO
Holdings notes and the credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the CCH&nbsp;II notes accrues at
10.25%&nbsp;per annum, from September&nbsp;23, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each March&nbsp;15 and September&nbsp;15, commencing on
March&nbsp;15, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to September&nbsp;15, 2006, the
issuers of the CCH&nbsp;II notes may redeem up to 35% of the
total principal amount of the CCH&nbsp;II notes on a pro rata
basis at a redemption price equal to 110.25% of the principal
amount of CCH&nbsp;II notes redeemed, plus any accrued and
unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or after September&nbsp;15, 2008, the issuers
of the CCH&nbsp;II notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 105.125% to a redemption price on or after
September&nbsp;15, 2009 of 100.0% of the principal amount of the
CCH&nbsp;II notes redeemed, plus, in each case, any accrued and
unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, CCH&nbsp;II must offer to purchase the outstanding
CCH&nbsp;II notes from the holders at a purchase price equal to
101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CCO Holdings Notes.</FONT></I><FONT size="2">
In November 2003, CCO Holdings and CCO Holdings Capital Corp.
jointly issued $500&nbsp;million total principal amount of
8&nbsp;3/4%&nbsp;senior notes due 2013. The CCO Holdings notes
are general unsecured obligations of CCO Holdings and CCO
Holdings Capital Corp. They rank equally with all other current
or future unsubordinated obligations of CCO Holdings and CCO
Holdings Capital Corp. The CCO Holdings notes are structurally
subordinated to all obligations of its subsidiaries, including
the credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest on the CCO Holdings senior notes accrues
at 8&nbsp;3/4%&nbsp;per year, from November&nbsp;10, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each May&nbsp;15 and November&nbsp;15, commencing on
May&nbsp;15, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to November&nbsp;15, 2006, the
issuers of the CCO Holdings senior notes may redeem up to 35% of
the total principal amount of the CCO Holdings senior notes to
the extent of public equity proceeds they have received on a pro
rata basis at a redemption price equal to 108.75% of the
principal amount of CCO Holdings senior notes redeemed, plus any
accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or after November&nbsp;15, 2008, the issuers
of the CCO Holdings senior notes may redeem all or a part of the
notes at a redemption price that declines ratably from the
initial redemption price of 104.375% to a redemption price on or
after November&nbsp;15, 2011 of 100.0% of the principal amount
of the CCO Holdings senior notes redeemed, plus, in each case,
any accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of specified change of control
events, CCO Holdings must offer to purchase the outstanding CCO
Holdings senior notes from the holders at a purchase price equal
to 101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Renaissance Notes.</FONT></I><FONT size="2">
In connection with the acquisition of Renaissance in April 1999,
the Company assumed $163&nbsp;million principal amount at
maturity of 10.000%&nbsp;senior discount notes due 2008 of which
$49&nbsp;million was repurchased in May 1999. The Renaissance
notes did not require the payment of interest until
April&nbsp;15, 2003. From and after April&nbsp;15, 2003, the
Renaissance notes bear interest, payable semi-annually in cash,
on April&nbsp;15 and October&nbsp;15, commencing on
October&nbsp;15, 2003. The Renaissance notes are due on
April&nbsp;15, 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CC V Holdings Notes.</FONT></I><FONT size="2">
Charter Holdco acquired CC V Holdings in November 1999 and
assumed CC V Holdings&#146; outstanding 11.875%&nbsp;senior
discount notes due 2008 with an accreted value of
$113&nbsp;million as of December&nbsp;31, 2003. Commencing
December&nbsp;1, 2003, cash interest on the CC V Holdings
11.875%&nbsp;notes will be payable semi-annually on June&nbsp;1
and December&nbsp;1 of each year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">High-Yield Restrictive Covenants; Limitation
on Indebtedness.</FONT></I><FONT size="2"> The indentures
governing the notes of the Company&#146;s subsidiaries contain
certain covenants that restrict the ability of Charter Holdings,
Charter Capital, CCH&nbsp;II, CCH&nbsp;II Capital Corp., CCO
Holdings, CCO Holdings Capital Corp., the CC&nbsp;V Holdings
notes issuers, Renaissance Media Group, and all of their
restricted subsidiaries to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur additional debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends on equity or repurchase equity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant liens;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell all or substantially all of their assets or
    merge with or into other companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell assets;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-26
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into sale-leasebacks;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of restricted subsidiaries, create or
    permit to exist dividend or payment restrictions with respect to
    the bond issuers, guarantee their parent companies debt, or
    issue specified equity interests;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">engage in certain transactions with affiliates.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Charter Operating Credit
Facilities.</FONT></I><FONT size="2"> The Charter Communications
Operating, LLC (&#147;Charter Operating&#148;) credit facilities
were amended and restated as of June&nbsp;19, 2003 to allow for
the insertion of intermediate holding companies between Charter
Holdings and Charter Operating. In exchange for the
lenders&#146; consent to the organizational restructuring,
Charter Operating&#146;s pricing increased by 50&nbsp;basis
points across all levels in the pricing grid then in effect
under the Charter Operating credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Obligations under the Charter Operating credit
facilities are guaranteed by Charter Holdings, CCO Holdings and
by Charter Operating&#146;s subsidiaries, other than the
non-recourse subsidiaries, subsidiaries precluded from so
guaranteeing by reason of the provisions of other indebtedness
to which they are subject, and immaterial subsidiaries. The
non-recourse subsidiaries include CCO&nbsp;NR Holdings, LLC, and
subsidiaries contributed to CCO&nbsp;NR Holdings, LLC by Charter
Holdings in the recent organizational restructuring that
occurred in June and July of 2003, including the CC V/CC VIII
Companies, the CC&nbsp;VI Companies and the CC&nbsp;VII
Companies and their respective subsidiaries. The obligations
under the Charter Operating credit facilities are secured by
pledges of all equity interests in Charter Operating&#146;s
direct subsidiaries, all equity interests owned by its guarantor
subsidiaries in their respective subsidiaries, and intercompany
obligations owing to Charter Operating and/or its guarantor
subsidiaries by their affiliates. The obligations are also
secured by a pledge of CCO Holdings&#146; equity interests in
all of its direct subsidiaries (including Charter Operating) as
collateral under these credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Charter Operating credit facilities provide
for borrowings of up to $5.1&nbsp;billion and provide for four
term facilities: two Term A facilities with a total principal
amount of $1.1&nbsp;billion that matures in September 2007, each
with different amortization schedules, one that began in June
2002 and one beginning in September 2005; and two Term B
facilities with a total principal amount of $2.7&nbsp;billion,
of which $1.8&nbsp;billion matures in March 2008 and
$884&nbsp;million matures in September 2008. The amortization of
the principal amount of the Term B term loan facilities is
substantially &#147;back-ended,&#148; with more than 90% of the
principal balance due in the year of maturity. The Charter
Operating credit facilities also provide for two revolving
credit facilities, in a total amount of $1.3&nbsp;billion, one
which will reduce annually beginning in March 2004 and one which
will reduce quarterly beginning in September 2005, with a
maturity date in September 2007. Supplemental credit facilities
in the amount of $100&nbsp;million may be available from lenders
within or outside the lending group that agree to provide it.
Amounts under the Charter Operating credit facilities bear
interest at the Eurodollar rate or the base rate, each as
defined, plus a margin of up to 3.0% for Eurodollar loans (3.15%
to 3.92% as of December&nbsp;31, 2003 and 3.13% to 4.58% as of
December&nbsp;31, 2002) and 2.0% for base rate loans. A
quarterly commitment fee of between 0.25% and 0.375%&nbsp;per
annum is payable on the unborrowed balance of the revolving
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, outstanding
borrowings under the Charter Operating credit facilities were
approximately $4.5&nbsp;billion and the unused total potential
availability was $681&nbsp;million, although financial covenants
limited the availability under these facilities to
$213&nbsp;million as of December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CC&nbsp;VI Operating Credit
Facilities.</FONT></I><FONT size="2"> The obligations under the
CC&nbsp;VI Operating credit facilities are guaranteed by
CC&nbsp;VI Operating&#146;s parent, CC&nbsp;VI Holdings, LLC,
and by the subsidiaries of CC VI Operating other than immaterial
subsidiaries. The obligations under the CC&nbsp;VI Operating
credit facilities are secured by pledges of all equity interests
owned by CC&nbsp;VI Operating and its guarantor subsidiaries in
</FONT>

<P align="center"><FONT size="2">F-27
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">other persons, and by intercompany obligations
owing CC VI Operating and/or its guarantor subsidiaries by their
affiliates, but are not secured by other assets of CC VI
Operating or its subsidiaries. The obligations under the
CC&nbsp;VI Operating credit facilities are also secured by
pledges by CC&nbsp;VI Holdings of all equity interests it holds
in other persons, and intercompany obligations owing to it by
its affiliates, but are not secured by the other assets of
CC&nbsp;VI Holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CC&nbsp;VI Operating credit facilities
provide for two term facilities, one with a principal amount of
$380&nbsp;million that matures May 2008 (Term A), and the other
with a principal amount of $372&nbsp;million that matures
November 2008 (Term B). The CC&nbsp;VI Operating credit
facilities also provide for a $350&nbsp;million reducing
revolving credit facility with a maturity date in May 2008.
Supplemental credit facilities in the amount of approximately
$300&nbsp;million may be available until December&nbsp;31, 2004
from lenders within or outside the lending group that agree to
provide it. Amounts under the CC&nbsp;VI Operating credit
facilities bear interest at the Eurodollar rate or the base
rate, each as defined, plus a margin of up to 2.5% for
Eurodollar loans (2.40% to 3.66% as of December&nbsp;31, 2003
and 2.62% to 4.31% as of December&nbsp;31, 2002) and 1.5% for
base rate loans. A quarterly commitment fee of 0.25%&nbsp;per
year is payable on the unborrowed balance of the Term&nbsp;A
facility and the revolving facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, outstanding
borrowings under the CC&nbsp;VI Operating credit facilities were
$868&nbsp;million and unused total potential availability was
$234&nbsp;million, although financial covenants limited the
availability under these facilities to $119&nbsp;million as of
December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Falcon Cable Credit
Facilities.</FONT></I><FONT size="2"> The obligations under the
Falcon credit facilities are guaranteed by the direct parent of
Falcon Cable Communications, Charter Communications VII, LLC,
and by the subsidiaries of Falcon Cable Communications (except
for certain excluded subsidiaries). The obligations under the
Falcon credit facilities are secured by pledges of all of the
equity interests in the guarantor subsidiaries of Falcon Cable
Communications, but are not secured by other assets of Falcon
Cable Communications or its subsidiaries. The obligations under
the Falcon credit facilities are also secured by a pledge of the
equity interests of Charter Communications&nbsp;VII in Falcon
Cable Communications and intercompany obligations owing to
Charter Communications&nbsp;VII by Falcon Cable Communications
and its guarantor subsidiaries, but are not secured by the other
assets of Charter Communications&nbsp;VII.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Falcon credit facilities provide for two term
facilities, one with a principal amount of $190&nbsp;million
that matures June 2007 (Term&nbsp;B), and the other with the
principal amount of $285&nbsp;million that matures December 2007
(Term&nbsp;C). The Falcon credit facilities also provide for a
reducing revolving facility of up to approximately
$60&nbsp;million (maturing in December 2006), a reducing
supplemental facility of up to approximately $105&nbsp;million
(maturing in December 2007) and a second reducing revolving
facility of up to $670&nbsp;million (maturing in June 2007).
Supplemental credit facilities in the amount of up to
$486&nbsp;million may also be available from lenders within or
outside the lending group that agree to provide it. Amounts
under the Falcon Cable credit facilities bear interest at the
Eurodollar rate or the base rate, each as defined, plus a margin
of up to 2.25% for Eurodollar loans (2.40% to 3.42% as of
December&nbsp;31, 2003 and 2.69% to 4.07% as of
December&nbsp;31, 2002) and up to 1.25% for base rate loans. A
quarterly commitment fee of between 0.25% and 0.375%&nbsp;per
year is payable on the unborrowed balance of the revolving
facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, outstanding
borrowings were $856&nbsp;million and unused total potential
availability was $454&nbsp;million, although financial covenants
limited the availability under these facilities to
$366&nbsp;million as of December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CC VIII Operating Credit
Facilities.</FONT></I><FONT size="2"> The obligations under the
CC&nbsp;VIII Operating credit facilities are guaranteed by the
parent company of CC&nbsp;VIII Operating, CC&nbsp;VIII Holdings,
LLC, and by the
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">subsidiaries of CC&nbsp;VIII Operating other than
immaterial subsidiaries. The obligations under the CC&nbsp;VIII
Operating credit facilities are secured by pledges of all equity
interests owned by CC&nbsp;VIII Operating and its guarantor
subsidiaries in other persons, and by intercompany obligations
owing to CC&nbsp;VIII Operating and/or its guarantor
subsidiaries by their affiliates, but are not secured by other
assets of CC&nbsp;VIII Operating or its subsidiaries. The
obligations under the CC&nbsp;VIII Operating credit facilities
are also secured by pledges of equity interests owned by
CC&nbsp;VIII Holdings in other persons, and by intercompany
obligations owing to CC&nbsp;VIII Holdings by its affiliates,
but are not secured by the other assets of CC&nbsp;VIII Holdings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CC VIII Operating credit facilities provide
for borrowings of up $1.4&nbsp;billion as of December&nbsp;31,
2003. The CC&nbsp;VIII Operating credit facilities provide for
two term facilities, a Term&nbsp;A facility with a reduced
current total principal amount of $375&nbsp;million, that
continues reducing quarterly until it reaches maturity in June
2007, and a Term&nbsp;B facility with a principal amount of
$490&nbsp;million, that continues reducing quarterly until it
reaches maturity in February 2008. The amortization of the
principal amount of the Term&nbsp;B term loan facilities is
substantially &#147;back-ended,&#148; with more than 90% of the
principal balance due in the year of maturity. The CC VIII
Operating credit facilities also provide for two reducing
revolving credit facilities, in the total amount of
$542&nbsp;million, which reduce quarterly beginning in June 2002
and September 2005, respectively, with maturity dates in June
2007. Supplemental facilities in the amount of approximately
$300&nbsp;million may be available from lenders within or
outside the lending group that agree to provide it. Amounts
under the CC&nbsp;VIII Operating credit facilities bear interest
at the Eurodollar rate or the base rate, each as defined, plus a
margin of up to 2.50% for Eurodollar loans (2.15% to 3.66% as of
December&nbsp;31, 2003 and 2.89% to 4.54% as of
December&nbsp;31, 2002) and up to 1.50% for base rate loans. A
quarterly commitment fee of 0.25% is payable on the unborrowed
balance of the revolving credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, outstanding
borrowings were $1.0&nbsp;billion, and unused total potential
availability was $363&nbsp;million although financial covenants
limited the availability under these facilities to
$130&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Credit Facility Restrictive
Covenants.</FONT></I><FONT size="2"> Each of the credit
facilities of the Company&#146;s subsidiaries contain
representations and warranties, affirmative and negative
covenants similar to those described above with respect to the
indentures governing the Company&#146;s notes and the notes of
the Company&#146;s subsidiaries, information requirements,
events of default and financial covenants. The financial
covenants, as defined, measure performance against standards set
for leverage, debt service coverage, and operating cash flow
coverage of cash interest expense on a quarterly basis or as
applicable. Additionally, the credit facilities contain
provisions requiring mandatory loan prepayments under specific
circumstances, including when significant amounts of assets are
sold and the proceeds are not promptly reinvested in assets
useful in the business of the borrower within a specified
period. The Charter Operating credit facility also provides that
in the event that any indebtedness of CCO Holdings remains
outstanding on the date, which is six months prior to the
scheduled final maturity, the term loans under the Charter
Operating credit facility will mature and the revolving credit
facilities will terminate on such date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of a default under the
Company&#146;s subsidiaries&#146; credit facilities or notes,
the subsidiaries&#146; creditors could elect to declare all
amounts borrowed, together with accrued and unpaid interest and
other fees, to be due and payable. In such event, the
subsidiaries&#146; credit facilities and indentures that were so
accelerated or were otherwise in default will not permit the
Company&#146;s subsidiaries to distribute funds to Charter
Holdco or the Company to pay interest or principal on the notes.
A default under the covenants governing any of the
Company&#146;s debt instruments could result in the acceleration
of its payment obligations under that debt and, under certain
circumstances, in cross-defaults under the Company&#146;s other
</FONT>

<P align="center"><FONT size="2">F-29
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">debt obligations, which would have a material
adverse effect on the Company&#146;s consolidated financial
condition or results of operations. In addition, the lenders
under the Company&#146;s credit facilities could foreclose on
their collateral, which includes equity interests in the
Company&#146;s subsidiaries, and exercise other rights of
secured creditors. In any such case, the Company might not be
able to repay or make any payments on its notes. Additionally,
such a default would cause a cross-default in the indentures
governing the Charter Holdings notes and the convertible senior
notes and would trigger the cross-default provision of the
Charter Operating Credit Agreement. Any default under any of the
subsidiaries&#146; credit facilities or notes might adversely
affect the holders of the Company&#146;s notes and the
Company&#146;s growth, financial condition and results of
operations and could force the Company to examine all options,
including seeking the protection of the bankruptcy laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon outstanding indebtedness as of
December&nbsp;31, 2003, the amortization of term loans,
scheduled reductions in available borrowings of the revolving
credit facilities, and the maturity dates for all senior and
subordinated notes and debentures, total future principal
payments on the total borrowings under all debt agreements as of
December&nbsp;31, 2003, are as follows:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,762</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the amounts of debt scheduled to mature
during 2004, it is management&#146;s intent to fund the
repayments from borrowings on the Company&#146;s revolving
credit facility. The accompanying consolidated balance sheet
reflects this intent by presenting all debt balances as
long-term while the table above reflects actual debt maturities
as of the stated date.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">10.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Minority Interest and Equity Interest of
    Charter Holdco</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is a holding company whose primary
asset is a controlling equity interest in Charter Holdco, the
indirect owner of the Company&#146;s cable systems and mirror
notes that are payable by Charter Holdco to the Company which
have the same principal amount and terms as those of
Charter&#146;s convertible senior notes. Minority interest on
the Company&#146;s consolidated balance sheets represents the
ownership percentages of Charter Holdco not owned by the
Company, or 54% of total members&#146; equity of Charter Holdco,
plus $694&nbsp;million, $668&nbsp;million and $655&nbsp;million
of preferred membership interests in CC&nbsp;VIII, LLC
(CC&nbsp;VIII), an indirect subsidiary of Charter Holdco, as of
December&nbsp;31, 2003, 2002 and 2001, respectively. As more
fully described in Note&nbsp;22, this preferred interest arises
from the approximately $630&nbsp;million of preferred membership
units issued by CC&nbsp;VIII in connection with the Bresnan
acquisition in February, 2000. As of December&nbsp;31, 2003 and
December&nbsp;31, 2002, minority interest also includes
$25&nbsp;million of preferred interest in Charter Helicon, LLC
issued in connection with the Helicon acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members&#146; equity of Charter Holdco was
($57)&nbsp;million, $662&nbsp;million and $7.0&nbsp;billion as
of December&nbsp;31, 2003, 2002 and 2001, respectively. Gains
and losses arising from the issuance by Charter Holdco of its
membership units are recorded as capital transactions, thereby
increasing or decreasing
</FONT>

<P align="center"><FONT size="2">F-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">shareholders&#146; equity and decreasing or
increasing minority interest on the accompanying consolidated
balance sheets. Minority interest was 53.5% as of
December&nbsp;31, 2003, 2002 and 2001. Minority interest
includes the proportionate share of changes in fair value of
interest rate risk management derivative agreements. Such
amounts are temporary as they are contractually scheduled to
reverse over the life of the underlying instrument.
Additionally, reported losses allocated to minority interest on
the statement of operations will be limited to the extent of any
remaining minority interest on the balance sheet related to
Charter Holdco. Accordingly, commencing in 2004, the Company
expects to absorb all, or substantially all, future losses
before income taxes, since the minority interest in Charter
Holdco was substantially eliminated at December&nbsp;31, 2003,
subject to any changes in Charter Holdco&#146;s capital
structure. Changes to minority interest consist of the following
for the periods presented:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Minority</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity reclassified from redeemable securities
    (26,539,746&nbsp;shares of Class&nbsp;A common stock)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in loss of a subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on issuance of equity by Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in loss of a subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(306</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in loss of a subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">11.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Preferred Stock&nbsp;&#151;
    Redeemable</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;31, 2001, in connection with its
acquisition of Cable USA, Inc. and certain cable system assets
from affiliates of Cable USA, Inc., the Company issued
505,664&nbsp;shares of Series&nbsp;A Convertible Redeemable
Preferred Stock (the Preferred Stock) valued at and with a
liquidation preference of $51&nbsp;million. Holders of the
Preferred Stock have no voting rights but are entitled to
receive cumulative cash dividends at an annual rate of 5.75%,
payable quarterly. If for any reason Charter fails to pay the
dividends on the Preferred Stock on a timely basis, the dividend
rate on each share increases to an annual rate of 7.75% until
the payment is made. The Preferred Stock is redeemable by
Charter at its option on or
</FONT>

<P align="center"><FONT size="2">F-31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">after August&nbsp;31, 2004 and must be redeemed
by Charter at any time upon a change of control, or if not
previously redeemed or converted, on August&nbsp;31, 2008. The
Preferred Stock is convertible, in whole or in part, at the
option of the holders from April&nbsp;1, 2002 through
August&nbsp;31, 2008, into shares of common stock at an initial
conversion rate equal to a conversion price of $24.71&nbsp;per
share of common stock, subject to certain customary adjustments.
The redemption price per share of Preferred Stock is the
Liquidation Preference of $100, subject to certain customary
adjustments. In the first quarter of 2003, the Company issued
39,595 additional shares of preferred stock valued at and with a
liquidation preference of $4&nbsp;million.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">12.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Common Stock</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s Class&nbsp;A common stock and
Class&nbsp;B common stock are identical except with respect to
certain voting, transfer and conversion rights. Holders of
Class&nbsp;A common stock are entitled to one vote per share and
holders of Class&nbsp;B common stock are entitled to ten votes
per share. The Class&nbsp;B common stock is subject to
significant transfer restrictions and is convertible on a share
for share basis into Class&nbsp;A common stock at the option of
the holder.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">13.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Comprehensive Loss</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive loss on the accompanying consolidated balance
sheets. The Company reports changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations, that meet the effectiveness criteria of
SFAS&nbsp;No.&nbsp;133, <I>Accounting for Derivative Instruments
and Hedging Activities</I>, in accumulated other comprehensive
loss, after giving effect to the minority interest share of such
gains and losses. Comprehensive loss for the years ended
December&nbsp;31, 2003, 2002 and 2001 was $219&nbsp;million,
$2.5&nbsp;billion and $1.2&nbsp;billion, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">14.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accounting for Derivative Instruments and
    Hedging Activities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company uses interest rate risk management
derivative instruments, such as interest rate swap agreements
and interest rate collar agreements (collectively referred to
herein as interest rate agreements) as required under the terms
of its credit facilities. The Company&#146;s policy is to manage
interest costs using a mix of fixed and variable rate debt.
Using interest rate swap agreements, the Company agrees to
exchange, at specified intervals through 2007, the difference
between fixed and variable interest amounts calculated by
reference to an agreed-upon notional principal amount. Interest
rate collar agreements are used to limit the Company&#146;s
exposure to and benefits from interest rate fluctuations on
variable rate debt to within a certain range of rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2001, the Company
adopted SFAS&nbsp;No.&nbsp;133. Interest rate agreements are
recorded in the consolidated balance sheet at December&nbsp;31,
2003 and 2002 as either an asset or liability measured at fair
value. In connection with the adoption of
SFAS&nbsp;No.&nbsp;133, the Company recorded a loss of
$10&nbsp;million (approximately $24&nbsp;million before minority
interest effects) as the cumulative effect of change in
accounting principle. The effect of adoption was to increase net
loss and loss per share by $10&nbsp;million and $0.04&nbsp;per
share, respectively, for the year ended December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company does not hold or issue derivative
instruments for trading purposes. The Company does however have
certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
are those that effectively convert variable interest payments on
certain debt instruments into fixed payments. For qualifying
hedges, SFAS&nbsp;No.&nbsp;133 allows derivative gains and
losses to offset related results on hedged items in the
consolidated statement of operations. The Company has
</FONT>

<P align="center"><FONT size="2">F-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">formally documented, designated and assessed the
effectiveness of transactions that receive hedge accounting. For
the years ended December&nbsp;31, 2003, 2002 and 2001, net gain
(loss) on derivative instruments and hedging activities includes
gains of $8&nbsp;million and losses of $14&nbsp;million and
$2&nbsp;million, respectively, which represent cash flow hedge
ineffectiveness on interest rate hedge agreements arising from
differences between the critical terms of the agreements and the
related hedged obligations. Changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations are reported in accumulated other comprehensive
loss. For the years ended December&nbsp;31, 2003, 2002 and 2001,
a gain of $48&nbsp;million and losses of $65&nbsp;million and
$39&nbsp;million, respectively, related to derivative
instruments designated as cash flow hedges was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS&nbsp;No.&nbsp;133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value with the impact recorded as gain (loss) on
derivative instruments and hedging activities in the
Company&#146;s statement of operations. For the years ended
December&nbsp;31, 2003, 2002 and 2001, net gain (loss) on
derivative instruments and hedging activities includes gains of
$57&nbsp;million and losses of $101&nbsp;million and
$48&nbsp;million, respectively, for interest rate derivative
instruments not designated as hedges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, 2002 and 2001, the
Company had outstanding $3.0&nbsp;billion, $3.4&nbsp;billion and
$3.3&nbsp;billion and $520&nbsp;million, $520&nbsp;million and
$520&nbsp;million, respectively, in notional amounts of interest
rate swaps and collars, respectively. The notional amounts of
interest rate instruments do not represent amounts exchanged by
the parties and, thus, are not a measure of exposure to credit
loss. The amounts exchanged are determined by reference to the
notional amount and the other terms of the contracts.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">15.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Fair Value of Financial Instruments</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has estimated the fair value of its
financial instruments as of December&nbsp;31, 2003 and 2002
using available market information or other appropriate
valuation methodologies. Considerable judgment, however, is
required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented in the
accompanying consolidated financial statements are not
necessarily indicative of the amounts the Company would realize
in a current market exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The carrying amounts of cash, receivables,
payables and other current assets and liabilities approximate
fair value because of the short maturity of those instruments.
The Company is exposed to market price risk volatility with
respect to investments in publicly traded and privately held
entities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of interest rate agreements
represents the estimated amount the Company would receive or pay
upon termination of the agreements. Management believes that the
sellers of the interest rate agreements will be able to meet
their obligations under the agreements. In addition, some of the
interest rate agreements are with certain of the participating
banks under the Company&#146;s credit facilities, thereby
reducing the exposure to credit loss. The Company has policies
regarding the financial stability and credit standing of major
counterparties. Nonperformance by the counterparties is not
anticipated nor would it have a material adverse effect on the
Company&#146;s consolidated financial condition or results of
operations.
</FONT>

<P align="center"><FONT size="2">F-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The estimated fair value of the Company&#146;s
notes, credit facilities and interest rate agreements at
December&nbsp;31, 2003 and 2002 are based on quoted market
prices or a discounted cash flow analysis using the
Company&#146;s incremental borrowing rate for similar types of
borrowing arrangements and dealer quotations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the carrying value and fair value of
the Company&#146;s debt and related interest rate agreements at
December&nbsp;31, 2003 and 2002 is as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter convertible notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Holdings debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCH&nbsp;II debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCO Holdings debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Credit facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,367</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">229</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Interest Rate Agreements</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets (Liabilities)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Swaps
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(258</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(258</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Collars
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The weighted average interest pay rate for the
Company&#146;s interest rate swap agreements was 7.25% and 7.40%
at December&nbsp;31, 2003 and 2002, respectively. The
Company&#146;s interest rate collar agreements are structured so
that if LIBOR falls below 5.3%, the Company pays 6.7%. If the
LIBOR rate is between 5.3% and 8.0%, the Company pays LIBOR. The
LIBOR rate is capped at 8.0%, if LIBOR is between 8.0% and 9.9%.
If the LIBOR rate rises above 9.9%, the cap is removed.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">16.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Revenues</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues consist of the following for the years
presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">346</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">17.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Operating Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating expenses consist of the following for
the years presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">18.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Selling, General and Administrative
    Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Selling, general and administrative expenses
consist of the following for the years presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">940</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">963</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">19.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Stock Compensation Plans</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company grants stock options, restricted
stock and other incentive compensation pursuant to the 2001
Stock Incentive Plan of Charter (the &#147;2001 Plan&#148;).
Prior to 2001, options were granted under the 1999 Option Plan
of Charter Holdco (the &#147;1999 Plan&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1999 Plan provided for the grant of options
to purchase membership units in Charter Holdco to current and
prospective employees and consultants of Charter Holdco and its
affiliates and current and prospective non-employee directors of
Charter. Options granted generally vest over five years from the
grant date, with 25% vesting 15&nbsp;months after the
anniversary of the grant date and ratably thereafter. Options
not exercised accumulate and are exercisable, in whole or in
part, in any subsequent period, but not later than 10&nbsp;years
from the date of grant. Membership units received upon exercise
of the options are automatically exchanged into Class&nbsp;A
common stock of Charter on a one-for-one basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2001 Plan provides for the grant of
non-qualified stock options, stock appreciation rights, dividend
equivalent rights, performance units and performance shares,
share awards, phantom stock and/or shares of restricted stock
(not to exceed 3,000,000), as each term is defined in the 2001
Plan. Employees, officers, consultants and directors of the
Company and its subsidiaries and affiliates are eligible to
receive grants under the 2001 Plan. Options granted generally
vest over four years from the grant date, with 25% vesting on
the anniversary of the grant date and ratably thereafter.
Generally, options expire 10&nbsp;years from the grant date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2001 Plan allows for the issuance of up to a
total of 90,000,000&nbsp;shares of Charter Class&nbsp;A common
stock (or units convertible into Charter Class&nbsp;A common
stock). The total shares available reflect a July 2003 amendment
to the 2001 Plan approved by the board of directors and the
shareholders of Charter to increase available shares by
30,000,000&nbsp;shares. In 2001, any shares covered by options
that terminated under the 1999 Plan were transferred to the 2001
Plan, and no new options can be granted under the 1999 Plan.
</FONT>

<P align="center"><FONT size="2">F-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During July and October 2003, in connection with
new employment agreements and related option agreements entered
into by the Company, certain executives and directors were
awarded a total of 80,603&nbsp;shares of restricted Class&nbsp;A
common stock. The shares vest monthly over a twelve-month period
beginning on the date of grant. During September and October
2001, in connection with new employment agreements and related
option agreements entered into by the Company, certain
executives of the Company were awarded a total of
256,000&nbsp;shares of restricted Class&nbsp;A common stock, of
which 140,063&nbsp;shares had been cancelled as of
December&nbsp;31, 2003. The shares vested 25% upon grant, with
the remaining shares vesting monthly over a three-year period
beginning after the first anniversary of the date of grant. As
of December&nbsp;31, 2003, deferred compensation remaining to be
recognized in future periods totaled $0.2&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the activity for the Company&#146;s
stock options, excluding granted shares of restricted
Class&nbsp;A common stock, for the years ended December&nbsp;31,
2003, 2002 and 2001, is as follows (amounts in thousands, except
per share data):
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options outstanding, beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(165</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(278</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cancelled
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,568</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,048</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,041</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options outstanding, end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average remaining contractual life
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options exercisable, end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average fair value of options granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes information about
stock options outstanding and exercisable as of
December&nbsp;31, 2003:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Options Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Options Exercisable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Range of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Exercise Prices</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$&nbsp;1.11&nbsp;&#151; $&nbsp;2.85
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$&nbsp;3.91&nbsp;&#151; $&nbsp;9.13
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$11.99&nbsp;&#151; $19.47
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$20.00&nbsp;&#151; $23.09
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6&nbsp;years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2003, the Company adopted the
fair value measurement provisions of SFAS&nbsp;No.&nbsp;123,
under which the Company recognizes compensation expense of a
stock-based award to an employee over
</FONT>

<P align="center"><FONT size="2">F-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">the vesting period based on the fair value of the
award on the grant date. Adoption of these provisions resulted
in utilizing a preferable accounting method as the consolidated
financial statements present the estimated fair value of
stock-based compensation in expense consistently with other
forms of compensation and other expense associated with goods
and services received for equity instruments. In accordance with
SFAS&nbsp;No.&nbsp;123, the fair value method will be applied
only to awards granted or modified after January&nbsp;1, 2003,
whereas awards granted prior to such date will continue to be
accounted for under APB No.&nbsp;25, unless they are modified or
settled in cash. The ongoing effect on consolidated results of
operations or financial condition will be dependent upon future
stock based compensation awards granted. The Company recorded
$4&nbsp;million of option compensation expense for the year
ended December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SFAS&nbsp;No.&nbsp;123,
the Company used the intrinsic value method prescribed by APB
No.&nbsp;25, <I>Accounting for Stock Issued to Employees</I>, to
account for the option plans. Option compensation expense of
$5&nbsp;million and net option compensation benefit of
$5&nbsp;million for the years ended December&nbsp;31, 2002 and
2001, respectively, was recorded in the consolidated statements
of operations since the exercise prices of certain options were
less than the estimated fair values of the underlying membership
interests on the date of grant. A reversal of previously
recognized option compensation expense of $22&nbsp;million for
the year ended December&nbsp;31, 2001 was recorded in the
consolidated statements of operations primarily in connection
with the waiver of the right to approximately seven million
options by the Company&#146;s former President and Chief
Executive Officer as part of his September 2001 separation
agreement. This was partially offset by expense recorded because
exercise prices on certain options were less than the estimated
fair values of the Company&#146;s stock at the time of grant.
Estimated fair values were determined by the Company using the
valuation inherent in the companies acquired by Paul G. Allen in
1998 and valuations of public companies in the cable television
industry adjusted for factors specific to the Company.
Compensation expense is being recorded with the method described
in FASB Interpretation No.&nbsp;28 over the vesting period of
the individual options that varies between four and five years.
As of December&nbsp;31, 2003, no deferred compensation remained
to be recognized in future periods. No stock option compensation
expense was recorded for the options granted after
November&nbsp;8, 1999, since the exercise price was equal to the
estimated fair value of the underlying membership interests or
shares of Class&nbsp;A common stock on the date of grant. Since
the membership units are exchangeable into Class&nbsp;A common
stock of Charter on a one-for-one basis, the estimated fair
value was equal to the quoted market values of Class&nbsp;A
common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, the Company commenced an option
exchange program in which employees of the Company and its
subsidiaries were offered the right to exchange all stock
options (vested and unvested) issued under the 1999 Charter
Communications Option Plan and 2001 Stock Incentive Plan that
had an exercise price over $10&nbsp;per share for shares of
restricted Charter Class&nbsp;A common stock or, in some
instances, cash. Based on a sliding exchange ratio, which varied
depending on the exercise price of an employees outstanding
options, if an employee would have received more than
400&nbsp;shares of restricted stock in exchange for tendered
options, Charter issued that employee shares of restricted stock
in the exchange. If, based on the exchange ratios, an employee
would have received 400 or fewer shares of restricted stock in
exchange for tendered options, Charter instead paid the employee
cash in an amount equal to the number of shares the employee
would have received multiplied by $5.00. The offer applied to
options (vested and unvested) to purchase a total of
22,929,573&nbsp;shares of Class&nbsp;A common stock, or
approximately 48% of the Company&#146;s 47,882,365 total options
issued and outstanding as of December&nbsp;31, 2003.
Participation by employees was voluntary. Those members of the
Company&#146;s board of directors who were not also employees of
the Company or any of its subsidiaries were not eligible to
participate in the exchange offer.
</FONT>

<P align="center"><FONT size="2">F-37
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the closing of the exchange offer on
February&nbsp;20, 2004, the Company accepted for cancellation
eligible options to purchase approximately
18,137,664&nbsp;shares of its Class&nbsp;A common stock. In
exchange, the Company granted 1,966,686&nbsp;shares of
restricted stock, including 460,777 performance shares to
eligible employees of the rank of senior vice president and
above, and paid a total cash amount of approximately
$4&nbsp;million (which amount includes applicable withholding
taxes) to those employees who received cash rather than shares
of restricted stock. The grants of restricted stock were
effective as of February&nbsp;25, 2004. Employees tendered
approximately 79% of the options eligible to be exchanged under
the program.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the results above, the cost to the
Company of the Stock Option Exchange Program was approximately
$12&nbsp;million, with a 2004 cash compensation expense of
approximately $4&nbsp;million and a non-cash compensation
expense of approximately $8&nbsp;million to be expensed ratably
over the three-year vesting period of the restricted stock in
the exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, the Compensation Committee of
the board of directors of Charter approved Charter&#146;s
Long-Term Incentive Program (&#147;LTIP&#148;), which is a
program administered under the 2001 Stock Incentive Plan.
Employees of Charter and its subsidiaries whose pay
classifications exceed a certain level are eligible to receive
stock options, and more senior level employees are eligible to
receive stock options and performance shares. Under the LTIP,
the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance shares are
earned on the third anniversary of the grant date, conditional
upon Charter&#146;s performance against financial performance
measures and customer growth targets established by
Charter&#146;s management and approved by its board of directors
as of the time of the award. No awards were made under the LTIP
in 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">20.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Special Charges</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of 2002, the Company
recorded a special charge of $35&nbsp;million, of which
$31&nbsp;million was associated with its workforce reduction
program and the consolidation of its operations from three
divisions and ten regions into five operating divisions,
elimination of redundant practices and streamlining its
management structure. The remaining $4&nbsp;million related to
legal and other costs associated with the Company&#146;s ongoing
grand jury investigation, shareholder lawsuits and SEC
investigation. The $31&nbsp;million charge related to
realignment activities, included severance costs of
$28&nbsp;million related to approximately 1,400&nbsp;employees
identified for termination as of December&nbsp;31, 2002 and
lease termination costs of $3&nbsp;million. During the year
ended December&nbsp;31, 2003, an additional 1,400&nbsp;employees
were identified for termination and additional severance costs
of $20&nbsp;million and additional lease costs of
$6&nbsp;million were recorded in special charges. In total,
approximately 2,600 employees were terminated during the year
ended December&nbsp;31, 2003. Severance payments are generally
made over a period of up to twelve months with approximately
$39&nbsp;million paid during the year ended December&nbsp;31,
2003. The Company paid $4&nbsp;million in lease termination
costs during the year ended December&nbsp;31, 2003. As of
December&nbsp;31, 2003 and December&nbsp;31, 2002, a liability
of approximately $14&nbsp;million and $31&nbsp;million,
respectively, is recorded on the accompanying consolidated
balance sheets related to the realignment activities. For the
year ended December&nbsp;31, 2003, the additional severance
costs were offset by a $5&nbsp;million settlement from the
Internet service provider Excite@Home related to the conversion
of high-speed data customers to Charter Pipeline service in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 2001, the
Company recorded $18&nbsp;million in special charges that
represent $15&nbsp;million of costs associated with the
transition of approximately 145,000 (unaudited)&nbsp;data
customers from the Excite@Home Internet service to the Charter
Pipeline Internet service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001, the Company implemented a
restructuring plan to reduce its workforce in certain markets
and reorganize its operating divisions from two to three and
operating regions from twelve to ten.
</FONT>

<P align="center"><FONT size="2">F-38
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">The restructuring plan was completed during the
first quarter of 2002, resulting in the termination of
approximately 320 employees and severance costs of
$4&nbsp;million of which $1&nbsp;million was recorded in the
first quarter of 2002 and $3&nbsp;million was recorded in the
fourth quarter of 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">21.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Income Taxes</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All operations are held through Charter Holdco
and its direct and indirect subsidiaries. Charter Holdco and the
majority of its subsidiaries are not subject to income tax.
However, certain of these subsidiaries are corporations and are
subject to income tax. All of the taxable income, gains, losses,
deductions and credits of Charter Holdco are passed through to
its members: Charter, Charter Investment, Inc. and Vulcan
Cable&nbsp;III Inc. Charter is responsible for its share of
taxable income or loss of Charter Holdco allocated to it in
accordance with the Charter Holdco limited liability company
agreement (&#147;LLC Agreement&#148;) and partnership tax rules
and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The LLC Agreement provides for certain special
allocations of net tax profits and net tax losses (such net tax
profits and net tax losses being determined under the applicable
federal income tax rules for determining capital accounts).
Pursuant to the LLC Agreement, through the end of 2003, net tax
losses of Charter Holdco that would otherwise have been
allocated to Charter based generally on its percentage ownership
of outstanding common units were allocated instead to membership
units held by Vulcan Cable&nbsp;III Inc. and Charter Investment,
Inc. (the &#147;Special Loss Allocations&#148;) to the extent of
their respective capital account balances. After 2003, pursuant
to the LLC Agreement, net tax losses of Charter Holdco are to be
allocated to Charter, Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. based generally on their respective percentage
ownership of outstanding common units to the extent of their
respective capital account balances. The LLC Agreement further
provides that, beginning at the time Charter Holdco generates
net tax profits, the net tax profits that would otherwise have
been allocated to Charter based generally on its percentage
ownership of outstanding common membership units will instead
generally be allocated to Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. (the &#147;Special Profit Allocations&#148;).
The Special Profit Allocations to Vulcan Cable&nbsp;III Inc. and
Charter Investment, Inc. will generally continue until the
cumulative amount of the Special Profit Allocations offsets the
cumulative amount of the Special Loss Allocations. The amount
and timing of the Special Profit Allocations are subject to the
potential application of, and interaction with, the Curative
Allocation Provisions described in the following paragraph. The
LLC Agreement generally provides that any additional net tax
profits are to be allocated among the members of Charter Holdco
based generally on their respective percentage ownership of
Charter Holdco common membership units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because the respective capital account balance of
each of Vulcan Cable&nbsp;III Inc. and Charter Investment, Inc.
was reduced to zero by December&nbsp;31, 2002, certain net tax
losses of Charter Holdco that were to be allocated for 2002,
2003 (subject to resolution of the issue described in
Note&nbsp;22) and possibly later years to Vulcan Cable&nbsp;III
Inc. and Charter Investment, Inc. will instead be allocated to
Charter (the &#147;Regulatory Allocations&#148;). The LLC
Agreement further provides that, to the extent possible, the
effect of the Regulatory Allocations is to be offset over time
pursuant to certain curative allocation provisions (the
&#147;Curative Allocation Provisions&#148;) so that, after
certain offsetting adjustments are made, each member&#146;s
capital account balance is equal to the capital account balance
such member would have had if the Regulatory Allocations had not
been part of the LLC Agreement. The cumulative amount of the
actual tax losses allocated to Charter as a result of the
Regulatory Allocations through the year ended December&nbsp;31,
2003 is approximately $2.0&nbsp;billion to $2.6&nbsp;billion
pending the resolution of the issue described in Note&nbsp;22.
</FONT>

<P align="center"><FONT size="2">F-39
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the Special Loss Allocations and
the Regulatory Allocations referred to above, the cumulative
amount of losses of Charter Holdco allocated to Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. is in excess of
the amount that would have been allocated to such entities if
the losses of Charter Holdco had been allocated among its
members in proportion to their respective percentage ownership
of Charter Holdco common membership units. The cumulative amount
of such excess losses was approximately $3.1&nbsp;billion
through December&nbsp;31, 2002 and $2.0&nbsp;billion to
$2.5&nbsp;billion through December&nbsp;31, 2003, depending upon
the resolution of the issue described in Note&nbsp;22.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In certain situations, the Special Loss
Allocations, Special Profit Allocations, Regulatory Allocations
and Curative Allocation Provisions described above could result
in Charter paying taxes in an amount that is more or less than
if Charter Holdco had allocated net tax profits and net tax
losses among its members based generally on the number of common
membership units owned by such members. This could occur due to
differences in (i)&nbsp;the character of the allocated income
(e.g.,&nbsp;ordinary versus capital), (ii)&nbsp;the allocated
amount and timing of tax depreciation and tax amortization
expense due to the application of section&nbsp;704(c) under the
Internal Revenue Code, (iii)&nbsp;the potential interaction
between the Special Profit Allocations and the Curative
Allocation Provisions, (iv)&nbsp;the amount and timing of
alternative minimum taxes paid by Charter, if any, (v)&nbsp;the
apportionment of the allocated income or loss among the states
in which Charter Holdco does business, and (vi)&nbsp;future
federal and state tax laws. Further, in the event of new capital
contributions to Charter Holdco, it is possible that the tax
effects of the Special Profit Allocations, Special Loss
Allocations, Regulatory Allocations and Curative Allocation
Provisions will change significantly pursuant to the provisions
of the income tax regulations. Such change could defer the
actual tax benefits to be derived by Charter with respect to the
net tax losses allocated to it or accelerate the actual taxable
income to Charter with respect to the net tax profits allocated
to it. As a result, it is possible under certain circumstances,
that Charter could receive future allocations of taxable income
in excess of its currently allocated tax deductions and
available tax loss carryforwards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, under their exchange agreement with
Charter, Vulcan Cable&nbsp;III Inc. and Charter Investment, Inc.
may exchange some or all of their membership units in Charter
Holdco for Charter&#146;s Class&nbsp;B common stock, be merged
with Charter, or be acquired by Charter in a non-taxable
reorganization. If such an exchange were to take place prior to
the date that the Special Profit Allocation provisions had fully
offset the Special Loss Allocations, Vulcan Cable&nbsp;III Inc.
and Charter Investment, Inc. could elect to cause Charter Holdco
to make the remaining Special Profit Allocations to Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. immediately
prior to the consummation of the exchange. In the event Vulcan
Cable&nbsp;III Inc. and Charter Investment, Inc. choose not to
make such election or to the extent such allocations are not
possible, Charter would then be allocated tax profits
attributable to the membership units received in such exchange
pursuant to the Special Profit Allocation provisions.
Mr.&nbsp;Allen has generally agreed to reimburse Charter for any
incremental income taxes that Charter would owe as a result of
such an exchange and any resulting future Special Profit
Allocations to Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the years ended December&nbsp;31, 2003, 2002
and 2001, the Company recorded deferred income tax benefits as
shown below. The income tax benefits were realized through
reductions in the deferred tax liabilities related to
Charter&#146;s investment in Charter Holdco, as well as the
deferred tax liabilities of certain of Charter&#146;s indirect
corporate subsidiaries. In 2003, Charter received tax loss
allocations from Charter Holdco. Previously, the tax losses had
been allocated to Vulcan Cable&nbsp;III Inc. and Charter
Investment, Inc. in accordance with the Special Loss Allocations
provided under the Charter Holdco amended and restated limited
liability company agreement. The Company does not expect to
recognize a similar benefit related to its investment in Charter
Holdco after 2003 due to limitations on its ability to offset
future tax benefits against the remaining deferred tax
liabilities. However, the actual tax provision calculation in
future periods will be the result of current and future
temporary differences, as well as future operating results.
</FONT>

<P align="center"><FONT size="2">F-40
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Current and deferred income tax expense (benefit)
is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current expense:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current income tax expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred benefit:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(456</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax benefit:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(522</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(520</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recorded the portion of the income
tax benefit associated with the adoption of SFAS No.&nbsp;142 as
a $60&nbsp;million reduction of the cumulative effect of
accounting change on the accompanying statement of operations
for the year ended December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s effective tax rate differs
from that derived by applying the applicable federal income tax
rate of 35%, and average state income tax rate of 5% for the
years ended December&nbsp;31, 2003, 2002 and 2001 as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statutory federal income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(122</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(969</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(409</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State income taxes, net of federal benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(138</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance provided
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(520</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-41
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tax effects of these temporary differences
that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at December&nbsp;31, 2003
and 2002 which are included in long-term liabilities are
presented below.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="74%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating loss carryforward
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total gross deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less: valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,291</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,444</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investment in Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(553</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant&nbsp;&#38; equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(260</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(240</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(855</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(573</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(417</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(519</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2003, the Company has
deferred tax assets of $1.7&nbsp;billion, which primarily relate
to financial and tax losses allocated to Charter from Charter
Holdco. The deferred tax assets also include $912&nbsp;million
of tax net operating loss carryforwards (generally expiring in
years 2004 through 2023) of Charter and its indirect corporate
subsidiaries, which are subject to certain limitations.
Valuation allowances of $480&nbsp;million exist with respect to
these carryforwards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total valuation allowance for deferred tax
assets as of December&nbsp;31, 2003 and 2002 was
$1.3&nbsp;billion and $1.4&nbsp;billion, respectively. In
assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion
or all of the deferred tax assets will be realized. Because of
the uncertainties in projecting future taxable income of Charter
Holdco, valuation allowances have been established except for
deferred benefits available to offset certain deferred tax
liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is currently under examination by the
Internal Revenue Service for the tax years ending
December&nbsp;31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
the Company&#146;s consolidated financial condition or results
of operation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">22.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Related Party Transactions</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following sets forth certain transactions in
which the Company and the directors, executive officers and
affiliates of the Company are involved. Unless otherwise
disclosed, management believes that each of the transactions
described below was on terms no less favorable to the Company
than could have been obtained from independent third parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter has entered into management arrangements
with Charter Holdco and certain of its subsidiaries. Under these
agreements, Charter provides management services for the cable
systems owned or operated by its subsidiaries. The management
services include such services as centralized customer
</FONT>

<P align="center"><FONT size="2">F-42
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">billing services, data processing and related
support, benefits administration and coordination of insurance
coverage and self-insurance programs for medical, dental and
workers&#146; compensation claims. Costs associated with
providing these services are billed and charged directly to the
Company&#146;s operating subsidiaries and are included within
operating costs in the accompanying consolidated statements of
operations. Such costs totaled $210&nbsp;million,
$176&nbsp;million and $119&nbsp;million for the years ended
December&nbsp;31, 2003, 2002 and 2001, respectively. All other
costs incurred on the behalf of the Company&#146;s operating
subsidiaries are considered a part of the management fee and are
recorded as a component of selling, general and administrative
expense, in the accompanying consolidated financial statements.
For the years ended December&nbsp;31, 2003, 2002 and 2001, the
management fee charged to the Company&#146;s operating
subsidiaries approximated the expenses incurred by Charter
Holdco and Charter on behalf of the Company&#146;s operating
subsidiaries. The credit facilities of the Company&#146;s
operating subsidiaries prohibit payments of management fees in
excess of 3.5% of revenues until repayment of the outstanding
indebtedness. In the event any portion of the management fee due
and payable is not paid, it is deferred by Charter and accrued
as a liability of such subsidiaries. Any deferred amount of the
management fee will bear interest at the rate of 10%&nbsp;per
annum, compounded annually, from the date it was due and payable
until the date it is paid.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen, the controlling shareholder of
Charter, and a number of his affiliates have interests in
various entities that provide services or programming to
Charter&#146;s subsidiaries. Given the diverse nature of
Mr.&nbsp;Allen&#146;s investment activities and interests, and
to avoid the possibility of future disputes as to potential
business, Charter may not, and may not allow its subsidiaries
to, engage in any business transaction outside the cable
transmission business except for certain existing approved
investments. Should Charter or its subsidiaries wish to pursue a
business transaction outside of this scope, it must first offer
Mr.&nbsp;Allen the opportunity to pursue the particular business
transaction. If he decides not to pursue the business
transaction and consents to Charter or its subsidiaries to
engage in the business transaction, they will be able to do so.
The cable transmission business means the business of
transmitting video, audio, including telephony, and data over
cable systems owned, operated or managed by Charter or its
subsidiaries from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen or his affiliates own equity
interests or warrants to purchase equity interests in various
entities with which the Company does business or which provides
it with products, services or programming. Among these entities
are TechTV L.L.C. (&#147;TechTV&#148;), Oxygen Media Corporation
(&#147;Oxygen Media&#148;), Digeo, Inc., Click2learn, Inc.,
Trail Blazer Inc., Action Sports Cable Network (&#147;Action
Sports&#148;) and Microsoft Corporation. In addition,
Mr.&nbsp;Allen and Mr.&nbsp;Savoy were directors of USA
Networks, Inc. (&#147;USA Networks&#148;), who operates the USA
Network, The Sci-Fi Channel, Trio, World News International and
Home Shopping Network, owning approximately 5% and less than 1%,
respectively, of the common stock of USA Networks. In 2002,
Mr.&nbsp;Allen and Mr.&nbsp;Savoy sold their common stock and
are no longer directors of the USA Network. Mr.&nbsp;Allen owns
100% of the equity of Vulcan Ventures Incorporated (&#147;Vulcan
Ventures&#148;) and Vulcan Inc. and is the president of Vulcan
Ventures. Mr.&nbsp;Savoy was a vice president and a director of
Vulcan Ventures until his resignation in September 2003.
Mr.&nbsp;Savoy will remain as a member of the board of directors
of Charter. The various cable, media, Internet and telephony
companies in which Mr.&nbsp;Allen has invested may mutually
benefit one another. The agreements governing the Company&#146;s
relationship with Digeo, Inc. (&#147;Digeo&#148;) are an example
of a cooperative business relationship among
Mr.&nbsp;Allen&#146;s affiliated companies. The Company can give
no assurance that any of these business relationships will be
successful, that the Company will realize any benefits from
these relationships or that the Company will enter into any
business relationships in the future with Mr.&nbsp;Allen&#146;s
affiliated companies.
</FONT>

<P align="center"><FONT size="2">F-43
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen and his affiliates have made, and
in the future likely will make, numerous investments outside of
the Company and its business. The Company cannot assure that, in
the event that the Company or any of its subsidiaries enter into
transactions in the future with any affiliate of Mr.&nbsp;Allen,
such transactions will be on terms as favorable to the Company
as terms it might have obtained from an unrelated third party.
Also, conflicts could arise with respect to the allocation of
corporate opportunities between the Company and Mr.&nbsp;Allen
and his affiliates. The Company has not instituted any formal
plan or arrangement to address potential conflicts of interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">High Speed Access
Corp.</FONT></I><FONT size="2"> (&#147;High Speed Access&#148;)
was a provider of high-speed Internet access services over cable
modems. During the period from 1997 to 2000, certain Charter
entities entered into Internet-access related service
agreements, and both Vulcan Ventures and certain of
Charter&#146;s subsidiaries made equity investments in High
Speed Access.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2002, Charter&#146;s
subsidiary, CC&nbsp;Systems, purchased from High Speed Access
the contracts and associated assets, and assumed related
liabilities, that served the Company&#146;s customers, including
a customer contact center, network operations center and
provisioning software. Immediately prior to the asset purchase,
Vulcan Ventures beneficially owned approximately 37%, and the
Company beneficially owned approximately 13%, of the common
stock of High Speed Access (including the shares of common stock
which could be acquired upon conversion of the Series&nbsp;D
preferred stock, and upon exercise of the warrants owned by
Charter Holdco). Following the consummation of the asset
purchase, neither the Company nor Vulcan Ventures beneficially
owned any securities of, or were otherwise affiliated with, High
Speed Access.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company receives or will receive programming
for broadcast via its cable systems from TechTV, USA Networks,
Oxygen Media and Action Sports. The Company pays a fee for the
programming service generally based on the number of customers
receiving the service. Such fees for the years ended
December&nbsp;31, 2003, 2002 and 2001 were each less than 1% of
total operating expenses with the exception of USA Networks
which was 2%, 2% and 3% of total operating expenses for the
years ended December&nbsp;31, 2003, 2002 and 2001, respectively.
In addition, the Company receives commissions from USA Networks
for home shopping sales generated by its customers. Such
revenues for the years ended December&nbsp;31, 2003, 2002 and
2001 were less than 1% of total revenues. On November&nbsp;5,
2002, Action Sports announced that it was discontinuing its
business. The Company believes that the failure of Action Sports
will not materially affect the Company&#146;s business or
results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company entered into an equity issuance
agreement pursuant to which Oxygen Media granted a subsidiary of
Charter Holdco a warrant to purchase&nbsp;2.4&nbsp;million
shares of common stock of Oxygen Media for an exercise price of
$22.00&nbsp;per share. Charter Holdco will also receive
unregistered shares of Oxygen Media common stock with a
guaranteed fair market value on the date of issuance of
$34&nbsp;million, on or prior to February&nbsp;2, 2005 with the
exact date to be determined by Oxygen Media. The Company
currently recognizes the guaranteed value of the investment over
the life of the programming agreement as a reduction of
programming expense. For the year ended December&nbsp;31, 2003,
the Company recorded approximately $9&nbsp;million as a
reduction of programming expense. The carrying value of the
Company&#146;s investment in Oxygen was approximately
$19&nbsp;million as of December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company receives from TechTV programming for
distribution via its cable system pursuant to an affiliation
agreement. The affiliation agreement provides, among other
things, that TechTV must offer the Company certain terms and
conditions that are no less favorable in the affiliation
agreement than are given to any other distributor that serves
the same number of or fewer TechTV viewing customers. The
Company believes that TechTV has breached the TechTV affiliation
agreement, and is involved in discussions with TechTV
representatives in an effort to reach a settlement regarding the
damages owed to
</FONT>

<P align="center"><FONT size="2">F-44
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">the Company for such breach. To date, no
settlement has been reached and no formal legal proceedings have
been commenced. In the event the parties are not able to reach a
settlement, the Company intends to pursue its contractual and
legal rights for relief.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;4, in April 2002,
Interlink Communications Partners, LLC, Rifkin Acquisition
Partners, LLC and Charter Communications Entertainment&nbsp;I,
LLC, each an indirect, wholly-owned subsidiary of the Company,
completed the cash purchase of certain assets of Enstar Income
Program&nbsp;II-2, L.P., Enstar Income Program&nbsp;IV-3, L.P.,
Enstar Income/ Growth Program Six-A, L.P., Enstar Cable of
Macoupin County and Enstar Income IV/PBD Systems Venture,
serving approximately 21,600 (unaudited) customers, for a total
cash sale price of approximately $48&nbsp;million. In September
2002, Charter Communications Entertainment&nbsp;I, LLC purchased
all of Enstar Income Program&nbsp;II-1, L.P.&#146;s Illinois
cable systems, serving approximately 6,400 (unaudited)
customers, for a cash sale price of $15&nbsp;million. Enstar
Communications Corporation, a direct subsidiary of Charter
Holdco, is a general partner of the Enstar limited partnerships
but does not exercise control over them. All of the executive
officers of Charter and Charter Holdco act as officers of Enstar
Communications Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company entered into various broadband
carriage agreements with Digeo Interactive, LLC (&#147;Digeo
Interactive&#148;), a wholly-owned subsidiary of Digeo. These
agreements provide for the development by Digeo Interactive of
future features to be included in the Basic&nbsp;i-TV service
provided by Digeo and for Digeo&#146;s development of an
interactive &#147;toolkit&#148; to enable the Company to develop
interactive local content. Furthermore, the Company may request
that Digeo Interactive manage local content for a fee. The
agreement provides for the Company to pay for development of the
Basic&nbsp;i-TV service as well as license fees for customers
who receive the service, and for the Company and Digeo to split
certain revenues earned from the service. In 2003, the Company
paid Digeo Interactive approximately $4&nbsp;million for
customized development of the i-channels and the local content
tool kit. The Company received no revenues under the broadband
carriage agreement in 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2003, Charter Holdco entered
into an agreement with Motorola for the purchase of 100,000
broadband media centers, subject to the Company&#146;s testing
and approval of product performance and functionality. It is
contemplated that the software for these broadband media centers
would be supplied to Motorola by Digeo. License fees for Digeo
to license such software to the Company and support fees for the
broadband media centers and relevant content and support
services are currently under negotiation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, Charter Communications Ventures,
LLC (&#147;Charter Ventures&#148;), the Company&#146;s indirect
subsidiary, and Vulcan Ventures formed DBroadband Holdings, LLC
(&#147;DBroadband&#148;) for the sole purpose of purchasing
equity interests in Digeo. In connection with the execution of
the broadband carriage agreement, DBroadband purchased an equity
interest in Digeo funded by contributions from Vulcan Ventures.
The equity interest is subject to a priority return of capital
to Vulcan Ventures up to the amount contributed by Vulcan
Ventures on Charter Ventures&#146; behalf. Charter Ventures has
a 100% profit interest in DBroadband. Vulcan Ventures also
agreed to make, through January&nbsp;24, 2004, certain
additional contributions through DBroadband to acquire
additional equity in Digeo as necessary to maintain Charter
Ventures&#146; pro rata interest in Digeo in the event of
certain future Digeo equity financings by the founders of Digeo.
These additional equity interests are also subject to a priority
return of capital to Vulcan Ventures up to amounts contributed
by Vulcan Ventures on Charter Ventures&#146; behalf. DBroadband
is therefore not included in the Company&#146;s consolidated
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company believes that Vulcan Ventures, an
entity controlled by Mr.&nbsp;Allen, owns an approximate 60%
equity interest in Digeo, Inc. Messrs.&nbsp;Allen and Vogel are
directors of Digeo. Mr.&nbsp;Savoy was a
</FONT>

<P align="center"><FONT size="2">F-45
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">director and served on the compensation committee
of Digeo until September 2003. Mr.&nbsp;Vogel owns options to
purchase&nbsp;10,000&nbsp;shares of Digeo common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;10, 2003, Charter signed an
agreement to carry two around-the-clock, high definition
networks, HDNet and HDNet Movies. The Company believes that
entities controlled by Mr.&nbsp;Mark Cuban, co-founder and
president of HDNet, owns 85% of HDNet and HDNet Movies as of
December&nbsp;31, 2003. As of December&nbsp;31, 2003
Mr.&nbsp;Cuban, owns an approximate 6.4% equity interest in
Charter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain related parties, including members of the
board of directors and management, hold interests in the
Company&#146;s senior convertible debt and senior notes and
discount notes of the Company&#146;s subsidiary of approximately
$61.5&nbsp;million of face value at December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the acquisition of the cable systems
owned by Bresnan Communications Company Limited Partnership in
February 2000, CC VIII, LLC, Charter&#146;s indirect limited
liability company subsidiary, issued, after adjustments,
24,279,943 Class&nbsp;A preferred membership units
(collectively, the &#147;CC VIII interest&#148;) with a value
and an initial capital account of approximately
$630&nbsp;million to certain sellers affiliated with AT&#38;T
Broadband, subsequently owned by Comcast Corporation (the
&#147;Comcast sellers&#148;). While held by the Comcast sellers,
the CC VIII interest was entitled to a 2% priority return on its
initial capital account and such priority return was entitled to
preferential distributions from available cash and upon
liquidation of CC VIII, LLC. While held by the Comcast sellers,
the CC VIII interest generally did not share in the profits and
losses of CC VIII, LLC. Mr.&nbsp;Allen granted the Comcast
sellers the right to sell to him the CC VIII interest for
approximately $630&nbsp;million plus 4.5% interest annually from
February 2000 (the &#147;Comcast put right&#148;). In April
2002, the Comcast sellers exercised the Comcast put right in
full, and this transaction was consummated on June&nbsp;6, 2003.
Accordingly, Mr.&nbsp;Allen has become the holder of the CC VIII
interest, indirectly through an affiliate. Consequently, subject
to the matters referenced in the next paragraph, Mr.&nbsp;Allen
generally thereafter will be allocated his pro rata share (based
on number of membership interests outstanding) of profits or
losses of CC VIII, LLC. In the event of a liquidation of CC
VIII, LLC, Mr.&nbsp;Allen would be entitled to a priority
distribution with respect to the 2% priority return (which will
continue to accrete). Any remaining distributions in liquidation
would be distributed to CC V Holdings, LLC and Mr.&nbsp;Allen in
proportion to CC V Holdings, LLC&#146;s capital account and
Mr.&nbsp;Allen&#146;s capital account (which will equal the
initial capital account of the Comcast sellers of approximately
$630&nbsp;million, increased or decreased by
Mr.&nbsp;Allen&#146;s pro rata share of CC VIII, LLC&#146;s
profits or losses (as computed for capital account purposes)
after June&nbsp;6, 2003). The limited liability company
agreement of CC VIII, LLC does not provide for a mandatory
redemption of the CC VIII interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the CC VIII
interest following consummation of the Comcast put right.
Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead would receive the preferred equity
interests in CC VIII, LLC represented by the CC VIII interest.
As part of the last-minute changes to the Bresnan transaction
documents, a draft amended version of the Charter Holdco limited
liability company agreement was prepared, and contract
provisions were drafted for that agreement that would have
required an automatic exchange of the CC VIII interest for
24,273,943 Charter Holdco membership units if the Comcast
sellers exercised the Comcast put right and sold the CC VIII
interest to Mr.&nbsp;Allen or his affiliates. However, the
provisions that would have required this automatic exchange did
not appear in the final version of the Charter Holdco limited
liability company
</FONT>

<P align="center"><FONT size="2">F-46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">agreement that was delivered and executed at the
closing of the Bresnan transaction. The law firm that prepared
the documents for the Bresnan transaction brought this matter to
the attention of Charter and representatives of Mr.&nbsp;Allen
in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs.&nbsp;Tory, Wangberg and Merritt) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a &#147;scrivener&#146;s
error&#148; had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr.&nbsp;Allen should be required to
contribute the CC VIII interest to Charter Holdco in exchange
for 24,273,943 Charter Holdco membership units. The Special
Committee also recommended to the board of directors of Charter
that, to the extent the contract reformation is achieved, the
board of directors should consider whether the CC VIII interest
should ultimately be held by Charter Holdco or Charter Holdings
or another entity owned directly or indirectly by them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen disagrees with the Special
Committee&#146;s determinations described above and has so
notified the Special Committee. Mr.&nbsp;Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days&#146; prior notice to the other.
In addition, the Special Committee and Mr.&nbsp;Allen have
determined to utilize the Delaware Court of Chancery&#146;s
program for mediation of complex business disputes in an effort
to resolve the CC VIII interest dispute. If the Special
Committee and Mr.&nbsp;Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr.&nbsp;Allen and his
affiliates seeking contract reformation, declaratory relief as
to the respective rights of the parties regarding this dispute
and alternative forms of legal and equitable relief. The
ultimate resolution and financial impact of the dispute are not
determinable at this time.
</FONT>

<P align="center"><FONT size="2">F-47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">23.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Commitments and Contingencies</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Commitments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the Company&#146;s
payment obligations as of December&nbsp;31, 2003 for its
contractual obligations.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2008</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Contractual Obligations</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating Lease Obligations(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming Minimum Commitments(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">342</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company leases certain facilities and
    equipment under noncancellable operating leases. Leases and
    rental costs charged to expense for the years ended
    December&nbsp;31, 2003, 2002 and 2001, were $30&nbsp;million,
    $31&nbsp;million and $25&nbsp;million, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company pays programming fees under
    multi-year contracts ranging from three to six years typically
    based on a flat fee per customer, which may be fixed for the
    term or may in some cases, escalate over the term. Programming
    costs included in the accompanying statement of operations were
    $1.2&nbsp;billion, $1.2&nbsp;billion and $963&nbsp;million for
    the years ended December&nbsp;31, 2003, 2002 and 2001,
    respectively. Certain of the Company&#146;s programming
    agreements are based on a flat fee per month or have guaranteed
    minimum payments. The table sets forth the aggregate guaranteed
    minimum commitments under the Company&#146;s programming
    contracts.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Other&#148; represents other guaranteed
    minimum commitments, which consist primarily of commitments to
    the Company&#146;s billing services vendors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following items are not included in the
contractual obligation table due to various factors discussed
below. However, the Company incurs these costs as part of its
operations:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company also rents utility poles used in its
    operations. Generally, pole rentals are cancelable on short
    notice, but the Company anticipates that such rentals will
    recur. Rent expense incurred for pole rental attachments for the
    years ended December&nbsp;31, 2003, 2002 and 2001, was
    $40&nbsp;million, $41&nbsp;million and $33&nbsp;million,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company pays franchise fees under multi-year
    franchise agreements based on a percentage of revenues earned
    from video service per year. The Company also pays other
    franchise related costs, such as public education grants under
    multi-year agreements. Franchise fees and other
    franchise-related costs included in the accompanying statement
    of operations were $162&nbsp;million, $160&nbsp;million and
    $144&nbsp;million for the years ended December&nbsp;31, 2003,
    2002 and 2001, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company also has $153&nbsp;million in letters
    of credit, primarily to its various worker&#146;s compensation,
    property casualty and general liability carriers as collateral
    for reimbursement of claims. These letters of credit reduce the
    amount the Company may borrow under its credit facilities.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Litigation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fourteen putative federal class action lawsuits
(the &#147;Federal Class&nbsp;Actions&#148;) have been filed
against Charter and certain of its former and present officers
and directors in various jurisdictions allegedly on
</FONT>

<P align="center"><FONT size="2">F-48
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">behalf of all purchasers of Charter&#146;s
securities during the period from either November 8 or
November&nbsp;9, 1999 through July&nbsp;17 or July&nbsp;18,
2002. Unspecified damages are sought by the plaintiffs. In
general, the lawsuits allege that Charter utilized misleading
accounting practices and failed to disclose these accounting
practices and/or issued false and misleading financial
statements and press releases concerning Charter&#146;s
operations and prospects. The Federal Class&nbsp;Actions were
specifically and individually identified in public filings made
by Charter prior to the date of this annual report.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2002, Charter filed a motion with the
Judicial Panel on Multidistrict Litigation (the
&#147;Panel&#148;) to transfer the Federal Class&nbsp;Actions to
the Eastern District of Missouri. On March&nbsp;12, 2003, the
Panel transferred the six Federal Class&nbsp;Actions not filed
in the Eastern District of Missouri to that district for
coordinated or consolidated pretrial proceedings with the eight
Federal Class&nbsp;Actions already pending there. The
Panel&#146;s transfer order assigned the Federal
Class&nbsp;Actions to Judge Charles A. Shaw. By virtue of a
prior court order, StoneRidge Investment Partners LLC became
lead plaintiff upon entry of the Panel&#146;s transfer order.
StoneRidge subsequently filed a Consolidated Amended Complaint.
The Court subsequently consolidated the Federal
Class&nbsp;Actions for pretrial purposes. On June&nbsp;19, 2003,
following a pretrial conference with the parties, the Court
issued a Case Management Order setting forth a schedule for the
pretrial phase of the consolidated class action. Motions to
dismiss the Consolidated Amended Complaint have been filed. On
February&nbsp;10, 2004, in response to a joint motion made by
StoneRidge and defendants, Charter, Vogel and Allen, the court
entered an order providing, among other things, that:
(1)&nbsp;the parties who filed such motion engage in a mediation
within ninety (90)&nbsp;days; and (2)&nbsp;all proceedings in
the Consolidated Federal Class&nbsp;Actions are stayed for
ninety (90)&nbsp;days.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;12, 2002, a shareholders
derivative suit (the &#147;State Derivative Action&#148;) was
filed in Missouri state court against Charter and its then
current directors, as well as its former auditors. A
substantively identical derivative action was later filed and
consolidated into the State Derivative Action. The plaintiffs
allege that the individual defendants breached their fiduciary
duties by failing to establish and maintain adequate internal
controls and procedures. Unspecified damages, allegedly on
Charter&#146;s behalf, are sought by the plaintiffs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Separately, on February&nbsp;12, 2003, a
shareholders derivative suit (the &#147;Federal Derivative
Action&#148;), was filed against Charter and its then current
directors in the United States District Court for the Eastern
District of Missouri. The plaintiff alleges that the individual
defendants breached their fiduciary duties and grossly
mismanaged Charter by failing to establish and maintain adequate
internal controls and procedures. Unspecified damages, allegedly
on Charter&#146;s behalf, are sought by the plaintiffs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the Federal Class&nbsp;Actions,
the State Derivative Action and the Federal Derivative Action,
six putative class action lawsuits have been filed against
Charter and certain of its then current directors and officers
in the Court of Chancery of the State of Delaware (the
&#147;Delaware Class&nbsp;Actions&#148;). The lawsuits were
filed after the filing of a 13D amendment by Mr.&nbsp;Allen
indicating that he was exploring a number of possible
alternatives with respect to restructuring or expanding his
ownership interest in Charter. Charter believes the plaintiffs
speculated that Mr.&nbsp;Allen might have been contemplating an
unfair bid for shares of Charter or some other sort of going
private transaction on unfair terms and generally alleged that
the defendants breached their fiduciary duties by participating
in or acquiescing to such a transaction. The lawsuits were
brought on behalf of Charter&#146;s securities holders as of
July&nbsp;29, 2002, and seek unspecified damages and possible
injunctive relief. The Delaware Class&nbsp;Actions are
substantively identical. No such transaction by Mr.&nbsp;Allen
has been presented. Plaintiffs&#146; counsel has granted the
defendants an indefinite extension of time to respond to the
only complaint that has been served in the Delaware
Class&nbsp;Actions.
</FONT>

<P align="center"><FONT size="2">F-49
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The lawsuits discussed above are each in
preliminary stages. No reserves have been established for
potential losses or related insurance recoveries on these
matters because the Company is unable to predict the outcome.
Charter intends to vigorously defend the lawsuits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August of 2002, Charter became aware of a
grand jury investigation being conducted by the United States
Attorney&#146;s Office for the Eastern District of Missouri into
certain of its accounting and reporting practices, focusing on
how Charter reported customer numbers and its reporting of
amounts received from digital set-top terminal suppliers for
advertising. The U.S.&nbsp;Attorney&#146;s Office has publicly
stated that Charter is not currently a target of the
investigation. Charter has also been advised by the
U.S.&nbsp;Attorney&#146;s Office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July&nbsp;24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July&nbsp;25, 2003, one of the former officers who was indicted
entered a guilty plea. Charter is fully cooperating with the
investigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;4, 2002, Charter received an
informal, non-public inquiry from the staff of the Securities
and Exchange Commission (&#147;SEC&#148;). The SEC subsequently
issued a formal order of investigation dated January&nbsp;23,
2003, and subsequent related document and testimony subpoenas.
The investigation and subpoenas generally concern Charter&#146;s
prior reports with respect to its determination of the number of
customers, and various of its other accounting policies and
practices including its capitalization of certain expenses and
dealings with certain vendors, including programmers and digital
set-top terminal suppliers. Charter is fully cooperating with
the SEC Staff.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is generally required to indemnify each
of the named individual defendants in connection with these
matters pursuant to the terms of its Bylaws and (where
applicable) such individual defendants&#146; employment
agreements. Pursuant to the terms of certain employment
agreements and in accordance with the Bylaws of Charter, in
connection with the pending grand jury investigation, SEC
investigation and the above described lawsuits, Charter&#146;s
current directors and its current and former officers have been
advanced certain costs and expenses incurred in connection with
their defense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter has liability insurance coverage that it
believes is available for these matters, where applicable, and
subject to the terms, conditions and limitations of the
respective policies. There is no assurance that current coverage
will be sufficient for all claims described above or any future
claims that may arise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter in South Carolina Court of Common Pleas (&#147;South
Carolina Class&nbsp;Action&#148;), purportedly on behalf of a
class of Charter customers, alleging that Charter improperly
charged them a wire maintenance fee without request or
permission. They also claimed that Charter improperly required
them to rent analog and/or digital set-top terminals even though
their television sets were &#147;cable ready.&#148; Charter
removed this case to the United States District Court for the
District of South Carolina in November 2001, and moved to
dismiss the suit in December 2001. The federal judge remanded
the case to the South Carolina Court of Common Pleas in August
2002 without ruling on the motion to dismiss. The plaintiffs
subsequently moved for a default judgment, arguing that upon
return to state court, Charter should have but did not file a
new motion to dismiss. The state court judge granted the
plaintiff&#146;s motion over Charter&#146;s objection in
September 2002. Charter immediately appealed that decision to
the South Carolina Court of Appeals and the South Carolina
Supreme Court, but those courts have ruled that until a final
judgment is entered against Charter, they lack jurisdiction to
hear the appeal.
</FONT>

<P align="center"><FONT size="2">F-50
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2003, the Court of Common Pleas
granted the plaintiffs&#146; motion for class certification. In
October and November 2003, Charter filed motions (a)&nbsp;asking
that court to set aside the default judgment, and
(b)&nbsp;seeking dismissal of plaintiffs&#146; suit for failure
to state a claim. In January 2004, the Court of Common Pleas
granted in part and denied in part Charter&#146;s motion to
dismiss for failure to state a claim. It also took under
advisement Charter&#146;s motion to set aside the default
judgment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is unable to predict the outcome of the
lawsuits and the government investigations described above. An
unfavorable outcome in the lawsuits or the government
investigations described above could have a material adverse
effect on the Company&#146;s consolidated financial condition,
results of operations or its liquidity, including its ability to
comply with the Company&#146;s debt covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims will not have a
material adverse effect on the Company&#146;s consolidated
financial condition or results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Regulation in the Cable
    Industry</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The operation of a cable system is extensively
regulated by the Federal Communications Commission
(&#147;FCC&#148;), some state governments and most local
governments. The FCC has the authority to enforce its
regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of
other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities used
in connection with cable operations. The 1996 Telecom Act
altered the regulatory structure governing the nation&#146;s
communications providers. It removed barriers to competition in
both the cable television market and the local telephone market.
Among other things, it reduced the scope of cable rate
regulation and encouraged additional competition in the video
programming industry by allowing local telephone companies to
provide video programming in their own telephone service areas.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1996 Telecom Act required the FCC to
undertake a number of implementing rulemakings. Moreover,
Congress and the FCC have frequently revisited the subject of
cable regulation. Future legislative and regulatory changes
could adversely affect the Company&#146;s operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">24.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Employee Benefit Plan</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s employees may participate in
the Charter Communications, Inc. 401(k) Plan. Employees that
qualify for participation can contribute up to 50% of their
salary, on a pre-tax basis, subject to a maximum contribution
limit as determined by the Internal Revenue Service. The Company
matches 50% of the first 5% of participant contributions. The
Company made contributions to the 401(k) plan totaling
$7&nbsp;million, $8&nbsp;million and $9&nbsp;million for the
years ended December&nbsp;31, 2003, 2002 and 2001, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">25.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Recently Issued Accounting Standards</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2003, the FASB issued FASB
Interpretation No.&nbsp;46 (revised December 2003),
<I>Consolidation of Variable Interest Entities
</I>(&#147;FIN&nbsp;46R&#148;), which addresses how a business
enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting
rights and accordingly should consolidate the entity.
FIN&nbsp;46R replaces FASB Interpretation No.&nbsp;46,
<I>Consolidation of Variable Interest Entities</I>, which was
issued in January 2003. The Company will be required to apply
FIN&nbsp;46R to variable interests in variable interest entities
created after December&nbsp;31, 2003. For variable interests in
variable interest entities created before December&nbsp;31,
2003, the FIN&nbsp;46R
</FONT>

<P align="center"><FONT size="2">F-51
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">will be applied beginning on March&nbsp;31, 2004.
For any variable interest entities that must be consolidated
under FIN&nbsp;46R that were created before December&nbsp;31,
2003, the assets, liabilities and noncontrolling interests of
the variable interest entity initially would be measured at
their carrying amounts with any difference between the net
amount added to the balance sheet and any previously recognized
interest being recognized as the cumulative effect of an
accounting change. If determining the carrying amounts is not
practicable, fair value at the date FIN&nbsp;46R first applies
may be used to measure the assets, liabilities and
noncontrolling interest of the variable interest entity. The
Company has identified DBroadband Holdings, LLC as a variable
interest entity in accordance with FIN&nbsp;46R. As the Company
is not the primary beneficiary of the variable interest entity
(as defined by FIN&nbsp;46R), DBroadband Holdings, LLC has not
been included in the Company&#146;s consolidated financial
statements. In future periods, the Company will continue to
reassess its relationship with DBroadband Holdings, LLC to
ensure proper recognition of the relationship in accordance with
FIN&nbsp;46R. See Note&nbsp;22 for additional information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2003, the SEC issued Staff Accounting
Bulletin (&#147;SAB&#148;) No.&nbsp;104, <I>Revenue
Recognition</I>. SAB No.&nbsp;104 revises or rescinds portions
of interpretative guidance on revenue recognition. SAB
No.&nbsp;104 became effective immediately upon release and
requires registrants to either restate prior financial
statements or report a change in accounting principle. The
adoption of SAB No.&nbsp;104 did not have a material impact on
the Company&#146;s consolidated financial statements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">26.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Parent Company Only Financial
    Statements</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As the result of limitations on, and prohibitions
of, distributions, substantially all of the net assets of the
consolidated subsidiaries are restricted for distribution to
Charter, the parent company. The following condensed parent-only
financial statements of Charter account for the investment in
Charter Holdco under the equity method of accounting. The
financial statements should be read in conjunction with the
consolidated financial statements of the Company and notes
thereto.
</FONT>

<P align="center">
<B><FONT size="2">Charter Communications, Inc. (Parent Company
Only)</FONT></B>

<DIV align="center">
<B><FONT size="2">Condensed Balance Sheet</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="9" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivable from related party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investment in Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes receivable from Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">803</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">813</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="9" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND SHAREHOLDERS&#146; EQUITY
    (DEFICIT)</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Convertible notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock&nbsp;&#151; redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shareholders&#146; equity (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and shareholders&#146; equity
    (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">813</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,754</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Condensed Statement of Operations</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">REVENUES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EXPENSES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in losses of Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(359</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,922</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(435</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,004</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,234</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(355</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,919</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,514</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend on preferred equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss after preferred dividends
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Condensed Statements of Cash Flows</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM OPERATING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss after preferred dividends
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,517</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,168</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in losses of Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(117</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(405</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM INVESTING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investments in and receivables from Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(633</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investment in Charter Holdco
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,224</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,857</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM FINANCING ACTIVITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of convertible notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net proceeds from issuance of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH
    EQUIVALENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31, 2003, 2002 AND
2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except where
indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">27.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Unaudited Quarterly Financial Data</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents quarterly data for
the periods presented on the consolidated statement of
operations:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,178</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) before minority interest and income
    taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(286</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss) applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic income (loss) per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted Income (loss) per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding, basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,466,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,474,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,566,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,875,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding, diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,466,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,474,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637,822,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,875,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31, 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,595</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before minority interest, income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(234</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(354</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(367</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(317</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(167</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,872</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share before
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.08</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,394,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,453,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,454,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,457,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-54
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONDENSED CONSOLIDATED BALANCE
SHEETS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except share
data)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="12" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT ASSETS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, less allowance for doubtful
    accounts of $16 and $17, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INVESTMENT IN CABLE PROPERTIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment, net of accumulated
    depreciation of $4,933 and $3,950, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises, net of accumulated amortization of
    $3,300 and $3,445, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total investment in cable properties, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER NONCURRENT ASSETS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="12"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="12" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND SHAREHOLDERS&#146;
    DEFICIT</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CURRENT LIABILITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable and accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LONG-TERM DEBT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">DEFERRED MANAGEMENT FEES&nbsp;&#151; RELATED PARTY
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER LONG-TERM LIABILITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MINORITY INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">PREFERRED STOCK&nbsp;&#151; REDEEMABLE;
    $.001&nbsp;par value; 1&nbsp;million shares authorized;
    545,259&nbsp;shares issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SHAREHOLDERS&#146; DEFICIT:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A Common stock; $.001&nbsp;par value;
    1.75&nbsp;billion shares authorized; 304,803,455 and
    295,038,606&nbsp;shares issued and outstanding, respectively
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;B Common stock; $.001&nbsp;par value;
    750&nbsp;million shares authorized; 50,000&nbsp;shares issued
    and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock; $.001&nbsp;par value;
    250&nbsp;million shares authorized; no non-redeemable shares
    issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,856</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,851</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and shareholders&#146; deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,084</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-55
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except share and per
share data)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Unaudited</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">REVENUES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">COSTS AND EXPENSES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (excluding depreciation and
    amortization)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,855</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,344</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER INCOME AND EXPENSE:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(424</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(387</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,227</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,163</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain (loss) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(432</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(94</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,223</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(870</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) before minority interest, income
    taxes and cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,776</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(564</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MINORITY INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) before income taxes and cumulative
    effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,353</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INCOME TAX BENEFIT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">213</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,529</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,294</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividends on preferred stock&nbsp;&#151;
    redeemable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss) applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,295</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EARNINGS (LOSS) PER COMMON SHARE
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding, basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302,604,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,566,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,503,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average common shares outstanding,
    diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302,604,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637,822,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">299,411,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">294,503,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">(Dollars in millions)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Unaudited</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM OPERATING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net loss to net cash
    flows from operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(297</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment of franchises
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Option compensation expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special charges, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Noncash interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">237</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) on derivative instruments and hedging
    activities, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) loss on sale of assets, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on debt to equity conversions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss on extinguishment of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on debt exchange, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(267</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(86</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities, net
    of effects from dispositions:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable, accrued expenses and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables from and payables to related party,
    including deferred management fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM INVESTING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(639</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(503</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in accrued expenses related to capital
    expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchases of investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(628</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH FLOWS FROM FINANCING ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Borrowings of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Repayments of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,707</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(646</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments for debt issuance costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(97</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash flows from financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(431</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(196</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH
    EQUIVALENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(186</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, beginning of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS, end of period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH PAID FOR INTEREST
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NONCASH TRANSACTIONS:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt exchanged for Charter Class&nbsp;A common
    stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of debt by CCH&nbsp;II, LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retirement of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-57
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">1.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Organization and Basis of
    Presentation</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Communications, Inc.
(&#147;Charter&#148;) is a holding company whose principal
assets at September&nbsp;30, 2004 are the 47.2% controlling
common equity interest in Charter Communications Holding
Company, LLC (&#147;Charter Holdco&#148;) and &#147;mirror&#148;
notes which are payable by Charter Holdco to Charter and have
the same principal amount and terms as those of Charter&#146;s
convertible senior notes. Charter Holdco is the sole owner of
Charter Communications Holdings, LLC (&#147;Charter
Holdings&#148;). The condensed consolidated financial statements
include the accounts of Charter, Charter Holdco, Charter
Holdings and all of their wholly owned subsidiaries where the
underlying operations reside, collectively referred to herein as
the &#147;Company.&#148; Charter consolidates Charter Holdco on
the basis of voting control. Charter Holdco&#146;s limited
liability company agreement provides that so long as
Charter&#146;s Class&nbsp;B common stock retains its special
voting rights, Charter will maintain a 100% voting interest in
Charter Holdco. Voting control gives Charter full authority and
control over the operations of Charter Holdco. All significant
intercompany accounts and transactions among consolidated
entities have been eliminated. The Company is a broadband
communications company operating in the United States. The
Company offers its customers traditional cable video programming
(analog and digital video) as well as high-speed data services
and, in some areas, advanced broadband services such as high
definition television, video on demand, telephony and
interactive television. The Company sells its cable video
programming, high-speed data and advanced broadband services on
a subscription basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying condensed consolidated financial
statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States
for interim financial information and the rules and regulations
of the Securities and Exchange Commission (&#147;SEC&#148;).
Accordingly, certain information and footnote disclosures
typically included in Charter&#146;s Annual Report on
Form&nbsp;10-K have been condensed or omitted for this quarterly
report. The accompanying condensed consolidated financial
statements are unaudited and are subject to review by regulatory
authorities. However, in the opinion of management, such
financial statements include all adjustments, which consist of
only normal recurring adjustments, necessary for a fair
presentation of the results for the periods presented. Interim
results are not necessarily indicative of results for a full
year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Areas
involving significant judgments and estimates include
capitalization of labor and overhead costs; depreciation and
amortization costs; impairments of property, plant and
equipment, franchises and goodwill; income taxes; and
contingencies. Actual results could differ from those estimates.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Reclassifications</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain 2003 amounts have been reclassified to
conform with the 2004 presentation.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">2.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Liquidity and Capital Resources</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company incurred net loss applicable to
common stock of $3.3&nbsp;billion and $4.0&nbsp;billion for the
three and nine months ended September&nbsp;30, 2004,
respectively, and $184&nbsp;million for the nine months ended
September&nbsp;30, 2003. The Company achieved net income
applicable to common stock of $36&nbsp;million for the three
months ended September&nbsp;30, 2003. The Company&#146;s net
cash flows from operating activities were $383&nbsp;million and
$638&nbsp;million for the nine months ended September&nbsp;30,
2004 and 2003, respectively.
</FONT>

<P align="center"><FONT size="2">F-58
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has historically required significant
cash to fund capital expenditures and debt service costs.
Historically, the Company has funded these requirements through
cash flows from operating activities, borrowings under its
credit facilities, issuances of debt and equity securities and
from cash on hand. The mix of funding sources changes from
period to period, but for the nine months ended
September&nbsp;30, 2004, approximately 49% of the Company&#146;s
funding requirements were met from cash flows from operating
activities and 51% from proceeds from the sale of systems. This
gives effect to the use of proceeds from the sale of systems,
described below, to repay long-term debt. For the nine months
ended September&nbsp;30, 2004, the Company had net cash flows
used in financing activities of $431&nbsp;million, reflecting a
net repayment of $334&nbsp;million of debt. Additionally, the
Company increased cash on hand by $2&nbsp;million to
$129&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a significant level of debt. The
Company&#146;s long-term financing as of September&nbsp;30, 2004
consists of $5.4&nbsp;billion of credit facility debt,
$12.3&nbsp;billion principal amount of high-yield notes and
$744&nbsp;million principal amount of convertible senior notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of 2004, $7.5&nbsp;million
of the Company&#146;s debt will mature. An additional
$618&nbsp;million and $186&nbsp;million of the Company&#146;s
debt will mature in 2005 and 2006, respectively. In addition,
the Charter Communications Operating, LLC (&#147;Charter
Operating&#148;) credit facilities require the CC V Holdings,
LLC notes to be redeemed within 45&nbsp;days after the Charter
Holdings leverage ratio, discussed below, is determined to be
below 8.75 to 1.0. In 2007 and beyond, significant additional
amounts will become due under the Company&#146;s remaining
long-term debt obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s ability to operate depends
upon, among other things, its continued access to capital,
including credit under the Charter Operating credit facilities.
These credit facilities are subject to certain restrictive
covenants, some of which require the Company to achieve
specified operating results. The Company expects to maintain
compliance with these covenants in 2004. If the Company&#146;s
operating performance results in non-compliance with these
covenants, or if any of certain other events of non-compliance
under these credit facilities or indentures governing the
Company&#146;s debt occurs, funding under the credit facilities
may not be available and defaults on some or potentially all of
the Company&#146;s debt obligations could occur. The
Company&#146;s borrowing availability under the credit
facilities totaled $957&nbsp;million as of September&nbsp;30,
2004, none of which was restricted due to covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company expects that cash on hand, cash flows
from operating activities and the amounts available under its
credit facilities will be adequate to meet its cash needs in
2004. However, as the principal amounts owing under the
Company&#146;s various debt obligations become due, meeting the
Company&#146;s liquidity needs in subsequent years will depend
on its ability to access additional sources of capital.
Currently, the Company does not expect that cash flows from
operating activities and amounts available under its credit
facilities will be sufficient to fund its operations and permit
the Company to satisfy its principal repayment obligations that
come due in 2005 and thereafter. In the event that the Company
is not able to demonstrate that it has adequate access to
liquidity in an amount sufficient to fund its business and to
make principal repayment obligations that come due in 2005 and
thereafter, Charter and its subsidiaries&#146; ability to
receive an unqualified opinion from an independent registered
public accounting firm may be adversely affected. The failure of
Charter Operating to receive an unqualified opinion would
constitute a default under Charter Operating&#146;s credit
facilities. An event of default under the covenants governing
any of the Company&#146;s debt instruments could result in the
acceleration of its payment obligations under that debt and,
under certain circumstances, in cross-defaults under its other
debt obligations, which would have a material adverse effect on
the Company&#146;s consolidated financial condition or results
of operations.
</FONT>

<P align="center"><FONT size="2">F-59
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter&#146;s ability to make interest payments
on its convertible senior notes, and, in 2005 and 2006, to repay
the outstanding principal of its convertible senior notes will
depend on its ability to raise additional capital and/or on
receipt of payments or distributions from Charter Holdco or its
subsidiaries, including CCH&nbsp;II, LLC
(&#147;CCH&nbsp;II&#148;), CCO Holdings, LLC (&#147;CCO
Holdings&#148;) and Charter Operating. The indentures governing
the CCH&nbsp;II notes, CCO Holdings notes, and Charter Operating
notes, however, restrict these entities and their subsidiaries
from making distributions to their parent companies (including
Charter and Charter Holdco) for payment of principal on
Charter&#146;s convertible senior notes, in each case unless
there is no default under the applicable indenture and a
specified leverage ratio test is met. In addition, each of
CCH&nbsp;II, CCO Holdings and Charter Operating must
independently assess whether such payments or distributions are
advisable. CCH&nbsp;II, CCO Holdings and Charter Operating
currently meet the applicable leverage ratio test under each of
their respective indentures, and therefore are not currently
prohibited from making any such distributions to their
respective direct parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions to Charter
Holdco for payment of interest or principal on the
Company&#146;s convertible senior notes, only if, after giving
effect to the distribution, Charter Holdings can incur
additional debt under the leverage ratio test of 8.75 to 1.0,
there is no default under Charter Holdings&#146; indentures and
the other specified tests are met. For the quarter ended
September&nbsp;30, 2004, there were no defaults under the
Charter Holdings indentures and the other specified tests were
met. However, Charter Holdings continued not to meet the
leverage ratio test of 8.75 to 1.0 at September&nbsp;30, 2004.
As a result, distributions from Charter Holdings to Charter or
Charter Holdco have been restricted and will continue to be
restricted until that test is met.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During this restriction period, the indentures
governing the Charter Holdings notes permit Charter Holdings and
its subsidiaries to make specified investments in Charter Holdco
or Charter, up to an amount determined by a formula, as long as
there is no default under the indentures. As of
September&nbsp;30, 2004, Charter Holdco had $31&nbsp;million in
cash on hand and was owed $39&nbsp;million in intercompany loans
from its subsidiaries, which were available to Charter Holdco to
pay interest on Charter&#146;s convertible senior notes, which
is expected to be approximately $21&nbsp;million for the
remainder of 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the foregoing, it is likely that
Charter or Charter Holdco will require additional funding to
repay debt maturing in 2005 and 2006. The Company is working
with its financial advisors to address such funding
requirements. However, there can be no assurance that such
funding will be available to the Company. Although
Mr.&nbsp;Allen and his affiliates have purchased equity from the
Company in the past, Mr.&nbsp;Allen and his affiliates are not
obligated to purchase equity from, contribute to or loan funds
to the Company in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;1, 2004, the Company closed the
sale of certain cable systems in Florida, Pennsylvania,
Maryland, Delaware and West Virginia to Atlantic Broadband
Finance, LLC. The Company closed on the sale of an additional
cable system in New York to Atlantic Broadband Finance, LLC in
April 2004. These transactions resulted in a $105&nbsp;million
pretax gain recorded as a gain on sale of assets in the
Company&#146;s condensed consolidated statements of operations.
Subject to post-closing contractual adjustments, the Company
expects the total net proceeds from the sale of all of these
systems to be approximately $733&nbsp;million, of which
$10&nbsp;million is currently held in an indemnity escrow
account (with the unused portion thereof to be released by
March&nbsp;1, 2005). The proceeds received to date have been
used to repay a portion of amounts outstanding under the
Company&#146;s credit facilities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">3.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Franchises and Goodwill</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2002, the Company adopted
Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No.&nbsp;142, which eliminates the amortization of
indefinite-lived intangible assets. Accordingly, beginning
</FONT>

<P align="center"><FONT size="2">F-60
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">January&nbsp;1, 2002, all franchises that qualify
for indefinite-life treatment under SFAS&nbsp;No.&nbsp;142 are
no longer amortized against earnings but instead are tested for
impairment annually, or more frequently as warranted by events
or changes in circumstances. Based on the guidance prescribed in
Emerging Issues Task Force (&#147;EITF&#148;) Issue
No.&nbsp;02-7, <I>Unit of Accounting for Testing of Impairment
of Indefinite-Lived Intangible Assets</I>, franchises are
aggregated into essentially inseparable asset groups to conduct
the valuations. The asset groups generally represent geographic
clustering of the Company&#146;s cable systems into groups by
which such systems are managed. Management believes such
grouping represents the highest and best use of those assets.
Fair value is determined based on estimated discounted future
cash flows using assumptions that are consistent with internal
forecasts. The Company has historically followed a residual
method of valuing its franchise assets, which had the effect of
including goodwill with the franchise assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2004, the SEC staff issued Topic
D-108, <I>Use of the Residual Method to Value Acquired Assets
Other than Goodwill</I>, which requires the direct method of
separately valuing all intangible assets and does not permit
goodwill to be included in franchise assets. On
September&nbsp;30, 2004, the Company adopted Topic&nbsp;D-108
which resulted in the Company recording a cumulative effect of
accounting change of $765&nbsp;million (approximately
$875&nbsp;million before tax effects of $91&nbsp;million and
minority interest effects of $19&nbsp;million) for the three and
nine months ended September&nbsp;30, 2004. The effect of the
adoption was to increase net loss and loss per share by
$765&nbsp;million and $2.53 for the three months ended
September&nbsp;30, 2004, respectively, and $765&nbsp;million and
$2.56 for the nine months ended September&nbsp;30, 2004,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company performed an impairment assessment
during the third quarter 2004 using an independent third-party
appraiser and following the guidance of EITF Issue&nbsp;02-17,
<I>Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination</I>, and Topic&nbsp;D-108.
The use of lower projected growth rates and the resulting
revised estimates of future cash flows in the Company&#146;s
valuation, primarily as a result of increased competition, led
to the recognition of a $2.4&nbsp;billion impairment charge for
the three and nine months ended September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The independent third-party appraisers&#146;
valuation as of September&nbsp;30, 2004 yielded a total
enterprise value of approximately $19.3&nbsp;billion, which
included approximately $2.0&nbsp;billion assigned to customer
relationships and approximately $0.9&nbsp;billion assigned to
goodwill. At October&nbsp;1, 2003, the independent third-party
appraisers&#146; valuation yielded an enterprise value of
approximately $24.7&nbsp;billion, which included approximately
$3.2&nbsp;billion assigned to customer relationships and
approximately $1.1&nbsp;billion assigned to goodwill. The
valuation completed at October&nbsp;1, 2003 resulted in no
impairment. SFAS&nbsp;No.&nbsp;142 does not permit the
recognition of intangible assets not previously recognized.
</FONT>

<P align="center"><FONT size="2">F-61
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, indefinite-lived and finite-lived
intangible assets are presented in the following table:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amortization</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amortization</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Indefinite-lived intangible assets:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises with indefinite lives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,412</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Finite-lived intangible assets:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchises with finite lives
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the nine months ended September&nbsp;30,
2004, the net carrying amount of indefinite-lived intangible
assets was reduced by $484&nbsp;million as a result of the sale
of cable systems to Atlantic Broadband Finance, LLC discussed in
Note&nbsp;2. Additionally, in the first quarter of 2004,
approximately $29&nbsp;million of franchises that were
previously classified as finite-lived were reclassified to
indefinite-lived, based on the Company&#146;s renewal of these
franchise assets in 2003. Franchise amortization expense for the
three and nine months ended September&nbsp;30, 2004 was
$1&nbsp;million and $3&nbsp;million, respectively, and franchise
amortization expense for the three and nine months ended
September&nbsp;30, 2003 was $2&nbsp;million and $6&nbsp;million,
respectively, which represents the amortization relating to
franchises that did not qualify for indefinite-life treatment
under SFAS&nbsp;No.&nbsp;142, including costs associated with
franchise renewals. The Company expects that amortization
expense on franchise assets will be approximately
$4&nbsp;million annually for each of the next five years. Actual
amortization expense in future periods could differ from these
estimates as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant factors.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">4.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accounts Payable and Accrued
    Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounts payable and accrued expenses consist of
the following as of September&nbsp;30, 2004 and
December&nbsp;31, 2003:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable&nbsp;&#151; trade
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Franchise-related fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State sales tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-62
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">5.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Long-Term Debt</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term debt consists of the following as of
September&nbsp;30, 2004 and December&nbsp;31, 2003:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Long-Term Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Communications, Inc.:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">October and November 2000<BR>
    5.75%&nbsp;convertible senior notes due 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2001<BR>
    4.75%&nbsp;convertible senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">March 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.250%&nbsp;senior notes due 2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.625%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.920%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,082</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.000%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.750%&nbsp;senior notes due 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.125%&nbsp;senior notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">13.500%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.625%&nbsp;senior notes due 2009 (includes
    January 2002 additional notes issue)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">640</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.000%&nbsp;senior notes due 2011 (includes
    January 2002 additional notes issue)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.750%&nbsp;senior discount notes due 2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">12.125%&nbsp;senior discount notes due 2012
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCH&nbsp;II:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.250%&nbsp;senior notes due 2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CCO Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8&nbsp;3/4%&nbsp;senior notes due 2013
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Operating:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.000%&nbsp;senior second lien notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.375%&nbsp;senior second lien notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Renaissance:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.00%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-63
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Face</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accreted</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC V Holdings:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">11.875%&nbsp;senior discount notes due 2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Credit Facilities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charter Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC VI Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">868</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Falcon Cable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CC VIII Operating
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2004, Charter&#146;s indirect
subsidiaries, Charter Operating and Charter Communications
Operating Capital Corp., sold $1.5&nbsp;billion of senior second
lien notes in a private transaction. Additionally, Charter
Operating amended and restated its $5.1&nbsp;billion credit
facilities, among other things, to defer maturities and increase
availability under those facilities to approximately
$6.5&nbsp;billion, consisting of a $1.5&nbsp;billion six-year
revolving credit facility, a $2.0&nbsp;billion six-year term
loan facility and a $3.0&nbsp;billion seven-year term loan
facility. Charter Operating used the additional borrowings under
the amended and restated credit facilities, together with
proceeds from the sale of the Charter Operating senior second
lien notes to refinance the credit facilities of its
subsidiaries, CC VI Operating Company, LLC (&#147;CC&nbsp;VI
Operating&#148;), Falcon Cable Communications, LLC (&#147;Falcon
Cable&#148;), and CC&nbsp;VIII Operating, LLC
(&#147;CC&nbsp;VIII Operating&#148;), all in concurrent
transactions. In addition, Charter Operating was substituted as
the lender in place of the banks under those subsidiaries&#146;
credit facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Loss on debt to equity
conversions.</FONT></I><FONT size="2"> The Company recognized a
loss of approximately $23&nbsp;million for the nine months ended
September&nbsp;30, 2004 from privately negotiated exchanges of a
total of $30&nbsp;million principal amount of Charter&#146;s
5.75%&nbsp;convertible senior notes for shares of Charter
Class&nbsp;A common stock. The exchanges resulted in the
issuance of more shares in the exchange transaction than would
have been issuable under the original terms of the convertible
senior notes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">6.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Minority Interest and Equity Interest of
    Charter Holdco</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is a holding company whose primary asset
is a controlling equity interest in Charter Holdco, the indirect
owner of the Company&#146;s cable systems, and $744&nbsp;million
of mirror notes which are payable by Charter Holdco to Charter
and have the same principal amount and terms as those of
Charter&#146;s convertible senior notes. Minority interest on
the Company&#146;s consolidated balance sheets represents the
percentage of Charter Holdco not owned by Charter, or 52.8% of
total members&#146; equity of Charter Holdco, plus
$705&nbsp;million and $694&nbsp;million of preferred membership
interests in CC&nbsp;VIII, LLC (&#147;CC&nbsp;VIII&#148;), an
indirect subsidiary of Charter Holdco, as of September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively. As more fully
described in Note&nbsp;17, this preferred interest arises from
the approximately $630&nbsp;million of preferred membership
units issued by CC&nbsp;VIII in connection with an acquisition
in February 2000. As of December&nbsp;31, 2003, minority
interest also includes $25&nbsp;million of preferred interest in
Charter Helicon, LLC, another indirect subsidiary of Charter
Holdco, issued in connection with the 1999 Helicon acquisition.
As of September&nbsp;30, 2004, the preferred interest in Charter
Helicon, LLC was reclassified to other long-term liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members&#146; deficit of Charter Holdco was
$673&nbsp;million and $57&nbsp;million as of September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively. Gains and losses
arising from the issuance by Charter Holdco of its
</FONT>

<P align="center"><FONT size="2">F-64
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">membership units are recorded as capital
transactions, thereby increasing or decreasing
shareholders&#146; equity and decreasing or increasing minority
interest on the accompanying consolidated balance sheets.
Minority interest was 52.8% and 53.5% as of September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively. Minority interest
includes the proportionate share of changes in fair value of
interest rate derivative agreements. Such amounts are temporary
as they are contractually scheduled to reverse over the life of
the underlying instrument. Additionally, reported losses
allocated to minority interest on the consolidated statement of
operations are limited to the extent of any remaining minority
interest on the balance sheet related to Charter Holdco. Because
minority interest in Charter Holdco was substantially eliminated
at December&nbsp;31, 2003, beginning in the first quarter of
2004, the Company began to absorb substantially all losses
before income taxes that otherwise would have been allocated to
minority interest. This resulted in an additional
$1.7&nbsp;billion and $2.0&nbsp;billion of net loss for the
three and nine months ended September&nbsp;30, 2004,
respectively. Subject to any changes in Charter Holdco&#146;s
capital structure, future losses will be substantially absorbed
by Charter. Changes to minority interest consist of the
following:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="82%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Minority</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Interest</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in loss of a subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reclassification of Helicon, LLC interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in fair value of interest rate agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance, September&nbsp;30, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">7.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Comprehensive Loss</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive loss on the accompanying consolidated balance
sheets. Additionally, the Company reports changes in the fair
value of interest rate agreements designated as hedging the
variability of cash flows associated with floating-rate debt
obligations, that meet the effectiveness criteria of
SFAS&nbsp;No.&nbsp;133, <I>Accounting for Derivative Instruments
and Hedging Activities</I>, in accumulated other comprehensive
loss, after giving effect to the minority interest share of such
gains and losses. Comprehensive loss for the three and nine
months ended September&nbsp;30, 2004 was $3.3&nbsp;billion and
$4.0&nbsp;billion, respectively. Comprehensive income for the
three months ended September&nbsp;30, 2003 was $48&nbsp;million,
and comprehensive loss for the nine months ended
September&nbsp;30, 2003 was $168&nbsp;million.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">8.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Accounting for Derivative Instruments and
    Hedging Activities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company uses interest rate derivative
instruments, such as interest rate swap agreements and interest
rate collar agreements (collectively referred to herein as
interest rate agreements) to manage its interest costs. The
Company&#146;s policy is to manage interest costs using a mix of
fixed and variable rate debt. Using interest rate swap
agreements, the Company has agreed to exchange, at specified
intervals through 2007, the difference between fixed and
variable interest amounts calculated by reference to an
agreed-upon notional principal amount. Interest rate collar
agreements are used to limit the Company&#146;s exposure to and
benefits from interest rate fluctuations on variable rate debt
to within a certain range of rates.
</FONT>

<P align="center"><FONT size="2">F-65
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company does not hold or issue derivative
instruments for trading purposes. The Company does, however,
have certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
are those that effectively convert variable interest payments on
certain debt instruments into fixed payments. For qualifying
hedges, SFAS&nbsp;No.&nbsp;133 allows derivative gains and
losses to offset related results on hedged items in the
consolidated statement of operations. The Company has formally
documented, designated and assessed the effectiveness of
transactions that receive hedge accounting. For the three months
ended September&nbsp;30, 2004 and 2003, net gain (loss) on
derivative instruments and hedging activities includes gains of
$1&nbsp;million and $0, respectively, and for the nine months
ended September&nbsp;30, 2004 and 2003, net gain (loss) on
derivative instruments and hedging activities includes gains of
$3&nbsp;million and $8&nbsp;million, respectively, which
represent cash flow hedge ineffectiveness on interest rate hedge
agreements arising from differences between the critical terms
of the agreements and the related hedged obligations. Changes in
the fair value of interest rate agreements designated as hedging
instruments of the variability of cash flows associated with
floating-rate debt obligations that meet the effectiveness
criteria of SFAS&nbsp;No.&nbsp;133 are reported in accumulated
other comprehensive loss. For the three and nine months ended
September&nbsp;30, 2004, a gain of $2&nbsp;million and
$31&nbsp;million, respectively, and for the three and nine
months ended September&nbsp;30, 2003, a gain of $21&nbsp;million
and $30&nbsp;million, respectively, related to derivative
instruments designated as cash flow hedges, was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS&nbsp;No.&nbsp;133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value, with the impact recorded as gain (loss) on
derivative instruments and hedging activities in the
Company&#146;s condensed consolidated statements of operations.
For the three months ended September&nbsp;30, 2004 and 2003, net
gain (loss) on derivative instruments and hedging activities
includes losses of $9&nbsp;million and gains of
$31&nbsp;million, respectively, and for the nine months ended
September&nbsp;30, 2004 and 2003&nbsp;net gain (loss) on
derivative instruments and hedging activities includes gains of
$45&nbsp;million and $27&nbsp;million, respectively, for
interest rate derivative instruments not designated as hedges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, the Company had outstanding
$2.7&nbsp;billion and $3.0&nbsp;billion and $20&nbsp;million and
$520&nbsp;million, respectively, in notional amounts of interest
rate swaps and collars, respectively. The notional amounts of
interest rate instruments do not represent amounts exchanged by
the parties and, thus, are not a measure of exposure to credit
loss. The amounts exchanged are determined by reference to the
notional amount and the other terms of the contracts.
</FONT>

<P align="center"><FONT size="2">F-66
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">9.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Revenues</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Revenues consist of the following for the three
and nine months ended September&nbsp;30, 2004 and 2003:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Video
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">High-speed data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commercial
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">10.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Operating Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating expenses consist of the following for
the three and nine months ended September&nbsp;30, 2004 and 2003:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Programming
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">934</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advertising sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">11.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Selling, General and Administrative
    Expenses</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Selling, general and administrative expenses
consist of the following for the three and nine months ended
September&nbsp;30, 2004 and 2003:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">636</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">702</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Components of selling expense are included in
general and administrative and marketing expense.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">12.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Special Charges</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of 2002, the Company
recorded a special charge of $31&nbsp;million associated with
the Company&#146;s workforce reduction and the consolidation of
its operations from three divisions and ten regions into five
operating divisions, elimination of redundant practices and
streamlining its management structure. During the year ended
December&nbsp;31, 2003, additional severance-related costs of
$26&nbsp;million were incurred and recorded as a special charge.
During the three and nine months ended September&nbsp;30, 2004,
an additional 300 and 450 employees, respectively, were
identified for termination, and severance
</FONT>

<P align="center"><FONT size="2">F-67
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">costs of $6&nbsp;million and $9&nbsp;million,
respectively, were recorded in special charges. Severance
payments are made over a period of up to two years with
approximately $3&nbsp;million and $14&nbsp;million paid during
the three and nine months ended September&nbsp;30, 2004,
respectively, and $43&nbsp;million paid during the year ended
December&nbsp;31, 2003. As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, a liability of approximately
$9&nbsp;million and $14&nbsp;million, respectively, is recorded
on the accompanying condensed consolidated balance sheets
related to the reorganization activities discussed above. For
the nine months ended September&nbsp;30, 2004, special charges
also includes approximately $85&nbsp;million, representing the
aggregate value of the Charter Class&nbsp;A common stock and
warrants to purchase Charter Class&nbsp;A common stock
contemplated to be issued as part of a settlement of
consolidated federal and state class actions and federal
derivative action lawsuits and approximately $9&nbsp;million of
litigation costs related to the tentative settlement of a
national class action suit, all of which are subject to final
documentation and court approval (see note&nbsp;14). For the
three and nine months ended September&nbsp;30, 2004, the
severance costs were offset by $3&nbsp;million received from a
third party in settlement of a dispute.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the three and nine months ended
September&nbsp;30, 2003, the Company recorded severance costs of
$8&nbsp;million and $23&nbsp;million, respectively, in special
charges. For the nine months ended September&nbsp;30, 2003, the
severance costs were offset by a $5&nbsp;million settlement from
the Internet service provider Excite@Home related to the
conversion of approximately 145,000 high-speed data customers to
our Charter High Speed service in 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">13.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Income Taxes</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All operations are held through Charter Holdco
and its direct and indirect subsidiaries. Charter Holdco and the
majority of its subsidiaries are not subject to income tax.
However, certain of these subsidiaries are corporations and are
subject to income tax. All of the taxable income, gains, losses,
deductions and credits of Charter Holdco are passed through to
its members: Charter, Charter Investment, Inc. (&#147;Charter
Investment&#148;) and Vulcan Cable&nbsp;III Inc. (&#147;Vulcan
Cable&#148;). Charter is responsible for its share of the
taxable income or loss of Charter Holdco allocated to Charter in
accordance with the Charter Holdco limited liability company
agreement (the &#147;LLC Agreement&#148;) and partnership tax
rules and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004 and
December&nbsp;31, 2003, the Company had net deferred income tax
liabilities of approximately $204&nbsp;million and
$417&nbsp;million, respectively. Approximately $204&nbsp;million
and $267&nbsp;million of the deferred tax liabilities recorded
in the condensed consolidated financial statements at
September&nbsp;30, 2004 and December&nbsp;31, 2003,
respectively, relate to certain indirect subsidiaries of Charter
Holdco, which file separate income tax returns.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the three and nine months ended
September&nbsp;30, 2004, the Company recorded $304&nbsp;million
and $207&nbsp;million of income tax benefit, respectively. The
Company recorded the portion of the income tax benefit
associated with the adoption of Topic D-108 as a
$91&nbsp;million reduction of the cumulative effect of
accounting change on the accompanying statement of operations
for the three and nine months ended September&nbsp;30, 2004.
During the three and nine months ended September&nbsp;30, 2003,
the Company recorded $28&nbsp;million and $86&nbsp;million of
income tax benefit, respectively. The sale of cable systems to
Atlantic Broadband Finance, LLC on March&nbsp;1 and
April&nbsp;30, 2004 resulted in $15&nbsp;million of income tax
expense for the nine months ended September&nbsp;30, 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax benefit is recognized through
reductions in the deferred tax liabilities related to
Charter&#146;s investment in Charter Holdco, as well as the
deferred tax liabilities of certain of Charter&#146;s indirect
corporate subsidiaries. The Company recorded an additional
deferred tax asset of approximately $1.4&nbsp;billion and
$1.7&nbsp;billion during the three and nine months ended
September&nbsp;30, 2004, respectively,
</FONT>

<P align="center"><FONT size="2">F-68
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">relating to net operating loss carryforwards, but
recorded a valuation allowance with respect to these amounts
because of the uncertainty of the ability to realize a benefit
from these carryforwards in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had deferred tax assets of
approximately $3.4&nbsp;billion and $1.7&nbsp;billion as of
September&nbsp;30, 2004 and December&nbsp;31, 2003,
respectively, a portion of which relates to the excess of
cumulative financial statement losses over cumulative tax losses
allocated from Charter Holdco. The deferred tax assets also
include approximately $1.8&nbsp;billion and $912&nbsp;million of
tax net operating loss carryforwards as of September&nbsp;30,
2004 and December&nbsp;31, 2003, respectively (generally
expiring in years 2004 through 2024), of Charter and its
indirect corporate subsidiaries, which are subject to certain
return limitations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total valuation allowance for deferred tax
assets was $3.0&nbsp;billion and $1.3&nbsp;billion as of
September&nbsp;30, 2004 and December&nbsp;31, 2003,
respectively. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not
that some or all of the deferred tax assets will be realized.
Because of the uncertainties in projecting future taxable income
of Charter Holdco, valuation allowances have been established
except for deferred benefits available to offset deferred tax
liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is currently under examination by the
Internal Revenue Service for the tax years ending
December&nbsp;31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
the Company&#146;s financial position or results of operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">14.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Contingencies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As previously reported in the Company&#146;s 2003
Annual Report on Form&nbsp;10-K and 2004 Quarterly Report on
Form&nbsp;10-Q for the quarter ended June&nbsp;30, 2004,
fourteen putative federal class action lawsuits (the
&#147;Federal Class&nbsp;Actions&#148;) were filed against
Charter and certain of its former and present officers and
directors in various jurisdictions allegedly on behalf of all
purchasers of Charter&#146;s securities during the period from
either November 8 or November&nbsp;9, 1999 through July&nbsp;17
or July&nbsp;18, 2002. In general, the lawsuits alleged that
Charter utilized misleading accounting practices and failed to
disclose these accounting practices and/or issued false and
misleading financial statements and press releases concerning
Charter&#146;s operations and prospects. The Federal
Class&nbsp;Actions were specifically and individually identified
in public filings made by Charter prior to the date of this
quarterly report.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;12, 2002, a shareholders
derivative suit (the &#147;State Derivative Action&#148;) was
filed in the Circuit Court of the City of St.&nbsp;Louis, State
of Missouri (the &#147;Missouri State Court&#148;) against
Charter and its then current directors, as well as its former
auditors. A substantively identical derivative action was later
filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their
fiduciary duties by failing to establish and maintain adequate
internal controls and procedures. An action substantively
identical to the State Derivative Action was filed in March
2004. The State Derivative Actions were specifically and
individually identified in public filings made by Charter prior
to the date of this quarterly report.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Separately, on February&nbsp;12, 2003, a
shareholders derivative suit (the &#147;Federal Derivative
Action&#148;) was filed against Charter and its then current
directors in the United States District Court for the Eastern
District of Missouri. The plaintiff in that suit alleged that
the individual defendants breached their fiduciary duties and
grossly mismanaged Charter by failing to establish and maintain
adequate internal controls and procedures. The Federal
Derivative Action was identified in public filings made by
Charter prior to the date of this quarterly report.
</FONT>

<P align="center"><FONT size="2">F-69
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;5, 2004, Charter entered into
Memoranda of Understanding setting forth agreements in principle
regarding settlement of the Federal Class&nbsp;Actions, the
State Derivative Action(s) and the Federal Derivative Action
(the &#147;Actions&#148;). In exchange for a release of all
claims by plaintiffs against Charter and its former and present
officers and directors named in the Actions, Charter will pay to
the plaintiffs a combination of cash and equity collectively
valued at $144&nbsp;million, which will include the fees and
expenses of plaintiffs&#146; counsel. Of this amount,
$64&nbsp;million will be paid in cash (by Charter&#146;s
insurance carriers) and the balance will be paid in shares of
Charter Class&nbsp;A common stock having an aggregate value of
$40&nbsp;million and ten-year warrants to purchase shares of
Charter Class&nbsp;A common stock having an aggregate warrant
value of $40&nbsp;million. The warrants would have an exercise
price equal to 150% of the fair market value (as defined) of
Charter Class&nbsp;A common stock as of the date of the entry of
the order of final judgment approving the settlement. In
addition, Charter expects to issue additional shares of its
Class&nbsp;A common stock to its insurance carrier having an
aggregate value of $5&nbsp;million. As a result, in the second
quarter of 2004, the Company recorded a $149&nbsp;million
litigation liability within other long-term liabilities and a
$64&nbsp;million insurance receivable as part of other
non-current assets on its consolidated balance sheet and an
$85&nbsp;million special charge on its consolidated statement of
operations. Additionally, as part of the settlements, Charter
will also commit to a variety of corporate governance changes,
internal practices and public disclosures, some of which have
already been undertaken and none of which are inconsistent with
measures Charter is taking in connection with the recent
conclusion of the SEC investigation described below. The
settlement of each of the lawsuits is conditioned upon, among
other things, the parties&#146; approval and execution of
definitive settlement agreements with respect to the matters
described above, judicial approval of the settlements by the
Court following notice to the class, and dismissal of the
consolidated derivative actions now pending in Missouri State
Court, which are related to the Federal Derivative Action.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2002, Charter became aware of a grand
jury investigation being conducted by the
U.S.&nbsp;Attorney&#146;s Office for the Eastern District of
Missouri into certain of its accounting and reporting practices,
focusing on how Charter reported customer numbers, and its
reporting of amounts received from digital set-top terminal
suppliers for advertising. The U.S.&nbsp;Attorney&#146;s Office
has publicly stated that Charter is not a target of the
investigation. Charter has also been advised by the
U.S.&nbsp;Attorney&#146;s office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July&nbsp;24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July&nbsp;25, 2003, one of the former officers who was indicted
entered a guilty plea. Charter is fully cooperating with the
investigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;4, 2002, Charter received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January&nbsp;23,
2003, and subsequently served document and testimony subpoenas
on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charter&#146;s
prior reports with respect to its determination of the number of
customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings
with certain vendors, including programmers and digital set-top
terminal suppliers. On July&nbsp;27, 2004, the SEC and Charter
reached a final agreement to settle the investigation. In the
Settlement Agreement and Cease and Desist Order, Charter agreed
to entry of an administrative order prohibiting any future
violations of United States securities laws and requiring
certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing,
and the SEC assessed no fine against Charter.
</FONT>

<P align="center"><FONT size="2">F-70
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter is generally required to indemnify each
of the named individual defendants in connection with the
matters described above pursuant to the terms of its bylaws and
(where applicable) such individual defendants&#146; employment
agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC
investigation and the above described lawsuits, some of
Charter&#146;s current and former directors and current and
former officers have been advanced certain costs and expenses
incurred in connection with their defense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina Court of Common Pleas (the
&#147;South Carolina Class&nbsp;Action&#148;), purportedly on
behalf of a class of Charter Holdco&#146;s customers, alleging
that Charter Holdco improperly charged them a wire maintenance
fee without request or permission. They also claimed that
Charter Holdco improperly required them to rent analog and/or
digital set-top terminals even though their television sets were
&#147;cable ready.&#148; A substantively identical case was
filed in the Superior Court of Athens&nbsp;&#151; Clarke County,
Georgia by Emma S. Tobar on March&nbsp;26, 2002 (the
&#147;Georgia Class&nbsp;Action&#148;), alleging a nationwide
class for these claims. The South Carolina Class&nbsp;Action and
the Georgia Class&nbsp;Action were identified in public filings
made by Charter prior to the date of this quarterly report.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2004, the parties to both the Georgia
and South Carolina Class&nbsp;Actions participated in a
mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the
mediator&#146;s proposal and reached a tentative settlement,
subject to final documentation and court approval. As a result
of the tentative settlement, the Company recorded a special
charge of $9&nbsp;million in its consolidated statement of
operations in the first quarter of 2004 (see note&nbsp;12). On
July&nbsp;8, 2004, the Superior Court of Athens&nbsp;&#151;
Clarke County, Georgia granted a motion to amend the Tobar
complaint to add Nicholls, Barber and April Jones as plaintiffs
in the Georgia Class&nbsp;Action and to add any potential class
members in South Carolina. The court also granted preliminary
approval of the proposed settlement on that date. A hearing to
consider final approval of the settlement is scheduled to occur
on November&nbsp;10, 2004. On August&nbsp;2, 2004, the parties
submitted a joint request to the South Carolina Court of Common
Pleas to stay the South Carolina Class&nbsp;Action pending final
approval of the settlement and on August&nbsp;17, 2004, that
court granted the parties&#146; request.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims are not expected
to have a material adverse effect on the Company&#146;s
financial condition, results of operations or its liquidity.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">15.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Earnings Per Share</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic earnings per share is based on the average
number of shares of common stock outstanding during the period.
Diluted earnings per share is based on the average number of
shares used for the basic earnings per share calculation,
adjusted for the dilutive effect of stock options, convertible
debt, convertible redeemable preferred stock and exchangeable
membership units. Basic earnings per share equals diluted
</FONT>

<P align="center"><FONT size="2">F-71
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">earnings per share for the three months ended
September&nbsp;30, 2004 and the nine months ended
September&nbsp;30, 2003 and 2004.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings Per</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic earnings per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of Charter Investment Class&nbsp;B Common
    Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of Vulcan Cable&nbsp;III Inc. Class&nbsp;B
    Common Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.01</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted earnings per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of stock options represents the shares
resulting from the assumed exercise of outstanding stock
options, calculated using the treasury stock method for all
options whose exercise price was less than the average market
price of the common shares. Charter Investment Class&nbsp;B
common stock and Vulcan Cable&nbsp;III Inc. Class&nbsp;B common
stock represent membership units in Charter Holdco that are
exchangeable at any time on a one-for-one basis for shares of
Charter Class&nbsp;B common stock, which are in turn convertible
on a one-for-one basis into shares of Charter Class&nbsp;A
common stock. Their effect on earnings represents the allocation
of gains to minority interest based on their ownership of
Charter Holdco.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain options to purchase common stock, which
were outstanding during the three months ended
September&nbsp;30, 2003, were not included in the computation of
diluted earnings per share because the options&#146; exercise
price was greater than the average market price of the common
shares. Charter&#146;s 5.75% and 4.75%&nbsp;convertible senior
notes, Charter&#146;s series&nbsp;A convertible redeemable
preferred stock and all of the outstanding exchangeable
membership units in Charter&#146;s indirect subsidiary, CC VIII,
LLC, also were not included in the computation of diluted
earnings per share because the effect of the conversions would
have been antidilutive.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">16.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Stock Compensation Plans</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has historically accounted for
stock-based compensation in accordance with Accounting
Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25,
<I>Accounting for Stock Issued to Employees,</I> and related
interpretations, as permitted by SFAS&nbsp;No.&nbsp;123,
<I>Accounting for Stock-Based Compensation. </I>On
January&nbsp;1, 2003, the Company adopted the fair value
measurement provisions of SFAS&nbsp;No.&nbsp;123 using the
prospective method, under which the Company recognizes
compensation expense of a stock-based award to an employee over
the vesting period based on the fair value of the award on the
grant date consistent with the method described in Financial
Accounting Standards Board Interpretation No.&nbsp;28,
<I>Accounting for Stock Appreciation Rights and Other Variable
Stock Option or Award Plans</I>. Adoption of these provisions
resulted in utilizing a preferable accounting method as the
condensed consolidated financial statements will present the
estimated fair value of stock-based compensation in expense
consistently with other forms of compensation and other expense
associated with goods and services received for equity
instruments. In accordance with SFAS&nbsp;No.&nbsp;148,
<I>Accounting for Stock-Based Compensation&nbsp;&#151;
Transition and Disclosure</I>, the fair value method is being
applied only to awards granted or modified after January&nbsp;1,
2003, whereas awards granted prior to such date will continue to
be accounted for under APB No.&nbsp;25, unless they are modified
or settled in cash. The ongoing effect on consolidated results
of operations or financial condition will depend on future
stock-based compensation awards granted by the Company.
</FONT>

<P align="center"><FONT size="2">F-72
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;No.&nbsp;123 requires pro forma
disclosure of the impact on earnings as if the compensation
expense for these plans had been determined using the fair value
method. The following table presents the Company&#146;s net
income (loss) and income (loss) per share as reported and the
pro forma amounts that would have been reported using the fair
value method under SFAS&nbsp;No.&nbsp;123 for the periods
presented:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss) applicable to common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,295</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,005</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add back stock-based compensation expense related
    to stock options included in reported net income (loss) (net of
    minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effects of unvested options in stock option
    exchange
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,960</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(194</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) per common shares, basic:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss) per common shares, diluted:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13.23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.66</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, Charter began an option exchange
program in which the Company offered its employees the right to
exchange all stock options (vested and unvested) under the 1999
Charter Communications Option Plan and 2001 Stock Incentive Plan
that had an exercise price over $10&nbsp;per share for shares of
restricted Charter Class&nbsp;A common stock or, in some
instances, cash. Based on a sliding exchange ratio, which varied
depending on the exercise price of an employee&#146;s
outstanding options, if an employee would have received more
than 400&nbsp;shares of restricted stock in exchange for
tendered options, Charter issued to that employee shares of
restricted stock in the exchange. If, based on the exchange
ratios, an employee would have received 400 or fewer shares of
restricted stock in exchange for tendered options, Charter
instead paid the employee cash in an amount equal to the number
of shares the employee would have received multiplied by $5.00.
The offer applied to options (vested and unvested) to purchase a
total of 22,929,573&nbsp;shares of Charter Class&nbsp;A common
stock, or approximately 48% of the Company&#146;s 47,882,365
total options (vested and unvested) issued and outstanding as of
December&nbsp;31, 2003. Participation by employees was
voluntary. Those members of Charter&#146;s board of directors
who were not also employees of the Company were not eligible to
participate in the exchange offer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the closing of the exchange offer on
February&nbsp;20, 2004, the Company accepted for cancellation
eligible options to purchase approximately
18,137,664&nbsp;shares of Charter Class&nbsp;A common stock. In
exchange, the Company granted 1,966,686&nbsp;shares of
restricted stock, including 460,777 performance shares to
eligible employees of the rank of senior vice president and
above, and paid a total cash amount of approximately
$4&nbsp;million (which amount includes applicable withholding
taxes) to those employees who
</FONT>

<P align="center"><FONT size="2">F-73
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">received cash rather than shares of restricted
stock. The restricted stock was granted on February&nbsp;25,
2004. Employees tendered approximately 79% of the options
exchangeable under the program.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost to the Company of the stock option
exchange program was approximately $12&nbsp;million, with a 2004
cash compensation expense of approximately $4&nbsp;million and a
non-cash compensation expense of approximately $8&nbsp;million
to be expensed ratably over the three-year vesting period of the
restricted stock issued in the exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2004, the Compensation Committee of
the board of directors of Charter approved Charter&#146;s
Long-Term Incentive Program (&#147;LTIP&#148;), which is a
program administered under the 2001 Stock Incentive Plan.
Employees of Charter and its subsidiaries whose pay
classifications exceed a certain level are eligible to receive
stock options, and more senior level employees are eligible to
receive stock options and performance shares. Under the LTIP,
the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance units vest
on the third anniversary of the grant date and shares of Charter
Class&nbsp;A common stock are issued, conditional upon
Charter&#146;s performance against financial performance targets
established by Charter&#146;s management and approved by its
board of directors as of the time of the award.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">17.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Related Parties</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">CC&nbsp;VIII.</FONT></I><FONT size="2"> As
part of the acquisition of the cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000,
CC&nbsp;VIII, Charter&#146;s indirect limited liability company
subsidiary, issued, after adjustments, 24,273,943 Class&nbsp;A
preferred membership units (collectively, the &#147;CC&nbsp;VIII
interest&#148;) with a value and an initial capital account of
approximately $630&nbsp;million to certain sellers affiliated
with AT&#38;T Broadband, subsequently owned by Comcast
Corporation (the &#147;Comcast sellers&#148;). While held by the
Comcast sellers, the CC&nbsp;VIII interest was entitled to a 2%
priority return on its initial capital account and such priority
return was entitled to preferential distributions from available
cash and upon liquidation of CC&nbsp;VIII. While held by the
Comcast sellers, the CC&nbsp;VIII interest generally did not
share in the profits and losses of CC&nbsp;VIII. Mr.&nbsp;Allen
granted the Comcast sellers the right to sell to him the
CC&nbsp;VIII interest for approximately $630&nbsp;million plus
4.5% interest annually from February 2000 (the &#147;Comcast put
right&#148;). In April 2002, the Comcast sellers exercised the
Comcast put right in full, and this transaction was consummated
on June&nbsp;6, 2003. Accordingly, Mr.&nbsp;Allen has become the
holder of the CC&nbsp;VIII interest, indirectly through an
affiliate. Consequently, subject to the matters referenced in
the next paragraph, Mr.&nbsp;Allen generally thereafter will be
allocated his pro rata share (based on number of membership
interests outstanding) of profits or losses of CC&nbsp;VIII. In
the event of a liquidation of CC&nbsp;VIII, Mr.&nbsp;Allen would
be entitled to a priority distribution with respect to the 2%
priority return (which will continue to accrete). Any remaining
distributions in liquidation would be distributed to CC&nbsp;V
Holdings, LLC and Mr.&nbsp;Allen in proportion to CC&nbsp;V
Holdings, LLC&#146;s capital account and Mr.&nbsp;Allen&#146;s
capital account (which will equal the initial capital account of
the Comcast sellers of approximately $630&nbsp;million,
increased or decreased by Mr.&nbsp;Allen&#146;s pro rata share
of CC&nbsp;VIII&#146;s profits or losses (as computed for
capital account purposes) after June&nbsp;6, 2003). The limited
liability company agreement of CC&nbsp;VIII does not provide for
a mandatory redemption of the CC&nbsp;VIII interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the
CC&nbsp;VIII interest following consummation of the Comcast put
right. Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead
</FONT>

<P align="center"><FONT size="2">F-74
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">would receive the preferred equity interests in
CC&nbsp;VIII represented by the CC&nbsp;VIII interest. As part
of the last-minute changes to the Bresnan transaction documents,
a draft amended version of the Charter Holdco limited liability
company agreement was prepared, and contract provisions were
drafted for that agreement that would have required an automatic
exchange of the CC&nbsp;VIII interest for 24,273,943 Charter
Holdco membership units if the Comcast sellers exercised the
Comcast put right and sold the CC&nbsp;VIII interest to
Mr.&nbsp;Allen or his affiliates. However, the provisions that
would have required this automatic exchange did not appear in
the final version of the Charter Holdco limited liability
company agreement that was delivered and executed at the closing
of the Bresnan transaction. The law firm that prepared the
documents for the Bresnan transaction brought this matter to the
attention of Charter and representatives of Mr.&nbsp;Allen in
2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs.&nbsp;Merritt, Tory and Wangberg) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a &#147;scrivener&#146;s
error&#148; had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr.&nbsp;Allen should be required to
contribute the CC VIII interest to Charter Holdco in exchange
for 24,273,943 Charter Holdco membership units. The Special
Committee also recommended to the board of directors of Charter
that, to the extent the contract reformation is achieved, the
board of directors should consider whether the CC VIII interest
should ultimately be held by Charter Holdco or Charter Holdings
or another entity owned directly or indirectly by them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Allen disagrees with the Special
Committee&#146;s determinations described above and has so
notified the Special Committee. Mr.&nbsp;Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days&#146; prior notice to the other.
In addition, the Special Committee and Mr.&nbsp;Allen have
determined to utilize the Delaware Court of Chancery&#146;s
program for mediation of complex business disputes in an effort
to resolve the CC VIII interest dispute. If the Special
Committee and Mr.&nbsp;Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr.&nbsp;Allen and his
affiliates seeking contract reformation, declaratory relief as
to the respective rights of the parties regarding this dispute
and alternative forms of legal and equitable relief. The
ultimate resolution and financial impact of the dispute are not
determinable at this time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">TechTV, Inc.</FONT></I><FONT size="2"> TechTV,
Inc. (&#147;TechTV&#148;) operated a cable television network
that offered programming mostly related to technology. Pursuant
to an affiliation agreement that originated in 1998 and that
terminates in 2008, TechTV has provided the Company with
programming for distribution via its cable systems. The
affiliation agreement provides, among other things, that TechTV
must offer Charter certain terms and conditions that are no less
favorable in the affiliation agreement than are given to any
</FONT>

<P align="center"><FONT size="2">F-75
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">other distributor that serves the same number of
or fewer TechTV viewing customers. Additionally, pursuant to the
affiliation agreement, the Company was entitled to incentive
payments for channel launches through December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2004, Charter Holdco entered into
agreements with Vulcan Programming and TechTV, which provide for
(i)&nbsp;Charter Holdco and TechTV to amend the affiliation
agreement which, among other things, revises the description of
the TechTV network content, provides for Charter Holdco to waive
certain claims against TechTV relating to alleged breaches of
the affiliation agreement and provides for TechTV to make
payment of outstanding launch receivables due to Charter Holdco
under the affiliation agreement, (ii)&nbsp;Vulcan Programming to
pay approximately $10&nbsp;million and purchase over a 24-month
period, at fair market rates, $2&nbsp;million of advertising
time across various cable networks on Charter cable systems in
consideration of the agreements, obligations, releases and
waivers under the agreements and in settlement of the
aforementioned claims and (iii)&nbsp;TechTV to be a provider of
content relating to technology and video gaming for
Charter&#146;s interactive television platforms through
December&nbsp;31, 2006 (exclusive for the first year). The
Company recognized approximately $5&nbsp;million of the Vulcan
Programming payment as an offset to programming expense during
the nine months ended September&nbsp;30, 2004 with the remaining
$5&nbsp;million to be recognized over the term of the agreement.
The Company believes that Vulcan Programming, which is 100%
owned by Mr.&nbsp;Allen, owned an approximate 98% equity
interest in TechTV at the time of the transaction. Until
September 2003, Mr.&nbsp;Savoy, a former Charter director, was
the president and director of Vulcan Programming and was a
director of TechTV. Mr.&nbsp;Wangberg, one of Charter&#146;s
directors, was the chairman, chief executive officer and a
director of TechTV. Mr.&nbsp;Wangberg resigned as the chief
executive officer of TechTV in July 2002. He remained a director
of TechTV along with Mr.&nbsp;Allen until Vulcan Programming
sold TechTV to an unrelated third party in May 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Digeo, Inc.</FONT></I><FONT size="2"> On
June&nbsp;30, 2003, Charter Holdco entered into an agreement
with Motorola, Inc. for the purchase of 100,000 digital video
recorder (&#147;DVR&#148;) units. The software for these DVR
units is being supplied by Digeo Interactive, LLC (&#147;Digeo
Interactive&#148;), a wholly owned subsidiary of Digeo, Inc.
(&#147;Digeo&#148;), under a license agreement entered into in
April 2004. Under the license agreement Digeo Interactive
granted to Charter Holdco the right to use Digeo&#146;s
proprietary software for the number of DVR units that Charter
deploys from a maximum of 10 headends through year-end 2004.
This maximum number of headends was increased from 10 to 15
pursuant to a letter agreement executed on June&nbsp;11, 2004
and was increased again from 15 to 20 pursuant to a second
letter agreement dated August&nbsp;4, 2004. The license granted
for each unit deployed under the agreement is valid for five
years. In addition, Charter will pay certain other fees
including a per-headend license fee and maintenance fees. Total
license and maintenance fees during the term of the agreement
are expected to be approximately $3&nbsp;million. The agreement
provides that Charter is entitled to receive contract terms,
considered on the whole, and license fees, considered apart from
other contract terms, no less favorable than those accorded to
any other Digeo customer. In April 2004, the Company launched
DVR service utilizing the Digeo proprietary software in its
Rochester, Minnesota market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2004, Charter Holdco entered into a
binding term sheet with Digeo Interactive for the purchase of
70,000 Digeo PowerKey DVR units. The term sheet provides that
the parties will proceed in good faith to negotiate, prior to
year-end 2004, definitive agreements for the purchase of the DVR
units and that the parties will enter into a license agreement
for Digeo&#146;s proprietary software on terms substantially
similar to the terms of the license agreement described above.
Total purchase price and license and maintenance fees during the
term of the definitive agreements are expected to be
approximately $40&nbsp;million. The term sheet and any
definitive agreements will be terminable at no penalty to
Charter in certain circumstances.
</FONT>

<P align="center"><FONT size="2">F-76
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter and Digeo entered into a letter agreement
effective September&nbsp;28, 2004 amending the April 2004
license agreement to reduce certain fees payable to Digeo by
Charter and to increase the maximum number of headends in which
Charter has the right to deploy the DVR units from a maximum of
20 by year end 2004, to a maximum of 30 by June&nbsp;30, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company believes that Vulcan Ventures, an
entity controlled by Mr.&nbsp;Allen, owns an approximate 60%
equity interest in Digeo, Inc. Messrs.&nbsp;Allen and Vogel are
directors of Digeo. Mr.&nbsp;Vogel owns options to
purchase&nbsp;10,000&nbsp;shares of Digeo common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Oxygen Media LLC.</FONT></I><FONT size="2">
Oxygen Media LLC (&#147;Oxygen&#148;) provides programming
content aimed at the female audience for distribution over cable
systems and satellite. On July&nbsp;22, 2002, Charter Holdco
entered into a carriage agreement with Oxygen, whereby the
Company agreed to carry programming content from Oxygen. Under
the carriage agreement, the Company currently makes Oxygen
programming available to approximately 5&nbsp;million of its
video customers. The term of the carriage agreement was
retroactive to February&nbsp;1, 2000, the date of launch of
Oxygen programming by the Company, and runs for a period of five
years from that date. For the nine months ended
September&nbsp;30, 2004 and 2003, the Company paid Oxygen
approximately $10&nbsp;million and $6&nbsp;million,
respectively, for programming content. In addition, Oxygen pays
the Company marketing support fees for customers launched after
the first year of the term of the carriage agreement up to a
total of $4&nbsp;million. The Company recorded approximately
$1&nbsp;million and $696&nbsp;million related to these launch
incentives as a reduction of programming expense for each of the
nine months ended September&nbsp;30, 2004 and 2003, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Concurrently with the execution of the carriage
agreement, Charter Holdco entered into an equity issuance
agreement pursuant to which Oxygen&#146;s parent company, Oxygen
Media Corporation (&#147;Oxygen Media&#148;), granted a
subsidiary of Charter Holdco a warrant to
purchase&nbsp;2.4&nbsp;million shares of Oxygen Media common
stock for an exercise price of $22.00&nbsp;per share. Charter
Holdco was also to receive unregistered shares of Oxygen Media
common stock with a guaranteed fair market value on the date of
issuance of $34&nbsp;million, on or prior to February&nbsp;2,
2005, with the exact date to be determined by Oxygen Media.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company recognizes the guaranteed value of
the investment over the life of the carriage agreement as a
reduction of programming expense. For the nine months ended
September&nbsp;30, 2004 and 2003, the Company recorded
approximately $10&nbsp;million and $6&nbsp;million,
respectively, as a reduction of programming expense. The
carrying value of the Company&#146;s investment in Oxygen was
approximately $29&nbsp;million and $19&nbsp;million as of
September&nbsp;30, 2004 and December&nbsp;31, 2003, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, Charter Holdco and Oxygen entered
into agreements that amend and renew the carriage agreement. The
amendment to the carriage agreement (a)&nbsp;revises the number
of the Company&#146;s customers to which Oxygen programming must
be carried and for which the Company must pay, (b)&nbsp;releases
Charter Holdco from any claims related to the failure to achieve
distribution benchmarks under the carriage agreement,
(c)&nbsp;requires Oxygen to make payment on outstanding
receivables for marketing support fees due to the Company under
the affiliation agreement; and (d)&nbsp;requires that Oxygen
provide its programming content to the Company on economic terms
no less favorable than Oxygen provides to any other cable or
satellite operator having fewer subscribers than the Company.
The renewal of the carriage agreement (a)&nbsp;extends the
period that the Company will carry Oxygen programming to its
customers through January&nbsp;31, 2008, and (b)&nbsp;requires
license fees to be paid based on customers receiving Oxygen
programming, rather than for specific customer benchmarks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2004, Charter Holdco and Oxygen also
amended the equity issuance agreement to provide for the
issuance of 1&nbsp;million shares of Oxygen Preferred Stock with
a liquidation preference of $33.10&nbsp;per
</FONT>

<P align="center"><FONT size="2">F-77
</FONT>

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<DIV align="center">
<B><FONT size="2">CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(UNAUDITED)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Dollars in millions, except per share amounts
and where indicated)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">share plus accrued dividends to Charter Holdco on
February&nbsp;1, 2005 in place of the $34&nbsp;million of
unregistered shares of Oxygen Media common stock. The preferred
stock is convertible into common stock after December&nbsp;31,
2007 at a conversion ratio, the numerator of which is the
liquidation preference and the denominator which is the fair
market value per share of Oxygen Media common stock on the
conversion date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2004, through Vulcan
Programming, Mr.&nbsp;Allen owned an approximate 31% interest in
Oxygen assuming no exercises of outstanding warrants or
conversion or exchange of convertible or exchangeable securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marc Nathanson has an indirect beneficial
interest of less than 1% in Oxygen.
</FONT>

<P align="center"><FONT size="2">F-78
</FONT>

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<P align="center">
<B><FONT size="2">PART&nbsp;II</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION NOT REQUIRED IN
PROSPECTUS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;13.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Expenses of Issuance and
    Distribution</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the various
expenses to be incurred in connection with the sale and
distribution of the securities covered by this prospectus, all
of which will be borne by the registrant. All amounts shown are
estimates except the SEC filing fee.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Regulatory filing fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Printing expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,321,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;14.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Indemnification of Directors and
    Officers</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Indemnification Under the Certificate of
Incorporation and Bylaws of Charter Communications,
Inc.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Charter Communications, Inc.&#146;s certificate
of incorporation provides that a director of Charter
Communications, Inc. shall not be personally liable to Charter
Communications, Inc. or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for
liability: (i)&nbsp;for any breach of the directors&#146; duty
of loyalty to Charter Communications, Inc. or its shareholders;
(ii)&nbsp;for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(iii)&nbsp;under Section&nbsp;174 of the Delaware General
Corporation law; or (iv)&nbsp;for any transaction from which the
director derived an improper personal benefit. Charter
Communications, Inc.&#146;s bylaws require Charter
Communications, Inc., to the fullest extent authorized by the
Delaware General Corporation Law, to indemnify any person who
was or is made a party or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding by reason
of the fact that he is or was a director or officer of Charter
Communications, Inc. or is or was serving at the request of
Charter Communications, Inc. as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity or enterprise, in each
case, against all expense, liability and loss (including
attorneys&#146; fees, judgments, amounts paid in settlement,
fines, ERISA excise taxes or penalties) reasonably incurred or
suffered by such person in connection therewith.
</FONT>

<P align="left">
<B><FONT size="2">Indemnification Under the Delaware General
Corporation Law</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;145 of the Delaware General
Corporation Law, authorizes a corporation to indemnify any
person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses,
including attorneys&#146; fees, judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding, if
the person acted in good faith and in a manner the person
reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the
person&#146;s conduct was unlawful. In addition, the Delaware
General Corporation Law does not permit indemnification in any
threatened, pending or completed action or suit by or in the
right of the corporation in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that
the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses, which such court shall deem proper. To the extent
that a present or former director or officer of a corporation
has been successful on the merits or otherwise in defense of any
action, suit or
</FONT>

<P align="center"><FONT size="2">II-1
</FONT>
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<DIV align="left">
<FONT size="2">proceeding referred to above, or in defense of
any claim, issue or matter, such person shall be indemnified
against expenses, including attorneys&#146; fees, actually and
reasonably incurred by such person. Indemnity is mandatory to
the extent a claim, issue or matter has been successfully
defended. The Delaware General Corporation Law also allows a
corporation to provide for the elimination or limit of the
personal liability of a director to the corporation or its
shareholders for monetary damages for breach of fiduciary duty
as a director, provided that such provision shall not eliminate
or limit the liability of a director
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;for any breach of the director&#146;s
    duty of loyalty to the corporation or its shareholders,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;for acts or omissions not in good faith
    or which involve intentional misconduct or a knowing violation
    of law,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;for unlawful payments of dividends or
    unlawful stock purchases or redemptions,&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;for any transaction from which the
    director derived an improper personal benefit. These provisions
    will not limit the liability of directors or officers under the
    federal securities laws of the United States.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;15.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Recent Sales of Unregistered
    Securities.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;29, 2004, Charter Communications,
Inc. issued 2,385,705&nbsp;shares of its Class&nbsp;A common
stock in exchange for $10&nbsp;million aggregate principal
amount of Charter&#146;s 5.75%&nbsp;convertible senior notes due
2005 in a privately negotiated transaction. The shares of
Class&nbsp;A common stock issued in this exchange were exempt
from registration under Section&nbsp;3(a)(9) of the Securities
Act of 1933.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;6, 2004, Charter Communications, Inc.
issued 4,867,113&nbsp;shares of its Class&nbsp;A common stock in
exchange for $20&nbsp;million aggregate principal amount of
Charter&#146;s 5.75%&nbsp;convertible senior notes due 2005 in a
privately negotiated transaction. The shares of Class&nbsp;A
common stock issued in this exchange were exempt from
registration under Section&nbsp;3(a)(9) of the Securities Act of
1933.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;22, 2004, Charter
Communications, Inc. issued and sold $862.5&nbsp;million
original principal amount of 5.875%&nbsp;Convertible Senior
Notes due 2009. The notes were sold in a private transaction to
qualified institutional buyers, and the sale was exempt from
registration by virtue of Section&nbsp;4(2) of the Securities
Act of 1933 and Rule&nbsp;506 of Regulation&nbsp;D. The notes
were eligible for resale to qualified institutional buyers
pursuant to Rule&nbsp;144A of the Securities Act of 1933. The
initial conversion rate, subject to adjustment in certain
circumstances, will be 413.2231&nbsp;shares of Charter&#146;s
Class&nbsp;A common stock per $1,000 original principal amount
of notes, which represents a conversion price of approximately
$2.42&nbsp;per share. Consequently, the notes are convertible
into an aggregate of approximately 356,405,000&nbsp;shares of
Class&nbsp;A common stock. A portion of the net proceeds from
the sale of the notes were used to purchase a portfolio of
U.S.&nbsp;Treasury securities which are pledged as security for
the notes and which Charter expects to use to fund the first six
scheduled interest payments on the notes. Charter also intends
to use a portion of the net proceeds to redeem outstanding
indebtedness in the aggregate principal amount of
$588&nbsp;million. Excess proceeds will be used for general
corporate purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;2003, subject to certain
conditions and finalizing appropriate documentation, the Company
agreed to issue 18,638 shares of Class&nbsp;A common stock in
exchange for cancellation of an option to purchase 186,385
shares which was issued in 2001 as compensation for services.
The exchange is scheduled to be consummated in 2005. In
addition, we agreed to issue to the same holder a new option to
purchase an additional 289,268 shares of Class&nbsp;A common
stock for an exercise price of $3.905 per share. The issuances
were in exchange for services rendered or to be rendered, and
were exempt from registration pursuant to Section&nbsp;4(2)
under the Securities Act of 1933 and Rule 506 of
Regulation&nbsp;D.
</FONT>

<P align="center"><FONT size="2">II-2
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;16.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Exhibits</FONT></I></B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;1**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Underwriting Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Purchase and Contribution Agreement, entered into
    as of June 1999, by and among BCI (USA), LLC, William Bresnan,
    Blackstone BC Capital Partners L.P., Blackstone BC Offshore
    Capital Partners L.P., Blackstone Family Investment
    Partnership&nbsp;III L.P., TCID of Michigan, Inc. and TCI
    Bresnan LLC and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit&nbsp;2.11 to Amendment
    No.&nbsp;2 to the registration statement on Form&nbsp;S-1 of
    Charter Communications, Inc. filed on September&nbsp;28, 1999
    (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Purchase and Contribution
    Agreement dated as of February&nbsp;14, 2000, by and among BCI
    (USA), LLC, William J. Bresnan, Blackstone BC Capital Partners
    L.P., Blackstone BC Offshore Capital Partners, L.P., Blackstone
    Family Media&nbsp;III L.P. (as assignee of Blackstone Family
    Investment&nbsp;III, L.P.), TCID of Michigan, Inc., TCI Bresnan,
    LLC and Charter Communications Holding Company, LLC.
    (Incorporated by reference to Exhibit&nbsp;2.11(a) to the
    current report on Form&nbsp;8-K filed by Charter Communications,
    Inc. on February&nbsp;29, 2000 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Asset Purchase Agreement, dated as of
    September&nbsp;28, 2001, between High Speed Access Corp. and
    Charter Communications Holding Company, LLC (including as
    Exhibit&nbsp;A, the Form of Voting Agreement, as Exhibit&nbsp;B,
    the form of Management Agreement, as Exhibit&nbsp;C, the form of
    License Agreement, and as Exhibit&nbsp;D, the Form of Billing
    Letter Agreement) (Incorporated by reference to
    Exhibit&nbsp;10.1 to Amendment No.&nbsp;6 to Schedule&nbsp;13D
    filed by Charter Communications, Inc. and others with respect to
    High Speed Access Corp., filed on October&nbsp;1, 2001 (File
    No.&nbsp;005-56431)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Asset Purchase Agreement, dated August&nbsp;29,
    2001, by and between Charter Communications
    Entertainment&nbsp;I, LLC, Interlink Communications Partners,
    LLC, and Rifkin Acquisitions Partners, LLC and Enstar Income
    Program&nbsp;II-1,&nbsp;L.P., Enstar Income Program&nbsp;II-2,
    L.P., Enstar Income Program&nbsp;IV-3, L.P., Enstar Income/
    Growth Program Six-A,&nbsp;L.P., Enstar IV/ PBD Systems Venture,
    and Enstar Cable of Macoupin County (Incorporated by reference
    to Exhibit&nbsp;2.1 to the current report of Form&nbsp;8-K filed
    by Enstar&nbsp;IV-2,&nbsp;L.P. on September&nbsp;13, 2001 (File
    No.&nbsp;000-15706)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter of Amendment, dated September&nbsp;10,
    2001, by and between Charter Communications
    Entertainment&nbsp;I, LLC, Interlink Communications Partners,
    LLC, and Rifkin Acquisition Partners, LLC and Enstar Income
    Program&nbsp;II-1,&nbsp;L.P., Enstar Income Program&nbsp;II-2,
    L.P., Enstar Income Program IV-3,&nbsp;L.P., Enstar Income/
    Growth Program Six-A,&nbsp;L.P., Enstar IV/ PBD Systems Venture,
    and Enstar Cable of Macoupin County (Incorporated by reference
    to Exhibit&nbsp;2.1 to the current report of Form&nbsp;8-K filed
    by Enstar&nbsp;IV-2,&nbsp;L.P. on September&nbsp;13, 2001 (File
    No.&nbsp;000-15706)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter of Amendment, dated April&nbsp;10, 2002,
    by and between Charter Communications Entertainment&nbsp;I, LLC,
    Interlink Communications Partners, LLC, and Rifkin Acquisition
    Partners, LLC and Enstar Income Program&nbsp;II-1,&nbsp;L.P.,
    Enstar Income Program&nbsp;II-2, L.P., Enstar Income
    Program&nbsp;IV-3,&nbsp;L.P., Enstar Income/ Growth Program
    Six-A,&nbsp;L.P., Enstar IV/ PBD&nbsp;Systems Venture, and
    Enstar Cable of Macoupin County (Incorporated by reference to
    Exhibit&nbsp;2.1 to the current report on Form&nbsp;8-K filed by
    Enstar Income Program&nbsp;IV-1,&nbsp;L.P. on April&nbsp;22,
    2002 (File No.&nbsp;000-15705)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Asset Purchase Agreement, dated April&nbsp;10,
    2002, by and between Charter Communications
    Entertainment&nbsp;I, LLC, and Enstar Income Program&nbsp;II-1,
    L.P. (Incorporated by reference to Exhibit&nbsp;2.2 to the
    current report on Form&nbsp;8-K filed by Enstar Income
    Program&nbsp;II-1, L.P. on April&nbsp;26, 2002
    (File&nbsp;No.&nbsp;000-14508)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Restated Certificate of Incorporation of Charter
    Communications, Inc. (Originally incorporated July&nbsp;22,
    1999) (Incorporated by reference to Exhibit&nbsp;3.1 to
    Amendment No.&nbsp;3 to the registration statement on
    Form&nbsp;S-1 of Charter Communications, Inc. filed on
    October&nbsp;18, 1999 (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certificate of Amendment of Restated Certificate
    of Incorporation of Charter Communications, Inc. filed
    May&nbsp;10, 2001 (Incorporated by reference to
    Exhibit&nbsp;3.1(b) to the annual report of Form&nbsp;10-K of
    Charter Communications, Inc. filed on March&nbsp;29, 2002 (File
    No.&nbsp;000-27927).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated By-laws of Charter
    Communications, Inc. as of November&nbsp;5, 1999 (Incorporated
    by reference to Exhibit&nbsp;3.2 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    November&nbsp;14, 2001 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fourth Amendment to Amended and Restated By-Laws
    of Charter Communications, Inc. adopted as of October&nbsp;3,
    2003 (Incorporated by reference to Exhibit&nbsp;No.&nbsp;3.3 to
    the quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on November&nbsp;3, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fifth Amendment to Amended and Restated By-Laws
    of Charter Communications, Inc. adopted as of October&nbsp;28,
    2003 (Incorporated by reference to Exhibit&nbsp;No.&nbsp;3.3 to
    the quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on November&nbsp;3, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2(d)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sixth Amendment to the Amended and Restated
    By-Laws of Charter Communications, Inc. adopted as of
    September&nbsp;24, 2004 (Incorporated by reference to
    Exhibit&nbsp;99.1 to the current report on Form&nbsp;8-K of
    Charter Communications, Inc. filed on September&nbsp;30, 2004
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2(e)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Seventh Amendment to the Amended and Restated
    By-Laws of Charter Communications, Inc. adopted as of
    October&nbsp;21, 2004 (Incorporated by reference to
    Exhibit&nbsp;3.1 to the current report on Form&nbsp;8-K of
    Charter Communications, Inc. filed on October&nbsp;22, 2004
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certificate of Designation of Series&nbsp;A
    Convertible Redeemable Preferred Stock of Charter
    Communications, Inc. and related Certificate of Correction of
    Certificate of Designation (Incorporated by reference to
    Exhibit&nbsp;3.1 to the quarterly report on Form&nbsp;10-Q filed
    by Charter Communications, Inc. on November&nbsp;14, 2001 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Supplemental Indenture, dated as of
    March&nbsp;26, 1999, by and among Avalon Cable of Michigan
    Holdings, Inc., Avalon Cable LLC and Avalon Cable Holdings
    Finance, Inc., as issuers, Avalon Cable of Michigan, Inc., as
    guarantor, and The Bank of New York, as trustee for the Notes
    (Incorporated by reference to Exhibit&nbsp;4.2 to Amendment
    No.&nbsp;1 to the registration statement on Form&nbsp;S-4 of
    Avalon Cable LLC, Avalon Cable Holdings Finance, Inc., Avalon
    Cable of Michigan Holdings, Inc. and Avalon Cable of Michigan,
    Inc. filed on May&nbsp;28, 1999 (File No.&nbsp;333-75415 and
    333-75453)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 8.250%&nbsp;Senior
    Notes due 2007, dated as of March&nbsp;17, 1999, between Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit&nbsp;4.1(a) to Amendment
    No.&nbsp;2 to the registration statement on Form&nbsp;S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June&nbsp;22, 1999 (File
    No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 8.625%&nbsp;Senior
    Notes due 2009, dated as of March&nbsp;17, 1999, among Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit&nbsp;4.2(a) to Amendment
    No.&nbsp;2 to the registration statement on Form&nbsp;S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June&nbsp;22, 1999 (File
    No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 9.920%&nbsp;Senior
    Discount Notes due 2011, dated as of March&nbsp;17, 1999, among
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit&nbsp;4.3(a) to Amendment
    No.&nbsp;2 to the registration statement on Form&nbsp;S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June&nbsp;22, 1999 (File
    No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 10.00%&nbsp;Senior
    Notes due 2009, dated as of January&nbsp;12, 2000, between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit&nbsp;4.1(a) to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January&nbsp;25, 2000 (File
    No.&nbsp;333-95351)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 10.25%&nbsp;Senior
    Notes due 2010, dated as of January&nbsp;12, 2000, among Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit&nbsp;4.2(a) to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January&nbsp;25, 2000 (File
    No.&nbsp;333-95351)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 11.75%&nbsp;Senior
    Discount Notes due 2010, dated as of January&nbsp;12, 2000,
    among Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and Harris Trust and
    Savings Bank (Incorporated by reference to Exhibit&nbsp;4.3(a)
    to the registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January&nbsp;25, 2000 (File
    No.&nbsp;333-95351)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to 5.75%&nbsp;Convertible
    Senior Notes due 2005, dated as of October&nbsp;30, 2000, among
    Charter Communications, Inc. and BNY Midwest Trust Company as
    trustee (Incorporated by reference to Exhibit&nbsp;10.35 to the
    quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on November&nbsp;14, 2000 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of January&nbsp;10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 10.750%&nbsp;senior notes due
    2009 (Incorporated by reference to Exhibit&nbsp;4.2(a) to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February&nbsp;2, 2001 (File
    No.&nbsp;333-54902)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of January&nbsp;10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 11.125%&nbsp;senior notes due
    2011 (Incorporated by reference to Exhibit&nbsp;4.2(b) to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February&nbsp;2, 2001 (File
    No.&nbsp;333-54902)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of January&nbsp;10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 13.500%&nbsp;senior discount
    notes due 2011 (Incorporated by reference to Exhibit&nbsp;4.2(c)
    to the registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February&nbsp;2, 2001 (File
    No.&nbsp;333-54902)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.14(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of May&nbsp;15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 9.625%&nbsp;Senior Notes due 2009
    (Incorporated by reference to Exhibit&nbsp;10.2(a) to the
    current report on Form&nbsp;8-K filed by Charter Communications,
    Inc. on June&nbsp;1, 2001 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.14(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Supplemental Indenture dated as of
    January&nbsp;14, 2002 between Charter Communications Holdings,
    LLC, Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 9.625%&nbsp;Senior
    Notes due 2009 (Incorporated by reference to
    Exhibit&nbsp;10.2(a) to the current report on Form&nbsp;8-K
    filed by Charter Communications, Inc. on January&nbsp;15, 2002
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.14(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Supplemental Indenture dated as of
    June&nbsp;25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 9.625%&nbsp;Senior
    Notes due 2009 (Incorporated by reference to Exhibit&nbsp;4.1 to
    the quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on August&nbsp;6, 2002 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.15(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of May&nbsp;15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 10.000%&nbsp;Senior Notes due 2011
    (Incorporated by reference to Exhibit&nbsp;10.3(a) to the
    current report on Form&nbsp;8-K filed by Charter Communications,
    Inc. on June&nbsp;1, 2001 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.15(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Supplemental Indenture dated as of
    January&nbsp;14, 2002 between Charter Communications Holdings,
    LLC, Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 10.000%&nbsp;Senior
    Notes due 2011 (Incorporated by reference to
    Exhibit&nbsp;10.3(a) to the current report on Form&nbsp;8-K
    filed by Charter Communications, Inc. on January&nbsp;15, 2002
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.15(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Supplemental Indenture dated as of
    June&nbsp;25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 10.000%&nbsp;Senior
    Notes due 2011 (Incorporated by reference to Exhibit&nbsp;4.2 to
    the quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on August&nbsp;6, 2002 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of May&nbsp;15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 11.750%&nbsp;Senior Discount Notes due 2011
    (Incorporated by reference to Exhibit&nbsp;10.4(a) to the
    current report on Form&nbsp;8-K filed by Charter Communications,
    Inc. on June&nbsp;1, 2001 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated May&nbsp;30, 2001 between Charter
    Communications, Inc. and BNY Midwest Trust Company as Trustee
    governing 4.75%&nbsp;Convertible Senior Notes due 2006
    (Incorporated by reference to Exhibit&nbsp;4.1(b) to the current
    report on Form&nbsp;8-K filed by Charter Communications, Inc. on
    June&nbsp;1, 2001 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.18(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of January&nbsp;14, 2002
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 12.125%&nbsp;Senior Discount
    Notes due 2012 (Incorporated by reference to
    Exhibit&nbsp;10.4(a) to the current report on Form&nbsp;8-K
    filed by Charter Communications, Inc. on January&nbsp;15, 2002
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.18(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Supplemental Indenture dated as of
    June&nbsp;25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 12.125%&nbsp;Senior
    Discount Notes due 2012 (Incorporated by reference to
    Exhibit&nbsp;4.3 to the quarterly report on Form&nbsp;10-Q filed
    by Charter Communications, Inc. on August&nbsp;6, 2002 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.19(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">5.75% Mirror Note in the principal amount of
    $650&nbsp;million dated as of October&nbsp;30, 2000 made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit&nbsp;4.4(a) to the quarterly report on Form&nbsp;10-Q
    filed by Charter Communications, Inc. on August&nbsp;6, 2002
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.19(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">5.75% Mirror Note in the principal amount of
    $100&nbsp;million dated as of November&nbsp;3, 2000 made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit&nbsp;4.4(b) to the quarterly report on Form&nbsp;10-Q
    filed by Charter Communications, Inc. on August&nbsp;6, 2002
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">4.75% Mirror Note in the principal amount of
    $632.5&nbsp;million dated as of May&nbsp;30, 2001, made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit&nbsp;4.5 to the quarterly report on Form&nbsp;10-Q filed
    by Charter Communications, Inc. on August&nbsp;6, 2002 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 10.25%&nbsp;Senior
    Notes due 2010, dated as of September&nbsp;23, 2003, among
    CCH&nbsp;II, LLC, CCH&nbsp;II Capital Corporation and Wells
    Fargo Bank, National Association (Incorporated by reference to
    Exhibit&nbsp;10.1 to the current report on Form&nbsp;8-K of
    Charter Communications Inc. filed on September&nbsp;26, 2003
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Exchange and Registration Rights Agreement
    relating to 10.25%&nbsp;Senior Notes due 2010, dated as of
    September&nbsp;23, 2003, among CCH&nbsp;II, LLC, CCH&nbsp;II
    Capital Corp., and the purchasers set forth on the signature
    pages thereto (Incorporated by reference to Exhibit&nbsp;10.2 to
    the current report on Form&nbsp;8-K of Charter Communications,
    Inc. filed on September&nbsp;26, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">CCI Senior Notes&nbsp;Exchange Agreement, dated
    as of September&nbsp;18, 2003, by and between Charter
    Communications, Inc., CCH&nbsp;II, LLC and CCH&nbsp;II Capital
    Corp. (Incorporated by reference to Exhibit&nbsp;10.4 to Charter
    Communications, Inc.&#146;s current report on Form&nbsp;8-K
    filed on September&nbsp;26, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Holdings Senior Notes&nbsp;Exchange Agreement,
    dated as of September&nbsp;18, 2003, by CCH&nbsp;II, LLC and
    CCH&nbsp;II Capital Corp. (Incorporated by reference to
    Exhibit&nbsp;10.5 to Charter Communications, Inc.&#146;s current
    report on Form&nbsp;8-K filed on September&nbsp;26, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 8&nbsp;3/4%&nbsp;Senior
    Notes due 2013, dated as of November&nbsp;10, 2003, by and among
    CCO Holdings, LLC, CCO Holdings Capital Corp. and Wells Fargo
    Bank, N.A., as trustee (Incorporated by reference to
    Exhibit&nbsp;4.1 to Charter Communications, Inc.&#146;s current
    report on Form&nbsp;8-K filed on November&nbsp;12, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Exchange and Registration Rights Agreement, dated
    as of November&nbsp;10, 2003, by and between CCO Holdings, LLC
    and CCO&nbsp;Holdings Capital Corp. (Incorporated by reference
    to Exhibit&nbsp;4.2 to Charter Communications, Inc.&#146;s
    current report on Form&nbsp;8-K filed on November&nbsp;12, 2003
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 8%&nbsp;senior second
    lien notes due 2012 and 8&nbsp;3/8%&nbsp;senior second lien
    notes due 2014, dated as of April&nbsp;27, 2004, by and among
    Charter Communications Operating, LLC, Charter Communications
    Operating Capital Corp. and Wells Fargo Bank, N.A. as trustee
    (Incorporated by reference to Exhibit&nbsp;10.32 to Amendment
    No.&nbsp;2 to the registration statement on Form&nbsp;S-4 of
    CCH&nbsp;II, LLC filed on May&nbsp;5, 2004 (File
    No.&nbsp;333-111423)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture relating to the 5.875% convertible
    senior notes due 2009, dated as of November 2004, by and among
    Charter Communications, Inc. and Wells Fargo Bank, N.A. as
    trustee (Incorporated by reference to Exhibit 10.1 to the
    current report on Form&nbsp;8-K of Charter Communications, Inc.
    filed on November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">5.875% convertible senior notes due 2009 Resale
    Registration Rights Agreement, dated November&nbsp;22, 2004, by
    and among Charter Communications, Inc. and Citigroup Global
    Markets Inc. and Morgan Stanley and Co. Incorporated as
    representatives of the initial purchasers (Incorporated by
    reference to Exhibit&nbsp;10.2 to the current report on
    Form&nbsp;8-K of Charter Communications, Inc. filed on
    November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Share Loan Registration Rights Agreement, dated
    November&nbsp;22, 2004, by and between Charter Communications,
    Inc. and Citigroup Global Markets Inc. (Incorporated by
    reference to Exhibit&nbsp;10.3 to the current report on
    Form&nbsp;8-K of Charter Communications, Inc. filed on
    November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Collateral Pledge and Security Agreement, dated
    as of November&nbsp;22, 2004, by and between Charter
    Communications, Inc. and Wells Fargo Bank, N.A. as trustee and
    collateral agent (Incorporated by reference to Exhibit&nbsp;10.4
    to the current report on Form&nbsp;8-K of Charter
    Communications, Inc. filed on November&nbsp;30, 2004 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Collateral Pledge and Security Agreement, dated
    as of November&nbsp;22, 2004 among Charter Communications, Inc.,
    Charter Communications Holding Company, LLC and Wells Fargo
    Bank, N.A. as trustee and collateral agent (Incorporated by
    reference to Exhibit&nbsp;10.5 to the current report on
    Form&nbsp;8-K of Charter Communications, Inc. filed on
    November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Share Lending Agreement, dated as of
    November&nbsp;22, 2004 between Charter Communications, Inc.,
    Citigroup Global Markets Limited, through Citigroup Global
    Markets, Inc. (Incorporated by reference to Exhibit&nbsp;10.6 to
    the current report on Form&nbsp;8-K of Charter Communications,
    Inc. filed on November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Holdco Mirror Notes Agreement, dated as of
    November&nbsp;22, 2004, by and between Charter Communications,
    Inc. and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit&nbsp;10.7 to the current
    report on Form&nbsp;8-K of Charter Communications, Inc. filed on
    November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Unit Lending Agreement, dated as of
    November&nbsp;22, 2004, by and between Charter Communications,
    Inc. and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit&nbsp;10.8 to the current
    report on Form&nbsp;8-K of Charter Communications, Inc. filed on
    November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">5.875% Mirror Convertible Senior Note due 2009,
    in the principal amount of $862,500,000 dated as of
    November&nbsp;22, 2004 made by Charter Communications Holding
    Company, LLC, a Delaware limited liability company, in favor of
    Charter Communications, Inc., a Delaware limited liability
    company, in favor of Charter Communications, Inc., a Delaware
    corporation (Incorporated by reference to Exhibit&nbsp;10.9 to
    the current report on Form&nbsp;8-K of Charter Communications,
    Inc. filed on November&nbsp;30, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion regarding legality.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consulting Agreement, dated as of March&nbsp;10,
    1999, by and between Vulcan Northwest Inc., Charter
    Communications, Inc. (now called Charter Investment, Inc.) and
    Charter Communications Holdings, LLC (Incorporated by reference
    to Exhibit&nbsp;10.3 to Amendment No.&nbsp;4 to the registration
    statement on Form&nbsp;S-4 of Charter Communications Holdings,
    LLC and Charter Communications Holdings Capital Corporation
    filed on July&nbsp;22, 1999 (File No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter Agreement, dated September&nbsp;21, 1999,
    by and among Charter Communications, Inc., Charter Investment,
    Inc., Charter Communications Holding Company, Inc. and Vulcan
    Ventures Inc. (Incorporated by reference to Exhibit&nbsp;10.22
    to Amendment No.&nbsp;3 to the registration statement on
    Form&nbsp;S-1 of Charter Communications, Inc. filed on
    October&nbsp;18, 1999 (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amended and Restated Mutual Services
    Agreement, dated as of December&nbsp;21, 2000, by and between
    Charter Communications, Inc., Charter Investment, Inc. and
    Charter Communications Holding Company, LLC (Incorporated by
    reference to Exhibit&nbsp;10.2(b) to the registration statement
    on Form&nbsp;S-4 of Charter Communications Holdings, LLC and
    Charter Communications Holdings Capital Corporation filed on
    February&nbsp;2, 2001 (File No.&nbsp;333-54902)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter Agreement, dated June&nbsp;19, 2003, by
    and among Charter Communications, Inc., Charter Communications
    Holding Company, LLC and Charter Investment, Inc. regarding
    Mutual Services Agreement (Incorporated by reference to Exhibit
    No.&nbsp;10.5(b) to the quarterly report on Form&nbsp;10-Q filed
    by Charter Communications, Inc. on August&nbsp;5, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amended and Restated Mutual Services
    Agreement, dated as of June&nbsp;19, 2003 between Charter
    Communications, Inc. and Charter Communications Holding Company,
    LLC (Incorporated by reference to Exhibit&nbsp;10.5(a) to the
    quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on August&nbsp;5, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Management Agreement, dated as of
    November&nbsp;9, 1999, by and between Charter Communications
    Holding Company, LLC and Charter Communications, Inc.
    (Incorporated by reference to Exhibit&nbsp;10.2(d) to Amendment
    No.&nbsp;3 to the registration statement on Form&nbsp;S-1 of
    Charter Communications, Inc. filed on October&nbsp;18, 1999
    (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Management Agreement, dated
    as of June&nbsp;19, 2003, between Charter Communications
    Operating, LLC and Charter Communications, Inc. (Incorporated by
    reference to Exhibit&nbsp;10.4 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    August&nbsp;5, 2003 (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Management Agreement, dated as of
    November&nbsp;12, 1999, by and between CC VI Operating Company,
    LLC and Charter Communications, Inc. (Incorporated by reference
    to Exhibit&nbsp;10.2(d) to Amendment No.&nbsp;1 to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on April&nbsp;18, 2000 (File
    No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Management Agreement, dated as of
    November&nbsp;12, 1999 by and between Falcon Cable
    Communications, LLC and Charter Communications, Inc.
    (Incorporated by reference to Exhibit&nbsp;10.2(e) to Amendment
    No.&nbsp;1 to the registration statement on Form&nbsp;S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on April&nbsp;18, 2000 (File
    No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Exchange Agreement, dated as of
    November&nbsp;12, 1999 by and among Charter Investment, Inc.,
    Charter Communications, Inc., Vulcan Cable&nbsp;III Inc. and
    Paul G. Allen (Incorporated by reference to Exhibit&nbsp;10.13
    to Amendment No.&nbsp;3 to the registration statement on
    Form&nbsp;S-1 of Charter Communications, Inc. filed on
    October&nbsp;18, 1999 (File No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Exchange Agreement, dated as of February&nbsp;14,
    2000, by and among Charter Communications, Inc., BCI (USA), LLC,
    William&nbsp;J. Bresnan, Blackstone BC&nbsp;Capital Partners
    L.P., Blackstone&nbsp;BC Offshore Capital Partners&nbsp;L.P.,
    Blackstone Family Media, III L.P. (as assignee of Blackstone
    Family Investment&nbsp;III L.P.), TCID of Michigan, Inc., and
    TCI&nbsp;Bresnan LLC (Incorporated by reference to
    Exhibit&nbsp;10.40 to the current report on Form&nbsp;8-K of
    Charter Communications, Inc. filed on February&nbsp;29, 2000
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(a)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter Communications Holdings, LLC 1999 Option
    Plan (Incorporated by reference to Exhibit&nbsp;10.4 to
    Amendment No.&nbsp;4 to the registration statement on
    Form&nbsp;S-4 of Charter Communications Holdings, LLC and
    Charter Communications Holdings Capital Corporation filed on
    July&nbsp;22, 1999 (File No.&nbsp;333-77499)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(b)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Assumption Agreement regarding Option Plan, dated
    as of May&nbsp;25, 1999, by and between Charter Communications
    Holdings, LLC and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit&nbsp;10.13 to Amendment
    No.&nbsp;6 to the registration statement on Form&nbsp;S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on August&nbsp;27, 1999 (File
    No.&nbsp;333-77499
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(c)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Amendment No.&nbsp;1 to the Charter
    Communications Holdings, LLC 1999 Option Plan (Incorporated by
    reference to Exhibit&nbsp;10.10(c) to Amendment No.&nbsp;4 to
    the registration statement on Form&nbsp;S-1 of Charter
    Communications, Inc. filed on November&nbsp;1, 1999 (File
    No.&nbsp;333-83887)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(d)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;2 to the Charter
    Communications Holdings, LLC 1999 Option Plan (Incorporated by
    reference to Exhibit&nbsp;10.4(c) to the annual report on
    Form&nbsp;10-K filed by Charter Communications, Inc. on
    March&nbsp;30, 2000 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(e)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;3 to the Charter
    Communications 1999 Option Plan (Incorporated by reference to
    Exhibit&nbsp;10.14(e) to the annual report of Form&nbsp;10-K of
    Charter Communications, Inc. filed on March&nbsp;29, 2002 (File
    No.&nbsp;000-27927).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.10(f)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;4 to the Charter
    Communications 1999 Option Plan (Incorporated by reference to
    Exhibit&nbsp;10.10(f) to the annual report on Form&nbsp;10-K of
    Charter Communications, Inc. filed on April&nbsp;15, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(a)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charter Communications, Inc. 2001 Stock Incentive
    Plan (Incorporated by reference to Exhibit&nbsp;10.25 to the
    quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on May&nbsp;15, 2001 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(b) +</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;1 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit&nbsp;10.11(b) to the annual report on
    Form&nbsp;10-K of Charter Communications, Inc. filed on
    April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(c)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;2 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit&nbsp;10.10 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    November&nbsp;14, 2001 (File No.&nbsp;000-27927).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(d)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;3 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan effective
    January&nbsp;2, 2002 (Incorporated by reference to
    Exhibit&nbsp;10.15(c) to the annual report of Form&nbsp;10-K of
    Charter Communications, Inc. filed on March&nbsp;29, 2002 (File
    No.&nbsp;000-27927).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(e)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;4 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit&nbsp;10.11(e) to the annual report on
    Form&nbsp;10-K of Charter Communications, Inc. filed on
    April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(f)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment No.&nbsp;5 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit&nbsp;10.11(f) to the annual report on
    Form&nbsp;10-K of Charter Communications, Inc. filed on
    April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.11(g)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Description of Long-Term Incentive Program to the
    Charter Communications, Inc. 2001 Stock Incentive Plan
    (Incorporated by reference to Exhibit&nbsp;10.11 to the annual
    report on Form&nbsp;10-K filed by Charter Communications, Inc.
    on March&nbsp;15, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.12(a)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter Agreement, dated May&nbsp;25, 1999,
    between Charter Communications, Inc. and Marc Nathanson
    (Incorporated by reference to Exhibit&nbsp;10.36 to the
    registration statement on Form&nbsp;S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January&nbsp;25, 2000 (File
    No.&nbsp;333-95351)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.12(b)+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter Agreement, dated March&nbsp;27, 2000,
    between CC&nbsp;VII&nbsp;Holdings, LLC and Marc Nathanson,
    amending the Letter Agreement dated May&nbsp;25, 1999
    (Incorporated by reference to Exhibit&nbsp;10.13(b) to the
    annual report on Form&nbsp;10-K of Charter Communications, Inc.
    filed on April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.13+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement between Charter
    Communications, Inc. and Margaret&nbsp;A. &#147;Maggie&#148;
    Bellville, entered into as of April&nbsp;27, 2003 (Incorporated
    by reference to Exhibit&nbsp;10.1 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    November&nbsp;3, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.14+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement, dated as of October&nbsp;8,
    2001, by and between Carl E. Vogel and Charter Communications,
    Inc. (Incorporated by reference to Exhibit&nbsp;10.4 to the
    quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on November&nbsp;14, 2001 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.15+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement, dated as of October&nbsp;18
    2001, by and between Stephen E. Silva and Charter
    Communications, Inc. (Incorporated by reference to
    Exhibit&nbsp;10.5 to the quarterly report on Form&nbsp;10-Q
    filed by Charter Communications, Inc. on November&nbsp;14, 2001
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Credit Agreement among
    Charter Communications Operating, LLC, CCO Holdings, LLC and
    certain lenders and agents named therein dated April&nbsp;27,
    2004 (Incorporated by reference to Exhibit&nbsp;10.25 to
    Amendment No.&nbsp;2 to the registration statement on
    Form&nbsp;S-4 of CCH&nbsp;II, LLC filed on May&nbsp;5, 2004
    (File No.&nbsp;333-111423)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Limited Liability Company
    Agreement for Charter Communications Holding Company, LLC made
    as of August&nbsp;31, 2001 (Incorporated by reference to
    Exhibit&nbsp;10.9 to the quarterly report on Form&nbsp;10-Q
    filed by Charter Communications, Inc. on November&nbsp;14, 2001
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Limited Liability Company
    Agreement for CC&nbsp;VIII,&nbsp;LLC, dated as of March&nbsp;31,
    2003 (Incorporated by reference to Exhibit&nbsp;10.27 to the
    annual report on Form&nbsp;10-K of Charter Communications, Inc.
    filed on April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Limited Liability Company
    Agreement of Charter Communications Operating, LLC, dated as of
    June&nbsp;19, 2003 (Incorporated by reference to
    Exhibit&nbsp;No.&nbsp;10.2 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    August&nbsp;5, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-11
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.20(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Commitment letter, dated April&nbsp;14, 2003,
    from Vulcan Inc. to Charter Communications VII, LLC
    (Incorporated by reference to Exhibit&nbsp;No.&nbsp;10.28 to the
    annual report on Form&nbsp;10-K filed by Charter Communications,
    Inc. on April&nbsp;15, 2003 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.20(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter from Vulcan Inc. dated June&nbsp;30, 2003
    amending the Commitment Letter, dated April&nbsp;14, 2003
    (Incorporated by reference to Exhibit&nbsp;No.&nbsp;10.3(b) to
    the quarterly report on Form&nbsp;10-Q filed by Charter
    Communications, Inc. on August&nbsp;5, 2003 (File
    No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.20(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notice of Termination of Commitment, dated
    November&nbsp;14, 2003 (Incorporated by reference to
    Exhibit&nbsp;10.8(c) to the registration statement on
    Form&nbsp;S-4 of CCO&nbsp;Holdings, LLC filed on
    February&nbsp;6, 2004 (File No.&nbsp;333-112593)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.21+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Offer Letter, dated December&nbsp;2,
    2003 by and between Charter Communications, Inc. and Derek Chang
    (Incorporated by reference to Exhibit&nbsp;10.24 to the annual
    report on Form&nbsp;10-K filed by Charter Communications, Inc.
    on March&nbsp;15, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.22+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Offer Letter, dated December&nbsp;17,
    2003 by and between Charter Communications, Inc. and Michael
    Huseby (Incorporated by reference to Exhibit&nbsp;10.25 to the
    annual report on Form&nbsp;10-K filed by Charter Communications,
    Inc. on March&nbsp;15, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.23+</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Separation Agreement and Release for Margaret A.
    Bellville, dated as of September&nbsp;16, 2004 (Incorporated by
    reference to Exhibit&nbsp;10.1 to the quarterly report on
    Form&nbsp;10-Q filed by Charter Communications, Inc. on
    November&nbsp;4, 2004 (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter Agreement between Charter Communications,
    Inc. and Charter Investment Inc. and Vulcan Cable III Inc.
    amending the Amended and Restated Limited Liability Company
    Agreement of Charter Communications Holding Company, LLC, dated
    as of November&nbsp;22, 2004 (Incorporated by reference to
    Exhibit&nbsp;10.10 to the current report on Form&nbsp;8-K of
    Charter Communications, Inc. filed on November&nbsp;30, 2004
    (File No.&nbsp;000-27927)).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of Charter Communications, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of KPMG LLP
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Irell &#38; Manella LLP
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">24</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Power of Attorney (included on the signature page
    hereto).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">**&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment
    </FONT></TD>
</TR>

</TABLE>

<P align="left">

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;+&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Management compensatory plan or arrangement
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;17.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Undertakings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">The Undersigned Registrant Hereby Undertakes
That:</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;For purpose of determining any liability
    under the Securities Act of 1933, the information omitted from
    the form of prospectus filed as part of this registration
    statement in reliance upon Rule&nbsp;430A and contained in a
    form of prospectus filed by the registrant pursuant to
    Rule&nbsp;424(b)(2) or (4)&nbsp;or 497(h) under the Securities
    Act shall be deemed to be part of this registration statement as
    of the time it was declared effective
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;For the purpose of determining any
    liability under the Securities Act of 1933, each post-effective
    amendment that contains a form of prospectus shall be deemed to
    be a new registration statement relating to the securities
    offered therein, and the offering of such securities at that
    time shall be deemed to be the initial bona fide offering
    thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or
</FONT>

<P align="center"><FONT size="2">II-12
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
</FONT>
</DIV>

<P align="center"><FONT size="2">II-13
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration
statement on Form&nbsp;S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Denver,
State of Colorado, on December&nbsp;6,
2004&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">CHARTER COMMUNICATIONS, INC.,
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Registrant
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ CARL E. VOGEL
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Carl E. Vogel
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I><FONT size="2">President and Chief Executive
    Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Curtis S.
Shaw, with full power to act as his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to the registration statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting unto
said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed below
by the following persons in the capacities and on the dates
indicated.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ PAUL G. ALLEN<BR>
    <HR size="1" noshade>Paul G. Allen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chairman of the Board of Directors
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">December&nbsp;6, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ CARL E. VOGEL<BR>
    <HR size="1" noshade>Carl E. Vogel
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">President, Chief Executive Officer, Director
    (Principal Executive Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">December&nbsp;6, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ DEREK CHANG<BR>
    <HR size="1" noshade>Derek Chang
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Executive Vice President and Interim Co-Chief
    Financial Officer (Principal Financial Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">December&nbsp;6, 2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ PAUL E. MARTIN<BR>
    <HR size="1" noshade>Paul E. Martin
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Senior Vice President, Controller and Interim
    Co-Chief Financial Officer (Principal Accounting Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">December&nbsp;6, 2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-14
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
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<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ W. LANCE CONN<BR>
    <HR size="1" noshade>W. Lance Conn
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JONATHAN L. DOLGEN<BR>
    <HR size="1" noshade>Jonathan L. Dolgen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ CHARLES M. LILLIS<BR>
    <HR size="1" noshade>Charles M. Lillis
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ ROBERT P. MAY<BR>
    <HR size="1" noshade>Robert P. May
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ DAVID C. MERRITT<BR>
    <HR size="1" noshade>David C. Merritt
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ MARC B. NATHANSON<BR>
    <HR size="1" noshade>Marc B. Nathanson
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JO ALLEN PATTON<BR>
    <HR size="1" noshade>Jo Allen Patton
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JOHN H. TORY<BR>
    <HR size="1" noshade>John H. Tory
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ LARRY W. WANGBERG<BR>
    <HR size="1" noshade>Larry W. Wangberg
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;6,&nbsp;2004
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-15
</FONT>
</BODY>
</HTML>
[{"type": "S-1", "sequence": "1", "filename": "y69007sv1.htm", "description": "FORM S-1", "secsgml_size_bytes": 3163047}]
{"company-data": {"conformed-name": "CHARTER COMMUNICATIONS INC /MO/", "cik": "0001091667", "assigned-sic": "4841", "irs-number": "431857213", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-121136", "film-number": "041195408"}, "business-address": {"street1": "12405 POWERSCOURT DRIVE", "street2": "SUITE 100", "city": "ST LOUIS", "state": "MO", "zip": "63131", "phone": "3145435712"}, "mail-address": {"street1": "12405 POWERSCOURT DRIVE", "street2": "SUITE 100", "city": "ST LOUIS", "state": "MO", "zip": "63131"}}
FORM S-1
Table of Contents
As filed with the Securities and Exchange
Commission on December 10, 2004
Registration
No. 333-
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Charter Communications, Inc.
(Exact name of registrant as specified in its
Charter)
Delaware
4841
43-1857213
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
12405 POWERSCOURT DRIVE
ST. LOUIS, MISSOURI 63131
(314) 965-0555
(Address, including zip code, and telephone
number, including area code,
of registrant principal executive
offices)
Curtis S. Shaw, Esq.
Executive Vice President, General Counsel and
Secretary
12405 Powerscourt Drive
St. Louis, Missouri 63131
(314) 965-0555
(Name, address, including zip code, and
telephone number,
including area code, of agent for
service)
Copies to:
Alvin G. Segel, Esq.
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
(310) 277-1010
Jeremy W. Dickens
Brian A. Haskel
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
Approximate date of commencement of proposed
sale to the public:
As soon as
practicable after this Registration Statement becomes effective.
If any of the securities
being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following
box.
o
If this form is filed to
register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.
o
If this form is a
post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.
o
If this form is a
post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same
offering.
o
If delivery of the
prospectus is expected to be made pursuant to Rule 434,
please check the following
box.
o
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Title of Each Class of
Offering Price Per
Proposed Maximum
Amount of Registration
Securities to be Registered
Amount to be Registered
Unit(1)
Aggregate Offering Price
Fee
Class A Common Stock
150,000,000 shares
$2.15
$322,500,000
$40,861
(1)
Calculated pursuant to Rule 457(a) under the
    Securities Act of 1993, as amended, solely for purposes of
    calculating the registration fee.
The Registrant hereby
amends this Registration Statement on such date or dates as may
be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933,
as amended, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
Table of Contents
The information in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state or
jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED
DECEMBER 10, 2004
PROSPECTUS
150,000,000 Shares
Charter Communications, Inc.
Class A Common Stock
$                   per
share
The shares of our Class A common stock
offered hereby are shares that we will loan to Citigroup Global
Markets Limited, as borrower, through Citigroup Global Markets
Inc., as agent, pursuant to a share lending agreement.
Our Class A common stock is quoted on the Nasdaq
National Market under the symbol "CHTR." The last
reported sale price of our Class A common stock on the Nasdaq
National Market on December 7, 2004 was $2.13 per
share.
Investing in our Class A common stock involves risks.
See "Risk Factors" beginning on page 8.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
Per Share
Total
Public Offering Price
$
$
Under the share lending agreement, we will
receive a loan fee of $.001 for each share that we lend. We have
been advised by Citigroup Global Markets Limited that it, or its
affiliates, intend(s) to use the proceeds from the sales of the
shares of our Class A common stock offered pursuant to this
prospectus to facilitate transactions by which investors in our
5.875% convertible senior notes due 2009 issued on
November 22, 2004 will hedge their investments in the
5.875% convertible notes. See "Share Lending
Agreement" and "Underwriting" on pages 79
and 181, respectively, of this prospectus. We will not receive
any of the proceeds from the sale of the shares of Class A
common stock in this offering.
The underwriter expects to deliver the shares to
purchasers on or
about                     ,
2004.
Citigroup
,
2004
TABLE OF CONTENTS
Disclosure Regarding
    Forward-Looking Statements
i
Additional Information
ii
Summary
1
Risk Factors
8
Use of Proceeds
23
Price Range of Common Stock
    and Dividend Policy
24
Capitalization
25
Unaudited Pro Forma
    Financial Information
28
Selected Historical
    Consolidated Financial Data
35
Supplementary Quarterly
    Financial Data
37
Management's Discussion
    and Analysis of Financial Condition and Results of Operations
38
Business
79
Regulation and
    Legislation
99
Management
104
Security Ownership of
    Certain Beneficial Owners and Management
118
Certain Relationships and
    Related Transactions
121
Description of Certain
    Indebtedness
141
Description of Capital Stock
    and Membership Units
166
Shares Eligible for Future
    Sale
174
Certain United States Tax
    Considerations for Non-United States Holders
176
Share Lending Agreement
179
Underwriting
181
Legal Matters
182
Independent Auditors
182
EX-21.1 SUBSIDIARIES OF CHARTER COMMUNICATIONS, INC.
EX-23.1 CONSENT OF KPMG LLP
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus includes forward-looking
statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act,
regarding, among other things, our plans, strategies and
prospects, both business and financial. Although we believe that
our plans, intentions and expectations reflected in or suggested
by these forward-looking statements are reasonable, we cannot
assure you that we will achieve or realize these plans,
intentions or expectations. Forward-looking statements are
inherently subject to risks, uncertainties and assumptions. Many
of the forward-looking statements contained in this prospectus
may be identified by the use of forward-looking words such as
"believe," "expect," "anticipate,"
"should," "planned," "will,"
"may," "intend," "estimate" and
"potential," among others. Important factors that
could cause actual results to differ materially from the
forward-looking statements we make in this
i
Table of Contents
prospectus are set forth in this prospectus and
in other reports or documents that we file from time to time
with the Securities and Exchange Commission, or SEC, and
include, but are not limited to:
•
our ability to sustain and grow revenues and cash
    flows from operating activities by offering video, high-speed
    data, telephony and other services and to maintain a stable
    customer base, particularly in the face of increasingly
    aggressive competition from other service providers;
•
the availability of funds to meet interest
    payment obligations under our debt and to fund our operations
    and necessary capital expenditures, either through cash flows
    from operating activities, further borrowings or other sources;
•
our ability to comply with all covenants in our
    indentures and credit facilities, any violation of which would
    result in a violation of the applicable facility or indenture
    and could trigger a default of other obligations under
    cross-default provisions;
•
our ability to repay or refinance debt as it
    becomes due;
•
any adverse consequences arising out of our
    restatement of our 2000, 2001 and 2002 financial statements;
•
the results of the pending grand jury
    investigation by the United States Attorney's Office for
    the Eastern District of Missouri, and our ability to reach a
    final approved settlement with respect to the putative class
    action, the unconsolidated state action, and derivative
    shareholders litigation against us on the terms of the memoranda
    of understanding described herein;
•
our ability to obtain programming at reasonable
    prices or to pass programming cost increases on to our customers;
•
general business conditions, economic uncertainty
    or slowdown; and
•
the effects of governmental regulation, including
    but not limited to local franchise taxing authorities, on our
    business.
All forward-looking statements attributable to us
or any person acting on our behalf are expressly qualified in
their entirety by this cautionary statement.
ADDITIONAL INFORMATION
We have filed with the SEC a registration
statement on Form S-1 to register the sale of the
securities covered by this prospectus. This prospectus, which
forms part of that registration statement, does not contain all
the information included in the registration statement. For
further information about us and the securities described in
this prospectus, you should refer to the registration statement
and its exhibits.
Our Class A common stock is quoted on the
Nasdaq National Market under the symbol "CHTR." We
file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy at
prescribed rates any document we file at the SEC's public
reference rooms at Room 1200, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the
SEC's website at www.sec.gov.
ii
Table of Contents
SUMMARY
This summary contains a general discussion of our
business, and summary financial information. It does not contain
all the information that you should consider before making an
investment decision regarding our Class A common stock. For
a more complete understanding of an investment in our
Class A common stock, you should read this entire
prospectus. Unless otherwise noted, all business data in this
summary is as of September 30, 2004.
Unless otherwise stated, the discussion in
this prospectus of our business and operations includes the
business and operations of Charter Communications, Inc. and its
subsidiaries. Unless the context otherwise requires, the terms
"we," "us" and "our" refer to
Charter Communications, Inc. and its direct and indirect
subsidiaries on a consolidated basis. The term
"Charter" refers to the issuer, Charter Communication,
Inc.
Our Business
We are a broadband communications company
operating in the United States, with approximately
6.3 million customers at September 30, 2004. Through
our broadband network of coaxial and fiber optic cable, we offer
our customers traditional cable video programming (analog and
digital, which we refer to as "video" service),
high-speed cable Internet access (which we refer to as
"high-speed data service"), advanced broadband cable
services (such as video on demand ("VOD"), high
definition television service, and interactive television) and,
in some of our markets, we offer telephone service (which we
refer to as "telephony"). See
"Business — Products and Services" for
further description of these terms, including
"customers."
At September 30, 2004, we served
approximately 6.1 million analog video customers, of which
approximately 2.7 million were also digital video
customers. We also served approximately 1.8 million
high-speed data customers (including approximately 205,000 who
received only high-speed data services). We also provided
telephony service to approximately 40,000 customers as of that
date.
Our principal executive offices are located at
Charter Plaza, 12405 Powerscourt Drive, St. Louis,
Missouri 63131. Our telephone number is (314) 965-0555 and
we have a website accessible at www.charter.com. The information
posted or linked on our website is not part of this prospectus
and you should rely solely on the information contained in this
prospectus and the related documents to which we refer herein
when deciding to make an investment in our Class A common
stock.
Strategy
Our principal financial goal is to maximize our
return on invested capital. To do so, we will focus on
increasing revenues, growing our customer base, improving
customer retention and enhancing customer satisfaction by
providing reliable, high-quality service offerings, superior
customer service and attractive bundled offerings.
Specifically, in the near term, we are focusing
on:
•
refining our sales and marketing efforts to grow
    revenues through consistent branding initiatives, promoting our
    advanced services and emphasizing what we believe to be
    advantages over our competitors, including one-stop shopping for
    video, voice, high-speed data and interactive services;
•
enhancing our digital service with new content
    and continued deployment of advanced products such as digital
    video recorder ("DVR") service, high definition
    television service, VOD and subscription video on demand
    ("SVOD," VOD service for selected programming
    categories);
•
implementing what we believe is an attractive and
    competitive price point strategy for various levels and bundled
    packages;
•
improving customer service and satisfaction;
•
managing our operating costs by exercising
    discipline in capital and operational spending; and
1
Table of Contents
•
identifying opportunities to continue to improve
    our balance sheet and liquidity.
We believe that our high-speed data service will
continue to provide a substantial portion of our revenue growth
in the near future. We also plan to continue to expand our
marketing of high-speed data service to the business community,
which we believe has shown an increasing interest in high-speed
data service and private network services.
We believe we offer our customers an excellent
choice of services through a variety of bundled packages,
particularly with respect to our digital video and high-speed
data services. Our digital platform enables us to offer a
significant number and variety of channels, and we offer
customers the opportunity to choose among groups of channel
offerings, including premium channels, and to combine selected
programming with other services such as high-speed data, high
definition television (in selected markets) and VOD (in selected
markets).
We have reduced the number of our customer
contact centers from over 300 at December 31, 2000, to 36
at September 30, 2004. Our 14 largest customer contact
centers now serve approximately 95% of our customers. We
anticipate that this initiative will improve overall customer
satisfaction while reducing costs. We believe that consolidation
and standardization of call centers enable us to provide a more
consistent experience for our customers and to improve sales
through the use of better trained, more efficient and
sales-oriented customer service representatives.
We continue to pursue opportunities to improve
our balance sheet and liquidity. Our efforts in this regard have
resulted in the completion of a number of transactions since
September 2003, as follows:
•
the signing of an agreement providing for the
    issuance by our subsidiaries CCO Holdings, LLC and CCO Holdings
    Capital Corp. of $550 million of senior floating rate notes;
•
the recent sale of $862.5 million of 5.875%
    convertible senior notes due 2009;
•
the sale of non-core cable systems for
    $824 million, the proceeds of which we used to reduce our
    indebtedness;
•
the issuance by our subsidiaries, CCH II and
    Charter Holdings, of approximately $1.6 billion of senior
    notes which they exchanged in private transactions for
    approximately $1.9 billion of outstanding indebtedness of
    Charter and Charter Holdings, resulting in a $294 million
    reduction of our consolidated debt outstanding; and
•
the sale in April 2004 of $1.5 billion of
    senior second lien notes by our subsidiary, Charter
    Communications Operating, LLC ("Charter Operating"),
    together with the concurrent refinancing of its credit
    facilities.
Going forward, we plan to continue to identify
and pursue opportunities to improve our liquidity and reduce
indebtedness in order to enhance the long-term strength of our
balance sheet and our business.
Recent Events
Agreement to issue CCO Holdings, LLC
    senior floating rate notes
On December 1, 2004, our subsidiaries,
CCO Holdings, LLC and CCO Holdings
Capital Corp., agreed to issue and sell $550 million
senior floating rate notes due 2010 in a private
transaction to qualified institutional buyers in reliance on
Rule 144A and outside the United States to
non-U.S. persons in reliance on Regulation S. The
notes will have an annual interest rate of LIBOR
plus 4.125%, payable quarterly. The closing of the sale of
these notes is expected to occur on December 15, 2004, and
we anticipate that the net proceeds from the sale of the notes
will be used to pay down bank debt and for general corporate
purposes.
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Table of Contents
Sale of 5.875% Convertible Senior
    Notes
On November 22, 2004, we issued
$862.5 million original principal amount of 5.875%
Convertible Senior Notes due 2009, which are convertible into
shares of our Class A common stock, par value $.001 per
share, at a rate of 413.2231 shares per $1,000 principal amount
of notes (or approximately $2.42 per share), subject to
adjustment in certain circumstances. In connection with the
issuance of the notes, we agreed to file a registration
statement containing this prospectus and also file a shelf
registration statement covering resales of the notes and the
Class A common stock issuable upon conversion of the notes.
We agreed to use the proceeds from the sale of the notes to
redeem our outstanding 5.75% convertible senior notes due 2005.
That redemption is scheduled to be completed on
December 23, 2004.
For additional terms of the notes and the
arrangements governing the loan of shares of our Class A
common stock covered by this prospectus, see "Share Lending
Agreement" and "Description of Certain
Indebtedness — Outstanding Notes — Charter
Communications, Inc. Notes — 5.875% Convertible
Senior Notes due 2009."
The Offering
Total shares of Class A common stock offered by
    us hereby
150,000,000 shares
Approximate number of shares of Class A common
    stock to be outstanding after the offering
454,890,987 shares (including the 150,000,000
    shares offered hereby)
Nasdaq National Market Symbol
CHTR
The shares of our Class A common stock
offered hereby are shares that we have loaned to Citigroup
Global Markets Limited pursuant to a share lending agreement,
dated as of November 22, 2004, which we refer to as the
"share lending agreement." Under the share lending
agreement, we receive a loan fee of $.001 per share. We will not
receive any proceeds from this offering. See "Share Lending
Agreement" and "Underwriting."
Risk Factors
Investing in our Class A common stock involves
substantial risk. See the "Risk Factors" section of
this prospectus for a description of certain of the risks you
should consider before investing in our Class A common
stock.
3
Table of Contents
Organizational Structure
The chart below sets forth our organizational
structure and that of our principal direct and indirect
subsidiaries. The equity ownership, voting percentages and
indebtedness amounts shown below are approximations as of
September 30, 2004 on the pro forma basis described in
"Unaudited Pro Forma Financial Information" and do not
give effect to any exercise, conversion or exchange of then
outstanding options, preferred stock, convertible notes and
other convertible or exchangeable securities. See "—
Recent Events."
(1)
Charter acts as the sole manager of Charter
    Holdco and most of its limited liability company subsidiaries.
(2)
These membership units are held by Charter
    Investment, Inc. and Vulcan Cable III Inc., each of which
    is 100% owned by Paul G. Allen, our Chairman and controlling
    shareholder. They are exchangeable at any time on a one-for-one
    basis for shares of Charter Class A common stock.
(3)
Represents 100% of the preferred membership
    interests in CC VIII, LLC, a subsidiary of CC V
    Holdings, LLC. An issue has arisen regarding the ultimate
    ownership of such CC VIII, LLC membership interests
    following Mr. Allen's acquisition of those interests
    on June 6, 2003. See "Certain Relations and Related
    Transactions — Transactions Arising out of Our
    Organizational Structure and Mr. Allen's Investment in
    Charter Communications, Inc. and Its
    Subsidiaries — Equity Put
    Rights — CC VIII."
(4)
CC V Holdings, LLC, the issuer of
    $113 million accreted value of senior discount notes, is a
    direct wholly owned subsidiary of CCO NR Holdings,
    LLC, and holds 100% of the common membership units of
    CC VIII, LLC. Mr. Allen through Charter Investment,
    Inc. holds 100% of the preferred membership units in
    CC VIII, LLC. CC VIII, LLC holds 100% of the equity of
    CC VIII Operating, LLC, which in turn holds 100% of the
    equity of a number of operating subsidiaries. One such operating
    subsidiary (CC Michigan, LLC) is a guarantor of the
    CC V Holdings senior discount notes.
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Table of Contents
Summary Consolidated Financial Data
Charter is a holding company whose principal
assets are a controlling common equity interest in Charter
Communications Holding Company, LLC and "mirror" notes
that are payable by Charter Communications Holding Company, LLC
to Charter which have the same principal amount and terms as
those of Charter's convertible senior notes. Charter
Communications Holding Company, LLC is a holding company whose
primary assets are equity interests in our cable operating
subsidiaries and intercompany loan receivables. Charter
consolidates Charter Communications Holding Company, LLC on the
basis of voting control. Charter Communications Holding Company,
LLC's limited liability agreement provides that so long as
Charter's Class B common stock retains its special
voting rights, Charter will maintain 100% voting interest in
Charter Communications Holding Company, LLC. Voting control
gives Charter full authority and control over the operations of
Charter Communications Holding Company, LLC.
The following table presents summary financial
and other data for Charter and its subsidiaries and has been
derived from the audited consolidated financial statements of
Charter and its subsidiaries for the three years ended
December 31, 2003 and the unaudited consolidated financial
statements of Charter and its subsidiaries for the nine months
ended September 30, 2004. The consolidated financial
statements of Charter and its subsidiaries for the years ended
December 31, 2001 to 2003 have been audited by KPMG LLP, an
independent registered public accounting firm. The pro forma
data set forth below represent our unaudited pro forma
consolidated financial statements after giving effect to the
following transactions as if they occurred on January 1 of
the respective period for the statement of operations data and
other financial data and as of the last day of the respective
period for the operating data and balance sheet data:
(1) the disposition of certain assets in
    October 2003 and in March and April 2004 and the use of proceeds
    in each case to pay down credit facilities;
(2) the issuance and sale of the CCH II
    senior notes in September 2003, the CCO Holdings senior notes in
    November 2003, the CCO Holdings senior floating rate notes in
    December 2004 and the Charter Operating senior second lien notes
    in April 2004 with proceeds used to refinance or repay
    outstanding debt and for general corporate purposes;
(3) an increase in amounts outstanding under
    the Charter Operating credit facilities in April 2004 and the
    use of such funds, together with the proceeds of the sale of the
    Charter Operating senior second lien notes, to refinance amounts
    outstanding under the credit facilities of our subsidiaries, CC
    VI Operating, CC VIII Operating and Falcon;
(4) the issuance and sale of
    $863 million of 5.875% convertible senior notes in November
    2004 with proceeds used for (i) the purchase of certain
    U.S. government securities pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii) redemption of the outstanding 5.75% convertible senior
    notes due 2005, and (iii) general corporate purposes; and
(5) the issuance of the shares offered
    hereby pursuant to a share lending agreement.
The following information should be read in
conjunction with "Selected Historical Consolidated
Financial Data," "Capitalization,"
"Unaudited Pro Forma Financial Information,"
"Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Share Lending
Agreement" and the historical consolidated financial
statements and related notes included elsewhere in this
prospectus.
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Table of Contents
Nine Months Ended
Year Ended December 31,
September 30,
2001
2002
2003
2003
2004
2004
Actual
Actual
Actual
Pro Forma(a)
Actual
Pro Forma(a)
(Dollars in millions, except per share, share and customer data)
Statement of Operations Data:
Revenues:
Video
$
2,971
$
3,420
$
3,461
$
3,324
$
2,534
$
2,513
High-speed data
148
337
556
541
538
535
Advertising sales
197
302
263
255
205
204
Commercial
123
161
204
188
175
173
Other
368
346
335
322
249
247
Total revenues
3,807
4,566
4,819
4,630
(b)
3,701
3,672
(b)
Costs and Expenses:
Operating (excluding depreciation and
    amortization)
1,486
1,807
1,952
1,881
1,552
1,540
Selling, general and administrative
826
963
940
914
735
731
Depreciation and amortization
2,683
1,436
1,453
1,413
1,105
1,099
(Gain) loss on sale of assets, net
10
3
5
26
(104
)
1
Impairment of franchises
—
4,638
—
—
2,433
2,433
Option compensation expense (income), net
(5
)
5
4
4
34
34
Special charges, net
18
36
21
21
100
100
Unfavorable contracts and other settlements
—
—
(72
)
(72
)
—
—
Total costs and expenses
5,018
8,888
4,303
4,187
5,855
5,938
Income (loss) from operations
(1,211
)
(4,322
)
516
443
(2,154
)
(2,266
)
Interest expense, net
(1,310
)
(1,503
)
(1,557
)
(1,722
)
(1,227
)
(1,289
)
Gain (loss) on derivative instruments and hedging
    activities, net
(50
)
(115
)
65
65
48
48
Gain on debt exchange, net
—
—
267
—
—
—
Loss on debt to equity conversions
—
—
—
—
(23
)
(23
)
Loss on extinguishment of debt
—
—
—
—
(21
)
—
Loss on equity investments
(54
)
(3
)
(3
)
(3
)
—
—
Other, net
(5
)
(1
)
(13
)
(13
)
—
—
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(2,630
)
(5,944
)
(725
)
(1,230
)
(3,377
)
(3,530
)
Minority interest
1,461
3,176
377
377
24
24
Loss before income taxes and cumulative effect of
    accounting change
(1,169
)
(2,768
)
(348
)
(853
)
(3,353
)
(3,506
)
Income tax benefit
12
460
110
111
116
130
Loss before cumulative effect of accounting change
(1,157
)
(2,308
)
(238
)
(742
)
(3,237
)
(3,376
)
Cumulative effect of accounting change, net of tax
(10
)
(206
)
—
—
(765
)
(765
)
Net loss
(1,167
)
(2,514
)
(238
)
(742
)
(4,002
)
(4,141
)
Dividends on preferred stock —
    redeemable
(1
)
(3
)
(4
)
(4
)
(3
)
(3
)
Net loss applicable to common stock
$
(1,168
)
$
(2,517
)
$
(242
)
$
(746
)
$
(4,005
)
$
(4,144
)
Loss per common share, basic and diluted
$
(4.33
)
$
(8.55
)
$
(0.82
)
$
(2.53
)
$
(13.38
)
$
(13.84
)
Weighted-average common shares outstanding, basic
    and diluted
269,594,386
294,440,261
294,597,519
294,597,519
299,411,053
299,411,053
Other Financial Data:
Cash flows from operating activities
$
489
$
748
$
765
$
551
$
383
$
311
Cash flows from investing activities
$
(4,774
)
$
(2,363
)
$
(817
)
$
(885
)
$
50
$
(671
)
Cash flows from financing activities
$
4,156
$
1,934
$
(142
)
$
38
$
(431
)
$
381
Capital expenditures
$
2,913
$
2,167
$
854
$
835
$
639
$
637
Deficiencies of earnings to cover fixed charges(c)
$
2,630
$
5,944
$
725
$
1,230
$
3,377
$
3,530
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Table of Contents
December 31,
September 30,
2003
2003
2004
Actual
Pro Forma
Actual
Operating Data (end of period)(d):
Analog video customers
6,431,300
6,200,500
6,074,600
Digital video customers
2,671,900
2,588,600
2,688,900
Residential high-speed data customers
1,565,600
1,527,800
1,819,900
Telephony customers
24,900
24,900
40,200
Pro Forma
As of September 30,
2004
(Dollars in millions)
Balance Sheet Data (end of period):
Cash and cash equivalents
$
355
Total assets
17,515
Accounts payable and accrued expenses
1,311
Long-term debt
18,875
Other long-term liabilities
698
Minority interest(e)
637
Shareholders' deficit
(4,075
)
(a)
Actual revenues exceeded pro forma revenues for
    the year ended December 31, 2003 and the nine months ended
    September 30, 2004 by $189 million and
    $29 million, respectively. Pro forma net loss exceeded
    actual net loss by $504 million and $139 million for
    the year ended December 31, 2003 and the nine months ended
    September 30, 2004, respectively. The unaudited pro forma
    financial information required allocation of certain revenues
    and expenses and such information has been presented for
    comparative purposes and is not intended (a) to provide any
    indication of what our actual financial position or results of
    operations would have been had the transactions described above
    been completed on the dates indicated or (b) to project our
    results of operations for any future date.
(b)
Pro forma revenue by quarter is as follows:
2003
2004
Pro
Pro
Forma
Forma
Revenue
Revenue
(In millions)
1st Quarter
$
1,130
$
1,185
2nd Quarter
1,168
1,239
3rd Quarter
1,159
1,248
Total through September 30
3,457
$
3,672
4th Quarter 2003
1,173
Total 2003 pro forma revenue
$
4,630
(c)
Earnings include net loss plus fixed charges.
    Fixed charges consist of interest expense and an estimated
    interest component of rent expense.
(d)
See "Business — Products and
    Services" for definitions of the terms contained in this
    section.
(e)
Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, plus preferred membership interests in CC VIII,
    LLC, an indirect subsidiary of Charter Holdco. Paul G. Allen
    indirectly holds the preferred membership units in CC VIII
    as a result of the exercise of a put right originally granted in
    connection with the Bresnan transaction in 2000. An issue has
    arisen regarding the ultimate ownership of the CC VIII
    membership interests following the consummation of the Bresnan
    put transaction on June 6, 2003. See "Certain
    Relationships and Related Transactions — Transactions
    Arising Out of Our Organizational Structure and
    Mr. Allen's Investment in Charter and Its
    Subsidiaries — Equity Put Rights —
    CC VIII." Reported losses allocated to minority
    interest on the statement of operations are limited to the
    extent of any remaining minority interest on the balance sheet
    related to Charter Communications Holding Company, LLC. Because
    minority interest in Charter Communications Holding Company, LLC
    was substantially eliminated at December 31, 2003,
    beginning in the first quarter of 2004, Charter began to absorb
    substantially all losses before income taxes that otherwise
    would have been allocated to minority interest. As a result of
    negative equity at Charter Communications Holding Company, LLC,
    during the nine months ended September 30, 2004, no
    additional losses were allocated to minority interest, resulting
    in an approximate additional $2.0 billion of net losses.
    Subject to any changes in Charter Communications Holding
    Company, LLC's capital structure, Charter will absorb
    substantially all future losses.
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Table of Contents
RISK FACTORS
An investment in our Class A common stock
entails the following risks. You should carefully consider these
risk factors, as well as the other information contained in this
prospectus, before making a decision to invest in our
Class A common stock.
Risks Related to Significant Indebtedness of
Us and Our Subsidiaries
We and our subsidiaries have a significant
    amount of existing debt and may incur substantial additional
    debt in the future, which could adversely affect our financial
    health and our ability to react to changes in our
    business.
We and our subsidiaries have a significant amount
of debt and may (subject to applicable restrictions in their
debt instruments) incur additional debt in the future. As of
September 30, 2004, our total debt was approximately
$18.5 billion, and our shareholders' deficit was
approximately $4.1 billion. On the pro forma basis set
forth in "Summary Consolidated Financial Data", our
total debt would have been approximately $18.9 billion at
September 30, 2004, and the deficiency of earnings to cover
fixed charges for the nine-month period ended September 30,
2004 would have been approximately $3.5 billion. In 2006
and beyond, significant amounts will become due under our
remaining long-term debt obligations. The maturities of these
obligations are set forth in "Description of Certain
Indebtedness."
We believe that as a result of our significant
levels of debt and operating performance, our access to the debt
markets could be limited. If our business does not generate
sufficient cash flow from operating activities, and sufficient
funds are not available to us from borrowings under our credit
facilities or from other sources, we may not be able to repay
our debt, grow our business, respond to competitive challenges,
or to fund our other liquidity and capital needs. Further, if we
are unable to refinance our debt, we could be forced to
restructure our obligations or seek protection under the
bankruptcy laws. If we were to raise capital through the
issuance of additional equity or to engage in a recapitalization
or other similar transaction, our shareholders could suffer
significant dilution and our noteholders might not receive all
principal and interest payments to which they are contractually
entitled on a timely basis or at all.
Our significant amount of debt could have other
important consequences to you. For example, it will or could:
•
require us to dedicate a significant portion of
    our cash flow from operating activities to payments on our debt,
    which will reduce our funds available for working capital,
    capital expenditures and other general corporate expenses;
•
limit our flexibility in planning for, or
    reacting to, changes in our business, the cable and
    telecommunications industries and the economy at large;
•
place us at a disadvantage as compared to our
    competitors that have proportionately less debt;
•
make us vulnerable to interest rate increases,
    because a significant amount of our borrowings are, and will
    continue to be, at variable rates of interest;
•
expose us to increased interest expense as we
    refinance our existing lower interest rate instruments;
•
adversely affect our relationship with customers
    and suppliers;
•
limit our ability to borrow additional funds in
    the future; and
•
make it more difficult for us to satisfy our
    obligations to the holders of our notes and for our subsidiaries
    to satisfy their obligations to their lenders under their credit
    facilities and to their bondholders.
A default by one of our subsidiaries under its
debt obligations could result in the acceleration of those
obligations, the obligations of our other subsidiaries and our
obligations under our convertible notes. If current debt levels
increase, the related risks that we and you now face will
intensify.
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Table of Contents
The agreements and instruments governing
    our debt and the debt of our subsidiaries contain restrictions
    and limitations that could significantly affect our ability to
    operate our business and adversely affect you, as a
    shareholder.
The credit facilities of our subsidiaries and the
indentures governing our and our subsidiaries' other debt
contain a number of significant covenants that could adversely
affect our stockholders and our ability to operate our business.
These covenants restrict our and our subsidiaries' ability
to:
•
pay dividends or make other distributions;
•
receive distributions from our subsidiaries;
•
make certain investments or acquisitions;
•
enter into related party transactions;
•
dispose of assets or merge;
•
incur additional debt;
•
repurchase or redeem equity interests and debt;
•
grant liens; and
•
pledge assets.
Furthermore, the credit facilities of Charter
Communications Operating, LLC ("Charter Operating")
require Charter Operating and its subsidiaries to maintain
specified financial ratios and meet financial tests and to
provide audited financial statements with an unqualified opinion
from our independent auditors. The ability to comply with these
provisions may be affected by events beyond our control.
The breach of any covenants or obligations in the
foregoing indentures or credit facilities could result in a
default under the applicable debt agreement or instrument and
could trigger acceleration of the related debt, which in turn
could trigger defaults under other agreements governing our
long-term indebtedness. In addition, the secured lenders under
the Charter Operating credit facilities and the Charter
Operating senior second-lien notes could foreclose on their
collateral, which includes equity interests in our subsidiaries,
and exercise other rights of secured creditors. Any default
under those credit facilities, the indentures governing our
convertible notes or our subsidiaries' debt could adversely
affect our growth, our financial condition and our results of
operations. See "Description of Certain Indebtedness."
We may not generate sufficient cash flow to
    fund our capital expenditures, ongoing operations and debt
    obligations.
Our ability to service our debt and our
subsidiaries' debt and to fund our subsidiaries'
planned capital expenditures and our subsidiaries' ongoing
operations will depend on our ability to generate cash flow. Our
ability to generate cash flow is dependent on many factors,
including:
•
our future operating performance;
•
the demand for our products and services;
•
general economic conditions and conditions
    affecting customer and advertiser spending;
•
competition and our ability to stabilize customer
    losses; and
•
legal and regulatory factors affecting our
    business.
Some of these factors are beyond our control. If
we are unable to generate sufficient cash flow, we may not be
able to repay our debt, operate our business, respond to
competitive challenges or fund our other liquidity and capital
needs. This may also result in future impairments to the
franchises in our financial statements.
9
Table of Contents
Charter Operating may not be able to access
    funds under its credit facilities if it fails to satisfy the
    covenant restrictions in its credit facilities, which could
    adversely affect our financial condition and our ability to
    conduct our business.
Our subsidiaries have historically relied on
access to credit facilities in order to fund operations and to
service parent company debt, and we expect such reliance to
continue in the future. Unused availability under the Charter
Operating credit facilities was approximately $957 million
as of September 30, 2004. However, our access to these
funds is subject to our satisfaction of the covenants and
conditions to borrowing in those facilities.
An event of default under the credit facilities
or indentures, if not waived, could result in the acceleration
of those debt obligations and, consequently, other debt
obligations. Such acceleration could result in the exercise of
remedies by our creditors and could force us to seek the
protection of the bankruptcy laws, which could materially
adversely impact our ability to operate our business and to make
payments under our debt instruments. In addition, an event of
default under the credit facilities, such as the failure to
maintain the applicable required financial ratios, would prevent
additional borrowing under our subsidiary credit facilities,
which could materially adversely affect our ability to operate
our business and to make payments under our debt instruments.
We may not have the ability to raise the
    funds necessary to fulfill our obligations under our
    indebtedness following a change of control, which would place us
    in default under the applicable debt instruments.
We may not have the ability to raise the funds
necessary to fulfill our obligations under our convertible
senior notes and our subsidiaries' senior notes, senior
discount notes, senior floating rate notes and credit facilities
following a change of control. Under the indentures governing
our convertible senior notes, upon the occurrence of specified
change of control events, we are required to offer to repurchase
all of our outstanding convertible senior notes. However, we may
not have sufficient funds at the time of the change of control
event to make the required repurchase of our convertible senior
notes, and our subsidiaries are limited in their ability to make
distributions or other payments to us to fund any required
repurchase. In addition, a change of control under our
subsidiaries' credit facilities and indentures governing
our subsidiaries' notes would require the repayment of
borrowings under those credit facilities and indentures. Because
such credit facilities and notes are obligations of our
subsidiaries, the credit facilities and our subsidiaries'
notes would have to be repaid by our subsidiaries before their
assets could be available to us to repurchase our convertible
senior notes. Our failure to make or complete a change of
control offer would place us in default under our convertible
senior notes. The failure of our subsidiaries to make a change
of control offer or repay the amounts outstanding under their
credit facilities would place them in default of these
agreements and could result in a default under the indentures
governing our convertible senior notes.
Paul G. Allen and his affiliates are not
    obligated to purchase equity from, contribute to or loan funds
    to us or any of our subsidiaries in the future.
Paul G. Allen and his affiliates have purchased
equity, contributed funds and provided other financial support
to Charter and Charter Communications Holding Company, LLC
("Charter Holdco") in the past. However,
Mr. Allen and his affiliates are not obligated to purchase
equity from, contribute to or loan funds to us or any of our
subsidiaries in the future.
Risks Related to Our Business
We operate in a very competitive business
    environment, which affects our ability to attract and retain
    customers and can adversely affect our business and operations.
    We have lost a significant number of customers to direct
    broadcast satellite competition, and further loss of customers
    could have a material negative impact on our
    business.
The industry in which we operate is highly
competitive. In some instances, we compete against companies
with fewer regulatory burdens, easier access to financing,
greater personnel resources, greater
10
Table of Contents
brand name recognition and longer-established
relationships with regulatory authorities and customers.
Increasing consolidation in the cable industry and the repeal of
certain ownership rules may provide additional benefits to
certain of our competitors, either through access to financing,
resources or efficiencies of scale.
Our principal competitor for video services
throughout our territory is direct broadcast satellite
television services, or DBS, and, in markets where it is
available, our principal competitor for data services is digital
subscriber line service, or DSL. Competition from DBS, including
intensive marketing efforts, aggressive pricing and the ability
of DBS to provide certain services that we currently do not
provide, has had an adverse impact on our ability to retain
customers. Our major DBS competitors continue to offer a greater
variety of channel packages than do we, and are especially
competitive at the lower end pricing and have been intensively
marketing their services. DBS has grown rapidly over the last
several years and continues to do so. We have lost a significant
number of customers to DBS competition, and will continue to
face serious challenges from DBS providers.
Local telephone companies and electric utilities
can offer video and other services in competition with us and
they may increasingly do so in the future. For example, certain
telephone companies have begun more extensive deployment of
fiber in their networks that will enable them to begin providing
video services, as well as telephony and Internet access
services, to residential and business customers. We also face
competition from free broadcast television and from other
communications and entertainment media. Further loss of
customers to DBS or other alternative video and data services
could have a material negative impact on our business.
With respect to our high-speed data services, we
face competition, including intensive marketing efforts and
aggressive pricing, from telephone companies and other providers
of "dial-up" and DSL. DSL service is competitive with
high-speed data service over cable systems. Telephone companies
(which already have telephone lines into the household, an
existing customer base and other operational functions in place)
and other companies offer DSL service. In addition, certain DBS
providers are now providing two-way high-speed Internet access
services, which are competing with our ability to provide
bundled services to our customers.
In order to attract new customers, from time to
time we make promotional offers, including offers of temporarily
reduced-price or free service. These promotional programs result
in significant advertising, programming and operating expenses,
and also require us to make capital expenditures to acquire
additional digital set-top terminals. Customers who subscribe to
our services as a result of these offerings may not remain
customers for any significant period of time following the end
of the promotional period. A failure to retain existing
customers and customers added through promotional offerings or
to collect the amounts they owe us could have an adverse effect
on our business and financial results.
Mergers, joint ventures and alliances among
franchised, wireless or private cable operators, satellite
television providers, local exchange carriers and others, and
the repeal of certain ownership rules may provide additional
benefits to some of our competitors, either through access to
financing, resources or efficiencies of scale, or the ability to
provide multiple services in direct competition with us.
We cannot assure you that our cable systems will
allow us to compete effectively. Additionally, as we expand our
offerings to include other telecommunications services, and to
introduce new and enhanced services, we will be subject to
competition from other providers of the services we offer. We
cannot predict the extent to which competition may affect our
business and operations in the future.
Our dispute with Paul G. Allen concerning
    the ownership of an interest in CC VIII, LLC could adversely
    impact the value of our common stock, our ability to repay our
    debt and our ability to obtain future financing.
As part of our acquisition of the cable systems
owned by Bresnan Communications Company Limited Partnership in
February 2000, CC VIII, LLC, our indirect limited liability
company subsidiary, issued, after adjustments, 24,273,943
Class A preferred membership units (which we collectively
refer to as the
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CC VIII interest) with a value and an initial
capital account of approximately $630 million to certain
sellers affiliated with AT&T Broadband, subsequently owned
by Comcast Corporation (which we refer to as the Comcast
sellers). Our controlling shareholder, Paul G. Allen,
granted the Comcast sellers the right to sell to him the
CC VIII interest for approximately $630 million plus
4.5% interest annually from February 2000 (which we refer to as
the Comcast put right). In April 2002, the Comcast sellers
exercised the Comcast put right in full, and this transaction
was consummated on June 6, 2003. Accordingly,
Mr. Allen has become the holder of the CC VIII interest,
indirectly through an affiliate.
We are in a dispute with Mr. Allen as to
whether he is entitled to retain the CC VIII interest, or
whether he must exchange that interest for units of our
subsidiary, Charter Holdco. The dispute and related matters
(including certain issues associated with the ultimate
disposition of the interest in CC VIII) are more fully described
in "Certain Relationships and Related
Transactions — Transactions Arising out of Our
Organizational Structure and Mr. Allen's Investment in
Charter and Its Subsidiaries — Equity Put
Rights — CC VIII." If it is determined that
Mr. Allen is entitled to retain such an ownership interest,
then our indirect interest in CC VIII would continue not to
include the value of Mr. Allen's retained interest in
CC VIII. As a result, the amounts available for repayment
of our creditors, including creditors of our subsidiaries, may
be affected, and the value of our Class A common stock may
be adversely affected. Further, such retained interest in
CC VIII could adversely affect our borrowing capacity or
make it more difficult for us to secure financing for our
CC VIII subsidiary. In addition, in the event of the sale
of our CC VIII subsidiary or its assets, if it is
determined that Mr. Allen is entitled to retain such
preferred membership interest, then he would be entitled to
receive a portion of such proceeds and the amount available to
us and our security holders would not include
Mr. Allen's portion of these proceeds.
We are currently the subject of certain
    lawsuits, government investigations and other legal matters, the
    unfavorable outcome of which could adversely affect our business
    and financial condition.
A number of putative federal class action
lawsuits have been filed against us and certain of our former
and present officers and directors alleging violations of
securities laws. These actions have been consolidated for
pretrial purposes. In addition, a number of other lawsuits have
been filed against us in other jurisdictions. A shareholders
derivative suit was filed in the U.S. District Court for
the Eastern District of Missouri against us and our then current
directors. Also, three shareholders derivative suits were filed
in Missouri state court against us, our then current directors
and our former independent auditor, which actions have been
consolidated. The federal shareholders derivative suit and the
consolidated derivative suit each allege that the individual
defendants breached their fiduciary duties.
In August 2004, we entered into Memoranda of
Understanding setting forth agreements in principal to settle
and resolve the class actions and derivative suits described
above on the terms set forth in the Memoranda. The settlements
are subject to a number of conditions, including the
parties' negotiation and execution of definitive settlement
documents (including without limitation a stipulation of
settlement and related papers), court approval of both
settlements and certain payments by our insurance carriers.
Accordingly, there can be no assurance that the settlements will
become effective or that the actions will be resolved on the
terms set forth in the Memoranda or at all. In the event that
the settlements do not become final, the litigations would
presumably resume.
In August 2002, we became aware of a grand jury
investigation being conducted by the U.S. Attorney's
Office for the Eastern District of Missouri into certain of our
accounting and reporting practices focusing on how we reported
customer numbers, and our reporting of amounts received from
digital set-top terminal suppliers for advertising. The
U.S. Attorney's Office publicly stated in July 2003
that we are not a target of the investigation. We have also been
advised by the U.S. Attorney's Office that no member
of our board of directors, including our Chief Executive
Officer, is a target of the investigation. On July 24,
2003, a federal grand jury charged four of our former officers
with conspiracy and mail and wire fraud, alleging improper
accounting and reporting practices focusing on revenue from
digital set-top terminal suppliers and inflated customer account
numbers. On July 25, 2003, one of the former officers who
was indicted entered a guilty plea. The trial for the other
three former officers is scheduled to begin on February 7,
2005. We are fully cooperating with the investigation.
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On November 4, 2002, we received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January 23,
2003, and subsequently served document and testimony subpoenas
on us and a number of our former employees. The investigation
and subpoenas generally concerned our prior reports with respect
to our determination of the number of customers and various of
our accounting policies and practices including our
capitalization of certain expenses and dealings with certain
vendors, including programmers and digital set-top terminal
suppliers. On July 27, 2004, the SEC reached a final
agreement with us to settle the investigation. In the Settlement
Agreement and Cease and Desist Order, we agreed to entry of an
administrative order prohibiting any future violations of United
States securities laws and requiring certain other remedial
internal practices and public disclosures. We neither admitted
nor denied any wrongdoing, and the SEC assessed no fine against
us.
In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina state court purportedly on
behalf of a class of Charter Holdco's customers, alleging,
among other things, that Charter Holdco improperly charged them
a wire maintenance fee without request or permission. They also
claimed that Charter Holdco improperly required them to rent
analog and/or digital set-top terminals even though their
television sets were "cable ready." A substantively
identical case was filed in the Superior Court of
Athens — Clarke County, Georgia by Emma S. Tobar on
March 26, 2002, alleging a nationwide class for these
claims. Following mediation the parties reached a tentative
settlement, subject to final documentation and court approval.
On November 10, 2004, the court granted final approval of
the settlement, rejecting the positions advanced by two
objectors to the settlement. One of the objectors recently has
filed a similar, but not identical, lawsuit.
Furthermore, we are also a party to other, or
otherwise involved in other lawsuits, claims, proceedings and
legal matters that have arisen in the ordinary course of
conducting our business. In addition, our restatement of our
2000, 2001 and 2002 financial statements could lead to
additional or expanded claims or investigations.
We cannot predict with certainty the ultimate
outcome of any of the lawsuits, claims, investigations,
proceedings and other legal matters to which we are a party to,
or otherwise involved in, due to, among other things,
(i) the inherent uncertainties of litigation, government
investigations and proceedings and legal matters generally,
(ii) the remaining conditions to the finalization of the
settlements described above, (iii) the possibility of
appeals and objections to the settlements described above, and
(iv) the need for us to comply with, and/or otherwise
implement, certain covenants, conditions, undertakings,
procedures and other obligations that would be, or have been,
imposed under the terms of the settlements and resolutions
described above.
The termination of the settlements described
above, an unfavorable outcome in any of the lawsuits pending
against us, in any government investigation or proceeding or in
any other legal matter, including those described above, or our
failure to comply with or properly implement the terms of the
settlements described above, could result in substantial
potential liabilities and otherwise have a material adverse
effect on our business, consolidated financial condition and
results of operations, in our liquidity, our operations, and/or
our ability to comply with any debt covenants. Further, these
legal matters, and our actions in response to them, could result
in substantial potential liabilities, additional defense and
other costs, increase our indemnification obligations, divert
management's attention, and/or adversely affect our ability
to execute our business and financial strategies.
See "Business — Legal
Proceedings" for additional information concerning these
and other litigation matters.
We have a history of net losses and expect
    to continue to experience net losses. Consequently, we may not
    have the ability to finance future operations.
We have had a history of net losses and expect to
continue to report net losses for the foreseeable future. Our
net losses are principally attributable to insufficient revenue
to cover the interest costs we incur because of our high level
of debt, the depreciation expenses that we incur resulting from
the capital investments we have made in our cable properties,
and the amortization and impairment of our franchise
intangibles. We expect that these expenses (other than
amortization and impairment of franchises) will
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remain significant, and we expect to continue to
report net losses for the foreseeable future. We reported losses
before cumulative effect of accounting change of
$1.2 billion for 2001, $2.3 billion for 2002,
$238 million for 2003 and $181 million and
$3.2 billion for the nine months ended September 30,
2003 and 2004, respectively. Continued losses would reduce our
cash available from operations to service our indebtedness, as
well as limit our ability to finance our operations.
We may not have the ability to pass our
    increasing programming costs on to our customers, which would
    adversely affect our cash flow and operating
    margins.
Programming has been, and is expected to continue
to be, our largest operating expense item. In recent years, the
cable industry has experienced a rapid escalation in the cost of
programming, particularly sports programming. We expect this
escalation to continue, and because of market and competitive
factors, we may not be able to pass programming cost increases
on to our customers. As measured by programming costs, and
excluding premium services (substantially all of which were
renegotiated and renewed in 2003) as of September 30, 2004,
approximately 33% of our current programming contracts (computed
based on programming expenditures) have expired or are scheduled
to expire by the end of 2004, and approximately another 12% will
expire by the end of 2005. There can be no assurance that these
agreements will be renewed on favorable or comparable terms. The
inability to fully pass programming cost increases on to our
customers would have an adverse impact on our cash flow and
operating margins.
If our required capital expenditures exceed
    our projections, we may not have sufficient funding, which could
    adversely affect our growth, financial condition and results of
    operations.
During the nine months ended September 30,
2004, we spent approximately $639 million on capital
expenditures. During 2004 we expect to spend approximately
$850 million to $950 million on capital expenditures.
The actual amount of our capital expenditures depends on the
level of growth in high-speed data customers and in the delivery
of other advanced services, as well as the cost of introducing
any new services. We may need additional capital if there is
accelerated growth in high-speed data customers or in the
delivery of other advanced services. If we cannot obtain such
capital from increases in our cash flow from operating
activities, additional borrowings or other sources, our growth,
financial condition and results of operations could suffer
materially.
Our inability to respond to technological
    developments and meet customer demand for new products and
    services could limit our ability to compete
    effectively.
Our business is characterized by rapid
technological change and the introduction of new products and
services. We cannot assure you that we will be able to fund the
capital expenditures necessary to keep pace with unanticipated
technological developments, or that we will successfully
anticipate the demand of our customers for products and services
requiring new technology. Our inability to maintain and expand
our upgraded systems and provide advanced services in a timely
manner, or to anticipate the demands of the marketplace, could
materially adversely affect our ability to attract and retain
customers. Consequently, our growth, financial condition and
results of operations could suffer materially.
We may not be able to carry out our
    strategy to improve operating results by standardizing and
    streamlining operations and procedures.
In prior years, we experienced rapid growth
through acquisitions of a number of cable operators and the
rapid rebuild and rollout of advanced services. Our future
success will depend in part on our ability to standardize and
streamline our operations. The failure to implement a consistent
corporate culture and management, operating or financial systems
or procedures necessary to standardize and streamline our
operations and effectively operate our enterprise could have a
material adverse effect on our business, results of operations
and financial condition.
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The loss of any of our key executives could
    adversely affect our ability to manage our
    business.
Our success is substantially dependent upon the
retention and the continued performance of our key executives,
including Carl Vogel (President and Chief Executive Officer) and
Derek Chang (Executive Vice President of Finance and Strategy
and interim co-Chief Financial Officer). The loss of the
services of any of our key executives could adversely affect our
growth, financial condition and results of operations.
Malicious and abusive Internet practices
    could impair our high-speed data services.
Our high-speed data customers utilize our network
to access the Internet and, as a consequence, we or they may
become victim to common malicious and abusive Internet
activities, such as unsolicited mass advertising (or spam) and
dissemination of viruses, worms and other destructive or
disruptive software. These activities could have adverse
consequences on our network and our customers, including
degradation of service, excessive call volume to call centers
and damage to our or our customers' equipment and data.
Significant incidents could lead to customer dissatisfaction
and, ultimately, loss of customers or revenue, in addition to
increased costs to us to service our customers and protect our
network. Any significant loss of high-speed data customers or
revenue or significant increase in costs of serving those
customers could adversely affect our growth, financial condition
and results of operations.
We could be deemed an "investment
    company" under the Investment Company Act of 1940. This
    would impose significant restrictions on us and would be likely
    to have a material adverse impact on our growth, financial
    condition and results of operation.
Our principal assets are our equity interests in
Charter Holdco and certain indebtedness of Charter Holdco. If
our membership interest in Charter Holdco were to constitute
less than 50% of the voting securities issued by Charter Holdco,
then our interest in Charter Holdco could be deemed an
"investment security" for purposes of the Investment
Company Act. This may occur, for example, if a court determines
that the Class B common stock is no longer entitled to
special voting rights and, in accordance with the terms of the
Charter Holdco limited liability company agreement, our
membership units in Charter Holdco were to lose their special
voting privileges. A determination that such interest was an
investment security could cause us to be deemed to be an
investment company under the Investment Company Act, unless an
exemption from registration were available or we were to obtain
an order of the Securities and Exchange Commission excluding or
exempting us from registration under the Investment Company Act.
If anything were to happen which would cause us
to be deemed an investment company, the Investment Company Act
would impose significant restrictions on us, including severe
limitations on our ability to borrow money, to issue additional
capital stock and to transact business with affiliates. In
addition, because our operations are very different from those
of the typical registered investment company, regulation under
the Investment Company Act could affect us in other ways that
are extremely difficult to predict. In sum, if we were deemed to
be an investment company it could become impractical for us to
continue our business as currently conducted and our growth, our
financial condition and our results of operations could suffer
materially.
If a court determines that the Class B
    common stock is no longer entitled to special voting rights, we
    would lose our rights to manage Charter Holdco. In addition to
    the investment company risks discussed above, this could
    materially impact the value of the Class A common
    stock.
If a court determines that the Class B
common stock is no longer entitled to special voting rights,
Charter would no longer have a controlling voting interest in,
and would lose its right to manage, Charter Holdco. If this were
to occur:
•
we would retain our proportional equity interest
    in Charter Holdco but would lose all of our powers to direct the
    management and affairs of Charter Holdco and its subsidiaries;
    and
•
we would become strictly a passive investment
    vehicle and would be treated under the Investment Company Act as
    an investment company.
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This result, as well as the impact of being
treated under the Investment Company Act as an investment
company, could materially adversely impact:
•
the liquidity of the Class A common stock;
•
how the Class A common stock trades in the
    marketplace;
•
the price that purchasers would be willing to pay
    for the Class A common stock in a change of control
    transaction or otherwise; and
•
the market price of the Class A common stock.
Uncertainties that may arise with respect to the
nature of our management role and voting power and
organizational documents, including legal actions or proceedings
relating thereto, may also materially adversely impact the value
of the Class A common stock.
Risks Related to Mr. Allen's
Controlling Position
The failure by Mr. Allen to maintain a
    minimum voting and economic interest in us could trigger a
    change of control default under our subsidiary's credit
    facilities.
The Charter Operating credit facilities provide
that the failure by Mr. Allen to maintain a 35% direct or
indirect voting interest in the applicable borrower would result
in a change of control default. Such a default could result in
the acceleration of repayment of our and our subsidiaries'
indebtedness, including borrowings under the Charter Operating
credit facilities. See "— Risks Related to
Significant Indebtedness of Us and Our Subsidiaries —
We may not have the ability to raise the funds necessary to
fulfill our obligations under our indebtedness following a
change of control, which would place us in default under the
applicable debt instruments."
Mr. Allen controls our stockholder
    voting and may have interests that conflict with your
    interests.
Mr. Allen has the ability to control us.
Through his control of approximately 93% of the voting power of
our capital stock, Mr. Allen, as sole Class B
shareholder, is entitled to elect all but one of its board
members and effectively has the voting power to elect the
remaining board member as well since he controls more than the
majority of the vote of the Class A and Class B
shareholders voting together as a class. By virtue of
Mr. Allen's control of the voting power of the
Company, we are a "controlled company" under Nasdaq
rule 4350(c)(5) and are not subject to requirements that a
majority of our directors be "independent" (as defined
in Nasdaq's rules) or that there be a nominating committee
of Charter's board. The Company does not have a nominating
committee. Mr. Allen thus has the ability to control
fundamental corporate transactions requiring equity holder
approval, including, but not limited to, the election of all of
our directors, approval of merger transactions involving us and
the sale of all or substantially all of our assets.
Mr. Allen is not restricted from investing
in, and has invested and engaged in, other businesses involving
or related to the operation of cable television systems, video
programming, high-speed data service, telephony or business and
financial transactions conducted through broadband interactivity
and Internet services. Mr. Allen may also engage in other
businesses that compete or may in the future compete with us.
Mr. Allen's control over our management
and affairs could create conflicts of interest if he is faced
with decisions that could have different implications for him,
us and the holders of our Class A common stock. Further,
Mr. Allen could effectively cause us to enter into
contracts with another entity in which he owns an interest or to
decline a transaction into which he (or another entity in which
he owns an interest) ultimately enters.
Current and future agreements between us and
either Mr. Allen or his affiliates may not be the result of
arm's-length negotiations. Consequently, such agreements
may be less favorable to us than agreements that we could
otherwise have entered into with unaffiliated third parties.
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We are not permitted to engage in any
    business activity other than the cable transmission of video,
    audio and data unless Mr. Allen authorizes us to pursue
    that particular business activity, which could adversely affect
    our ability to offer new products and services outside of the
    cable transmission business and to enter into new businesses,
    and could adversely affect our growth, financial condition and
    results of operations.
Our certificate of incorporation and Charter
Holdco's limited liability company agreement provide that
Charter and Charter Holdco and its subsidiaries, cannot engage
in any business activity outside the cable transmission business
except for specified businesses. This will be the case unless we
first offer the opportunity to pursue the particular business
activity to Mr. Allen, he decides not to pursue it and he
consents to our engaging in the business activity. The cable
transmission business means the business of transmitting video,
audio (including telephone services), and data over cable
television systems owned, operated or managed by us from time to
time. These provisions may limit our ability to take advantage
of attractive business opportunities.
The loss of Mr. Allen's services
    could adversely affect our ability to manage our
    business.
Mr. Allen is Chairman of our board of
directors and provides strategic guidance and other services to
us. If we were to lose his services, our growth, financial
condition and results of operations could be adversely impacted.
The special tax allocation provisions of
    the Charter Holdco limited liability company agreement may cause
    us in some circumstances to pay more taxes than if the special
    tax allocation provisions were not in effect.
Charter Holdco's limited liability company
agreement provided that through the end of 2003, net tax losses
of Charter Holdco that would otherwise have been allocated to us
based generally on our percentage ownership of outstanding
common membership units of Charter Holdco would instead be
allocated to the membership units held by Vulcan Cable III
Inc. and Charter Investment, Inc. The purpose of these special
tax allocation provisions was to allow Mr. Allen to take
advantage for tax purposes of the losses generated by Charter
Holdco. However, beginning in 2002, due to tax capital account
limitations, certain net tax losses of Charter Holdco were
allocated to us and have continued to be so allocated since that
time. The limited liability company agreement further provides
that beginning at the time that Charter Holdco generates net tax
profits (as determined under the applicable federal income tax
rules for determining book profits), the net tax profits that
would otherwise have been allocated to us based generally on our
percentage of outstanding common membership units of Charter
Holdco will instead generally be allocated to membership units
held by Vulcan Cable III Inc. and Charter Investment, Inc.
In some situations, the special tax allocation provisions could
result in our having to pay taxes in an amount that is more or
less than if Charter Holdco losses and net tax profits to its
members based generally on the percentage of outstanding common
membership units owned by such members from the time of the
completion of the offering. See "Description of Capital
Stock and Membership Units — Special Tax Allocation
Provisions." For further discussions on the details of the
tax allocation provision see "Management's Discussion
and Analysis of Financial Condition and Results of
Operations — Critical Accounting Policies and
Estimates — Income Taxes."
The issuance of our Class A common
    stock offered hereby pursuant to the share lending agreement, as
    well as possible future conversions of our convertible notes,
    significantly increases the risk that we will experience an
    ownership change in the future for tax purposes, resulting in a
    material limitation on the use of a substantial amount of our
    existing net operating loss carryforwards.
As of December 31, 2003, we had
approximately $2.8 billion of tax net operating losses
(resulting in a gross deferred tax asset of approximately
$1.1 billion), expiring in the years 2019 through 2023 and
anticipate that we will generate approximately an additional
$2.0 billion (which would result in an additional gross
deferred tax asset of approximately $814 million) by
December 31, 2004, which would expire in 2024. Due to
uncertainties in projected future taxable income, valuation
allowances have been
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established against the gross deferred tax assets
for book accounting purposes except for deferred benefits
available to offset certain deferred tax liabilities. Currently,
such tax net operating losses can accumulate and be used to
offset any future taxable income of Charter. An "ownership
change" as defined in Section 382 of the Internal
Revenue Code of 1986, as amended, would place significant
limitations, on an annual basis, on the use of such net
operating losses to shelter any future taxable income we may
generate. Such limitations, in conjunction with the net
operating loss expiration provisions, could effectively
eliminate our ability to use a substantial portion of our net
operating losses to offset future taxable income. The shares
issued hereby are being issued pursuant to a share lending
agreement. See "Share Lending Agreement." While the
tax treatment of the issuance of shares offered hereby pursuant
to a borrowing transaction under the share lending agreement is
uncertain, we do not believe that this issuance would result in
our experiencing an ownership change. However, future
transactions and the timing of such transactions, such as
additional stock issuances by us (including but not limited to
issuances upon future conversion of our 5.875% convertible
senior notes), reacquisitions of the borrowed shares by us, or
acquisitions or sales of shares by certain holders of our
shares, including persons who have held, currently hold, or
accumulate in the future five percent or more of our outstanding
stock (including upon an exchange by Paul Allen or his
affiliates, directly or indirectly, of membership units of
Charter Holdco), could cause an ownership change. Many of the
foregoing transactions are beyond our control.
Risks Related to Regulatory and Legislative
Matters
Our business is subject to extensive
    governmental legislation and regulation, which could adversely
    affect our business by increasing our expenses.
Regulation of the cable industry has increased
cable operators' administrative and operational expenses
and limited their revenues. Cable operators are subject to,
among other things:
•
rules governing the provision of cable equipment
    and compatibility with new digital technologies;
•
rules and regulations relating to subscriber
    privacy;
•
limited rate regulation;
•
requirements that, under specified circumstances,
    a cable system carry a local broadcast station or obtain consent
    to carry a local or distant broadcast station;
•
rules for franchise renewals and
    transfers; and
•
other requirements covering a variety of
    operational areas such as equal employment opportunity,
    technical standards and customer service requirements.
Additionally, many aspects of these regulations
are currently the subject of judicial proceedings and
administrative or legislative proposals. There are also ongoing
efforts to amend or expand the federal, state and local
regulation of some of our cable systems, which may compound the
regulatory risks we already face. Certain states and localities
are considering new telecommunications taxes that could increase
operating expenses.
Our cable systems are operated under
    franchises that are subject to non-renewal or termination. The
    failure to renew a franchise in one or more key markets could
    adversely affect our business.
Our cable systems generally operate pursuant to
franchises, permits and similar authorizations issued by a state
or local governmental authority controlling the public
rights-of-way. Many franchises establish comprehensive
facilities and service requirements, as well as specific
customer service standards and monetary penalties for
non-compliance. In many cases, franchises are terminable if the
franchisee fails to comply with significant provisions set forth
in the franchise agreement governing system operations.
Franchises are generally granted for fixed terms and must be
periodically renewed. Local franchising authorities may resist
granting a renewal if either past performance or the prospective
operating proposal is considered inadequate. Franchise
authorities often demand concessions or other commitments as a
condition to renewal. In some instances, franchises have not
been renewed at expiration, and we have
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operated and are operating under either temporary
operating agreements or without a license while negotiating
renewal terms with the local franchising authorities.
Approximately 28% of our franchises, covering approximately 30%
of our video customers, have either expired or expire on or
before December 31, 2006.
We cannot assure you that we will be able to
comply with all significant provisions of our franchise
agreements and certain of our franchisors have from time to time
alleged that we have not complied with these agreements.
Additionally, although historically we have renewed our
franchises without incurring significant costs, we cannot assure
you that we will be able to renew, or to renew as favorably, our
franchises in the future. A termination of and/or a sustained
failure to renew a franchise in one or more key markets could
adversely affect our business in the affected geographic area.
Our cable systems are operated under
    franchises that are non-exclusive. Accordingly, local
    franchising authorities can grant additional franchises and
    create competition in market areas where none existed
    previously, resulting in overbuilds, which could adversely
    affect results of operations.
Our cable systems are operated under
non-exclusive franchises granted by local franchising
authorities. Consequently, local franchising authorities can
grant additional franchises to competitors in the same
geographic area or operate their own cable systems. As a result,
competing operators may build systems in areas in which we hold
franchises. In some cases municipal utilities may legally
compete with us without obtaining a franchise from the local
franchising authority. The existence of more than one cable
system operating in the same territory is referred to as an
overbuild. These overbuilds could adversely affect our growth,
financial condition and results of operations by creating or
increasing competition. As of September 30, 2004, we are
aware of overbuild situations impacting approximately 5% of our
estimated homes passed, and potential overbuild situations in
areas servicing approximately 2% of our estimated homes passed.
Additional overbuild situations may occur in other systems.
Local franchise authorities have the
    ability to impose additional regulatory constraints on our
    business, which could further increase our
    expenses.
In addition to the franchise agreement, cable
authorities in some jurisdictions have adopted cable regulatory
ordinances that further regulate the operation of cable systems.
This additional regulation increases the cost of operating our
business. We cannot assure you that the local franchising
authorities will not impose new and more restrictive
requirements. Local franchising authorities also have the power
to reduce rates and order refunds on the rates charged for basic
services.
Further regulation of the cable industry
    could cause us to delay or cancel service or programming
    enhancements or impair our ability to raise rates to cover our
    increasing costs, resulting in increased losses.
Currently, rate regulation is strictly limited to
the basic service tier and associated equipment and installation
activities. However, the Federal Communications Commission (or
FCC) and the U.S. Congress continue to be concerned that
cable rate increases are exceeding inflation. It is possible
that either the FCC or the U.S. Congress will again
restrict the ability of cable system operators to implement rate
increases. Should this occur, it would impede our ability to
raise our rates. If we are unable to raise our rates in response
to increasing costs, our losses would increase.
There has been considerable legislative interest
recently in requiring cable operators to offer historically
bundled programming services on an á la carte basis.
Although the FCC recently made a recommendation to Congress
against the á la carte mandate, it is still possible that
new marketing restrictions could be adopted in the future.
Actions by pole owners might subject us to
    significantly increased pole attachment costs.
Pole attachments are cable wires that are
attached to poles. Cable system attachments to public utility
poles historically have been regulated at the federal or state
level, generally resulting in favorable
19
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pole attachment rates for attachments used to
provide cable service. The FCC clarified that a cable
operator's favorable pole rates are not endangered by the
provision of Internet access, and that approach ultimately was
upheld by the Supreme Court of the United States, except that
subsequently on October 6, 2003, the United States Court of
Appeals for the Ninth Circuit held that cable modem service is
not "cable service" but is part
"telecommunications service" and part
"information service," which possibly could lead to
higher pole attachment rates. The Ninth Circuit's decision
has been appealed to the U.S. Supreme Court, which has
agreed to hear the case. Despite the existing regulatory regime,
utility pole owners in many areas are attempting to raise pole
attachment fees and impose additional costs on cable operators
and others. In addition, the favorable pole attachment rates
afforded cable operators under federal law can be increased by
utility companies if the operator provides telecommunications
services, as well as cable service, over plant attached to
utility poles. Any significant increased costs could have a
material adverse impact on our profitability and discourage
system upgrades and the introduction of new products and
services.
We may be required to provide access to our
    networks to other Internet service providers, which could
    significantly increase our competition and adversely affect our
    ability to provide new products and services.
A number of companies, including telephone
companies and Internet service providers, or ISPs, have
requested local authorities and the FCC to require cable
operators to provide non-discriminatory access to cable's
broadband infrastructure, which allows cable to deliver a
multitude of channels and/or services, so that these companies
may deliver Internet services directly to customers over cable
facilities. A federal court in each of California, Virginia and
Florida has struck down "open-access" requirements
imposed by a variety of franchising authorities as unlawful.
Each of these decisions struck down the "open-access"
requirements on different legal grounds. On October 6,
2003, however, the United States Court of Appeals for the Ninth
Circuit issued a decision holding that cable modem service is
part "telecommunications service" and part
"information service." The U.S. Supreme Court has
agreed to hear an appeal of that decision. If not overturned,
the decision could potentially result in "open access"
requirements being imposed on us.
We believe that allocating a portion of our
bandwidth capacity to other Internet service providers:
•
would impair our ability to use our bandwidth in
    ways that would generate maximum revenues; and
•
would strengthen our Internet service provider
    competitors by granting them access and lowering their costs to
    enter into our markets.
In addition, if we were required to provide
access in this manner, it could have a significant adverse
impact on our profitability. This requirement could impact us in
many ways, including by:
•
increasing competition;
•
increasing the expenses we incur to maintain our
    systems; and/or
•
increasing the expense of upgrading and/or
    expanding our systems.
Changes in channel carriage regulations
    could impose significant additional costs on us.
Cable operators also face significant regulation
of their channel carriage. They currently can be required to
devote substantial capacity to the carriage of programming that
they would not carry voluntarily, including certain local
broadcast signals, local public, educational and government
access programming, and unaffiliated commercial leased access
programming. This carriage burden could increase in the future,
particularly if the FCC were to require cable systems to carry
both the analog and digital versions of local broadcast signals.
The FCC currently is conducting a proceeding in which it is
considering this channel usage possibility, although it
previously issued a tentative decision against such dual
carriage.
20
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Offering voice communications service may
    subject us to additional regulatory burdens, causing us to incur
    additional costs.
In 2002, we began to offer voice communications
services on a limited basis over our broadband network. We
continue to explore development and deployment of VOIP services.
The regulatory requirements applicable to VOIP service are
unclear although the FCC recently declared that certain VOIP
services are not subject to traditional state public utility
regulation. The full extent of the FCC preemption of VOIP
services is not yet clear. Expanding our offering of these
services may require us to obtain certain authorizations,
including federal, state and local licenses. We may not be able
to obtain such authorizations in a timely manner, or at all, and
conditions could be imposed upon such licenses or authorizations
that may not be favorable to us. Furthermore, telecommunications
companies generally are subject to significant regulation, and
it may be difficult or costly for us to comply with such
regulations, were it to be determined that they applied to VOIP
offerings such as ours. In addition, pole attachment rates are
higher for providers of telecommunications services than for
providers of cable service. If there were to be a final legal
determination by the FCC, a state Public Utility Commission, or
appropriate court that VOIP services are subject to these higher
rates, our pole attachment costs could increase significantly,
which could adversely affect our financial condition and results
of operations.
Additional Risks Related to this
Offering
The market price of our Class A common
    stock may be volatile, which could cause the value of your
    investment to decline.
It is impossible to predict whether the price of
our Class A common stock will rise or fall. Trading prices
of our Class A common stock will be influenced by our
operating results and prospects and by economic, financial,
regulatory and other factors. In addition, general market
conditions, including the level of, and fluctuations in, the
trading prices of stocks generally, and sales of substantial
amounts of our Class A common stock by us in the market
after this offering, or the perception that such sales may
occur, could affect the price of our Class A common stock.
The price of our Class A common stock also
could be affected by any sales of our Class A common stock
by investors who view our recently issued
5.875% convertible senior notes as a more attractive means
of equity participation in our company and by hedging or
arbitrage trading activity that we expect to develop involving
our Class A common stock as a result of this offering and
the recent issuance of our convertible notes. The hedging or
arbitrage could, in turn, affect the trading prices of our
Class A common stock.
The market price of our Class A common
    stock could be adversely affected by the large number of
    additional shares of Class A common stock eligible for
    issuance in the future.
As of September 30, 2004,
304,803,455 shares of Class A common stock were issued
and outstanding, and 50,000 shares of Class B common
stock were issued and outstanding. An additional
339,132,031 shares of Class A common stock were
issuable upon conversion of outstanding units of Charter Holdco
(increasing by 24,273,943 shares if Mr. Allen is
required to contribute his CC VIII membership interest to
Charter Holdco), and 28,213,409 shares were issuable upon
the exercise of outstanding options. An additional
356 million shares are now issuable upon conversion of our
recently issued 5.875% convertible senior notes due 2009. In
addition, additional shares and warrants to acquire shares are
expected to be issued in connection with the settlement of
certain outstanding litigation matters, as more fully described
in "Business — Legal Proceedings." All of
the 339,132,031 shares of Class A common stock
issuable upon exchange of Charter Holdco membership units and
all shares of the Class A common stock issuable upon
conversion of shares of our Class B common stock will have
"demand" and/or "piggyback" registration
rights attached to them. All of the 356 million shares
issuable upon conversion of the 5.875% convertible senior notes
are expected to be eligible for resale pursuant to a shelf
registration statement. The sale of a substantial number of
shares of Class A common stock or the perception that such
sales could occur could adversely affect the market price for
the Class A common stock because the sale could cause the
amount of the Class A common stock available for sale in
the market to exceed the demand for the Class A common
21
Table of Contents
stock and could also make it more difficult for
us to sell equity securities or equity-related securities in the
future at a time and price that we deem appropriate. This could
adversely affect our ability to fund our current and future
obligations. See "Shares Eligible for Future Sale."
The effect of the issuance of our shares of
    Class A common stock pursuant to the share lending
    agreement and upon conversion of the recently issued 5.875%
    convertible notes, including sales of our Class A common
    stock in short sale transactions by the holders of the 5.875%
    convertible notes, may have a negative effect on the market
    price of our Class A common stock.
We have agreed pursuant to a share lending
agreement to lend to Citigroup Global Markets Limited the
150 million shares of our common stock that are being
offered pursuant to this prospectus. In addition, we recently
sold $862.5 million original aggregate principal amount of
5.875% convertible senior notes due 2009, which are currently
convertible into approximately 356 million shares of our
Class A common stock. We have been advised by Citigroup
Global Markets Limited that it or an affiliate intends to
facilitate the establishment by holders of those convertible
notes of hedged positions in the convertible notes. While
issuance of shares upon the conversion of the convertible notes
may require a reduction of an equal number in the outstanding
borrowed shares under the share lending agreement, the effect of
the increase in the number of shares of our Class A common
stock issued or issuable pursuant to the share lending agreement
or upon conversion of the 5.875% convertible senior notes
could have a negative effect on the market price of our
Class A common stock. The market price of our Class A
common stock also could be negatively affected by other short
sales of our Class A common stock by the purchasers of the
5.875% convertible senior notes to hedge their investment
in the convertible notes. See "Share Lending
Agreement" and "Underwriting."
22
Table of Contents
USE OF PROCEEDS
None of the proceeds from the sale of our
Class A common stock offered by this prospectus will be
received by us. However, pursuant to the share lending
agreement, we will receive a loan fee of $0.001 for each share
that we lend to Citigroup Global Markets Limited, which will be
used for general corporate purposes. See "Share Lending
Agreement."
23
Table of Contents
PRICE RANGE OF COMMON STOCK AND DIVIDEND
POLICY
Our Class A common stock is quoted on the
Nasdaq National Market under the symbol "CHTR." The
following table sets forth, for the periods indicated, the range
of high and low last reported sale price per share of
Class A common stock on the Nasdaq National Market. There
is no established trading market for our Class B common
stock.
2004
High
Low
First Quarter
$
5.43
$
3.99
Second Quarter
$
4.70
$
3.61
Third Quarter
$
3.90
$
2.61
Fourth Quarter through December 8
$
3.01
$
2.08
2003
High
Low
First Quarter
$
1.73
$
0.76
Second Quarter
$
4.18
$
0.94
Third Quarter
$
5.50
$
3.32
Fourth Quarter
$
4.71
$
3.72
2002
High
Low
First Quarter
$
16.85
$
9.10
Second Quarter
$
11.53
$
2.96
Third Quarter
$
4.65
$
1.81
Fourth Quarter
$
2.27
$
0.76
As of October 31, 2004, there were 3,785
holders of record of our Class A common stock, one holder
of our Class B common stock, and 13 holders of record of
our Series A Convertible Redeemable Preferred Stock.
The last reported sale price of our Class A
common stock on the Nasdaq National Market on December 7,
2004 was $2.13 per share.
We have never paid and do not expect to pay any
cash dividends on our Class A common stock in the
foreseeable future. Charter Holdco is required under certain
circumstances to pay distributions pro rata to all its common
members to the extent necessary for any common member to pay
taxes incurred with respect to its share of taxable income
attributed to Charter Holdco. Covenants in the indentures and
credit agreements governing the debt of our subsidiaries
restrict their ability to make distributions to us and,
accordingly, limit our ability to declare or pay cash dividends.
We intend to cause Charter Holdco and its subsidiaries to retain
future earnings, if any, to finance the operation of the
business of Charter Holdco and its subsidiaries.
24
Table of Contents
CAPITALIZATION
The following table sets forth as of
September 30, 2004, on a consolidated basis:
•
the actual (historical) capitalization of
    Charter;
•
The capitalization of Charter, on a pro forma
    basis to reflect the sale by CCO Holdings, LLC of
    $550 million of senior floating rate notes due 2010 with
    the net proceeds used to repay borrowings under Charter
    Communications Operating, LLC's revolving credit facility
    and for general corporate purposes;
•
the capitalization of Charter, on a pro forma as
    adjusted basis to reflect:
(1)
the issuance and sale of $863 million of
    5.875% convertible senior notes in November 2004 and the
    use of the proceeds for (i) purchase of certain U.S.
    government securities which were pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii) redemption of outstanding 5.75% convertible
    senior notes due 2005 and (iii) general corporate purposes;
    and
(2)
the issuance of the shares offered hereby
    pursuant to a share lending agreement.
The following information should be read in
conjunction with "Selected Historical Consolidated
Financial Data," "Unaudited Pro Forma Financial
Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and the historical consolidated financial statements and related
notes included elsewhere in this prospectus.
As of September 30, 2004
Pro Forma
Actual
Pro Forma
as adjusted
(Dollars in millions)
Cash and cash equivalents
$
129
$
266
$
355
Long-term debt:
Charter Communications, Inc.:
5.875% convertible senior notes due 2009(a)
$
—
—
$
829
5.75% convertible senior notes due 2005
588
588
—
4.75% convertible senior notes due 2006
156
156
156
Charter Holdings:
Senior and senior discount notes(b)
8,517
8,517
8,517
CCH II:
10.250% senior notes due 2010
1,601
1,601
1,601
CCO Holdings:
8 3/4% senior notes due 2013
500
500
500
Senior floating rate notes due 2010
—
550
550
Charter Operating:
8.000% senior second lien notes
1,100
1,100
1,100
8.375% senior second lien notes
400
400
400
Renaissance:
10.00% senior discount notes due 2008
116
116
116
CC V Holdings:
11.875% senior discount notes due 2008
113
113
113
Credit facilities:
Charter Operating(c)
5,393
4,993
4,993
Total long-term debt
18,484
18,634
18,875
Preferred stock —
    redeemable(d)
55
55
55
Minority interest(e)
637
637
637
Shareholders' deficit:
Class A common stock; $.001 par value;
    1.75 billion shares authorized; 304,803,455, 304,803,455
    and 454,803,455 shares issued and outstanding,
    respectively(f)
—
—
—
Class B common stock; $.001 par value;
    750 million shares authorized; 50,000 shares issued
    and outstanding
—
—
—
Preferred stock; $.001 par value;
    250 million shares
—
—
—
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As of September 30, 2004
Pro Forma
Actual
Pro Forma
as adjusted
(Dollars in millions)
Additional paid-in-capital
4,783
4,783
4,796
Accumulated deficit
(8,856
)
(8,856
)
(8,862
)
Accumulated other comprehensive income
(9
)
(9
)
(9
)
Total shareholders' deficit
(4,082
)
(4,082
)
(4,075
)
Total capitalization
$
15,094
$
15,244
$
15,492
(a)
Represents issuance and sale of the 5.875%
    convertible senior notes. This assumes proceeds of
    $863 million of which $33 million, related to certain
    provisions of the 5.875% convertible senior notes that for
    accounting purposes were derivatives which required bifurcation,
    is based on preliminary estimates and is recorded as accounts
    payable and accrued expenses and other long-term liabilities,
    and may differ as a result of finalization of an independent
    valuation, with the resulting long-term debt of
    $829 million. The debt will accrete from the
    $829 million to the $863 million face value over three
    years, the duration of our pledged securities.
As of September 30, 2004
Pro Forma
Actual
Pro Forma
as adjusted
(Dollars in millions)
(b)
Represents the following Charter Holdings notes:
8.250% senior notes due 2007
$
451
$
451
$
451
8.625% senior notes due 2009
1,242
1,242
1,242
9.920% senior discount notes due 2011
1,108
1,108
1,108
10.000% senior notes due 2009
640
640
640
10.250% senior notes due 2010
318
318
318
11.750% senior discount notes due 2010
435
435
435
10.750% senior notes due 2009
874
874
874
11.125% senior notes due 2011
500
500
500
13.500% senior discount notes due 2011
571
571
571
9.625% senior notes due 2009
638
638
638
10.000% senior notes due 2011
708
708
708
11.750% senior discount notes due 2011
780
780
780
12.125% senior discount notes due 2012
252
252
252
Total
$
8,517
$
8,517
$
8,517
(c)
The amounts outstanding under the Charter
    Operating credit facilities as of September 30, 2004
    totaled $5.4 billion. Borrowing availability under the
    credit facilities totaled $957 million as of
    September 30, 2004, none of which was restricted due to
    covenants.
(d)
In connection with Charter's acquisition of
    Cable USA, Inc. and certain cable system assets from affiliates
    of Cable USA, Inc., Charter issued 545,259 shares of
    Series A Convertible Redeemable Preferred Stock valued at
    and with a liquidation preference of $55 million. Holders
    of the preferred stock have no voting rights but are entitled to
    receive cumulative cash dividends at an annual rate of 5.75%,
    payable quarterly. The preferred stock is redeemable by Charter
    at its option on or after August 31, 2004 and must be
    redeemed by Charter at any time upon a change of control, or if
    not previously redeemed or converted, on August 31, 2008.
    The preferred stock is convertible, in whole or in part, at the
    option of the holders from April 1, 2002 through
    August 31, 2008, into shares of Class A common stock
    at an initial conversion rate equal to a conversion price of
    $24.71 per share of Class A common stock, subject to
    certain customary adjustments.
(e)
Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, or approximately 53% of total members' equity of
    Charter Communications Holding Company, LLC, plus
    $650 million of preferred membership interests in CC VIII,
    LLC, an indirect subsidiary of Charter Communications Holding
    Company, LLC. Paul G. Allen indirectly holds the preferred
    membership units in CC VIII as a result of the exercise of put
    rights originally granted in connection with the Bresnan
    transaction in 2000. An issue has arisen regarding the ultimate
26
Table of Contents
ownership of the CC VIII membership interests
    following the consummation of the Bresnan put transaction on
    June 6, 2003. See "Certain Relationships and Related
    Transactions — Transactions Arising Out of Our
    Organizational Structure and Mr. Allen's Investment in
    Charter and its Subsidiaries — Equity Put
    Rights — CC VIII". Reported losses allocated to
    minority interest on the statement of operations are limited to
    the extent of any remaining minority interest on the balance
    sheet related to Charter Communications Holding Company, LLC.
    Because minority interest in Charter Communications Holding
    Company, LLC was substantially eliminated at December 31,
    2003, beginning in the first quarter of 2004, Charter began to
    absorb substantially all losses before income taxes that
    otherwise would have been allocated to minority interest.
    Subject to any changes in Charter Communications Holding
    Company, LLC's capital structure, Charter will absorb
    substantially all future losses.
(f)
Although the shares offered by this prospectus
    will be considered issued and outstanding, we do not expect they
    will impact earnings per share under current accounting
    literature. See "Share Lending Agreement."
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Table of Contents
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS
The following unaudited pro forma consolidated
financial statements are based on the historical consolidated
financial statements of Charter, adjusted on a pro forma basis
to reflect the following transactions as if they had occurred on
September 30, 2004 (for the unaudited pro forma
consolidated balance sheet) and on January 1, 2003 (for the
unaudited pro forma consolidated statement of operations):
(1) the disposition of certain assets in
    October 2003 and in March and April 2004 and the use of proceeds
    in each case to pay down credit facilities;
(2) the issuance and sale of the CCH II
    senior notes in September 2003, the CCO Holdings senior notes in
    November 2003, the CCO Holdings senior floating rate notes in
    December 2004 and the Charter Operating senior second lien notes
    in April 2004 with proceeds used to refinance or repay
    outstanding debt and for general corporate purposes;
(3) an increase in amounts outstanding under
    the Charter Operating credit facilities in April 2004 and the
    use of such funds, together with the proceeds of the sale of the
    Charter Operating senior second lien notes, to refinance amounts
    outstanding under the credit facilities of our subsidiaries,
    CC VI Operating, CC VIII Operating and Falcon;
(4) the issuance and sale of
    $863 million of 5.875% convertible senior notes in November
    2004 with proceeds used for (i) the purchase of certain
    U.S. government securities pledged as security for the
    5.875% convertible senior notes (and which we expect to use to
    fund the first six interest payments thereon),
    (ii) redemption of outstanding 5.75% convertible senior
    notes due 2005, and (iii) general corporate
    purposes; and
(5) the issuance of the shares offered
    hereby pursuant to a share lending agreement. See "Share
    Lending Agreement."
The unaudited pro forma adjustments are based on
information available to us as of the date of this prospectus
and certain assumptions that we believe are reasonable under the
circumstances. The Unaudited Pro Forma Consolidated Financial
Statements required allocation of certain revenues and expenses
and such information has been presented for comparative purposes
and is not intended (a) to provide any indication of what
our actual financial position or results of operations would
have been had the transactions described above been completed on
the dates indicated or (b) to project our results of
operations for any future date.
28
Table of Contents
CHARTER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS
For the Year Ended December 31,
2003
Asset
Financing
Offering
Dispositions
Transactions
Adjustments
Historical
(Note A)
(Note B)
Subtotal
(Note C)
Pro Forma
(Dollars in millions, except per share and share data)
Revenues
Video
$
3,461
$
(137
)
$
—
$
3,324
$
—
$
3,324
High-speed data
556
(15
)
—
541
—
541
Advertising sales
263
(8
)
—
255
—
255
Commercial
204
(16
)
—
188
—
188
Other
335
(13
)
—
322
—
322
Total revenues
4,819
(189
)
—
4,630
—
4,630
Costs and Expenses:
Operating(excluding depreciation and amortization)
1,952
(71
)
—
1,881
—
1,881
Selling, general and administrative
940
(26
)
—
914
—
914
Depreciation and amortization
1,453
(40
)
—
1,413
—
1,413
Loss on sale of assets, net
5
21
—
26
—
26
Option compensation expense, net
4
—
—
4
—
4
Special charges, net
21
—
—
21
—
21
Unfavorable contracts and other adjustments
(72
)
—
—
(72
)
—
(72
)
4,303
(116
)
—
4,187
—
4,187
Income (loss) from operations
516
(73
)
—
443
—
443
Interest expense, net
(1,557
)
27
(174
)
(1,704
)
(18
)
(1,722
)
Gain on derivative instruments and hedging
    activities, net
65
—
—
65
—
65
Gain on debt exchange, net
267
—
(267
)
—
—
—
Loss on equity investments
(3
)
—
—
(3
)
—
(3
)
Other, net
(13
)
—
—
(13
)
—
(13
)
(1,241
)
27
(441
)
(1,655
)
(18
)
(1,673
)
Loss before minority interest and income taxes
(725
)
(46
)
(441
)
(1,212
)
(18
)
(1,230
)
Minority interest
377
—
—
377
—
377
Loss before income taxes
(348
)
(46
)
(441
)
(835
)
(18
)
(853
)
Income tax benefit
110
1
—
111
—
111
Net loss
(238
)
$
(45
)
$
(441
)
$
(724
)
$
(18
)
(742
)
Dividends on preferred stock —
    redeemable
(4
)
(4
)
Net loss applicable to common stock
$
(242
)
$
(746
)
Loss per common share, basic and diluted
$
(0.82
)
$
(2.53
)
Weighted average common shares outstanding, basic
    and diluted
294,597,519
294,597,519
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Note A:
Represents the elimination of operating results related to the
disposition of certain assets in October 2003 and in March and
April 2004 and a reduction of interest expense related to the
use of the net proceeds from such sales to repay a portion of
our subsidiaries' credit facilities.
Note B:
Represents adjustment to interest expense associated with the
completion of the financing transactions discussed in pro forma
assumptions two and three (in millions):
Interest in the Charter Operating senior second
    lien notes and the amended and restated Charter Operating credit
    facilities at a weighted average rate of 5.1%
$
340
Interest on CCH II 10.25% senior notes
123
Interest on CCO Holdings 8 3/4% senior
    notes
38
Interest on CCO Holdings senior floating rate
    notes
36
Amortization of deferred financing costs
27
Less:
Historical interest expense for Charter Operating
    credit facilities and on subsidiary credit facilities repaid
(253
)
Historical interest expense for CCI and CCH
    senior and senior discount notes repaid with proceeds from
    CCH II refinancing
(117
)
Interest expense for Charter Operatings'
    revolving credit facility repaid with proceeds from issuance of
    the CCO Holdings senior floating rate notes
(20
)
Net increase in interest expense for other
    financing transactions
$
174
Net gain on debt exchange represents the
elimination of the gain realized on the purchase of an aggregate
of $609 million principal amount of our convertible senior
notes and $1.3 billion principal amount of Charter
Communications Holdings, LLC's senior notes and senior
discount notes in consideration for an aggregate of
$1.6 billion principal amount of 10.25% notes due 2010
issued by CCH II, LLC. The gain is net of the write-off of
deferred financing costs associated with the retired debt of
$27 million.
Note C:
Represents the increase in interest expense from the issuance of
$863 million of convertible senior notes due 2009 with a
stated interest rate of 5.875% and the amortization of deferred
debt issuance cost associated with such issuance reduced by the
use of proceeds to retire $588 million of the 5.75%
convertible senior notes due in 2005 and the interest on the
$144 million of securities purchased and pledged as
security for interest payments on such debt (in millions):
Interest on the convertible senior notes issued
    in November 2004
$
51
Amortization of deferred debt issuance costs(a)
4
Less interest from the pledged securities
(3
)
Less interest on 5.75% convertible senior
    notes retired with proceeds
(34
)
Pro forma interest expense adjustment
$
18
(a)
The adjustment related to the amortization of
    deferred financing cost is based on preliminary information
    available at this time and is subject to change based on
    finalization of an independent valuation and on finalization of
    the amount of financing costs to be deferred.
30
Table of Contents
CHARTER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS
For the Nine Months Ended September 30,
2004
Asset
Financing
Offering
Dispositions
Transactions
Adjustments
Historical
(Note A)
(Note B)
Subtotal
(Note C)
Pro Forma
(Dollars in millions, except per share and share data)
Revenues
Video
$
2,534
$
(21
)
$
—
$
2,513
$
—
$
2,513
High-speed data
538
(3
)
—
535
—
535
Advertising
205
(1
)
—
204
—
204
Commercial
175
(2
)
—
173
—
173
Other
249
(2
)
—
247
—
247
Total
3,701
(29
)
—
3,672
—
3,672
Costs and Expenses
Operating (excluding depreciation and
    amortization)
1,552
(12
)
—
1,540
—
1,540
Selling, general and administrative
735
(4
)
—
731
—
731
Depreciation and amortization
1,105
(6
)
—
1,099
—
1,099
Impairments of franchises
2,433
—
—
2,433
—
2,433
Gain (loss) on sale of assets, net
(104
)
105
—
1
—
1
Option compensation expense, net
34
—
—
34
—
34
Special charges, net
100
—
—
100
—
100
5,855
83
—
5,938
—
5,938
Loss from operations
(2,154
)
(112
)
—
(2,266
)
—
(2,266
)
Interest expense, net
(1,227
)
4
(52
)
(1,275
)
(14
)
(1,289
)
Gain on derivative instruments and hedging
    activities, net
48
—
—
48
—
48
Loss on debt to equity conversions
(23
)
—
—
(23
)
—
(23
)
Loss on extinguishment of debt
(21
)
—
21
—
—
—
(1,223
)
4
(31
)
(1,250
)
(14
)
(1,264
)
Loss before minority interest, income taxes, and
    cumulative effect of accounting change
(3,377
)
(108
)
(31
)
(3,516
)
(14
)
(3,530
)
Minority interest
24
—
—
24
—
24
Loss before income taxes and cumulative effect of
    accounting change
(3,353
)
(108
)
(31
)
(3,492
)
(14
)
(3,506
)
Income tax benefit
116
14
—
130
—
130
Loss before cumulative effect of accounting change
(3,237
)
(94
)
(31
)
(3,362
)
(14
)
(3,376
)
Cumulative effect of accounting change, net of tax
(765
)
—
—
(765
)
—
(765
)
Net loss
(4,002
)
(94
)
(31
)
(4,127
)
(14
)
(4,141
)
Dividends on preferred stock —
    redeemable
(3
)
—
—
(3
)
—
(3
)
Net loss applicable to common stock
$
(4,005
)
$
(94
)
$
(31
)
$
(4,130
)
$
(14
)
$
(4,144
)
Loss per common share, basic and diluted
$
(13.38
)
$
(13.84
)
Weighted average common shares outstanding, basic
    and diluted
299,411,053
299,411,053
31
Table of Contents
Note A:
Represents the elimination of operating results related to the
disposition of certain assets in March and April 2004 and a
reduction of interest expense related to the use of the net
proceeds from such sales to repay a portion of our
subsidiaries' credit facilities.
Note B:
Represents adjustment to interest expense associated with the
completion of the financing transactions discussed in pro forma
assumptions two and three (in millions):
Interest on the Charter Operating senior second
    lien notes and the amended and restated Charter Operating credit
    facilities at a weighted average rate of 4.9%
$
114
Interest on CCO Holdings senior floating rate
    notes
27
Amortization of deferred financing costs
9
Less:
Historical interest expense for Charter Operating
    credit facilities and on subsidiary credit facilities repaid
(83
)
Interest expense for Charter Operating's
    revolving credit facility repaid with proceeds from issuance of
    the CCO Holdings senior floating rate notes
(15
)
Net increase in interest expense for other
    financing transactions
$
52
Loss on extinguishment of debt represents the
elimination of the write-off of deferred financing fees and
third party costs related to the Charter Operating refinancing
in April 2004.
Note C:
Represents the increase in interest expense from the issuance of
$863 million of convertible senior notes due 2009 with a
stated interest rate of 5.875% and the amortization of deferred
debt issuance cost associated with such issuance reduced by the
use of proceeds to retire $588 million of the 5.75%
convertible senior notes due in 2005 and the interest on the
$144 million of securities purchased and pledged as
security for interest payments on such debt (in millions):
Interest on the convertible senior notes issued
    in November 2004
$
38
Amortization of deferred debt issuance costs(a)
3
Less interest from the pledged securities
(2
)
Less interest on 5.75% convertible senior
    notes retired with proceeds
(25
)
Pro forma interest expense adjustment
$
14
(a)
The adjustment related to the amortization of
    deferred financing cost is based on preliminary information
    available at this time and is subject to change based on
    finalization of the amount of financing costs to be deferred.
32
Table of Contents
CHARTER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE
SHEET
As of September 30, 2004
Financing
Offering
Transactions
Adjustments
Historical
(Note A)
Subtotal
(Note B)
Pro Forma
(Dollars in millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
129
$
137
$
266
$
89
$
355
Accounts receivable, net
186
—
186
—
186
Receivables from related party
—
—
—
—
—
Prepaid expenses and other current assets
30
—
30
48
78
Total current assets
345
137
482
137
619
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net
6,415
—
6,415
—
6,415
Franchises, net
9,885
—
9,885
—
9,885
Total investment in cable properties, net
16,300
—
16,300
—
16,300
OTHER NONCURRENT ASSETS
439
13
452
144
596
Total assets
$
17,084
$
150
$
17,234
$
281
$
17,515
LIABILITIES AND SHAREHOLDERS'
    DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses
$
1,301
$
—
$
1,301
$
10
1,311
Total current liabilities
1,301
—
1,301
10
1,311
LONG-TERM DEBT
18,484
150
18,634
241
18,875
DEFERRED MANAGEMENT FEES — RELATED PARTY
14
—
14
—
14
OTHER LONG-TERM LIABILITIES
675
—
675
23
698
MINORITY INTEREST
637
—
637
—
637
PREFERRED STOCK-REDEEMABLE
55
—
55
—
55
SHAREHOLDERS' DEFICIT:
Class A common stock
—
—
—
—
—
Class B common stock
—
—
—
—
—
Preferred stock
—
—
—
—
—
Additional paid-in capital
4,783
—
4,783
13
4,796
Accumulated deficit
(8,856
)
—
(8,856
)
(6
)
(8,862
)
Accumulated other comprehensive loss
(9
)
—
(9
)
—
(9
)
Total shareholders' deficit
(4,082
)
—
(4,082
)
7
(4,075
)
Total liabilities and shareholders' deficit
$
17,084
$
150
$
17,234
$
281
$
17,515
33
Table of Contents
Note A:
Financing transactions represent the issuance in December 2004
of $550 million of senior floating rate notes by CCO
Holdings with proceeds used for (i) repayment of
$400 million under Charter Operatings' revolving
credit facility, (ii) payment of financing costs and
(iii) general corporate purposes. The amount of financing
costs deferred is based on preliminary information regarding
actual expenses. Sources and uses are as follows (in millions):
Source of funds:
Issuance of senior floating rate notes due 2010
$
550
Total sources
$
550
Uses of funds:
Repay Charter Operatings' revolving credit
    facility
$
400
Payment of financing costs
13
General corporate purposes
137
Total uses
$
550
Note
B:
Offering adjustments
include the issuance and sale of approximately $863 million
of convertible senior notes with proceeds used (i) to
purchase approximately $144 million of securities, which
are pledged as security for interest payments on such debt,
(ii) to call, at 101.15%, the outstanding 5.75% convertible
senior notes due 2005, (iii) to pay financing cost and
(iv) for general corporate purposes. The short-term portion
of the pledged securities is recorded on our unaudited pro forma
consolidated balance sheet in prepaid expenses and other current
assets, while the long-term portion is recorded in other assets.
Certain provisions of the 5.875% convertible senior notes
with a fair value of $33 million for accounting purposes
are considered derivatives and require bifurcation. These
derivatives are preliminary estimates and may differ based on
finalization of independent valuations and have been bifurcated
from the long-term debt, with the short-term portion recorded as
accounts payable and accrued expenses and the long-term portion
recorded as other long-term liabilities on the unaudited pro
forma consolidated balance sheet. Additionally, the fair market
value of the stock borrow arrangement of approximately
$13 million was recorded as deferred financing cost (other
noncurrent assets) and additional paid in capital on the
unaudited consolidated balance sheet. The amount of financing
costs deferred is based on preliminary information available at
this time and is subject to adjustment based on final
information regarding actual expenses. Sources and uses are as
follows (in millions):
Sources of funds:
Issuance of 5.875% convertible senior notes due
    2009
$
863
Total sources
$
863
Uses of funds:
Redeem 5.75% convertible senior notes due 2005
$
595
Purchase pledged securities
144
Payment of financing cost
35
General corporate purposes
89
Total uses
$
863
34
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA
The following table presents summary financial
and other data for Charter and its subsidiaries and has been
derived from (i) the audited consolidated financial
statements of Charter and its subsidiaries for the four years
ended December 31, 2003, (ii) the unaudited
consolidated financial statements of Charter and its
subsidiaries for the year ended December 31, 1999, and
(iii) the unaudited consolidated financial statements of
Charter and its subsidiaries for the nine months ended
September 30, 2003 and 2004. The consolidated financial
statements of Charter and its subsidiaries for the years ended
December 31, 2000 to 2003 have been audited by KPMG LLP, an
independent registered public accounting firm. The following
information should be read in conjunction with
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical
consolidated financial statements and related notes included
elsewhere in this prospectus.
Nine Months Ended
Year Ended December 31,
September 30,
1999
2000
2001
2002
2003
2003
2004
(Dollars in millions, except share and per share amounts)
Statement of Operations Data:
Revenues
$
1,428
$
3,141
$
3,807
$
4,566
$
4,819
$
3,602
$
3,701
Costs and Expenses:
Operating (excluding depreciation and
    amortization)
460
1,187
1,486
1,807
1,952
1,457
1,552
Selling, general and administrative
329
606
826
963
940
702
735
Depreciation and amortization
745
2,398
2,683
1,436
1,453
1,095
1,105
(Gain) loss on sale of assets, net
—
—
10
3
5
23
(104
)
Impairment of franchises
—
—
—
4,638
—
—
2,433
Option compensation expense (income), net
80
38
(5
)
5
4
1
34
Special charges, net
—
—
18
36
21
18
100
Unfavorable contracts and other settlements
—
—
—
—
(72
)
—
—
1,614
4,229
5,018
8,888
4,303
3,296
5,855
Income (loss) from operations
(186
)
(1,088
)
(1,211
)
(4,322
)
516
306
(2,154
)
Interest expense, net
(444
)
(1,040
)
(1,310
)
(1,503
)
(1,557
)
(1,163
)
(1,227
)
Gain (loss) on derivative instruments and hedging
    activities, net
—
—
(50
)
(115
)
65
35
48
Gain on debt exchange, net
—
—
—
—
267
267
—
Loss on debt to equity conversions
—
—
—
—
—
—
(23
)
Loss on extinguishment of debt
—
—
—
—
—
—
(21
)
Loss on equity investments
—
(19
)
(54
)
(3
)
(3
)
(3
)
—
Other, net
(8
)
(1
)
(5
)
(1
)
(13
)
(6
)
—
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(638
)
(2,148
)
(2,630
)
(5,944
)
(725
)
(564
)
(3,377
)
Minority interest
573
1,280
1,461
3,176
377
297
24
Loss before income taxes and cumulative effect of
    accounting change
(65
)
(868
)
(1,169
)
(2,768
)
(348
)
(267
)
(3,353
)
Income tax benefit (expense)
(1
)
10
12
460
110
86
116
Loss before cumulative effect of accounting change
(66
)
(858
)
(1,157
)
(2,308
)
(238
)
(181
)
(3,237
)
Cumulative effect of accounting change, net of tax
—
—
(10
)
(206
)
—
—
(765
)
35
Table of Contents
Nine Months Ended
Year Ended December 31,
September 30,
1999
2000
2001
2002
2003
2003
2004
(Dollars in millions, except share and per share amounts)
Net loss
(66
)
(858
)
(1,167
)
(2,514
)
(238
)
(181
)
(4,002
)
Dividends on preferred stock —
    redeemable
—
—
(1
)
(3
)
(4
)
(3
)
(3
)
Net loss applicable to common stock
$
(66
)
$
(858
)
$
(1,168
)
$
(2,517
)
$
(242
)
$
(184
)
$
(4,005
)
Loss per common share, basic and diluted
$
(2.22
)
$
(3.80
)
$
(4.33
)
$
(8.55
)
$
(0.82
)
$
(0.62
)
$
(13.38
)
Weighted-average common shares outstanding, basic
    and diluted
29,811,202
225,697,775
269,594,386
294,440,261
294,597,519
294,503,840
299,411,053
Other Data:
Deficiencies of earnings to cover fixed charges(a)
$
(638
)
$
(2,148
)
$
(2,630
)
$
(5,944
)
$
(725
)
$
(564
)
$
(3,377
)
Balance Sheet Data (end of period):
Total assets
$
18,967
$
24,352
$
26,463
$
22,384
$
21,364
$
21,451
$
17,084
Long-term debt
8,937
13,061
16,343
18,671
18,647
18,498
18,484
Minority interest(b)
5,381
4,571
4,434
1,050
689
763
637
Redeemable securities
751
1,104
—
—
—
—
—
Preferred stock — redeemable
—
—
51
51
55
55
55
Shareholders' equity (deficit)
3,011
2,767
2,585
41
(175
)
(127
)
(4,082
)
(a)
Earnings include net loss plus fixed charges.
    Fixed charges consist of interest expense and an estimated
    interest component of rent expense.
(b)
Minority interest represents the percentage of
    Charter Communications Holding Company, LLC not owned by
    Charter, plus preferred membership interests in CC VIII, LLC, an
    indirect subsidiary of Charter. Paul G. Allen indirectly holds
    the preferred membership units in CC VIII, LLC as a result of
    the exercise of a put right originally granted in connection
    with the Bresnan transaction in 2000. An issue has arisen
    regarding the ultimate ownership of the CC VIII, LLC membership
    interest following the consummation of the Bresnan put
    transaction on June 6, 2003. See "Certain
    Relationships and Related Transactions — Transactions
    Arising Out of Our Organizational Structure and
    Mr. Allen's Investment in Charter and Its
    Subsidiaries — Equity Put Rights — CC
    VIII." Reported losses allocated to minority interest on
    the statement of operations are limited to the extent of any
    remaining minority interest on the balance sheet related to
    Charter Communications Holding Company, LLC. Because minority
    interest in Charter Communications Holding Company, LLC was
    substantially eliminated at December 31, 2003, beginning in
    the first quarter of 2004, Charter began to absorb substantially
    all losses before income taxes that otherwise would have been
    allocated to minority interest. As a result of negative equity
    at Charter Communications Holding Company, LLC, during the nine
    months ended September 30, 2004, no additional losses were
    allocated to minority interest, resulting in an approximate
    additional $2.0 billion of net losses. Subject to any
    changes in Charter Communications Holding Company, LLC's
    capital structure, Charter will absorb substantially all future
    losses.
36
Table of Contents
SUPPLEMENTARY QUARTERLY FINANCIAL
DATA
The following tables present quarterly financial
data for the periods presented on the consolidated statements of
operations (in millions):
Nine Months Ended September 30, 2004
First Quarter
Second Quarter
Third Quarter
Revenues
$
1,214
$
1,239
$
1,248
Income (loss) from operations
175
15
(2,344
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(235
)
(366
)
(2,766
)
Net loss applicable to common stock
(294
)
(416
)
(3,295
)
Basic and diluted loss per common share before
    cumulative effect of accounting change
(1.00
)
(1.39
)
(8.36
)
Basic and diluted loss per common share
(1.00
)
(1.39
)
(10.89
)
Weighted-average shares outstanding
295,106,077
300,522,815
302,604,978
Year Ended December 31, 2003
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Revenues
$
1,178
$
1,217
$
1,207
$
1,217
Income from operations
77
112
117
208
Income (loss) before minority interest and
    income taxes
(301
)
(286
)
23
(161
)
Net income (loss) applicable to common stock
(182
)
(38
)
36
(58
)
Basic income (loss) per common share
(0.62
)
(0.13
)
0.12
(0.20
)
Diluted Income (loss) per common share
(0.62
)
(0.13
)
0.07
(0.20
)
Weighted-average shares outstanding, basic
294,466,137
294,474,596
294,566,878
294,875,504
Weighted-average shares outstanding, diluted
294,466,137
294,474,596
637,822,843
294,875,504
Year Ended December 31, 2002
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Revenues
$
1,074
$
1,137
$
1,166
$
1,189
Income (loss) from operations
97
84
91
(4,597
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(234
)
(354
)
(367
)
(4,989
)
Net loss applicable to common stock
(317
)
(161
)
(167
)
(1,872
)
Basic and diluted loss per common share before
    cumulative effect of accounting change
(0.38
)
(0.55
)
(0.57
)
(6.36
)
Basic and diluted loss per common share
(1.08
)
(0.55
)
(0.57
)
(6.36
)
Weighted-average shares outstanding
294,394,939
294,453,454
294,454,659
294,457,134
37
Table of Contents
MANAGEMENT'S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Reference is made to "Disclosure Regarding
Forward-Looking Statements," which describe important
factors that could cause actual results to differ from
expectations and non-historical information contained herein. In
addition, the following discussion should be read in conjunction
with the audited consolidated financial statements of Charter
Communications, Inc. and subsidiaries as of and for the years
ended December 31, 2003, 2002 and 2001 and the unaudited
consolidated financial statements of Charter Communications,
Inc. and subsidiaries as of and for the nine months ended
September 30, 2004 included in this prospectus.
Introduction
During 2003, we undertook a number of transition
activities including reorganizing our workforce, adjusting our
video pricing and packages, call center consolidations and
implementing billing conversions. Due to the focus on such
activities and certain financial constraints, we reduced
spending on marketing our products and services. The reduced
marketing activities and other necessary operational changes
negatively impacted customer retention and acquisition,
primarily during the first half of the year. During the second
half of 2003, we increased our marketing efforts and implemented
promotional campaigns to slow the loss of analog video
customers, and to accelerate advanced service penetration,
especially in high-speed data.
In 2003 and the nine months ended
September 30, 2004, we took a series of steps intended to
improve our balance sheet and liquidity. The issuance of
approximately $862.5 million original principal amount of
convertible senior notes due 2009, the net proceeds of which
have been used to purchase a portfolio of U.S. government
securities as security for certain interest payments on the new
notes and will be used to redeem Charter's
$588 million outstanding 5.75% Convertible Senior
Notes due October 2005, and our subsidiaries' issuance of
$550 million of senior floating rate notes with the net
proceeds used to repay Charter Operatings' revolving credit
facility and for general corporate purposes, are our most recent
examples of these efforts. In addition, since September 2003:
•
We and our subsidiaries exchanged
    $1.9 billion of indebtedness for $1.6 billion of
    indebtedness while extending maturities and achieving
    approximately $294 million of debt discount.
•
Our subsidiary, CCO Holdings, sold
    $500 million total principal amount of
    8 3/4% senior notes and used the net proceeds to repay
    approximately $486 million principal amount of our
    subsidiaries' credit facilities, providing additional
    financial flexibility for use of our subsidiary's credit
    facilities.
•
Our subsidiaries amended the Charter Operating
    credit facilities and concurrently issued $1.5 billion in
    senior second lien notes to refinance bank debt of CC VI
    Operating, CC VIII Operating and Falcon. The transaction
    extended beyond 2008 approximately $8.0 billion of
    scheduled debt maturities and credit facility commitment
    reductions which would have otherwise come due before that time.
•
Our subsidiaries completed the sale of cable
    systems in Port Orchard, Washington, for a total price of
    approximately $91 million, subject to adjustments.
•
We closed the sale of cable systems in Florida,
    Pennsylvania, Maryland, Delaware and West Virginia with Atlantic
    Broadband Finance, LLC. We closed on the sale of an additional
    cable system in New York to Atlantic Broadband Finance, LLC in
    April 2004. Subject to post-closing contractual adjustments, the
    Company expects the total net proceeds from the sale of all of
    these systems to be approximately $733 million, of which
    $5 million is currently held in an indemnity escrow account
    (with the unused portion thereof to be released by March 1,
    2005). The proceeds received to date have been used to repay a
    portion of amounts outstanding under our subsidiary's
    credit facilities.
•
We significantly reduced capital spending from
    approximately $2.2 billion for the year ended
    December 31, 2002 to approximately $854 million for
    the year ended December 31, 2003, primarily due to the
    substantial completion of our network rebuild and upgrade.
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During the years 1999 through 2001, we grew
significantly, principally through acquisitions of other cable
businesses financed by debt and, to a lesser extent, equity. We
have no current plans to pursue any significant acquisitions.
However, we may pursue exchanges of non-strategic assets or
divestitures, such as the sale of cable systems to Atlantic
Broadband Finance, LLC discussed above. We therefore do not
believe that our historical growth rates are accurate indicators
of future growth.
Historically, our ability to fund operations and
investing activities has depended on our continued access to
credit under our subsidiary's credit facilities. While our
use of cash has changed over time such that the substantial
majority of our cash now comes from cash flows from operating
activities, we expect we will continue to borrow under our
subsidiary's credit facilities from time to time to fund
cash needs. The occurrence of an event of default under our
subsidiary's credit facilities could result in borrowings
from these facilities being unavailable to us and could, in the
event of a payment default or acceleration, also trigger events
of default under our notes and our subsidiaries'
outstanding notes and would have a material adverse effect on us.
Adoption of New Policies
Commencing in January 2002 and continuing through
the first quarter of 2003, our management elected to implement a
number of new policies including:
Change in Disconnect and Bad Debt
Policies.
Our estimated customer count
is intended to include those people receiving cable service
(regardless of payment status), except for complementary
accounts (such as our employees). Our disconnect and bad debt
guidelines for slow or nonpaying customers provide that, in
general, customers are to be terminated for non-payment after
approximately 60-75 days, and written off/referred to
collection at approximately 90-110 days. We initially began
implementing this policy in January 2002 after we decided to
change our past practice under which we did not promptly
disconnect these customers on a uniform basis. Effective
year-end 2001, we also increased our allowance for doubtful
accounts. The number of our customers who are presently more
than 90 days overdue and our bad debt expense associated
with such customers are lower than they were prior to the
institution of these policies.
Procedures to Ensure Adherence to Disconnect
and Customer Count Policies.
During
our review of internal audit findings and in the course of
internal investigations, and subsequently in the course of
responding to governmental investigations, we became concerned
that certain employees either were not complying or had not
previously been complying with our customer count and disconnect
policies. We have since announced to our employees that a
failure to follow these polices will be met with disciplinary
action including, in appropriate cases, termination. We have
terminated and disciplined employees who have not followed the
policies. We have instituted regular review of customer reports
by senior employees in an effort to ensure adherence to our
policies and consistency of application throughout our various
operating divisions, and we have established a telephone hotline
number for employees to call and report misconduct relating to
the reporting of customer numbers. We have also elected not to
provide guidance on expected customer numbers in our public
disclosures.
Corporate Compliance
Program.
Prior to 2003, we did not
have a formal compliance program. In early 2003, we established
a corporate compliance program, pursuant to which we provide
training to our employees, and provide a revised Code of Conduct
to our employees that is incorporated into our Employee
Handbook. The Code and Handbook require that employees report
violations of the Code or other behavior which they believe
might be unethical or illegal. Employees can report matters to
their supervisor, to the Human Resources Department, or through
a hotline or through a secure website, and may do so
anonymously. The compliance program is overseen by a compliance
committee comprised of our high-ranking officers, which meets at
least on a quarterly basis. The Chief Compliance Officer also
reports to the Audit Committee on a quarterly basis.
Treatment of Data Only
Customers.
We have changed our
methodology for reporting analog cable video customers to
exclude those customers who receive high-speed data service
only. This represents a change in our methodology from prior
reports through September 30, 2002, in which high-speed
data service only customers (which numbered approximately 55,900
at September 30, 2002) were included within our analog
cable video customers. We made this change because we determined
that a substantial number of those customers who only received
high-speed data service were unable to receive our most
39
Table of Contents
basic level of analog video service because this
service was physically secured or blocked, was unavailable in
certain areas or the customers were unaware that this service
was available to them. In addition, in light of our decision to
begin marketing of our high-speed data services as a separate
product, we believed that separate disclosure of this
information would assist investors in understanding our current
business and in monitoring what we expected to be an increasing
number of data only customers. See "Business —
Products and Services."
Disclosure
Committee.
We established a Disclosure
Committee, consisting of senior personnel from the business
units, our internal audit group, and the finance and legal
groups, and we now follow an extensive review and certification
process in connection with our filings with the SEC and other
disclosure documents.
Audit Committee.
We
modified our Audit Committee's charter to expand the role
of the committee and to comply with the Sarbanes-Oxley Act of
2002 and the rules issued thereunder (including applicable
Nasdaq rules).
Accounting Policy
Changes.
Consistent with the
description of the restatement, we have revised a number of our
accounting policies, including treatment of launch incentives
received from programmers. For a complete discussion of
accounting changes and adjustments brought about as a result of
the re-audit or restatement, see "— Restatement
of Prior Results."
Restatement of Prior Results
There were no restatements in 2003 or 2004 of
prior results. However, certain reclassifications have been made
to 2002 and 2001 amounts to conform to 2003 presentation. Also,
as discussed in our annual report on Form 10-K for the year
ended December 31, 2002, on November 19, 2002, we
announced that we had determined that additional franchise costs
and deferred income tax liability should have been recorded for
the differences between the financial statement and tax basis of
assets we acquired in connection with certain cable businesses
acquired throughout 1999 and 2000. As a result of this
restatement, we engaged KPMG LLP to perform audits as of and for
the years ended December 31, 2001 and 2000 because our
former accountants, Arthur Andersen LLP, were no longer
available to provide an opinion as to restated financial
statements. In connection with these audits, we concluded that
it was appropriate to make certain additional adjustments to
previously reported results. Among other things, adjustments
were made to previous interpretations and applications of
generally accepted accounting principles ("GAAP") that
had been consistently followed by us since 2000 and throughout
the restatement period.
These adjustments reduced revenues reported in
our 2002 quarterly reports on Form 10-Q for the first three
quarters of 2002 by a total of $38 million, and in our 2001
annual report on Form 10-K for the year ended
December 31, 2001 and 2000 by $146 million and
$108 million, respectively. Such adjustments represent
approximately 1%, 4% and 3% of previously reported revenues for
the respective periods in 2002, 2001 and 2000. Our previously
reported consolidated net loss increased by a total of
$26 million for the first three quarters of 2002 and
decreased by $11 million for the year ended
December 31, 2001. Our previously reported net loss
increased by $29 million for the year ended
December 31, 2000, primarily due to adjustments related to
the original accounting for acquisitions and elements of our
rebuild and upgrade activities. Net cash flows from operating
activities for the years ended December 31, 2001 and 2000
were reduced by $30 million and $303 million,
respectively. The most significant categories of adjustments
related to the following items outlined below.
Launch Incentives from
Programmers.
Amounts previously
recognized as advertising revenue in connection with the launch
of new programming channels have been deferred and recorded in
other long-term liabilities in the year such launch support was
provided, and amortized as a reduction of programming costs
based upon the relevant contract term. These adjustments
decreased revenue $30 million for the first three quarters
of 2002, and $118 million and $76 million for the
years ended December 31, 2001 and 2000, respectively.
Additionally, for the year ended December 31, 2000, we
increased marketing expense by $24 million for other
promotional activities associated with launching new programming
services previously deferred and subsequently amortized. The
corresponding amortization of
40
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such deferred amounts reduced programming
expenses by $36 million for the first three quarters of
2002, and $27 million and $5 million for the years
ended December 31, 2001 and 2000, respectively.
Customer Incentives and Inducements.
Marketing inducements paid to
encourage potential customers to switch from satellite providers
to Charter-branded services and enter into multi-period service
agreements were previously deferred and recorded as property,
plant and equipment and recognized as depreciation and
amortization expense over the life of customer contracts. These
amounts have been restated as a reduction of revenue in the
period such inducements were paid. Revenue declined a total of
$5 million for the first three quarters of 2002, and
$19 million and $2 million for the years ended
December 31, 2001 and 2000, respectively. Substantially all
of these amounts are offset by reduced depreciation and
amortization expense.
Capitalized Labor and Overhead
Costs.
Certain elements of labor costs
and related overhead allocations previously capitalized as
property, plant and equipment as part of our rebuild activities,
customer installation and new service introductions have been
expensed in the period incurred. Such adjustments increased
operating expenses by $73 million for the first three
quarters of 2002, and $93 million and $52 million for
the years ended December 31, 2001 and 2000, respectively.
Customer Acquisition
Costs.
Certain customer acquisition
campaigns were conducted through third-party contractors in
2000, 2001 and portions of 2002. The costs of these campaigns
were originally deferred and recorded as other assets and
recognized as amortization expense over the average customer
contract life. These amounts have been reported as marketing
expense in the period incurred and totaled $32 million for
the first three quarters of 2002, and $59 million and
$4 million and for the years ended December 31, 2001
and 2000, respectively. We discontinued this program in the
third quarter of 2002 as contracts for third-party vendors
expired. Substantially all of these amounts are offset by
reduced depreciation and amortization expense.
Rebuild and Upgrade of Cable Systems.
In 2000, as we were completing our
acquisitions, we initiated a three-year program to replace,
upgrade and integrate a substantial portion of our network (the
rebuild program). This rebuild/upgrade of the cable network
infrastructure was envisioned as providing the platform capacity
through which many broadband communication services could be
provided to the marketplace for many years to come. Such a
rebuild program was unprecedented and is not expected to recur.
We began implementation of this three-year rebuild program in
January 2000 and adhered to it over the period. It was expanded
in July 2001 to encompass cable system assets acquired in June
2001 from AT&T Broadband. There were no other significant
modifications to the rebuild program over the three-year period.
As the rebuild program was beginning in early
2000, we were nearing the end of a period in which we were
acquired by Paul G. Allen and merged with Marcus Cable and in
which we had subsequently completed an initial public offering
and acquired 16 cable businesses adding approximately
5 million additional customers. We were faced with
integrating these acquisitions, administering the rebuild
program and also putting in place processes and new personnel to
handle the increased size and complexity of an operation that
had grown significantly in a period of about 18 months.
During the first quarter of 2000, management also recognized the
need to reassess depreciable lives of the property that was
subject to the three-year rebuild program. Based on a review of
the rebuild program, $3 billion of assets were identified
as being subject to replacement, and accordingly, management
reduced the useful lives of those assets. In connection with the
restatement, however, it has been determined that some of these
assets were to be retained and not replaced because sections of
the network were scheduled to be upgraded and not rebuilt. In a
cable system
rebuild
there is outright replacement and
retirement of substantially all components of the network,
whereas an
upgrade
involves the retention of the original
property, particularly the fiber and coaxial cabling.
41
Table of Contents
Presented below is a schedule of the costs of
cable distribution system assets subject to the rebuild program,
as originally recorded, reconciled to the final determinations
in the restatement. The depreciation lives were shortened for
this asset pool as discussed previously and supplemented below.
Total
(In millions)
Total asset population subject to rebuild and
    upgrade, as originally recorded
$
2,998
Assets which were never intended to be replaced
    but rather were upgraded and remain in service
(946
)
Cost of assets inadvertently excluded from the
    asset population
401
Adjustment to record acquired assets at
    depreciated replacement cost at date of acquisition
(1,225
)
Total adjusted asset value subject to replacement
    and thus shortened depreciation life
$
1,228
In connection with the restatement process, we
conducted a detailed system-by-system analysis of the rebuild
program to identify those assets which were intended to be
rebuilt versus upgraded and determined that approximately
$844 million of trunk and distribution cabling, and
$102 million of headend equipment (in aggregate,
$946 million) was enhanced and retained in service.
Accordingly, an adjustment was made in the restatement with
effect from January 1, 2000 to properly exclude those
assets from the population of assets treated as subject to
replacement and thus for which a shortened depreciation life was
previously assigned.
The evaluation conducted in connection with the
restatement also revealed the inadvertent exclusion of
$401 million of trunk and distribution cabling and
electronics, which were acquired in 1999, from the population of
assets that were subject to shortened depreciation lives. This
group of assets were misclassified within our fixed assets
sub-ledger for one acquisition and thus omitted from the
analysis performed in connection with the preparation of our
historical financial statements. Accordingly, an adjustment was
made in the restatement to properly include these assets as well.
Furthermore, we reduced the value of assets
subject to replacement by a total of approximately
$1.2 billion to record the assets at estimated depreciated
replacement cost at the date of acquisition. This includes a
$598 million reduction originally recorded in our
previously issued financial statements and a $627 million
adjustment identified as part of the restatement. As a result of
the items identified above, we determined that depreciation
expense was overstated by a total of $413 million for the
first three quarters of 2002, and $330 million and
$119 million in the years ended 2001 and 2000,
respectively. This resulted in net loss being overstated by a
total of $192 million for the first three quarters of 2002,
and $146 million and $48 million for the years ended
2001 and 2000, respectively.
Deferred Tax Liabilities/ Franchise
Assets.
Adjustments were made to
record deferred tax liabilities associated with the acquisition
of various cable television businesses. These adjustments
increased amounts assigned to franchise assets by
$1.4 billion with a corresponding increase in deferred tax
liabilities of $1.2 billion. The balance of the entry was
recorded to equity and minority interest. In addition, as
described above, a correction was made to reduce amounts
assigned in purchase accounting to assets identified for
replacement over the three-year period of our rebuild and
upgrade of our network. This reduced the amount assigned to the
network assets to be retained and increased the amount assigned
to franchise assets by approximately $627 million with a
resulting increase in amortization expense for the years
restated. Such adjustments increased the impairment of
franchises recognized in the first quarter of 2002 by
$199 million (before minority interest) and increased
amortization expense by $130 million and $121 million
for the years ended December 31, 2001 and 2000,
respectively. This resulted in net loss being understated by a
total of $71 million for the first three quarters of 2002,
and $57 million and $49 million for the years ended
2001 and 2000, respectively.
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Table of Contents
Other Adjustments.
In addition to the items described above, certain other
adjustments were made that increased net loss by
$38 million and decreased net loss by $10 million,
respectively, for the years ended December 31, 2001 and
2000. These adjustments were as follows:
•
During 2000, advertising revenue was recognized
    in conjunction with the promotion of equipment offered by two
    set-top terminal manufacturers from which we purchased digital
    set-top terminals. However, in connection with our restatement
    announced in April 2003, we reversed all advertising revenues
    from the set-top terminal manufacturers recognized in 2000.
    Based on a reassessment of the underlying structure of the
    arrangements during 2000, the prices paid for set-top terminals
    and the advertising revenues recognized were determined to be in
    excess of fair value. We therefore reduced our advertising
    revenue and decreased our related property, plant and equipment
    associated with the purchase of set-top terminals.
•
During 2001 and 2000, certain post-acquisition
    marketing and customer acquisition costs were charged against
    purchase accounting reserves in the financial statements. These
    costs have been reclassified to record them as period cost in
    the appropriate fiscal year.
•
During 2002, 2001 and 2000, certain state taxes,
    which are equity-based taxes and not based on income, were
    reclassified as operating expenses, rather than as taxes
    recorded in "other expenses" on our consolidated
    statements of operations.
•
During 2000, we received management fees from a
    joint venture pursuant to the terms of the joint venture
    agreement and recognized revenue. Based on the limited amount of
    operational management activities performed on behalf of the
    joint venture, we determined this amount should be reclassified
    from revenue and recorded as investment income within
    "other expense" on our consolidated statements of
    operations.
•
During 2000 and 2001, we accounted for the
    outstanding and unexercised portion of separated employees'
    options by reversing all (both vested and unvested) previously
    recorded compensation expense for separated employees who
    forfeited stock-based awards. Compensation related to vested
    awards should not have been reversed at the time of separation,
    as the employee did not "fail to fulfill an
    obligation" associated with such vested awards. Stock
    compensation expense was increased to eliminate the effect of
    such reversal during 2000 and 2001. In addition, the computation
    of the compensation expense was adjusted during 2000 to reverse
    a miscalculation recorded during such years.
The tables below set forth our condensed
consolidated balance sheets as of December 31, 2001 and
December 31, 2000, and condensed consolidated statement of
operations and condensed consolidated statement of cash flows
information for the years ended December 31, 2001 and 2000.
Controls.
The major
adjustments discussed above, including for the rebuild and
upgrade of cable systems and deferred tax matters/franchise,
generally relate to non-routine items and did not result from
control deficiencies in our core accounting operations. Since
our period of rapid growth in 2000 and early 2001, in which we
were rapidly acquiring cable systems, we have integrated the
various accounting processes of our acquired cable systems. We
have also substantially improved the quantity and, we believe,
the quality of our accounting and internal audit staff. In
addition, we are developing better interactions between our
accounting and internal audit staff and the other elements of
our organization. These changes in our staff have been
supplemented with changes in accounting and internal controls
processes and systems which we believe result in an improved
ability of management to understand and analyze underlying
business data. As part of our acquisitions integration process,
we have, among other things, standardized our data and put in
place a data warehouse, which has enhanced our abilities to
analyze our operating data. Budgeting has been integrated into
our financial systems, through the use of specialized commercial
software rather than spreadsheet programs. Additionally, we have
implemented in the first quarter 2004, a job costing system,
that tracks capital at the project level. These changes have
given us the ability to better understand, analyze and manage
our business data. The role of our internal audit staff has also
been expanded, particularly with respect to capitalization and
depreciation. We believe that these changes have improved our
controls over both recurring transactions and non-recurring
transactions.
43
Table of Contents
The following table sets forth selected
consolidated balance sheet information, showing previously
reported and restated amounts, as of December 31, 2001 (in
millions):
As Previously
Reported
As Restated
Property, plant and equipment, net
$
7,150
$
6,914
Franchises, net
17,139
18,911
Total assets
24,962
26,463
Long-term debt
16,343
16,343
Other long-term liabilities
341
1,725
Minority interest
3,976
4,434
Total shareholders' equity
2,862
2,585
The following table sets forth selected
consolidated statement of operations information, showing
previously reported and restated amounts, for the year ended
December 31, 2001 (in millions, except per share and share
data):
As Previously
Reported
As Restated
Revenues
$
3,953
$
3,807
Costs and expenses:
Operating (excluding depreciation and
    amortization)
1,326
1,486
Selling, general and administrative
841
826
Depreciation and amortization
3,010
2,693
Option compensation income
(46
)
(5
)
Special charges
18
18
5,149
5,018
Loss from operations
(1,196
)
(1,211
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(2,656
)
(2,630
)
Loss before cumulative effect of accounting change
(1,178
)
(1,157
)
Net loss applicable to common stock
$
(1,179
)
$
(1,168
)
Loss per common share, basic and diluted
$
(4.37
)
$
(4.33
)
Weighted average common shares outstanding, basic
    and diluted
269,594,386
269,594,386
The following table sets forth selected
consolidated balance sheet information, showing previously
reported and restated amounts, as of December 31, 2000 (in
millions):
As Previously
Reported
As Restated
Property, plant and equipment, net
$
5,267
$
4,829
Franchises, net
17,069
18,835
Total assets
23,044
24,352
Long-term debt
13,061
13,061
Other long-term liabilities
285
1,568
Minority interest
4,090
4,571
Total shareholders' equity
3,123
2,767
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Table of Contents
The following table sets forth selected
consolidated statement of operations information, showing
previously reported and restated amounts, for the year ended
December 31, 2000 (in millions, except per share and share
data):
As Previously
Reported
As Restated
Revenues
$
3,249
$
3,141
Costs and expenses:
Operating (excluding depreciation and
    amortization)
1,036
1,187
Selling, general and administrative
670
606
Depreciation and amortization
2,473
2,398
Stock compensation expense
41
38
4,220
4,229
Loss from operations
(971
)
(1,088
)
Loss before minority interest and income taxes
(2,055
)
(2,148
)
Net loss
$
(829
)
$
(858
)
Loss per common share, basic and diluted
$
(3.67
)
$
(3.80
)
Weighted average common shares outstanding, basic
    and diluted
225,697,775
225,697,775
The following table sets forth selected
consolidated cash flow information, showing previously reported
and restated amounts, for the years ended December 31, 2001
and 2000 (in millions):
2001
2000
As Previously
As
As Previously
As
Reported
Restated
Reported
Restated
Net cash from operating activities
$
519
$
489
$
1,131
$
828
Net cash from investing activities
(4,809
)
(4,774
)
(4,054
)
(3,751
)
Net cash from financing activities
$
4,162
$
4,156
$
2,920
$
2,920
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Table of Contents
Acquisitions
The following table sets forth information
regarding our significant acquisitions from January 1, 1999
to December 31, 2002 (none in 2003 or 2004):
Purchase Price
Securities
Acquired
Acquisition
Cash
Assumed
Issued/Other
Total
Customers
Date
Paid
Debt
Consideration
Price
(approx)
(Dollars in millions)
Renaissance
4/99
$
348
$
111
$
—
$
459
134,000
American Cable
5/99
240
—
—
240
69,000
Greater Media Systems
6/99
500
—
—
500
176,000
Helicon
7/99
410
115
25
(a)
550
171,000
Vista
7/99
126
—
—
126
26,000
Cable Satellite
8/99
22
—
—
22
9,000
Rifkin
9/99
1,200
128
133
(b)
1,461
463,000
InterMedia
10/99
873
—
420
(c)
1,293
278,000
Fanch
11/99
2,400
—
—
2,400
535,600
Falcon
11/99
1,250
1,700
550
(d)
3,500
977,200
Avalon
11/99
558
274
—
832
270,800
Total 1999 Acquisitions
$
7,927
$
2,328
$
1,128
$
11,383
3,109,600
Interlake
1/00
$
13
$
—
$
—
$
13
6,000
Bresnan
2/00
1,100
963
1,014
(e)
3,077
695,800
Capital Cable
4/00
60
—
—
60
23,200
Farmington
4/00
15
—
—
15
5,700
Kalamazoo
9/00
—
—
171
(f)
171
50,700
Total 2000 Acquisitions
$
1,188
$
963
$
1,185
$
3,336
781,400
AT&T Systems
6/01
$
1,711
$
—
$
25
$
1,736
(g)
551,100
Cable USA
8/01
45
—
55
(h)
100
30,600
Total 2001 Acquisitions
$
1,756
$
—
$
80
$
1,836
581,700
High Speed Access Corp.
2/02
78
—
—
78
N/A
Enstar Limited Partnership Systems
4/02
48
—
—
48
21,600
Enstar Income Program II-1, L.P.
9/02
15
—
—
15
6,400
Total 2002 Acquisitions
$
141
$
—
$
—
$
141
28,000
Total 1999-2002 Acquisitions
$
11,012
$
3,291
$
2,393
$
16,696
4,500,700
(a)
Represents a preferred limited liability company
    interest in Charter Helicon, LLC, an indirect wholly owned
    subsidiary.
(b)
Relates to preferred equity in Charter Holdco,
    approximately $130 million, excluding accrued dividends, of
    which was subsequently exchanged for shares of Charter
    Class A common stock.
(c)
As part of this transaction, we agreed to
    "swap" certain of our non-strategic cable systems
    serving customers in Indiana, Montana, Utah and Northern
    Kentucky valued at approximately $420 million.
(d)
Relates to common membership units in Charter
    Holdco issued to certain of the Falcon sellers, which were
    subsequently exchanged for shares of Charter Class A common
    stock.
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(e)
Comprised of $385 million in equity in
    Charter Holdco and $629 million of equity in CC VIII.
(f)
In connection with this transaction, we acquired
    all of the outstanding stock of Cablevision of Michigan in
    exchange for 11,173,376 shares of Charter Class A
    common stock.
(g)
Comprised of approximately $1.7 billion, as
    adjusted, in cash and a cable system located in Florida valued
    at approximately $25 million, as adjusted.
(h)
In connection with this transaction, at the
    closing we and Charter Holdco acquired all of the outstanding
    stock of Cable USA and the assets of related affiliates in
    exchange for cash and 505,664 shares of Charter
    Series A convertible redeemable preferred stock. In the
    first quarter of 2003, an additional $0.34 million in cash
    was paid and 39,595 additional shares of Charter Series A
    convertible redeemable preferred stock were issued to certain
    sellers.
All acquisitions were accounted for under the
purchase method of accounting and results of operations were
included in our consolidated financial statements from their
respective dates of acquisition.
We have no current plans to pursue any
significant acquisitions. However, we will continue to evaluate
opportunities to consolidate our operations through the sale of
cable systems to, or exchange of like-kind assets with, other
cable operators as such opportunities arise, and on a very
limited basis, consider strategic new acquisitions. Our primary
criteria in considering these opportunities are the
rationalization of our operations into geographic clusters and
the potential financial benefits we expect to ultimately realize
as a result of the sale, exchange, or acquisition.
Overview of Operations
Approximately 86% of our revenues for the nine
months ended September 30, 2004 and the year ended
December 31, 2003 are attributable to monthly subscription
fees charged to customers for our video, high-speed data,
telephone and commercial services provided by our cable systems.
Generally, these customer subscriptions may be discontinued by
the customer at any time. The remaining 14% of revenue is
derived primarily from pay-per-view and VOD programming where
users are charged a fee for individual programs viewed,
advertising revenues, installation or reconnection fees charged
to customers to commence or reinstate service, commissions
related to the sale of merchandise by home shopping services and
franchise fee revenues, which are collected by us but then paid
to local franchising authorities. We have generated increased
revenues during the past three years, primarily through the sale
of digital video and high-speed data services to new and
existing customers, price increases on video services and
customer growth from acquisitions. Going forward, our goal is to
increase revenues by stabilizing our analog video customer base,
implementing price increases on certain services and packages
and increasing revenues from incremental high-speed data
services, digital video and advanced products and services such
as telephony using voice-over-Internet protocol
("VOIP"), video on demand ("VOD"), high
definition television and digital video recorder service
provided to our customers. To accomplish this, we are increasing
prices for certain services and we are offering new bundling of
services combining digital video and our advanced services (such
as high-speed data service and high definition television) at
what we believe are attractive price points. See
"Business — Sales and Marketing" for more
details.
Our success in our efforts to grow revenues and
improve margins will be impacted by our ability to compete
against companies with often fewer regulatory burdens, easier
access to financing, greater personnel resources, greater brand
name recognition and long-established relationships with
regulatory authorities and customers. Additionally, controlling
our cost of operations is critical, particularly cable
programming costs, which have historically increased at rates in
excess of inflation and are expected to continue to increase.
See "Business — Programming" for more
details. We are attempting to control our costs of operations by
maintaining strict controls on expenses. More specifically, we
are focused on managing our cost structure by renegotiating
programming agreements to reduce the rate of historical
increases in programming cost, managing our workforce to control
increases and improve productivity, and leveraging our size in
purchasing activities.
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Our expenses primarily consist of operating
costs, selling, general and administrative expenses,
depreciation and amortization expense and interest expense.
Operating costs primarily include programming costs, the cost of
our workforce, cable service related expenses, advertising sales
costs, franchise fees and expenses related to customer billings.
Our income from operations decreased from $306 million for
the nine months ended September 30, 2003 to loss of
operations of $2.2 billion for the nine months ended
September 30, 2004, principally due to the impairment of
franchises of $2.4 billion recorded in the third quarter of
2004. The nine months ended September 30, 2004 includes a
gain on the sale of certain cable systems to Atlantic Broadband
Finance, LLC which is substantially offset by an increase in
option compensation expense and special charges when compared to
the nine months ended September 30, 2003. For the year
ended December 31, 2003, income from operations was
$516 million and for the years ended December 31, 2002
and 2001, our loss from operations was $4.3 billion and
$1.2 billion, respectively. Operating margin, which is
defined as income (loss) from operations divided by revenues,
was 11% for the year ended December 31, 2003, whereas for
the years ending December 31, 2002 and 2001, we had
negative operating margins of 95% and 32%, respectively. The
improvement in income from operations and operating margin from
2002 to 2003 was principally due to a $4.6 billion
franchise impairment charge in the fourth quarter of 2002 which
did not recur in 2003 and the recognition of gains in 2003 of
$93 million related to unfavorable contracts and other
settlements and gain on sale of system. The increase in loss
from operations and negative operating margins from 2001 to 2002
was primarily as a result of a $4.6 billion franchise
impairment charge in the fourth quarter of 2002, partially
offset by a decrease in amortization expense of
$1.5 billion as a result of the adoption of
SFAS No. 142,
Goodwill and Other Intangible
Assets
, which eliminated the amortization of franchises
determined to have an indefinite life. Although we do not expect
charges for impairment in the future of comparable magnitude,
potential charges could occur due to changes in market
conditions.
We have a history of net losses. Further, we
expect to continue to report net losses for the foreseeable
future. Our net losses are principally attributable to
insufficient revenue to cover the interest costs we incur
because of our high level of debt, the depreciation expenses
that we incur resulting from the capital investments we have
made in our cable properties, and the amortization and
impairment of our franchise intangibles. We expect that these
expenses (other than amortization and impairment of franchises)
will remain significant, and we therefore expect to continue to
report net losses for the foreseeable future. Additionally,
because minority interest in Charter Holdco was substantially
eliminated at December 31, 2003, beginning in the first
quarter of 2004, we began to absorb substantially all future
losses before income taxes that otherwise would have been
allocated to minority interest. This resulted in an additional
$2.0 billion of net loss for the nine months ended
September 30, 2004. Subject to any changes in Charter
Holdco's capital structure, future losses will continue to
be absorbed by Charter.
Critical Accounting Policies and
Estimates
Certain of our accounting policies require our
management to make difficult, subjective or complex judgments.
Management has discussed these policies with the Audit Committee
of Charter's board of directors and the Audit Committee has
reviewed the following disclosure. We consider the following
policies to be the most critical in understanding the estimates,
assumptions and judgments that are involved in preparing our
financial statements and the uncertainties that could affect our
results of operations, financial condition and cash flows:
•
Capitalization of labor and overhead costs;
•
Useful lives of property, plant and equipment;
•
Impairment of property, plant, and equipment,
    franchises, and goodwill;
•
Income taxes; and
•
Litigation.
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In addition, there are other items within our
financial statements that require estimates or judgment but are
not deemed critical, such as the allowance for doubtful
accounts, but changes in judgment, or estimates in these other
items could also have a material impact on our financial
statements.
Capitalization of labor and overhead
costs.
The cable industry is capital
intensive, and a large portion of our resources are spent on
capital activities associated with extending, rebuilding, and
upgrading our cable network. As of September 30, 2004 and
December 31, 2003 and 2002, the net carrying amount of our
property, plant and equipment (consisting primarily of cable
network assets) was approximately $6.4 billion
(representing 38% of total assets), $7.0 billion
(representing 33% of total assets) and $7.7 billion
(representing 34% of total assets), respectively. Total capital
expenditures for the nine months ended September 30, 2004
and the years ended December 31, 2003, 2002 and 2001 were
approximately $639 million, $854 million,
$2.2 billion and $2.9 billion, respectively.
Costs associated with network construction,
initial customer installations, installation refurbishments and
the addition of network equipment necessary to provide advanced
services are capitalized. Costs capitalized as part of initial
customer installations include materials, direct labor, and
certain indirect costs. These indirect costs are associated with
the activities of personnel who assist in connecting and
activating the new service and consist of compensation and
overhead costs associated with these support functions. The
costs of disconnecting service at a customer's dwelling or
reconnecting service to a previously installed dwelling are
charged to operating expense in the period incurred. Costs for
repairs and maintenance are charged to operating expense as
incurred, while equipment replacement and betterments, including
replacement of cable drops from the pole to the dwelling, are
capitalized.
Direct labor costs directly associated with
capital projects are capitalized. We capitalize direct labor
costs associated with personnel based upon the specific time
devoted to network construction and customer installation
activities. Capitalizable activities performed in connection
with customer installations include:
•
Scheduling a "truck roll" to the
    customer's dwelling for service connection;
•
Verification of serviceability to the
    customer's dwelling (i.e., determining whether the
    customer's dwelling is capable of receiving service by our
    cable network and/ or receiving advanced or data services);
•
Customer premise activities performed by in-house
    field technicians and third-party contractors in connection with
    customer installations, installation of network equipment in
    connection with the installation of expanded services and
    equipment replacement and betterment; and
•
Verifying the integrity of the customer's
    network connection by initiating test signals downstream from
    the headend to the customer's digital set-top terminal.
We capitalized internal direct labor costs of
$59 million, $88 million, $173 million and
$171 million, for the nine months ended September 30,
2004 and the years ended December 31, 2003, 2002 and 2001,
respectively. Capitalized internal direct labor costs
substantially decreased in 2003 compared to 2002 primarily due
to the substantial completion of the upgrade of our systems and
a decrease in the amount of capitalizable installation costs.
Judgment is required to determine the extent to
which indirect costs ("overhead") are incurred as a
result of specific capital activities, and therefore should be
capitalized. We capitalize overhead using an overhead rate
applied to the amount of direct labor capitalized. We have
established the overhead rates based on an analysis of the
nature of costs incurred in support of capitalizable activities
and a determination of the portion of costs that is directly
attributable to capitalizable activities. The primary costs that
are included in the determination of the overhead rate are
(i) employee benefits and payroll taxes associated with
capitalized direct labor, (ii) direct variable costs
associated with capitalizable activities, consisting primarily
of installation and construction vehicle costs, (iii) the
cost of support personnel, such as dispatch, that directly
assist with capitalizable installation activities, and
(iv) indirect costs directly attributable to capitalizable
activities.
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While we believe our existing capitalization
policies are appropriate, a significant change in the nature or
extent of our system activities could affect management's
judgment about the extent to which we should capitalize direct
labor or overhead in the future. We monitor the appropriateness
of our capitalization policies, and perform updates to our
internal overhead study on a periodic basis to determine whether
facts or circumstances warrant a change to our capitalization
policies. We capitalized overhead of $57 million,
$86 million, $162 million and $134 million,
respectively, for the nine months ended September 30, 2004
and the years ended December 31, 2003, 2002 and 2001.
Useful lives of property, plant and
equipment.
We evaluate the
appropriateness of estimated useful lives assigned to our
property, plant and equipment, and revise such lives to the
extent warranted by changing facts and circumstances. Beginning
in January 2000, we commenced a significant initiative to
rebuild and upgrade portions of our cable network. We reduced
the useful lives of certain assets with a book value of
$1.1 billion in 2000 and an additional $125 million in
2001. These assets were expected to be replaced and retired
through that process in approximately one to three years,
representing management's best estimate of the expected
pattern of the retirement from service of such assets. A
significant change in assumptions about the extent or timing of
future asset usage or retirements could materially affect future
depreciation expense.
Depreciation expense related to property, plant
and equipment totaled $1.1 billion, $1.5 billion,
$1.4 billion and $1.2 billion, representing
approximately 19%, 34%, 16% and 24% of costs and expenses, for
the nine months ended September 30, 2004 and the years
ended December 31, 2003, 2002 and 2001, respectively. Of
these amounts, approximately $183 million and
$352 million for the years ended December 31, 2002 and
2001, respectively, relates to network assets which were
replaced and retired over the three-year period of the rebuild
initiative. Depreciation is recorded using the straight-line
method over management's estimate of the estimated useful
lives of the related assets as follows:
Cable distribution systems
7-15  years
Customer equipment and installations
3-5 years
Vehicles and equipment
1-5 years
Buildings and leasehold improvements
5-15  years
Furniture and fixtures
5 years
Impairment of property, plant and equipment,
franchises and goodwill.
As discussed
above, the net carrying value of our property, plant and
equipment is significant. We also have recorded a significant
amount of cost related to franchises, pursuant to which we are
granted the right to operate our cable distribution network
throughout our service areas. The net carrying value of
franchises as of September 30, 2004, December 31, 2003
and 2002 was approximately $9.9 billion (representing 58%
of total assets), $13.7 billion (representing 64% of total
assets) and $13.7 billion (representing 61% of total
assets), respectively. Furthermore, we recorded within other
noncurrent assets approximately $52 million of goodwill as
a result of the acquisition of High Speed Access in February
2002.
We adopted SFAS No. 142 on
January 1, 2002. SFAS No. 142 requires that
franchise intangible assets that meet specified indefinite-life
criteria no longer be amortized against earnings, but instead
must be tested for impairment annually, or more frequently as
warranted by events or changes in circumstances. In determining
whether our franchises have an indefinite-life, we considered
the exclusivity of the franchise, the expected costs of
franchise renewals, and the technological state of the
associated cable systems with a view to whether or not we are in
compliance with any technology upgrading requirements. We have
concluded that as of January 1, 2002, December 31,
2002, December 31, 2003 and September 30, 2004 more
than 99% of our franchises qualify for indefinite-life treatment
under SFAS No. 142, and that less than one percent of
our franchises do not qualify for indefinite-life treatment due
to technological or operational factors that limit their lives.
Costs of finite-lived franchises, along with costs associated
with franchise renewals, will be amortized on a straight-line
basis over 10 years, which represents management's
best estimate of the average remaining useful lives of such
franchises. Franchise amortization expense was $3 million
for the nine months ended September 30, 2004 and
$9 million for
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each of the years ended December 31, 2003
and 2002. Franchise amortization expense was $1.5 billion,
representing approximately 29% of costs and expenses, for the
year ended December 31, 2001. We expect that amortization
expense on franchise assets will be approximately
$4 million annually for each of the next five years. Actual
amortization expense in future periods could differ from these
estimates as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant factors.
SFAS No. 144,
Accounting for
Impairment or Disposal of Long-Lived Assets
, requires that
we evaluate the recoverability of our property, plant and
equipment and franchise assets which did not qualify for
indefinite life treatment under SFAS No. 142 upon the
occurrence of events or changes in circumstances which indicate
that the carrying amount of an asset may not be recoverable.
Such events or changes in circumstances could include such
factors as changes in technological advances, fluctuations in
the fair value of such assets, adverse changes in relationships
with local franchise authorities, adverse changes in market
conditions or poor operating results. Under
SFAS No. 144, a long-lived asset is deemed impaired
when the carrying amount of the asset exceeds the projected
undiscounted future cash flows associated with the asset.
Furthermore, we were required to evaluate the recoverability of
our indefinite life franchises, as well as goodwill, as of
January 1, 2002 upon adoption of SFAS No. 142,
and on an annual basis or more frequently as deemed necessary.
Under both SFAS No. 144 and
SFAS No. 142, if an asset is determined to be
impaired, it is required to be written down to its estimated
fair market value. We determine fair market value based on
estimated discounted future cash flows, using reasonable and
appropriate assumptions that are consistent with internal
forecasts. Our assumptions include these and other factors:
penetration rates for analog and digital video and high-speed
data, revenue growth rates, expected operating margins and
capital expenditures. Considerable management judgment is
necessary to estimate future cash flows, and such estimates
include inherent uncertainties, including those relating to the
timing and amount of future cash flows and the discount rate
used in the calculation. We utilize an independent third-party
appraiser with expertise in the cable industry to assist in the
determination of the fair value of intangible assets.
Based on the guidance prescribed in Emerging
Issues Task Force ("EITF") Issue No. 02-7,
Unit of Accounting for Testing of Impairment of
Indefinite-Lived Intangible Assets
, franchises were
aggregated into essentially inseparable asset groups to conduct
the valuations. The asset groups generally represent geographic
clustering of our cable systems into groups by which such
systems are managed. Management believes such grouping
represents the highest and best use of those assets. Fair value
is determined based on estimated discounted future cash flows
using assumptions that are consistent with internal forecasts.
We have historically followed a residual method of valuing our
franchise assets, which had the effect of including goodwill
with the franchise assets. We determined that our franchises
were impaired for the year ended December 31, 2002 and as a
result recorded the cumulative effect of a change in accounting
principle of $206 million (approximately $572 million
before minority interest effects of $306 million and tax
effects of $60 million). As required by
SFAS No. 142, the standard has not been retroactively
applied to results for the period prior to adoption.
In September 2004, the Securities and Exchange
Commission ("SEC") staff issued Topic D-108,
Use of
the Residual Method to Value Acquired Assets Other than
Goodwill
, which requires the direct method of separately
valuing all intangible assets and does not permit goodwill to be
included in franchise assets. On September 30, 2004, we
adopted Topic D-108 which resulted in our recording a cumulative
effect of accounting change of $765 million (approximately
$875 million before tax effects of $91 million and
minority interest effects of $19 million) for the nine
months ended September 30, 2004. The effect of the adoption
was to increase net loss and loss per share by $765 million
and $2.56 for the nine months ended September 30, 2004.
We performed our annual impairment assessment as
of October 1, 2002 using an independent third-party
appraiser and following the guidance of EITF Issue 02-17,
Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination
, which was issued in
October 2002 and requires the consideration of assumptions that
marketplace participants would consider, such as expectations of
future contract renewals and other benefits related to the
intangible asset. We performed an impairment
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assessment during the third quarter 2004 using an
independent third-party appraiser and following the guidance of
EITF Issue 02-17,
Recognition of Customer Relationship
Intangible Assets Acquired in a Business Combination
, and
Topic D-108. Revised estimates of future cash flows and the
use of a lower projected long-term growth rate in our valuation,
primarily as a result of increased competition, led to the
recognition of a $4.6 billion impairment charge in the
fourth quarter of 2002 and a $2.4 billion impairment charge
for the nine months ended September 30, 2004. The valuation
completed at October 1, 2003 showed franchise values in
excess of book value and thus resulted in no impairment.
The independent third party appraiser's
valuations as of January 1, 2002, October 1, 2002,
October 1, 2003 and September 30, 2004, yielded total
enterprise values of approximately $30 billion,
$25 billion, $25 billion and $19 billion,
respectively, which included approximately $2.4 billion,
$3.1 billion, $3.2 billion and $2.0 billion,
respectively, assigned to customer relationships and
approximately $1.4 billion, $0.8 billion,
$1.1 billion and $0.9 billion assigned to goodwill,
respectively. SFAS No. 142 does not permit the
recognition of intangible assets not previously recognized.
The valuations involve numerous assumptions as
noted above. While the economic conditions at the time of each
valuation indicate that the combination of assumptions utilized
in the appraisals are reasonable, as market conditions change so
will the assumptions with a resulting impact on the valuation.
Income Taxes.
All
operations are held through Charter Holdco and its direct and
indirect subsidiaries. Charter Holdco and the majority of its
subsidiaries are not subject to income tax. However, certain of
these subsidiaries are corporations and are subject to income
tax. All of the taxable income, gains, losses, deductions and
credits of Charter Holdco are passed through to its members:
Charter, Charter Investment, Inc. and Vulcan Cable III Inc.
Charter is responsible for its share of taxable income or loss
of Charter Holdco allocated to it in accordance with the Charter
Holdco limited liability company agreement ("LLC
Agreement") and partnership tax rules and regulations.
The LLC Agreement provides for certain special
allocations of net tax profits and net tax losses (such net tax
profits and net tax losses being determined under the applicable
federal income tax rules for determining capital accounts).
Pursuant to the LLC Agreement, through the end of 2003, net tax
losses of Charter Holdco that would otherwise have been
allocated to Charter based generally on its percentage ownership
of outstanding common units were allocated instead to membership
units held by Vulcan Cable III Inc. and Charter Investment,
Inc. (the "Special Loss Allocations") to the extent of
their respective capital account balances. After 2003, pursuant
to the LLC Agreement, net tax losses of Charter Holdco are to be
allocated to Charter, Vulcan Cable III Inc. and Charter
Investment, Inc. based generally on their respective percentage
ownership of outstanding common units to the extent of their
respective capital account balances. The LLC Agreement further
provides that, beginning at the time Charter Holdco generates
net tax profits, the net tax profits that would otherwise have
been allocated to Charter based generally on its percentage
ownership of outstanding common membership units will instead
generally be allocated to Vulcan Cable III Inc. and Charter
Investment, Inc. (the "Special Profit Allocations").
The Special Profit Allocations to Vulcan Cable III Inc. and
Charter Investment, Inc. will generally continue until the
cumulative amount of the Special Profit Allocations offsets the
cumulative amount of the Special Loss Allocations. The amount
and timing of the Special Profit Allocations are subject to the
potential application of, and interaction with, the Curative
Allocation Provisions described in the following paragraph. The
LLC Agreement generally provides that any additional net tax
profits are to be allocated among the members of Charter Holdco
based generally on their respective percentage ownership of
Charter Holdco common membership units.
Because the respective capital account balance of
each of Vulcan Cable III Inc. and Charter Investment, Inc.
was reduced to zero by December 31, 2002, certain net tax
losses of Charter Holdco that were to be allocated for 2002,
2003 (subject to resolution of the issue described in
"Certain Relationships and Related Transactions —
Transactions Arising Out of Our Organizational Structure and
Mr. Allen's Investment in Charter and Its
Subsidiaries — Equity Put Rights — CC
VIII") and possibly later years to Vulcan Cable III
Inc. and Charter Investment, Inc. will instead be allocated to
Charter (the "Regulatory Allocations"). The LLC
Agreement further provides that, to the extent possible, the
effect of the
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Regulatory Allocations is to be offset over time
pursuant to certain curative allocation provisions (the
"Curative Allocation Provisions") so that, after
certain offsetting adjustments are made, each member's
capital account balance is equal to the capital account balance
such member would have had if the Regulatory Allocations had not
been part of the LLC Agreement. The cumulative amount of the
actual tax losses allocated to Charter as a result of the
Regulatory Allocations through the year ended December 31,
2003 is approximately $2.0 billion to $2.6 billion
pending the resolution of the issue described in "Certain
Relationships and Related Transactions — Transactions
Arising Out of Our Organizational Structure and
Mr. Allen's Investment in Charter and Its
Subsidiaries — Equity Put Rights — CC
VIII."
As a result of the Special Loss Allocations and
the Regulatory Allocations referred to above, the cumulative
amount of losses of Charter Holdco allocated to Vulcan
Cable III Inc. and Charter Investment, Inc. is in excess of
the amount that would have been allocated to such entities if
the losses of Charter Holdco had been allocated among its
members in proportion to their respective percentage ownership
of Charter Holdco common membership units. The cumulative amount
of such excess losses was approximately $3.1 billion
through December 31, 2002 and $2.0 billion to
$2.5 billion through December 31, 2003, depending upon
the resolution of the issue described in "Certain
Relationships and Related Transactions — Transactions
Arising Out of Our Organizational Structure and
Mr. Allen's Investment in Charter and Its
Subsidiaries — Equity Put Rights — CC
VIII."
In certain situations, the Special Loss
Allocations, Special Profit Allocations, Regulatory Allocations
and Curative Allocation Provisions described above could result
in Charter paying taxes in an amount that is more or less than
if Charter Holdco had allocated net tax profits and net tax
losses among its members based generally on the number of common
membership units owned by such members. This could occur due to
differences in (i) the character of the allocated income
(e.g., ordinary versus capital), (ii) the allocated amount
and timing of tax depreciation and tax amortization expense due
to the application of section 704(c) under the Internal
Revenue Code, (iii) the potential interaction between the
Special Profit Allocations and the Curative Allocation
Provisions, (iv) the amount and timing of alternative
minimum taxes paid by Charter, if any, (v) the
apportionment of the allocated income or loss among the states
in which Charter Holdco does business, and (vi) future federal
and state tax laws. Further, in the event of new capital
contributions to Charter Holdco, it is possible that the tax
effects of the Special Profit Allocations, Special Loss
Allocations, Regulatory Allocations and Curative Allocation
Provisions will change significantly pursuant to the provisions
of the income tax regulations. Such change could defer the
actual tax benefits to be derived by Charter with respect to the
net tax losses allocated to it or accelerate the actual taxable
income to Charter with respect to the net tax profits allocated
to it. As a result, it is possible under certain circumstances,
that Charter could receive future allocations of taxable income
in excess of its currently allocated tax deductions and
available tax loss carryforwards.
In addition, under their exchange agreement with
Charter, Vulcan Cable III Inc. and Charter Investment, Inc.
may exchange some or all of their membership units in Charter
Holdco for Charter's Class B common stock, be merged
with Charter, or be acquired by Charter in a non-taxable
reorganization. If such an exchange were to take place prior to
the date that the Special Profit Allocation provisions had fully
offset the Special Loss Allocations, Vulcan Cable III Inc.
and Charter Investment, Inc. could elect to cause Charter Holdco
to make the remaining Special Profit Allocations to Vulcan
Cable III Inc. and Charter Investment, Inc. immediately
prior to the consummation of the exchange. In the event Vulcan
Cable III Inc. and Charter Investment, Inc. choose not to
make such election or to the extent such allocations are not
possible, Charter would then be allocated tax profits
attributable to the membership units received in such exchange
pursuant to the Special Profit Allocation provisions.
Mr. Allen has generally agreed to reimburse Charter for any
incremental income taxes that Charter would owe as a result of
such an exchange and any resulting future Special Profit
Allocations to Charter.
As of September 30, 2004 and
December 31, 2003 and 2002, we have recorded net deferred
income tax liabilities of $204 million, $417 million
and $519 million, respectively. Additionally, as of
September 30, 2004, December 31, 2003 and 2002, we
have deferred tax assets of $3.4 billion, $1.7 billion
and $1.5 billion, respectively, which primarily relate to
financial and tax losses allocated to Charter from
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Charter Holdco. We are required to record a
valuation allowance when it is more likely than not that some
portion or all of the deferred income tax assets will not be
realized. Given the uncertainty surrounding our ability to
utilize our deferred tax assets, these items have been offset
with a corresponding valuation allowance of $3.0 billion,
$1.3 billion and $1.4 billion at September 30,
2004, December 31, 2003 and 2002, respectively.
We are currently under examination by the
Internal Revenue Service for the tax years ending
December 31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
our consolidated financial condition, results of operations or
our liquidity, including our ability to comply with our debt
covenants.
Litigation.
As
described in "Business — Legal Proceedings,"
numerous allegations have been made against us. These legal
contingencies have a high degree of uncertainty. No reserves
have been established for these matters because we are unable to
predict the outcome. When a contingency becomes estimable and
probable, a reserve is established. We have established reserves
for certain other matters. If any of the litigation matters
described in "Business — Legal Proceedings"
is resolved unfavorably, such resolution could have a material
adverse effect on our consolidated financial condition, results
of operations or our liquidity, including our ability to comply
with our debt covenants.
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Results of Operations
Nine Months Ended September 30, 2004
Compared to Nine Months Ended September 30, 2003
The following table sets forth the percentages of
revenues that items in the accompanying consolidated statements
of operations constituted for the periods presented (dollars in
millions, except share data):
Nine Months Ended September 30,
2004
2003
Revenues
$
3,701
100
%
$
3,602
100
%
Costs and expenses:
Operating (excluding depreciation and
    amortization)
1,552
42
%
1,457
41
%
Selling, general and administrative
735
20
%
702
19
%
Depreciation and amortization
1,105
30
%
1,095
30
%
Impairment of franchises
2,433
66
%
—
—
(Gain) loss on sale of assets, net
(104
)
(3
)%
23
1
%
Option compensation expense, net
34
1
%
1
—
Special charges, net
100
2
%
18
1
%
5,855
158
%
3,296
92
%
Income (loss) from operations
(2,154
)
(58
)%
306
8
%
Interest expense, net
(1,227
)
(1,163
)
Gain on derivative instruments and hedging
    activities, net
48
35
Loss on debt to equity conversions
(23
)
—
Loss on extinguishment of debt
(21
)
—
Gain on debt exchange, net
—
267
Other, net
—
(9
)
(1,223
)
(870
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(3,377
)
(564
)
Minority interest
24
297
Loss before income taxes and cumulative effect of
    accounting change
(3,353
)
(267
)
Income tax benefit
116
86
Loss before cumulative effect of accounting change
(3,237
)
(181
)
Cumulative effect of accounting change, net of tax
(765
)
—
Net loss
(4,002
)
(181
)
Dividends on preferred stock —
    redeemable
(3
)
(3
)
Net loss applicable to common stock
$
(4,005
)
$
(184
)
Loss per common share, basic and diluted
$
(13.38
)
$
(0.62
)
Weighted average common shares outstanding, basic
    and diluted
299,411,053
294,503,840
Revenues.
Revenues
increased by $99 million, or 3%, from $3.6 billion for
the nine months ended September 30, 2003 to
$3.7 billion for the nine months ended September 30,
2004. This increase is principally the result of an increase of
330,200 and 24,100 high-speed data and digital video customers,
respectively, as well as price increases for video and
high-speed data services, and is offset partially by a decrease
of 423,500 analog video customers. Included in the reduction in
analog video customers and reducing the increase in digital
video and high-speed data customers are 259,100 analog
video customers, 94,500 digital video customers and
48,200 high-speed data customers sold in the cable system
sales to Atlantic Broadband Finance, LLC, which closed in March
and April 2004 and to WaveDivision Holdings,
55
Table of Contents
LLC which closed in October 2003 (collectively
referred to herein as the "System Sales"). The Systems
Sales reduced the increase in revenues by $116 million. Our
goal is to increase revenues by stabilizing our analog video
customer base, implementing price increases on certain services
and packages and increasing revenues from incremental high-speed
data services, digital video and advanced products and services
such as telephony using VOIP, VOD, high definition television
and digital video recorder service provided to our customers.
Revenues by service offering were as follows
(dollars in millions):
Nine Months Ended September 30,
2004
2003
2004 over 2003
% of
% of
%
Revenues
Revenues
Revenues
Revenues
Change
Change
Video
$
2,534
68
%
$
2,607
73
%
$
(73
)
(3
)%
High-speed data
538
14
%
403
11
%
135
33
%
Advertising sales
205
6
%
188
5
%
17
9
%
Commercial
175
5
%
149
4
%
26
17
%
Other
249
7
%
255
7
%
(6
)
(2
)%
$
3,701
100
%
$
3,602
100
%
$
99
3
%
Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues decreased by $73 million, or 3%,
from $2.6 billion for the nine months ended
September 30, 2003 to $2.5 billion for the nine months
ended September 30, 2004. Approximately $84 million of
the decrease was the result of the Systems Sales, while the
offsetting increase of approximately $11 million was
primarily the result of price increases and an increase in
digital video customers, partially offset by a decline in analog
video customers.
Revenues from high-speed data services provided
to our non-commercial customers increased $135 million, or
33%, from $403 million for the nine months ended
September 30, 2003 to $538 million for the nine months
ended September 30, 2004. Approximately 88% of the increase
related to the increase in the average number of customers
receiving high-speed data services, whereas approximately 12%
related to the increase in average price of the service. We were
also able to offer this service to more of our customers, as the
estimated percentage of homes passed that could receive
high-speed data service increased from 85% as of
September 30, 2003 to 88% as of September 30, 2004 as
a result of our system upgrades. The increase in high-speed data
revenues was reduced by approximately $9 million as a
result of the Systems Sales.
Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales increased $17 million, or
9%, from $188 million for the nine months ended
September 30, 2003 to $205 million for the nine months
ended September 30, 2004, primarily as a result of an
increase in national advertising campaigns and election related
advertising. The increase in advertising sales was reduced by
approximately $5 million as a result of the Systems Sales.
For the nine months ended September 30, 2004 and 2003, we
received $9 million and $10 million, respectively, in
advertising revenue from vendors.
Commercial revenues consist primarily of revenues
from cable video and high-speed data services to our commercial
customers. Commercial revenues increased $26 million, or
17%, from $149 million for the nine months ended
September 30, 2003 to $175 million for the nine months
ended September 30, 2004, primarily as a result of an
increase in commercial high-speed data revenues. The increase
was reduced by approximately $10 million as a result of the
Systems Sales.
Other revenues consist of revenues from franchise
fees, telephony revenue, equipment rental, customer
installations, home shopping, dial-up Internet service, late
payment fees, wire maintenance fees and other miscellaneous
revenues. Other revenues decreased $6 million, or 2%, from
$255 million for the nine months ended September 30,
2003 to $249 million for the nine months ended
September 30, 2004.
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Approximately $8 million of the decrease was
the result of the Systems Sales, while the offsetting increase
was primarily the result of an increase in home shopping and
infomercial revenue.
Operating Expenses.
Operating expenses increased
$95 million, or 7%, from $1.5 billion for the nine
months ended September 30, 2003 to $1.6 billion for
the nine months ended September 30, 2004. The increase in
operating expenses was reduced by approximately $42 million
as a result of the System Sales. Programming costs included in
the accompanying condensed consolidated statements of operations
were $991 million and $934 million, representing 17%
and 28% of total costs and expenses for the nine months ended
September 30, 2004 and 2003, respectively. Key expense
components as a percentage of revenues were as follows (dollars
in millions):
Nine Months Ended September 30,
2004
2003
2004 over 2003
% of
% of
%
Expenses
Revenues
Expenses
Revenues
Change
Change
Programming
$
991
27
%
$
934
26
%
$
57
6
%
Advertising sales
72
2
%
65
2
%
7
11
%
Service
489
13
%
458
13
%
31
7
%
$
1,552
42
%
$
1,457
41
%
$
95
7
%
Programming costs consist primarily of costs paid
to programmers for analog, premium and digital channels and
pay-per-view programming. The increase in programming costs of
$57 million, or 6%, for the nine months ended
September 30, 2004 over the nine months ended
September 30, 2003 was a result of price increases,
particularly in sports programming, an increased number of
channels carried on our systems and an increase in digital video
customers, partially offset by decreases in analog video
customers. Additionally, the increase in programming costs was
reduced by $30 million as a result of the Systems Sales.
Programming costs were offset by the amortization of payments
received from programmers in support of launches of new channels
of $43 million and $47 million for the nine months
ended September 30, 2004 and 2003, respectively.
Programming costs for the nine months ended September 30,
2004 also include a $5 million reduction related to the
settlement of a dispute with TechTV, Inc. See Note 17 to
our September 30, 2004 unaudited condensed consolidated
financial statements attached hereto for more information.
Our cable programming costs have increased in
every year we have operated in excess of customary inflationary
and cost-of-living type increases, and we expect them to
continue to increase because of a variety of factors, including
additional programming being provided to customers as a result
of system rebuilds that increase channel capacity, increased
costs to produce or purchase programming, increased costs for
previously discounted programming and inflationary or negotiated
annual increases. Our increasing programming costs will result
in declining operating margins for our video services to the
extent we are unable to pass on cost increases to our customers.
We expect to partially offset any resulting margin compression
from our traditional video services with revenue from advanced
video services, increased high-speed data revenues, advertising
revenues and commercial service revenues.
Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries, benefits and
commissions. Advertising sales expenses increased
$7 million, or 11%, primarily due to increased salary,
benefit and commission costs. Service costs consist primarily of
service personnel salaries and benefits, franchise fees, system
utilities, Internet service provider fees, maintenance and pole
rent expense. The increase in service costs of $31 million,
or 7%, resulted primarily from additional activity associated
with ongoing infrastructure maintenance.
Selling, General and Administrative
Expenses.
Selling, general and
administrative expenses increased by $33 million, or 5%,
from $702 million for the nine months ended
September 30, 2003 to $735 million for the nine months
ended September 30, 2004. The increase in selling, general
and administrative
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Table of Contents
expenses was reduced by $16 million as a
result of the System Sales. Key components of expense as a
percentage of revenues were as follows (dollars in millions):
Nine Months Ended September 30,
2004
2003
2004 over 2003
% of
% of
%
Expenses
Revenues
Expenses
Revenues
Change
Change
General and administrative
$
636
17
%
$
622
17
%
$
14
2
%
Marketing
99
3
%
80
2
%
19
24
%
$
735
20
%
$
702
19
%
$
33
5
%
General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $14 million, or 2%, resulted primarily from
increases in costs associated with our commercial business of
$16 million, bad debt expense of $11 million,
franchise taxes of $4 million and third party call center
costs of $12 million. These increases were partially offset
by a decrease in salaries and benefits of $19 million and
property taxes of $14 million.
Marketing expenses increased $19 million, or
24%, as a result of an increased investment in marketing and
branding campaigns.
Depreciation and Amortization.
Depreciation and amortization expense
increased by $10 million, or 1%, from $1.10 billion
for the nine months ended September 30, 2003 to
$1.11 billion for the nine months ended September 30,
2004. The increase in depreciation related to an increase in
capital expenditures, which was offset by lower depreciation as
the result of the Systems Sales.
Impairment of
Franchises.
We performed an impairment
assessment during the third quarter of 2004 using an independent
third-party appraiser. The use of lower projected growth rates
and the resulting revised estimates of future cash flows in our
valuation, primarily as a result of increased competition, led
to the recognition of a $2.4 billion impairment charge for
the nine months ended September 30, 2004.
(Gain) Loss on Sale of Assets,
Net.
Gain on sale of assets of
$104 million for the nine months ended September 30,
2004 primarily represents the pretax gain realized on the sale
of systems to Atlantic Broadband Finance, LLC which closed in
March and April 2004. Loss on sale of assets of $23 million
for the nine months ended September 30, 2003 primarily
represents the loss recognized on the disposition of fixed
assets.
Option Compensation Expense,
Net.
Option compensation expense of
$34 million for the nine months ended September 30,
2004 primarily represents the expense of approximately
$9 million related to a stock option exchange program,
under which our employees were offered the right to exchange all
stock options (vested and unvested) issued under the 1999
Charter Communications Option Plan and 2001 Stock Incentive Plan
that had an exercise price over $10 per share for shares of
restricted Charter Class A common stock or, in some
instances, cash. The exchange offer closed in February 2004.
Additionally, during the nine months ended September 30,
2004, we recognized approximately $8 million related to the
options granted under the Charter Long-Term Incentive Program
and approximately $17 million related to options granted
following the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 123,
Accounting for
Stock-Based Compensation.
Option compensation expense of
$1 million for the nine months ended September 30,
2003 primarily represents options expensed in accordance with
SFAS No. 123,
Accounting for Stock-Based
Compensation.
Special Charges, Net.
Special charges of $100 million
for the nine months ended September 30, 2004 represents
approximately $85 million of aggregate value of the Charter
Class A common stock and warrants to purchase Charter
Class A common stock contemplated to be issued as part of a
settlement of the consolidated federal class actions, state
derivative actions and federal derivative action lawsuits,
approximately $9 million of litigation costs related to the
tentative settlement of a South Carolina national class action
suit, all of which settlements are subject to final
documentation and court approval and
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approximately $9 million of severance and
related costs of our workforce reduction. Special charges for
the nine months ended September 30, 2004 were offset by
$3 million received from a third party in settlement of a
dispute. Special charges of $18 million for the nine months
ended September 30, 2003 represents approximately
$23 million of severance and related costs of our workforce
reduction partially offset by a $5 million credit from a
settlement from the Internet service provider Excite@Home
related to the conversion of about 145,000 high-speed data
customers to our Charter Pipeline service in 2001. We expect to
continue to record additional special charges in 2004 related to
the continued reorganization of our operations.
Interest Expense,
Net.
Net interest expense increased by
$64 million, or 6%, from $1.16 billion for the nine
months ended September 30, 2003 to $1.23 billion for
the nine months ended September 30, 2004. The increase in
net interest expense was a result of an increase in our average
borrowing rate from 7.95% in the nine months ended
September 30, 2003 to 8.61% in the nine months ended
September 30, 2004 partially offset by a decrease of
$516 million in average debt outstanding from
$18.9 billion for the nine months ended September 30,
2003 compared to $18.4 billion for the nine months ended
September 30, 2004.
Gain on Derivative Instruments and Hedging
Activities, Net.
Net gain on
derivative instruments and hedging activities increased
$13 million from $35 million for the nine months ended
September 30, 2003 to $48 million for the nine months
ended September 30, 2004. The increase is primarily the
result of an increase in gains on interest rate agreements that
do not qualify for hedge accounting under
SFAS No. 133, which increased from a gain of
$27 million for the nine months ended September 30,
2003 to a gain of $45 million for the nine months ended
September 30, 2004. This was coupled with a decrease in
gains on interest rate agreements, as a result of hedge
ineffectiveness on designated hedges, which decreased from
$8 million for the nine months ended September 30,
2003 to $3 million for the nine months ended
September 30, 2004.
Loss on Debt to Equity
Conversions.
Loss on debt to equity
conversions of $23 million for the nine months ended
September 30, 2004 represents the loss recognized from
privately negotiated exchanges of a total of $30 million
principal amount of Charter's 5.75% convertible senior
notes held by two unrelated parties for shares of Charter
Class A common stock. The exchange resulted in the issuance
of more shares in the exchange transaction than would have been
issuable under the original terms of the convertible senior
notes.
Loss on Extinguishment of
Debt.
Loss on extinguishment of debt
of $21 million for the nine months ended September 30,
2004 represents the write-off of deferred financing fees and
third party costs related to the Charter Communications
Operating, LLC ("Charter Operating") refinancing in
April 2004.
Gain on Debt Exchange,
Net.
Net gain on debt exchange of
$267 million for the nine months ended September 30,
2003 represents the gain realized on the purchase of an
aggregate of $609 million principal amount of our
convertible senior notes and $1.3 billion principal amount
of Charter Holdings' senior notes and senior discount notes
in consideration for an aggregate of $1.6 billion principal
amount of 10.25% notes due 2010 issued by CCH II. The
gain is net of the write-off of deferred financing costs
associated with the retired debt of $27 million.
Other, Net.
Net
other expense of $9 million for the nine months ended
September 30, 2003 primarily represents losses on equity
investments.
Minority Interest.
Minority interest represents the 2% accretion of the preferred
membership interests in our indirect subsidiary, CC VIII, LLC,
and since June 6, 2003, the pro rata share of the profits
and losses of CC VIII, LLC. Reported losses allocated to
minority interest on the statement of operations are limited to
the extent of any remaining minority interest on the balance
sheet related to Charter Holdco. Because minority interest in
Charter Holdco was substantially eliminated at December 31,
2003, beginning in the first quarter of 2004, Charter began to
absorb substantially all future losses before income taxes that
otherwise would have been allocated to minority interest. For
the nine months ended September 30, 2003, 52.8% of
Charter's losses were allocated to minority interest. As a
result of
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Table of Contents
negative equity at Charter Holdco during the nine
months ended September 30, 2004, no additional losses were
allocated to minority interest, resulting in an additional
$2.0 billion of net losses. Subject to any changes in
Charter Holdco's capital structure, future losses will be
substantially absorbed by Charter.
Income Tax Benefit.
Income tax benefit of $116 million and $86 million was
recognized for the nine months ended September 30, 2004 and
the nine months ended September 30, 2003, respectively. The
income tax benefits were realized as a result of decreases in
certain deferred tax liabilities related to our investment in
Charter Holdco as well as decreases in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.
The income tax benefit recognized in the nine
months ended September 30, 2004 was directly related to the
impairment of franchises as discussed above. We do not expect to
recognize a similar benefit associated with the impairment
charge in future periods. However, the actual tax provision
calculations in future periods will be the result of current and
future temporary differences, as well as future operating
results.
The income tax benefit recognized in the nine
months ended September 30, 2003 was directly related to the
tax losses allocated to Charter from Charter Holdco. In the
second quarter of 2003, Charter started receiving tax loss
allocations from Charter Holdco. Previously, the tax losses had
been allocated to Vulcan Cable III Inc. and Charter
Investment, Inc. in accordance with the Special Loss Allocations
provided under the Charter Holdco limited liability company
agreement. We do not expect to recognize a similar benefit
related to our investment in Charter Holdco after 2003 related
to tax loss allocations received from Charter Holdco, due to
limitations associated with our ability to offset future tax
benefits against the remaining deferred tax liabilities.
However, the actual tax provision calculations in future periods
will be the result of current and future temporary differences,
as well as future operating results.
Cumulative Effect of Accounting Change, Net of
Tax.
Cumulative effect of accounting
change of $765 million (net of minority interest effects of
$19 million and tax effects of $91 million) in 2004
represents the impairment charge recorded as a result of our
adoption of Topic D-108.
Net Loss.
Net loss
increased by $3.8 billion, from $181 million for the
nine months ended September 30, 2003 to $4.0 billion
for the nine months ended September 30, 2004 as a result of
the factors described above.
Preferred Stock
Dividends.
On August 31, 2001,
Charter issued 505,664 shares (and on February 28,
2003 issued an additional 39,595 shares) of Series A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition, on which Charter pays a quarterly
cumulative cash dividends at an annual rate of 5.75% on a
liquidation preference of $100 per share.
Loss Per Common
Share.
The loss per common share
increased by $12.76, from $0.62 per common share for the
nine months ended September 30, 2003 to $13.38 per
common share for the nine months ended September 30, 2004
as a result of the factors described above.
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Table of Contents
Year Ended December 31, 2003,
December 31, 2002 and December 31, 2001
The following table sets forth the percentages of
revenues that items in the accompanying consolidated statements
of operations constitute for the indicated periods (dollars in
millions, except per share and share data):
Year Ended December 31,
2003
2002
2001
Revenues
$
4,819
100
%
$
4,566
100
%
$
3,807
100
%
Costs and Expenses:
Operating (excluding depreciation and
    amortization)
1,952
40
%
1,807
40
%
1,486
39
%
Selling, general and administrative
940
20
%
963
21
%
826
22
%
Depreciation and amortization
1,453
30
%
1,436
31
%
2,683
71
%
Impairment of franchises
—
—
4,638
102
%
—
—
Loss on sale of assets, net
5
—
3
—
10
—
Option compensation expense (income), net
4
—
5
—
(5
)
—
Special charges, net
21
—
36
1
%
18
—
Unfavorable contracts and other settlements
(72
)
(1
)%
—
—
—
—
4,303
89
%
8,888
195
%
5,018
132
%
Income (loss) from operations
516
11
%
(4,322
)
(95
)%
(1,211
)
(32
)%
Interest expense, net
(1,557
)
(1,503
)
(1,310
)
Gain (loss) on derivative instruments and hedging
    activities, net
65
(115
)
(50
)
Gain on debt exchange, net
267
—
—
Loss on equity investments
(3
)
(3
)
(54
)
Other, net
(13
)
(1
)
(5
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(725
)
(5,944
)
(2,630
)
Minority interest
377
3,176
1,461
Loss before income taxes and cumulative effect of
    accounting change
(348
)
(2,768
)
(1,169
)
Income tax benefit
110
460
12
Loss before cumulative effect of accounting change
(238
)
(2,308
)
(1,157
)
Cumulative effect of accounting change, net of tax
—
(206
)
(10
)
Net loss
(238
)
(2,514
)
(1,167
)
Dividends on preferred stock —
    redeemable
(4
)
(3
)
(1
)
Net loss applicable to common stock
$
(242
)
$
(2,517
)
$
(1,168
)
Loss per common share, basic and diluted
$
(0.82
)
$
(8.55
)
$
(4.33
)
Weighted average common shares outstanding
294,597,519
294,440,261
269,594,386
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Table of Contents
Year Ended December 31, 2003 Compared to
Year Ended December 31, 2002
Revenues.
Revenues
increased by $253 million, or 6%, from $4.6 billion
for the year ended December 31, 2002 to $4.8 billion
for the year ended December 31, 2003. This increase is
principally the result of an increase of 427,500 high-speed data
customers, as well as price increases for video and high-speed
data services, and is offset partially by a decrease of 147,500
and 10,900 in analog and digital video customers, respectively.
Included within the decrease of analog and digital video
customers and reducing the increase of high-speed data customers
are 25,500 analog video customers, 12,500 digital video
customers and 12,200 high-speed data customers sold in the Port
Orchard, Washington sale on October 1, 2003. Our goal is to
increase revenues by mitigating our past analog video customer
losses, implementing limited price increases on certain services
and packages and increasing revenues from incremental high-speed
data services, digital video and advanced products and services
such as digital video recorders, high definition television, VOD
and telephony using VOIP to our existing customer base and
commercial customers.
Average monthly revenue per analog video customer
increased from $56.91 for the year ended December 31, 2002
to $61.92 for the year ended December 31, 2003. Average
monthly revenue per analog video customer represents total
annual revenue, divided by twelve, divided by the average number
of analog video customers.
Revenues by service offering are as follows
(dollars in millions):
Year Ended December 31,
2003
2002
2003 over 2002
Revenues
% of Revenues
Revenues
% of Revenues
Change
% Change
Video
$
3,461
72
%
$
3,420
75
%
$
41
1
%
High-speed data
556
12
%
337
7
%
219
65
%
Advertising sales
263
5
%
302
7
%
(39
)
(13
)%
Commercial
204
4
%
161
3
%
43
27
%
Other
335
7
%
346
8
%
(11
)
(3
)%
$
4,819
100
%
$
4,566
100
%
$
253
6
%
Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues increased by $41 million, or 1%,
for the year ended December 31, 2003 compared to the year
ended December 31, 2002. The increase was primarily due to
price increases partially offset by a decline in analog and
digital video customers.
Revenues from high-speed data services provided
to our non-commercial customers increased $219 million, or
65%, from $337 million for the year ended December 31,
2002 to $556 million for the year ended December 31,
2003. Approximately 93% of the increase related to the increase
in the average number of customers, whereas approximately 7%
related to the increase in average price of the service. The
increase was primarily due to the addition of high-speed data
customers within our existing service areas. We were also able
to offer this service to more of our customers, as the estimated
percentage of homes passed that could receive high-speed data
service increased from 82% as of December 31, 2002 to 87%
as of December 31, 2003 as a result of our system upgrades.
Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales decreased $39 million, or
13%, from $302 million for the year ended December 31,
2002, to $263 million for the year ended December 31,
2003 primarily as a result of a decrease in advertising from
vendors offset partially by an increase in local advertising
sales revenues. For the years ended December 31, 2003 and
2002, we received $15 million and $79 million,
respectively, in advertising revenue from vendors.
Commercial revenues consist primarily of revenues
from video and high-speed data services to our commercial
customers. Commercial revenues increased $43 million, or
27%, from $161 million for the year
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ended December 31, 2002, to
$204 million for the year ended December 31, 2003,
primarily due to an increase in commercial high-speed data
revenues.
Other revenues consist of revenues from franchise
fees, equipment rental, customer installations, home shopping,
dial-up Internet service, late payment fees, wire maintenance
fees and other miscellaneous revenues. For the year ended
December 31, 2003 and 2002, franchise fees represented
approximately 48% and 46%, respectively, of total other
revenues. Other revenues decreased $11 million, or 3%, from
$346 million for the year ended December 31, 2002 to
$335 million for the year ended December 31, 2003. The
decrease was due primarily to a decrease in franchise fees after
an FCC ruling in March 2002, no longer requiring the collection
of franchise fees for high-speed data services. Franchise fee
revenues are collected from customers and remitted to franchise
authorities.
The decrease in accounts receivable of 27%
compared to the increase in revenues of 6% is primarily due to
the timing of collection of receivables from programmers for
fees associated with the launching of their networks coupled
with our tightened credit and collections policy. These fees
from programmers are not recorded as revenue but, rather, are
recorded as reductions of programming expense on a straight-line
basis over the term of the contract. Programmer receivables
decreased $40 million, or 57%, from $70 million as of
December 31, 2002 to $30 million as of
December 31, 2003.
Operating expenses.
Operating expenses increased
$145 million, or 8%, from $1.8 billion for the year
ended December 31, 2002 to $2.0 billion for the year
ended December 31, 2003. Programming costs included in the
accompanying consolidated statements of operations were
$1.2 billion and $1.2 billion, representing 64% and
65% of total operating expenses for the years ended
December 31, 2003 and 2002, respectively. Key expense
components as a percentage of revenues are as follows (dollars
in millions):
Year Ended December 31,
2003
2002
2003 over 2002
% of
% of
%
Expenses
Revenues
Expenses
Revenues
Change
Change
Programming
$
1,249
26
%
$
1,166
26
%
$
83
7
%
Advertising sales
88
2
%
87
2
%
1
1
%
Service
615
12
%
554
12
%
61
11
%
$
1,952
40
%
$
1,807
40
%
$
145
8
%
Programming costs consist primarily of costs paid
to programmers for the provision of analog, premium and digital
channels and pay-per-view programs. The increase in programming
costs of $83 million, or 7%, was due to price increases,
particularly in sports programming, and due to an increased
number of channels carried on our systems, partially offset by
decreases in analog and digital video customers. Programming
costs were offset by the amortization of payments received from
programmers in support of launches of new channels against
programming costs of $62 million and $57 million for
the year ended December 31, 2003 and 2002, respectively.
Our cable programming costs have increased, in
every year we have operated, in excess of customary inflationary
and cost-of-living type increases, and we expect them to
continue to increase due to a variety of factors, including
additional programming being provided to customers as a result
of system rebuilds that increase channel capacity, increased
costs to produce or purchase cable programming and inflationary
or negotiated annual increases. Our increasing programming costs
will result in declining video product margins to the extent we
are unable to pass on cost increases to our customers. We expect
to partially offset any resulting margin compression from our
traditional video services with revenue from advanced video
services, increased incremental high-speed data revenues,
advertising revenues and commercial services revenues.
Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries and benefits and
commissions. Advertising sales expenses increased
$1 million, or 1%, primarily due to increased sales
commissions, taxes and benefits. Service costs
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consist primarily of service personnel salaries
and benefits, franchise fees, system utilities, Internet service
provider fees, maintenance and pole rent expense. The increase
in service costs of $61 million, or 11%, resulted primarily
from additional activity associated with ongoing infrastructure
maintenance and customer service, including activities
associated with our promotional program.
Selling, general and administrative
expenses.
Selling, general and
administrative expenses decreased by $23 million, or 2%,
from $963 million for the year ended December 31, 2002
to $940 million for the year ended December 31, 2003.
Key components of expense as a percentage of revenues are as
follows (dollars in millions):
Year Ended December 31,
2003
2002
2003 over 2002
% of
% of
%
Expenses
Revenues
Expenses
Revenues
Change
Change
General and administrative
$
833
17
%
$
810
18
%
$
23
3
%
Marketing
107
2
%
153
3
%
(46
)
(30
)%
$
940
19
%
$
963
21
%
$
(23
)
(2
)%
General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $23 million, or 3%, resulted primarily from
increases in salaries and benefits of $4 million, call
center costs of $25 million and internal network costs of
$16 million. These increases were partially offset by a
decrease in bad debt and collection expense of $27 million
as we continue to realize benefits from our strengthened credit
policies.
Marketing expenses decreased $46 million, or
30%, due to reduced promotional activity related to our service
offerings including reductions in advertising, telemarketing and
direct sales activities. However, we expect marketing expenses
to increase in 2004.
Depreciation and
amortization.
Depreciation and
amortization expense increased by $17 million, or 1%, from
$1.4 billion in 2002 to $1.5 billion in 2003 due
primarily to an increase in depreciation expense related to
additional capital expenditures in 2003 and 2002.
Impairment of
franchises.
We performed our annual
impairment assessments on October 1, 2002 and 2003 using an
independent third-party appraiser. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in our valuation led to a $4.6 billion impairment
charge in the fourth quarter of 2002. Our 2003 assessment
performed on October 1, 2003 did not result in an
impairment. We do not expect to incur impairment charges of
comparable magnitude to the 2002 charge in the future.
Loss on sale of assets,
net.
Loss on sale of assets for the
year ended December 31, 2003 represents $26 million of
losses related to the disposition of fixed assets offset by the
$21 million gain recognized on the sale of cable systems in
Port Orchard, Washington which closed on October 1, 2003.
Loss on sale of assets for the year ended December 31, 2002
represents losses related to the disposition of fixed assets.
Option compensation expense (income),
net.
Option compensation expense
decreased by $1 million for the year ended
December 31, 2003 compared to the year ended
December 31, 2002. Option compensation expense includes
expense related to exercise prices on certain options that were
issued prior to our initial public offering in 1999 that were
less than the estimated fair values of our common stock at the
time of grant. Compensation expense is being recognized over the
vesting period of such options and will continue to be recorded
until the last vesting period lapses in April 2004. On
January 1, 2003, we adopted SFAS No. 123,
Accounting for Stock-Based Compensation
, using the
prospective method under which we will recognize compensation
expense of a stock-based award to an employee over the vesting
period based on the fair value of the award on the grant date.
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Table of Contents
Special charges,
net.
Special charges of
$21 million for the year ended December 31, 2003
represent approximately $26 million of severance and
related costs of our ongoing initiative to reduce our workforce
partially offset by a $5 million credit from a settlement
from the Internet service provider Excite@Home related to the
conversion of about 145,000 high-speed data customers to our
Charter Pipeline service in 2001. In the fourth quarter of 2002,
we recorded a special charge of $35 million, of which
$31 million is associated with our workforce reduction
program. The remaining $4 million is related to legal and
other costs associated with our shareholder lawsuits and
governmental investigations. We expect to continue to record
additional special charges in 2004 related to the reorganization
of our operations and costs of litigation.
Unfavorable contracts and other
settlements.
Unfavorable contracts and
other settlements of $72 million for the year ended
December 31, 2003 represents the settlement of estimated
liabilities recorded in connection with prior business
combinations. The majority of this benefit (approximately
$52 million) is due to the renegotiation in 2003 of a major
programming contract, for which a liability had been recorded
for the above market portion of that agreement in conjunction
with the Falcon acquisition in 1999 and the Bresnan acquisition
in 2000. The remaining benefit relates to the reversal of
previously recorded liabilities, which, based on an evaluation
of current facts and circumstances, are no longer required.
Interest expense,
net.
Net interest expense increased by
$54 million, or 4%, from $1.5 billion for the year
ended December 31, 2002 to $1.6 billion for the year
ended December 31, 2003. The increase in net interest
expense was a result of increased average debt outstanding in
2003 of $18.9 billion compared to $17.8 billion in
2002, partially offset by a decrease in our average borrowing
rate from 8.02% in 2002 to 7.99% in 2003. The increased debt was
primarily used for capital expenditures.
Gain (loss) on derivative instruments and
hedging activities, net.
Net gain on
derivative instruments and hedging activities increased
$180 million from a loss of $115 million for the year
ended December 31, 2002 to a gain of $65 million for
the year ended December 31, 2003. The increase is primarily
due to an increase in gains on interest rate agreements, which
do not qualify for hedge accounting under
SFAS No. 133,
Accounting for Derivative Instruments
and Hedging Activities
, which increased from a loss of
$101 million for the year ended December 31, 2002 to a
gain of $57 million for the year ended December 31,
2003.
Gain on debt exchange,
net.
Net gain on debt exchange of
$267 million for the year ended December 31, 2003
represents the gain realized on the purchase, in a non-monetary
transaction, of a total of $609 million principal amount of
our outstanding convertible senior notes and $1.3 billion
principal amount of Charter Holdings' senior notes and
senior discount notes in consideration for a total of
$1.6 billion principal amount of 10.25% notes due 2010
issued by our indirect subsidiary, CCH II. The gain is net
of the write-off of deferred financing costs associated with the
retired debt of $27 million.
Loss on equity
investments.
Loss on equity
investments remained constant at $3 million for the years
ended December 31, 2003 and 2002. Loss on equity
investments is primarily due to losses on investments carried
under the equity method of accounting offset by realized gains
on marketable securities.
Other expense, net.
Other expense increased by $12 million from $1 million
in 2002 to $13 million in 2003. This increase is primarily
due to increases in costs associated with amending a revolving
credit facility of our subsidiaries and costs associated with
terminated debt transactions.
Minority interest.
Minority interest represents the allocation of losses to the
minority interest based on ownership of Charter Holdco, the 10%
dividend on preferred membership units in our indirect
subsidiary, Charter Helicon, LLC and the 2% accretion of the
preferred membership interests in our indirect subsidiary, CC
VIII, LLC, and since June 6, 2003, the pro rata share of
the profits of CC VIII, LLC. See "Certain Relationships and
Related Transactions — Transactions Arising Out of Our
Organizational Structure and Mr. Allen's Investment in
Charter Communications, Inc. and Its Subsidiaries —
Equity Put Rights — CC VIII." Additionally,
reported losses allocated to minority interest on the statement
of operations will be limited to the extent of any remaining
minority interest on the
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Table of Contents
balance sheet related to Charter Holdco.
Accordingly, commencing in 2004, Charter expects to absorb all,
or substantially all, future losses before income taxes because
minority interest in Charter Holdco was substantially eliminated
at December 31, 2003. For the year ended December 31,
2003, 53.5% of our losses before income taxes were classified as
minority interest.
Income Tax Benefit.
Income tax benefit of $110 million and $460 million
was recognized for the years ended December 31, 2003 and
2002, respectively. The income tax benefit was realized through
decreases in certain deferred tax liabilities related to our
investment in Charter Holdco, as well as to the change in the
deferred tax liabilities of certain of our indirect corporate
subsidiaries. In 2003, Charter received tax loss allocations
from Charter Holdco. Previously, the tax losses had been
allocated to Vulcan Cable III Inc. and Charter Investment,
Inc. in accordance with the Special Loss Allocations provided
under the Charter Holdco limited liability company agreement. We
do not expect to recognize a similar benefit related to our
investment in Charter Holdco after 2003 due to limitations on
our ability to offset future tax benefits against the remaining
deferred tax liabilities. However, the actual tax provision
calculation in future periods will be the result of current and
future temporary differences, as well as future operating
results.
Cumulative effect of accounting change, net of
tax.
Cumulative effect of accounting
change in 2002 represents the impairment charge recorded as a
result of adopting SFAS No. 142.
Net loss.
Net loss
decreased by $2.3 billion, or 91%, from $2.5 billion
in 2002 to $238 million in 2003 as a result of the factors
described above. The impact of the gain on sale of system,
unfavorable contracts and settlements and gain on debt exchange,
net of minority interest and income tax impacts, was to decrease
net loss by $168 million in 2003. The impact of the
impairment of franchises and the cumulative effect of accounting
change, net of minority interest and income tax impacts, was to
increase net loss by $1.6 billion in 2002.
Preferred stock
dividends.
On August 31, 2001,
Charter issued 505,664 shares (and on February 28,
2003 issued an additional 39,595 shares) of Series A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition in August 2001, on which it pays a
quarterly cumulative cash dividends at an annual rate of 5.75%
on a liquidation preference of $100 per share.
Loss per common
share.
The loss per common share
decreased by $7.73, from $8.55 per common share for the
year ended December 31, 2002 to $0.82 per common share
for the year ended December 31, 2003 as a result of the
factors described above.
Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001
Revenues.
Revenues
increased by $759 million, or 20%, from $3.8 billion
in 2001 to $4.6 billion in 2002. This increase is
principally the result of an increase of 538,000 and 585,200 in
the number of digital video and high-speed data customers,
respectively, as well as price increases, and is offset by a
decrease of 357,400 in analog video customers. Average monthly
revenue per analog video customer increased from $45.68 in 2001
to $56.91 in 2002. Average monthly revenue per analog video
customer represents total annual revenue, divided by twelve,
divided by the average number of analog video customers.
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Table of Contents
Revenues by service offering are as follows
(dollars in millions):
Year Ended December 31,
2002
2001
2002 over 2001
Revenues
% of Revenues
Revenues
% of Revenues
Change
% Change
Video
$
3,420
75
%
$
2,971
78
%
$
449
15
%
High-speed data
337
7
%
148
4
%
189
128
%
Advertising sales
302
7
%
197
5
%
105
53
%
Commercial
161
3
%
123
3
%
38
31
%
Other
346
8
%
368
10
%
(22
)
(6
)%
$
4,566
100
%
$
3,807
100
%
$
759
20
%
Video revenues consist primarily of revenues from
analog and digital video services provided to our non-commercial
customers. Video revenues increased by $449 million, or
15%, to $3.4 billion in 2002 compared to $3.0 billion
in 2001. The increase was due to a full year of revenue from the
AT&T Broadband systems acquired in June 2001, general price
increases and the addition of approximately 538,000 digital
video customers partially offset by a reduction of approximately
357,400 analog video customers. Overall, the net increase in the
average number of customers resulted in approximately 7% of the
increase in video revenue, whereas approximately 93% resulted
from the increase in average price of our video products.
Revenues from high-speed data services provided
to our non-commercial customers increased $189 million, or
128%, from $148 million for the year ended
December 31, 2001 to $337 million for the year ended
December 31, 2002. Approximately 73% of the increase
related to the increase in the average number of customers,
whereas approximately 27% related to the increase in average
price of the service. The increase was primarily due to the
addition of 585,200 high-speed data customers. Between 2001 and
2002, we were able to offer this service to more of our
customers, as the estimated percentage of homes passed that
could receive high-speed data service increased from 66% to 82%
as a result of our ongoing system upgrades.
Advertising sales revenues consist primarily of
revenues from commercial advertising customers, programmers and
other vendors. Advertising sales increased $105 million, or
53%, from $197 million in 2001 to $302 million in
2002. The increase was due to an increase of $53 million,
from $13 million in 2001 to $66 million in 2002, in
advertising contracts with programmers, $40 million of
additional sales primarily due to the increased advertising
capacity as a result of an increased number of channels carried
by our systems and $14 million related to the acquisition
of AT&T Broadband systems in June 2001. For the years ended
December 31, 2002 and 2001, we received $13 million
and $14 million, respectively, in advertising revenues from
our two largest suppliers of digital set-top terminals
representing 0.3% and 0.4% of total revenues, respectively.
Revenues from advertising provided to vendors and programmers
are recognized based upon the fair value of advertising. Vendor
advertising purchases are made pursuant to written agreements
that are generally consistent with other third-party commercial
advertising agreements and at prices that we believe approximate
fair value. In some cases we purchased equipment from the
vendors at the same time.
Commercial revenues consist primarily of revenues
from video and high-speed data services to our commercial
customers. Commercial revenues increased $38 million, or
31%, from $123 million for the year ended December 31,
2001, to $161 million for the year ended December 31,
2002, primarily due to an increase in commercial high-speed data
revenues.
Other revenues consist of revenues from franchise
fees, equipment rental, customer installations, home shopping,
dial-up Internet service, late payment fees, wire maintenance
fees and other miscellaneous revenues. For the years ended
December 31, 2002 and 2001, franchise fees represented
approximately 46% and 39%, respectively, of total other
revenues. Other revenues decreased $22 million, or 6%, from
$368 million for the year ended December 31, 2001 to
$346 million for the year ended December 31,
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Table of Contents
2002. The decrease was due to decreases in late
payment fees charged to customers and other miscellaneous
revenues. Franchise fee revenues are collected from customers
and remitted to franchise authorities.
The decrease in accounts receivable of 11%
compared to the increase in revenues of 20% is primarily due to
the timing of collection of receivables from programmers for
fees associated with the launching of their networks, coupled
with our tightened credit and collections policy. These fees
from programmers are not recorded as revenue but, rather, are
recorded as reductions of programming expense on a straight-line
basis over the term of the contract. Programmer receivables
decreased $27 million, or 28%, from $97 million as of
December 31, 2001 to $70 million as of
December 31, 2002.
Operating expenses.
Operating expenses increased
$321 million, or 22%, from $1.5 billion in 2001 to
$1.8 billion in 2002. Programming costs included in the
accompanying consolidated statements of operations were
$1.2 billion and $963 million, representing 65% of
total operating expenses for the years ended December 31,
2002 and 2001, respectively. Key expense components as a
percentage of revenues are as follows (dollars in millions):
Year Ended December 31,
2002
2001
2002 over 2001
% of
% of
Expenses
Revenues
Expenses
Revenues
Change
% Change
Programming
$
1,166
26
%
$
963
25
%
$
203
21
%
Advertising sales
87
2
%
64
2
%
23
36
%
Service
554
12
%
459
12
%
95
21
%
$
1,807
40
%
$
1,486
39
%
$
321
22
%
Programming costs consist primarily of costs paid
to programmers for the provision of analog, premium and digital
channels and pay-per-view programs. The increase in programming
costs of $203 million, or 21%, was primarily due to price
increases, particularly in sports programming, an increased
number of channels carried on our systems and an increase in
digital video customers. In addition, approximately
$51 million of the increase results from a full year of
costs related to the acquisition of AT&T Broadband systems
in June 2001. Programming costs were offset by the amortization
of payments received from programmers in support of launches of
new channels against programming costs of $57 million and
$35 million for the years ended December 31, 2002 and
2001, respectively.
Advertising sales expenses consist of costs
related to traditional advertising services provided to
advertising customers, including salaries and benefits and
commissions. Advertising sales expenses increased
$23 million, or 36%, primarily due to increased sales
commissions resulting from the increase in advertising revenues.
Service costs consist primarily of service personnel salaries
and benefits, franchise fees, system utilities, Internet service
provider fees, maintenance and pole rent expense. The increase
in service costs of $95 million, or 21%, resulted primarily
from our growth in digital video and high-speed data services.
Selling, general and administrative
expenses.
Selling, general and
administrative expenses increased by $137 million, or 17%,
from $826 million for the year ended December 31, 2001
to $963 million for the year ended December 31, 2002.
Key components of expense as a percentage of revenues are as
follows (dollars in millions):
Year Ended December 31,
2002
2001
2002 over 2001
% of
% of
%
Expenses
Revenues
Expenses
Revenues
Change
Change
General and administrative
$
810
18
%
$
689
18
%
$
121
18
%
Marketing
153
3
%
137
4
%
16
12
%
$
963
21
%
$
826
22
%
$
137
17
%
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Table of Contents
General and administrative expenses consist
primarily of salaries and benefits, rent expense, billing costs,
call center costs, internal network costs, bad debt expense and
property taxes. The increase in general and administrative
expenses of $121 million, or 18%, resulted primarily from
increases in salaries and benefits of $66 million, bad debt
and collection expense of $24 million and insurance of
$13 million. The increase in bad debt expense resulted
primarily from continuing effects of our aggressive discounting
of our analog video service during late 2000 and most of 2001 in
an effort to grow our customer base and respond to price
competition from satellite providers. This practice led to an
increase in customers during the discounted period whose service
was subsequently disconnected for non-payment or who
subsequently cancelled their service without payment for
services provided. We also lengthened the period during which we
extended credit to customers, which increased exposure to
customers whose accounts were subject to cancellation and
increased bad debt expense. These increases were partially
offset by a decrease in billing expenses of $12 million as
a result of renegotiated contracts with third-party billing
providers.
Marketing expenses increased $16 million, or
12%, due to increased costs associated with promotions of our
service offerings including advertising, telemarketing and
direct sales.
Depreciation and
amortization.
Depreciation and
amortization expense decreased by $1.2 billion, or 46%,
from $2.7 billion in 2001 to $1.4 billion in 2002.
This decrease was due primarily to the adoption on
January 1, 2002 of SFAS No. 142, which requires
that franchise intangible assets that meet the indefinite life
criteria of SFAS No. 142 no longer be amortized
against earnings but instead be tested for impairment on an
annual basis. As a result of this change, total amortization of
franchise assets decreased from $1.5 billion in 2001 to
$9 million in 2002. The decrease was partially offset by
the increase in depreciation expense related to additional
capital expenditures in 2002.
Impairment of
franchises.
We performed our annual
impairment assessment on October 1, 2002 using an
independent third-party appraiser. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in our valuation led to a $4.6 billion impairment
charge in the fourth quarter of 2002. We do not expect to incur
impairment charges of comparable magnitude in the future.
Loss on sale of assets,
net.
Loss on sale of assets decreased
by $7 million, or 70%, from $10 million for the year ended
December 31, 2001 to $3 million for the year ended
December 31, 2002 primarily as a result of a decrease in
the losses related to the disposition of fixed assets.
Option compensation expense (income),
net.
Option compensation expense
increased by $10 million from $5 million of net
benefit in 2001 to $5 million of expense in 2002. The net
benefit in 2001 was primarily the result of the reversal of
$22 million of expense previously recorded in connection
with approximately 7 million options for which the rights
were waived by our former President and Chief Executive Officer
as part of his September 2001 separation agreement. Option
compensation expense was recorded in 2002 because exercise
prices on certain options issued prior to our initial public
offering in 1999 were less than the estimated fair values of our
common stock at the time of grant. Compensation expense is being
recognized over the vesting period of such options, which ends
in April 2004. On January 1, 2003, we adopted
SFAS No. 123 using the prospective method under which
we recognize compensation expense of a stock-based award to an
employee over the vesting period based on the fair value of the
award on the grant date. For more information, see Note 19
to our consolidated financial statements attached hereto.
Special charges,
net.
In the fourth quarter of 2002, we
recorded a special charge of $35 million, of which
$31 million is associated with our workforce reduction
program. The remaining $4 million is related to legal and
other costs associated with our shareholder lawsuits and
governmental investigations. Special charges of $18 million
in 2001 represent charges associated with the transition of
approximately 145,000 data customers from the Excite@Home
Internet service to our Charter Pipeline (now known as Charter
High Speed Internet) service, as well as employee severance
costs.
Interest expense,
net.
Net interest expense increased by
$193 million, or 15%, from $1.3 billion in 2001 to
$1.5 billion in 2002. The increase in net interest expense
was a result of increased average debt outstanding in 2002 of
$17.8 billion compared to $15.7 billion in 2001,
partially offset by a decrease in our
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Table of Contents
average borrowing rate from 8.40% in 2001 to
8.02% in 2002. The increased debt was used for capital
expenditures.
Gain (loss) on derivative instruments and
hedging activities, net.
Loss on
derivative instruments and hedging activities increased
$65 million from $50 million for the year ended
December 31, 2001 to $115 million for the year ended
December 31, 2002. The increase is primarily due to an
increase in losses on interest rate agreements, which do not
qualify for hedge accounting under SFAS No. 133, which
increased from $48 million for the year ended
December 31, 2001 to $101 million for the year ended
December 31, 2002.
Loss on equity
investments.
Loss on equity
investments decreased by $51 million, or 94%, from
$54 million for the year ended December 31, 2001 to
$3 million for the year ended December 31, 2002. This
decrease is primarily due to a decrease of $38 million in
our investment in High Speed Access, a related party until our
acquisition of certain of its assets, as described more fully in
"Certain Relationships and Related Transactions."
Minority interest.
Minority interest increased by $1.7 billion, from
$1.5 billion in 2001 to $3.2 billion in 2002. Minority
interest represents the allocation of losses to the minority
interest based on ownership of Charter Holdco, the 10% dividend
on preferred membership units in our indirect subsidiary,
Charter Helicon, LLC, and the 2% accretion of the preferred
membership interests in our indirect subsidiary, CC VIII,
LLC issued to certain sellers of the Bresnan systems acquired by
CC VIII systems in February 2000. The increase is a result
of an increase in loss before minority interest. See
"Certain Relationships and Related Transactions —
Transactions Arising Out of Our Organizational Structure and
Mr. Allen's Investment in Charter Communications, Inc.
and Its Subsidiaries — Equity Put Rights —
CC VIII."
Income tax benefit.
Income tax benefit of $460 million and $12 million
were recognized for the years ended December 31, 2002 and
2001, respectively. The income tax benefits are realized through
reductions in deferred tax liabilities related to our investment
in Charter Holdco, as well as the change in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.
Cumulative effect of accounting change, net of
tax.
Cumulative effect of accounting
change in 2002 represents the impairment charge recorded as a
result of adopting SFAS No. 142. Cumulative effect of
accounting change in 2001 represents losses incurred upon
adoption of SFAS No. 133.
Net loss.
Net loss
increased by $1.3 billion, or 115%, from $1.2 billion
in 2001 to $2.5 billion in 2002 as a result of the
combination of factors described above. The impact of the
impairment of franchises and the cumulative effect of accounting
change, net of minority interest and income tax impacts, was to
increase net loss by $1.6 billion in 2002. This was offset
somewhat by the decrease in amortization expense, net of
minority interest and income tax impacts, in 2002 verses 2001 of
$645 million as a result of the adoption of
SFAS No. 142 on January 1, 2002.
Preferred stock
dividends.
On August 31, 2001,
Charter issued 505,664 shares (and on February 28,
2003 issued an additional 39,595 shares) of Series A
Convertible Redeemable Preferred Stock in connection with the
Cable USA acquisition in August 2001, on which it pays a
quarterly cumulative cash dividends at an annual rate of 5.75%
on a liquidation preference of $100 per share.
Loss per common
share.
The loss per common share
increased by $4.22, from $4.33 per common share for the
year ended December 31, 2001 to $8.55 per common share
for the year ended December 31, 2002 as a result of the
factors described above.
Liquidity and Capital Resources
Introduction
This section contains a discussion of our
liquidity and capital resources, including a discussion of our
cash position, sources and uses of cash, access to credit
facilities and other financing sources, historical financing
activities, cash needs, capital expenditures and outstanding
debt. The discussion of our cash position, our access to credit
facilities and other financing sources and cash needs gives
effect to the
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issuance of the 5.875% convertible senior notes
and the senior floating rate notes in November and December
2004, respectively, and the use of those proceeds, as discussed
in the "Unaudited Pro Forma Consolidated Financial
Statements".
Overview
Our business requires significant cash to fund
debt service costs, capital expenditures and ongoing operations.
We have historically funded our debt service costs, operating
activities and capital requirements through cash flows from
operating activities, borrowings under our credit facilities,
sale of assets, issuances of debt and equity securities and cash
on hand. The mix of funding sources changes from period to
period, but for the nine months ended September 30, 2004,
approximately 49% of our funding requirements were met from cash
flows from operating activities and 51% from proceeds from the
sale of systems. For the nine months ended September 30,
2004, net cash flows used in financing activities were
$431 million, reflecting a net repayment of
$334 million of debt. Additionally, we increased cash on
hand by $2 million to $129 million during the nine
months ended September 30, 2004. We expect that our mix of
sources of funds will continue to change in the future based on
overall needs relative to our cash flow and on the availability
of funds under our credit facilities, our access to the debt and
equity markets, the timing of possible asset sales and our
ability to generate cash flows from operating activities.
We have a significant level of debt. In the
fourth quarter of 2004, $7.5 million of our debt will
mature. An additional $30 million and $186 million of
our debt will mature in 2005 and 2006, respectively. In
addition, the Charter Operating credit facilities require the
$113 million principal amount of CC V Holdings, LLC notes
to be redeemed within 45 days after the Charter Holdings
leverage ratio discussed below is determined to be below 8.75 to
1.0. In 2007 and beyond, significant additional amounts will
become due under our remaining long-term debt obligations.
Our ability to operate depends upon, among other
things, our continued access to capital, including credit under
the Charter Operating credit facilities. These credit facilities
are subject to certain restrictive covenants, some of which
require us to achieve specified operating results. As of
September 30, 2004, we were and, as of the date of this
prospectus, we are in compliance with the covenants under our
credit facilities and our indentures, and we expect to remain in
compliance with those covenants throughout 2005. If our
operating performance results in non-compliance with these
covenants, or if any of certain other events of non-compliance
under these credit facilities or indentures governing our debt
occurs, funding under the credit facilities may not be available
and defaults on some or potentially all debt obligations could
occur. As of September 30, 2004, we had borrowing
availability under the Charter Operating credit facilities of
$957 million, approximately $1.4 billion after giving
effect to the fourth quarter 2004 financing transactions, none
of which was restricted due to covenants.
We expect that cash on hand, cash flows from
operating activities and the amounts available under our credit
facilities will be adequate to meet our cash needs in 2005.
However, as the principal amounts owing under our various debt
obligations become due, meeting our liquidity needs in
subsequent years will depend on our ability to access additional
sources of capital. Cash flows from operating activities and
amounts available under our credit facilities may not be
sufficient to permit us to fund our operations and satisfy our
principal repayment obligations that come due in 2006 and we
believe will not be sufficient to fund our operations and
satisfy such repayment obligations thereafter. Continued access
to our credit facilities is subject to our remaining in
compliance with the applicable covenants of these credit
facilities, including covenants tied to our operating
performance. An event of default under the covenants governing
any of our debt instruments could result in the acceleration of
our payment obligations under that debt and, under certain
circumstances, in cross-defaults under our other debt
obligations, which would have a material adverse effect on our
consolidated financial condition and results of operations.
Our ability to make interest payments on our
convertible senior notes, and, in 2006 and 2009, to repay the
outstanding principal of our convertible senior notes, will
depend on our ability to raise additional capital and/or on
receipt of payments or distributions from Charter Holdco or its
subsidiaries, including CCH II, CCO Holdings, LLC
("CCO Holdings") and Charter Operating. The indentures
governing the
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CCH II notes, CCO Holdings notes, and
Charter Operating notes, however, restrict these entities and
their subsidiaries from making distributions to their parent
companies (including us) for payment of principal on our
convertible senior notes, in each case unless there is no
default under the applicable indenture and a specified leverage
ratio test is met. In addition, each of CCH II, CCO
Holdings and Charter Operating must independently assess whether
such payments or distributions are advisable. CCH II, CCO
Holdings and Charter Operating currently meet the applicable
leverage ratio test under each of their respective indentures,
and therefore are not currently prohibited from making any such
distributions to their respective direct parent.
The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions to Charter
Holdco for payment of interest or principal on our convertible
senior notes, only if, after giving effect to the distribution,
Charter Holdings can incur additional debt under the leverage
ratio test of 8.75 to 1.0, there is no default under Charter
Holdings' indentures and other specified tests are met. For
the quarter ended September 30, 2004, there were no
defaults under the Charter Holdings indentures and the other
specified tests were met. However, Charter Holdings continued
not to meet the leverage ratio test of 8.75 to 1.0 at
September 30, 2004. As a result, distributions from Charter
Holdings to Charter or Charter Holdco have been restricted and
will continue to be restricted until that test is met.
During this restriction period, the indentures
governing the Charter Holdings notes permit Charter Holdings and
its subsidiaries to make specified investments in Charter Holdco
or Charter, up to an amount determined by a formula, as long as
there is no default under the indentures. As of
September 30, 2004, Charter Holdco had $31 million in
cash on hand ($120 million after giving effect to the
fourth quarter 2004 financing transactions) and was owed
$39 million in intercompany loans from its subsidiaries,
which were available to Charter Holdco to pay interest on
Charter's convertible senior notes, which is expected to be
approximately $27 million for the remainder of 2004.
As a result of the foregoing, it is likely that
Charter or Charter Holdco will require additional funding to
repay debt maturing in 2006. We are working with our financial
advisors to address such funding requirements. However, there
can be no assurance that such funding will be available to us.
Although Mr. Allen and his affiliates have purchased equity
from us in the past, Mr. Allen and his affiliates are not
obligated to purchase equity from, contribute to or loan funds
to us in the future.
It is likely that our significant amount of debt
will negatively affect our ability to access additional capital
in the future. No assurances can be given that we will not
experience liquidity problems because of adverse market
conditions, increased competition or other unfavorable events or
if we do not obtain sufficient additional financing on a timely
basis as our debt becomes due. If, at any time, additional
capital or borrowing capacity is required beyond amounts
internally generated or available through existing credit
facilities or through additional debt or equity financings, we
would consider:
•
issuing equity that would significantly dilute
    existing shareholders;
•
issuing convertible debt or some other securities
    that may have structural or other priority over our existing
    notes and may also significantly dilute Charter's existing
    shareholders;
•
further reducing our expenses and capital
    expenditures, which would likely impair our ability to increase
    revenue;
•
selling assets;
•
issuing debt securities that may have structural
    or other priorities over our existing notes; or
•
requesting waivers or amendments with respect to
    our credit facilities, the availability and terms of which would
    be subject to market conditions.
If the above strategies are not successful,
ultimately, we could be forced to restructure our obligations or
seek protection under the bankruptcy laws. In addition, if we
need to raise additional capital through the issuance of equity
or find it necessary to engage in a recapitalization or other
similar transaction, our
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shareholders could suffer significant dilution
and our noteholders might not receive all principal and interest
payments to which they are contractually entitled.
On March 1, 2004, we closed the sale of
certain cable systems in Florida, Pennsylvania, Maryland,
Delaware and West Virginia to Atlantic Broadband Finance, LLC.
We closed on the sale of an additional cable system in New York
to Atlantic Broadband Finance, LLC in April 2004. Subject to
post-closing contractual adjustments, we expect the total net
proceeds from the sale of all of these systems to be
approximately $733 million, of which $5 million is
currently held in an indemnity escrow account (with the unused
portion thereof to be released by March 1, 2005). The
proceeds received to date have been used to repay a portion of
our credit facilities.
Summary of Outstanding Contractual
    Obligations
The following table summarizes our payment
obligations as of December 31, 2003 under our long-term
debt and certain other contractual obligations and commitments
(dollars in millions).
Payments by Period
Less than
1-3
3-5
More than
Total
1 Year
Years
Years
5 Years
Contractual Obligations
Long-Term Debt(1)
$
19,208
$
188
$
2,199
$
6,293
$
10,528
Capital and Operating Lease Obligations(1)
80
19
29
14
18
Programming Minimum Commitments(2)
1,949
320
684
703
242
Other(3)
282
63
86
49
84
Total
$
21,519
$
590
$
2,998
$
7,059
$
10,872
(1)
The tables present maturities of long-term debt
    outstanding as of December 31, 2003 and does not reflect
    the effects of the sale of the Charter Operating senior second
    lien notes, the amendment and restatement of the Charter
    Operating credit facilities, the 5.875% convertible senior notes
    and the senior floating rate notes. Refer to "Description
    of Certain Indebtedness" and Notes 9 and 23 to our
    December 31, 2003 consolidated financial statements
    included in this prospectus for a description of our long-term
    debt and other contractual obligations and commitments.
(2)
We pay programming fees under multi-year
    contracts ranging from three to six years typically based on a
    flat fee per customer, which may be fixed for the term or may in
    some cases, escalate over the term. Programming costs included
    in the accompanying statement of operations were
    $1.2 billion, $1.2 billion and $963 million for
    the years ended December 31, 2003, 2002 and 2001,
    respectively. Certain of our programming agreements are based on
    a flat fee per month or have guaranteed minimum payments. The
    table sets forth the aggregate guaranteed minimum commitments
    under our programming contracts.
(3)
"Other" represents other guaranteed
    minimum commitments, which consist primarily of commitments to
    our billing services vendors.
The following items are not included in the
contractual obligations table due to various factors discussed
below. However, we incur these costs as part of our operations:
•
We also rent utility poles used in our
    operations. Generally, pole rentals are cancelable on short
    notice, but we anticipate that such rentals will recur. Rent
    expense incurred for pole rental attachments for the years ended
    December 31, 2003, 2002 and 2001, was $40 million,
    $41 million and $33 million, respectively.
•
We pay franchise fees under multi-year franchise
    agreements based on a percentage of revenues earned from video
    service per year. We also pay other franchise related costs,
    such as public education grants under multi-year agreements.
    Franchise fees and other franchise-related costs
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included in the accompanying statement of
    operations were $162 million, $160 million and
    $144 million for the years ended December 31, 2003,
    2002 and 2001, respectively.
•
We also have $153 million in letters of
    credit, primarily to our various worker's compensation,
    property casualty and general liability carriers as collateral
    for reimbursement of claims. These letters of credit reduce the
    amount we may borrow under our credit facilities.
Historical Operating, Financing and
    Investing Activities
We held $129 million in cash and cash
equivalents as of September 30, 2004 compared to
$127 million as of December 31, 2003. The decrease in
cash and cash equivalents reflects the use of cash in funding
operations, capital expenditures and debt service cost.
Operating
Activities.
Net cash provided by
operating activities decreased $255 million, or 40%, from
$638 million for the nine months ended September 30,
2003 to $383 million for the nine months ended
September 30, 2004. For the nine months ended
September 30, 2004, net cash provided by operating
activities decreased primarily as a result of changes in
operating assets and liabilities that provided $80 million
less cash during the nine months ended September 30, 2004
than the corresponding period in 2003 and an increase in cash
interest expense of $146 million over the corresponding
prior period. The change in operating assets and liabilities is
primarily the result of the benefit in the nine months ended
September 30, 2003 from collection of receivables from
programmers related to network launches, while accounts
receivable remained essentially flat in the nine months ended
September 30, 2004.
Net cash provided by operating activities for the
years ended December 31, 2003, 2002 and 2001 was
$765 million, $748 million and $489 million,
respectively. Operating activities provided $17 million
more cash in 2003 than in 2002 primarily due to an increase in
revenue over cash costs year over year partially offset by
changes in operating assets and liabilities that provided
$82 million less cash in 2003 than in 2002.
Operating activities provided $259 million
more cash in 2002 than in 2001 primarily due to increased
revenues of $759 million over 2001 and changes in operating
assets and liabilities that provided $65 million more cash
in 2002 than in 2001 offset in part by increases in operating
expenses and cash interest expense.
Investing
Activities.
Net cash provided by
investing activities for the nine months ended
September 30, 2004 was $50 million and net cash used
in investing activities for the nine months ended
September 30, 2003 was $628 million. Investing
activities provided $678 million more cash during the nine
months ended September 30, 2004 than the corresponding
period in 2003 primarily as a result of proceeds from the sale
of certain cable systems to Atlantic Broadband Finance, LLC.
Net cash used in investing activities for the
years ended December 31, 2003, 2002 and 2001 was
$817 million, $2.4 billion and $4.8 billion,
respectively. Investing activities used $1.5 billion less
cash in 2003 than in 2002 primarily as a result of reductions in
capital expenditures and acquisitions. Purchases of property,
plant and equipment used $1.3 billion less cash in 2003
than in 2002 as a result of reduced rebuild and upgrade
activities and our efforts to reduce capital expenditures.
Payments for acquisitions used $139 million less cash in
2003 than in 2002.
Investing activities used $2.4 billion less
cash in 2002 than in 2001 primarily as a result of reductions in
capital expenditures and acquisitions. Purchases of property,
plant and equipment used $746 million less cash in 2002
than in 2001 as a result of our efforts to reduce capital
expenditures. Payments for acquisitions used $1.6 billion
less cash in 2002 than in 2001.
Financing
Activities.
Net cash used in financing
activities for the nine months ended September 30, 2004 and
2003 was $431 million and $196 million, respectively.
The increase in cash used during the nine months ended
September 30, 2004, as compared to the corresponding period
in 2003, was primarily the result of an increase in net
repayments of long-term debt.
Net cash used in financing activities was
$142 million for the year ended December 31, 2003,
whereas net cash provided by financing activities for the year
ended December 31, 2002 and 2001 was $1.9 billion
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and $4.2 billion, respectively. Financing
activities provided $2.1 billion less cash in 2003 than in
2002. The decrease in cash provided in 2003 compared to 2002 was
primarily due to a decrease in borrowings of long-term debt.
Financing activities provided $2.2 billion
less cash in 2002 than in 2001. The decrease in cash provided in
2002 compared to 2001 was primarily due to a decrease in
borrowings of long-term debt. In addition, in 2001 we received
proceeds from the issuance of Class A common stock of
$1.2 billion which did not recur in 2002. These decreases
in cash provided were offset partially by decreases in cash used
for repayments of long-term debt.
Capital Expenditures
We have significant ongoing capital expenditure
requirements. However, we experienced a significant decline in
such requirements in 2004 and 2003, compared to prior years.
This decline in 2004 and 2003 was primarily the result of a
substantial reduction in rebuild costs as our network had been
largely upgraded and rebuilt in prior years, consumption of
inventories, negotiated savings in contract labor and network
components including digital set-top terminals and cable modems
and reduced volume of installation related activities.
Capitalized labor and overhead declined $161 million in
2003 compared to 2002. Capital expenditures, excluding
acquisitions of cable systems, were $639 million,
$503 million, $854 million, $2.2 billion and
$2.9 billion for the nine months ended September 30,
2004 and 2003 and the years ended December 31, 2003, 2002
and 2001, respectively. The majority of the capital expenditures
in 2004 and 2003 related to our customer premise equipment
costs. The majority of the capital expenditures in 2002 related
to our rebuild and upgrade program and purchases of customer
premise equipment. See the table below for more details.
Upgrading our cable systems has enabled us to
offer digital television, high-speed data services, VOD,
interactive services, additional channels and tiers, and
expanded pay-per-view options to a larger customer base. Our
capital expenditures are funded primarily from cash flows from
operating activities, the issuance of debt and borrowings under
credit facilities. In addition, during the nine months ended
September 30, 2004 and 2003 and the years ended
December 31, 2003, 2002 and 2001, our liabilities related
to capital expenditures decreased $23 million,
$109 million, $33 million, $55 million and
$88 million, respectively.
During 2004, we expect to spend a total of
$850 million to $950 million on capital expenditures.
We expect that the nature of these expenditures will continue to
shift from upgrade/rebuild costs to customer premise equipment
and scalable infrastructure costs. Expected capital expenditures
for 2004 are consistent with our total capital expenditures for
2003 and significantly lower than 2002 levels because our
rebuild and upgrade plans are largely completed, a greater
portion of our work force is focused on maintenance and period
related activities, our purchases of digital set-top terminals
have declined and the volume of installation related activities
has declined. We expect to fund capital expenditures for 2004
primarily from cash flows from operating activities and
borrowings under our credit facilities.
We have adopted capital expenditure disclosure
guidance, which was developed by eleven publicly traded cable
system operators, including Charter, with the support of the
National Cable & Telecommunications Association
("NCTA"). The new disclosure is intended to provide
more consistency in the reporting of operating statistics in
capital expenditures and customers among peer companies in the
cable industry. These disclosure guidelines are not required
disclosure under GAAP, nor do they impact our accounting for
capital expenditures under GAAP.
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The following table presents our major capital
expenditures categories in accordance with NCTA disclosure
guidelines for the nine months ended September 30, 2004 and
2003, and the years ended December 31, 2003, 2002 and 2001
(dollars in millions):
Nine Months
Ended
For the Years Ended
September 30,
December 31,
2004
2003
2003
2002
2001
Customer premise equipment(a)
$
345
$
253
$
380
$
748
$
926
Scalable infrastructure(b)
55
35
67
261
308
Line extensions(c)
94
69
131
101
161
Upgrade/ Rebuild(d)
28
76
132
777
1,014
Support capital(e)
117
70
144
280
504
Total capital expenditures(f)
$
639
$
503
$
854
$
2,167
$
2,913
(a)
Customer premise equipment includes costs
    incurred at the customer residence to secure new customers,
    revenue units and additional bandwidth revenues. It also
    includes customer installation costs in accordance with
    SFAS 51 and customer premise equipment (e.g., set-top
    terminals and cable modems, etc.).
(b)
Scalable infrastructure includes costs, not
    related to customer premise equipment or our network, to secure
    growth of new customers, revenue units and additional bandwidth
    revenues or provide service enhancements (e.g., headend
    equipment).
(c)
Line extensions include network costs associated
    with entering new service areas (e.g., fiber/coaxial cable,
    amplifiers, electronic equipment, make-ready and design
    engineering).
(d)
Upgrade/rebuild includes costs to modify or
    replace existing fiber/coaxial cable networks, including
    betterments.
(e)
Support capital includes costs associated with
    the replacement or enhancement of non-network assets due to
    technological and physical obsolescence (e.g., non-network
    equipment, land, buildings and vehicles).
(f)
Represents all capital expenditures made during
    the nine months ended September 30, 2004 and 2003 and the
    years ended December 31, 2003, 2002 and 2001, respectively.
Interest Rate Risk
We are exposed to various market risks, including
fluctuations in interest rates. We use interest rate risk
management derivative instruments, such as interest rate swap
agreements and interest rate collar agreements (collectively
referred to herein as interest rate agreements) as required
under the terms of the credit facilities of our subsidiaries.
Our policy is to manage interest costs using a mix of fixed and
variable rate debt. Using interest rate swap agreements, we
agree to exchange, at specified intervals through 2007, the
difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional principal
amount. Interest rate collar agreements are used to limit our
exposure to, and to derive benefits from, interest rate
fluctuations on variable rate debt to within a certain range of
rates. Interest rate risk management agreements are not held or
issued for speculative or trading purposes.
As of September 30, 2004 and
December 31, 2003, long-term debt totaled approximately
$18.5 billion and $18.6 billion, respectively. This
debt was comprised of approximately $5.4 billion and
$7.2 billion of credit facility debt, $12.3 billion
and $10.6 billion principal amount of high-yield notes and
$744 million and $774 million principal amount of
convertible senior notes, respectively. As of September 30,
2004 and December 31, 2003, the weighted average interest
rate on the credit facility debt, was approximately 6.6% and
5.4%, respectively, the weighted average interest rate on the
high-yield notes was approximately 10.3%, and the weighted
average interest rate on the convertible notes was approximately
5.5%, resulting in a blended weighted average interest rate of
8.8% and 8.2%, respectively. Approximately 85% of our debt was
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Table of Contents
effectively fixed including the effects of our
interest rate hedge agreements as of September 30, 2004
compared to approximately 80% at December 31, 2003. The
fair value of our high-yield notes was $10.6 billion and
$9.9 billion at September 30, 2004 and
December 31, 2003, respectively. The fair value of credit
facility debt was $5.3 billion and $6.9 billion at
September 30, 2004 and December 31, 2003,
respectively. The fair value of our convertible senior notes was
$651 million and $732 million at September 30,
2004 and December 31, 2003, respectively. The fair value of
high-yield notes, credit facility debt and convertible senior
notes is based on quoted market prices.
We do not hold or issue derivative instruments
for trading purposes. We do, however, have certain interest rate
derivative instruments that have been designated as cash flow
hedging instruments. Such instruments are those that effectively
convert variable interest payments on certain debt instruments
into fixed payments. For qualifying hedges,
SFAS No. 133 allows derivative gains and losses to
offset related results on hedged items in the consolidated
statement of operations. We have formally documented, designated
and assessed the effectiveness of transactions that receive
hedge accounting. For the nine months ended September 30,
2004 and 2003 and the years ended December 31, 2003, 2002
and 2001, net gain (loss) on derivative instruments and hedging
activities includes gains of $3 million, $8 million,
$8 million and losses of $14 million and
$2 million, respectively, which represent cash flow hedge
ineffectiveness on interest rate hedge agreements arising from
differences between the critical terms of the agreements and the
related hedged obligations. Changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations that meet the effectiveness criteria of
SFAS No. 133 are reported in accumulated other
comprehensive loss. For the nine months ended September 30,
2004 and 2003 and the years ended December 31, 2003, 2002
and 2001, a gain of $31 million, $30 million,
$48 million and losses of $65 million and
$39 million, respectively, related to derivative
instruments designated as cash flow hedges, was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS No. 133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value, with the impact recorded as gain (loss) on
derivative instruments and hedging activities in our condensed
consolidated statements of operations. For the nine months ended
September 30, 2004 and 2003 and the years ended
December 31, 2003, 2002 and 2001, net gain (loss) on
derivative instruments and hedging activities includes gains of
$45 million, $27 million and $57 million and
losses of $101 million and $48 million, respectively,
for interest rate derivative instruments not designated as
hedges.
The table set forth below summarizes the fair
values and contract terms of financial instruments subject to
interest rate risk maintained by us as of September 30,
2004 (dollars in millions):
Fair Value at
September 30,
2004
2005
2006
2007
2008
2009
Thereafter
Total
2004
Debt:
Fixed Rate
$
—
$
588
$
156
$
451
$
227
$
3,398
$
8,631
$
13,451
$
11,232
Average Interest Rate
—
5.75
%
4.75
%
8.25
%
10.93
%
9.60
%
9.32
%
9.18
%
Variable Rate
$
8
$
30
$
30
$
280
$
630
$
780
$
3,635
$
5,393
$
5,319
Average Interest Rate
4.88
%
6.05
%
6.85
%
7.15
%
7.53
%
7.86
%
8.48
%
8.18
%
Interest Rate Instruments:
Variable to Fixed Swaps
$
240
$
990
$
873
$
575
$
—
$
—
$
—
$
2,678
$
101
Average Pay Rate
8.05
%
7.95
%
8.25
%
8.07
%
—
—
—
8.08
%
Average Receive Rate
4.64
%
5.96
%
6.94
%
7.15
%
—
—
—
6.42
%
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The notional amounts of interest rate instruments
do not represent amounts exchanged by the parties and, thus, are
not a measure of our exposure to credit loss. The amounts
exchanged are determined by reference to the notional amount and
the other terms of the contracts. The estimated fair value
approximates the costs (proceeds) to settle the outstanding
contracts. Interest rates on variable debt are estimated using
the average implied forward London Interbank Offering Rate
(LIBOR) rates for the year of maturity based on the yield curve
in effect at September 30, 2004.
At September 30, 2004 and December 31,
2003, we had outstanding $2.7 billion and $3.0 billion
and $20 million and $520 million, respectively, in
notional amounts of interest rate swaps and collars,
respectively. The notional amounts of interest rate instruments
do not represent amounts exchanged by the parties and, thus, are
not a measure of exposure to credit loss. The amounts exchanged
are determined by reference to the notional amount and the other
terms of the contracts.
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BUSINESS
Overview
We are a broadband communications company
operating in the United States, with approximately
6.3 million customers at September 30, 2004. Through
our broadband network of coaxial and fiber optic cable, we offer
our customers traditional cable video programming (analog and
digital, which we refer to as "video" service),
high-speed cable Internet access (which we refer to as
"high-speed data service"), advanced broadband cable
services (such as video on demand ("VOD"), high
definition television service, and interactive television) and,
in some of our markets, we offer telephone service (which we
refer to as "telephony"). See
"Business — Products and Services" for
further description of these terms, including
"customers."
At September 30, 2004, we served
approximately 6.1 million analog video customers, of which
approximately 2.7 million were also digital video
customers. We serve approximately 1.8 million
high–speed data customers (including approximately 205,000
who receive only high-speed data services). We also provided
telephony service to approximately 40,000 customers as of that
date.
At September 30, 2004, our investment in
cable properties, long-term debt and total shareholders'
deficit was $16.3 billion, $18.5 billion and
$4.1 billion, respectively. Our working capital deficit was
$956 million at September 30, 2004. For the nine
months ended September 30, 2004, our revenues were
approximately $3.7 billion.
We have a history of net losses. Further, we
expect to continue to report net losses for the foreseeable
future. Our net losses are principally attributable to
insufficient revenue to cover the interest costs we incur
because of our high level of debt, the depreciation expenses
that we incur resulting from the capital investments we have
made in our cable properties, and the amortization and
impairment of our franchise intangibles. We expect that these
expenses (other than amortization and impairment of franchises)
will remain significant, and we therefore expect to continue to
report net losses for the foreseeable future.
Charter was organized as a Delaware corporation
in 1999 and completed an initial public offering of its
Class A common stock in November 1999. Charter is a holding
company whose principal assets are an approximate 47% equity
interest and a 100% voting interest in Charter Holdco, the
direct parent of Charter Holdings. Charter's only business
is to act as the sole manager of Charter Holdco and its
subsidiaries. As sole manager, Charter controls the affairs of
Charter Holdco and its subsidiaries. Certain of our subsidiaries
commenced operations under the "Charter
Communications" name in 1994, and our growth to date has
been primarily due to acquisitions and business combinations,
most notably acquisitions completed from 1999 through 2001,
pursuant to which we acquired a total of approximately
5.5 million customers. We do not expect to make any
significant acquisitions in the foreseeable future, but plan to
evaluate opportunities to consolidate our operations through
exchanges of cable systems with other cable operators, as they
arise. We may also sell certain assets from time to time.
Paul G. Allen controls Charter with an as-converted common
equity interest of approximately 57% and a beneficial voting
control interest of approximately 92.5% as of September 30,
2004.
Adoption of New Policies
Commencing in January 2002 and continuing through
the first quarter of 2003, our management elected to implement a
number of new policies described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations — Adoption of New Policies."
Business Strategy
Our principal financial goal is to maximize our
return on invested capital. To do so, we will focus on
increasing revenues, growing our customer base, improving
customer retention and enhancing customer satisfaction by
providing reliable, high-quality service offerings, superior
customer service and attractive bundled offerings.
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Specifically, in the near term, we are focusing
on:
•
refining our sales and marketing efforts to grow
    revenues through consistent branding initiatives, promoting our
    advanced services and emphasizing what we believe to be
    advantages over our competitors, including one-stop shopping for
    video, voice, high-speed data and interactive services;
•
enhancing our digital service with new content
    and continued deployment of advanced products such as digital
    video recorder ("DVR") service, high definition
    television service, VOD and subscription video on demand
    ("SVOD," VOD service for selected programming
    categories);
•
implementing what we believe is an attractive and
    competitive price point strategy for various levels and bundled
    packages;
•
improving customer service and satisfaction;
•
managing our operating costs by exercising
    discipline in capital and operational spending; and
•
identifying opportunities to continue to improve
    our balance sheet and liquidity.
We believe that our high-speed data service will
continue to provide a substantial portion of our revenue growth
in the near future. We also plan to continue to expand our
marketing of high-speed data service to the business community,
which we believe has shown an increasing interest in high-speed
data service and private network services.
We believe we offer our customers an excellent
choice of services through a variety of bundled packages,
particularly with respect to our digital video and high-speed
data services. Our digital platform enables us to offer a
significant number and variety of channels, and we offer
customers the opportunity to choose among groups of channel
offerings, including premium channels, and to combine selected
programming with other services such as high-speed data, high
definition television (in selected markets) and VOD (in selected
markets).
We have reduced the number of our customer
contact centers from over 300 at December 31, 2000, to 36
at September 30, 2004. Our 14 largest customer contact
centers now serve approximately 95% of our customers. We
anticipate that this initiative will improve overall customer
satisfaction while reducing costs. We believe that consolidation
and standardization of call centers enable us to provide a more
consistent experience for our customers and to improve sales
through the use of better trained, more efficient and
sales-oriented customer service representatives.
We continue to pursue opportunities to improve
our balance sheet and liquidity. Our efforts in this regard have
resulted in the completion of a number of transactions since
September 2003, as follows:
•
the signing of an agreement providing for the
    issuance by our subsidiaries CCO Holdings, LLC and CCO Holdings
    Capital Corp. of $550 million of senior floating rate notes;
•
the recent sale of $862.5 million of 5.875%
    convertible senior notes due 2009;
•
the sale of non-core cable systems for
    $824 million, the proceeds of which we used to reduce our
    indebtedness;
•
the issuance by our subsidiaries, CCH II and
    Charter Holdings, of approximately $1.6 billion of senior
    notes which they exchanged in private transactions for
    approximately $1.9 billion of outstanding indebtedness of
    Charter and Charter Holdings, resulting in a $294 million
    reduction of our consolidated debt outstanding; and
•
the sale in April 2004 of $1.5 billion of
    senior second lien notes by our subsidiary, Charter
    Communications Operating, LLC ("Charter Operating"),
    together with the concurrent refinancing of its credit
    facilities.
Going forward, we plan to continue to identify
and pursue opportunities to improve our liquidity and reduce
indebtedness in order to enhance the long-term strength of our
balance sheet and our business.
Charter Background
In 1998, Mr. Allen acquired approximately
99% of the non-voting economic interests in Marcus Cable, which
owned various operating subsidiaries that served approximately
1.1 million customers.
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Thereafter, in December 1998, Mr. Allen acquired,
through a series of transactions, approximately 94% of the
equity interests of Charter Investment, Inc., which controlled
various operating subsidiaries that serviced approximately
1.2 million customers.
In March and April of 1999, Mr. Allen
acquired the remaining interests in Marcus Cable and, through a
series of transactions, combined the Marcus companies with the
Charter companies. As a consequence, the former operating
subsidiaries of Marcus Cable and all of the cable systems they
owned came under the ownership of Charter Holdings.
In July 1999, Charter was formed as a wholly
owned subsidiary of Charter Investment, Inc., and in November
1999, Charter completed its initial public offering.
During 1999 and 2000, Charter completed 16 cable
system acquisitions for a total purchase price of
$14.7 billion including $9.1 billion in cash, $3.3
billion of assumed debt, $1.9 billion of equity interests
issued and Charter cable systems valued at $420 million.
These transactions resulted in a net total increase of
approximately 3.9 million customers as of their respective
dates of acquisition.
In February 2001, Charter entered into several
agreements with AT&T Broadband, LLC involving several
strategic cable system transactions that resulted in a net
addition of customers for our systems. In the AT&T
transactions, which closed in June 2001, Charter acquired cable
systems from AT&T Broadband serving approximately 551,000
customers for a total of $1.74 billion consisting of
$1.71 billion in cash and a Charter cable system valued at
$25 million. In 2001, Charter also acquired all of the
outstanding stock of Cable USA, Inc. and the assets of certain
of its related affiliates in exchange for consideration valued
at $100 million (consisting of Series A preferred
stock with a face amount of $55 million and the remainder
in cash and assumed debt).
During 2002, Charter purchased additional cable
systems in Illinois serving approximately 28,000 customers, for
a total cash purchase price of approximately $63 million.
For additional information regarding
Charter's acquisitions see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations — Acquisitions."
Products and Services
We offer our customers traditional cable video
programming (analog and digital video) as well as high-speed
data services and in some areas advanced broadband services such
as high definition television, VOD and interactive television.
We sell our video programming and high-speed data services on a
subscription basis, with prices and related charges, that vary
primarily based on the types of service selected, whether the
services are sold as a "bundle" versus on an
"à la carte" basis, and the equipment necessary
to receive the services, with some variation in prices depending
on geographic location. In addition, we offer telephony service
to a limited number of customers.
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The following table summarizes our customer
statistics for analog and digital video, residential high-speed
data, and residential telephony as of September 30, 2004
and 2003:
Approximate as of
September 30,
September 30,
2004(a)
2003(a)
Cable Video Services:
Analog Video:
Residential (non-bulk) analog video customers(b)
5,825,000
6,240,000
Multi-dwelling (bulk) and commercial unit
    customers(c)
249,600
258,100
Analog video customers(b)(c)
6,074,600
6,498,100
Digital Video:
Digital video customers(d)
2,688,900
2,664,800
Digital percentage of analog video
    customers(b)(c)(d)(e)
44
%
41
%
Non-Video Cable Services:
Residential high-speed data customers(f)
1,819,900
1,489,700
Dial-up customers
7,300
10,900
Telephony customers(g)
40,200
24,100
Pro forma for the sale of systems to Atlantic
Broadband Finance, LLC in March and April 2004 and to
WaveDivision Holdings, LLC in October 2003, as if all of these
sales had occurred as of January 1, 2003, analog video
customers, digital video customers and residential high-speed
data customers would have been 6,239,000, 2,570,300 and
1,441,500, respectively, as of September 30, 2003.
(a)
"Customers" include all persons our
    corporate billing records show as receiving service (regardless
    of their payment status), except for complimentary accounts
    (such as our employees). Further, "customers" include
    persons receiving service under promotional programs that
    offered up to two months of service for free, some of whom
    had not requested to be disconnected, but had not become paying
    customers as of September 30, 2004. If such persons do not
    become paying customers, we do not believe this would have a
    material impact on our consolidated financial condition or
    consolidated results of operations. In addition, at
    September 30, 2004 and 2003, "customers" include
    approximately 46,000 and 64,600 persons whose accounts were over
    60 days past due in payment, approximately 5,500 and 7,100
    persons whose accounts were over 90 days past due in
    payment, and approximately 2,000 and 2,300 of which were over
    120 days past due in payment, respectively.
(b)
"Residential (non-bulk) analog video
    customers" include all residential customers who receive
    video services, except for complimentary accounts (such as our
    employees).
(c)
Included within "video customers" are
    those in commercial and multi-dwelling structures, which are
    calculated on an equivalent bulk unit ("EBU") basis.
    EBU is calculated for a system by dividing the bulk price
    charged to accounts in an area by the most prevalent price
    charged to non-bulk residential customers in that market for the
    comparable tier of service. The EBU method of estimating analog
    video customers is consistent with the methodology used in
    determining costs paid to programmers and has been consistently
    applied year over year. As we increase our effective analog
    video prices to residential customers without a corresponding
    increase in the prices charged to commercial service or
    multi-dwelling customers, our EBU count will decline even if
    there is no real loss in commercial service or multi-dwelling
    customers.
(d)
"Digital video customers" include all
    households that have one or more digital set-top terminals.
    Included in "digital video customers" on
    September 30, 2004 and 2003 are approximately 10,700 and
    12,600 customers, respectively, that receive digital video
    service directly through satellite transmission.
(e)
Represents the number of digital video customers
    as a percentage of analog video customers.
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(f)
All of these customers also receive video service
    and are included in the video statistics above except for
    approximately 205,500 and 75,200 of these customers at
    September 30, 2004 and 2003, respectively, who were
    residential high-speed data only customers.
(g)
"Telephony customers" include all
    households receiving telephone service.
Video Services
Our video service offerings include the following:
•
Basic Analog Video.
All of our video customers receive a package of basic
    programming, which generally consists of local broadcast
    television, local community programming, including governmental
    and public access, and limited satellite-delivered or
    non-broadcast channels, such as weather, shopping and religious
    services. Our basic channel line-up generally has between 15 and
    30 channels.
•
Expanded Basic Analog
    Video.
This expanded programming level
    includes a package of satellite-delivered or non-broadcast
    channels and generally has between 30 and 50 channels in
    addition to the basic channel line-up.
•
Premium Channels.
These channels provide commercial-free movies, sports and other
    special event entertainment programming. Although we offer
    subscriptions to premium channels on an individual basis, we
    offer an increasing number of premium channel packages and offer
    premium channels with our advanced services.
•
Pay-Per-View.
These
    channels allow customers to pay on a per event basis to view a
    single showing of a recently released movie, a one-time special
    sporting event or music concert on a commercial-free basis.
•
Digital Video.
We
    offer digital video to our customers in several different
    service combination packages. All of our digital packages
    include a digital set-top terminal, an interactive electronic
    programming guide, up to 45 channels of digital music, an
    expanded menu of pay-per-view channels and the option to also
    receive digital packages which range from 4 to 30 additional
    video channels. We also offer our customers certain digital
    packages with one or more premium channels of their choice with
    "multiplexes." Multiplexes give customers access to
    several different versions of the same premium channel, which
    are varied as to time of airing (such as east and west coast
    time slots) or programming content theme (such as westerns or
    romance). Some digital tier packages focus on the interests of a
    particular customer demographic and emphasize, for example,
    sports, movies, family or ethnic programming. In addition to
    video programming, digital video service enables customers to
    receive our advanced services such as VOD and high definition
    television. Other digital packages bundle digital television
    with our advanced services, such as high-speed data services.
High-Speed Data Services
We offer high-speed data services to our
residential and commercial customers primarily via cable modems
attached to personal computers. We generally offer our
high-speed data service as Charter High-Speed
Internet
TM
. We also provide traditional dial-up
Internet access in a very limited number of our markets.
In the fall of 2003, we re-priced our high-speed
data service, offering faster speed and additional features,
both as part of a service bundle and as an "à la
carte" offering. We ended the third quarter of 2004 with
17% penetration of high-speed data homes passed, up from the 15%
penetration of high-speed data homes passed at year-end 2003.
This gave us a percentage increase in high-speed data customers
of 16% and an increase in high-speed data revenues of 33% in the
nine months ended September 30, 2003. As of
September 30, 2003, in most of our systems, we migrated
high-speed data customers to the fastest residential speed
available at no additional charge to our existing high-speed
data customers. These
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customers remained at that speed without
additional charge through March 2004. As of September 30,
2004, 65% of our high-speed data customers subscribe at the
fastest residential speed available.
Advanced Broadband Services
We continue to test, evaluate and deploy new
advanced services that we believe will provide new revenue
streams to offset overall increasing programming costs or
enhance our appeal to consumers to counter competition. These
advanced services include:
•
Video On Demand and Subscription Video on
    Demand.
We offer VOD service, which
    allows customers to access hundreds of movies and other
    programming at any time with digital picture quality. In some
    systems we also offer SVOD for a single monthly fee or included
    with a digital tier premium channel subscription. As of
    September 30, 2004, we offered VOD in systems serving
    approximately 1.3 million digital video customers or 48% of
    our digital video customers as of that date. We expect to make
    VOD service available in systems serving approximately
    1.6 million digital video customers by mid-2005.
•
High Definition
    Television.
High definition television
    offers our digital customers video programming at a higher
    resolution than the standard analog or digital video image. As
    of September 30, 2004, we offered high definition
    television in systems serving approximately 2.1 million
    digital video customers. Our objective in 2004 was to provide at
    least 8-10 broadcast and cable network high definition channels
    per system, focusing on providing at least two local high
    definition broadcast channels per system. As of
    September 30, 2004 we have reached our objective in systems
    covering 1.2 million digital video customers or 57% of our
    total customers able to receive high definition television as of
    that date.
•
Telephony Services.
We continue to explore development and deployment of voice
    communications services using VOIP to transmit digital voice
    signals over our systems. At September 30, 2004, our VOIP
    telephony service was available to approximately 416,300 homes
    passed in two markets and traditional switch-based telephony was
    available to approximately 91,800 homes passed in another
    market. At year-end 2004, we anticipate having nearly
    1 million telephony-ready homes. We will continue to
    prepare these and additional markets for VOIP launches in 2005.
•
i-TV Service.
We
    ended 2003 with interactive television service
    ("i-TV") available to over 1 million digital
    video customers. In 2004 we decreased availability of our i-TV
    channels and dropped the service in certain markets, due to
    incompatibility issues with our VOD provider in those markets.
    We are exploring a possible relaunch of i-TV in those markets in
    mid-2005. We expect to end 2004 with i-TV channels available to
    approximately 815,100 digital video customers.
•
Commercial Services.
We offer integrated network solutions to commercial and
    institutional customers. These solutions include high-speed data
    and video services. In addition, we offer high- speed data
    services to local businesses.
Digital Video Recorder
In December 2003, we launched digital video
recording capabilities service in four Los Angeles systems
serving 121,000 digital video customers at year-end. In April
2004, we launched DVR service in our Rochester, Minnesota
market. As of September 30, 2004 we have DVR service
available in 33 markets serving approximately
1.4 million digital video customers. We expect to end 2004
with DVR deployment in systems serving approximately
1.8 million digital video customers, which would be
approximately 67% of our digital video customers as of
September 30, 2004.
Sale of Advertising
We receive revenue from the sale of local
advertising on satellite-delivered networks such as MTV®,
CNN® and ESPN®. In any particular market, we generally
insert local advertising on a minimum of four networks, and have
covered up to 39 channels. Our system rebuilds have increased
the number of available
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channels on which we are able to insert local
advertising. We also provide cross-channel advertising to some
programmers.
From time to time, certain of our equipment
vendors have purchased advertising from us. For the nine months
ended September 30, 2004 and the years ending
December 31, 2003, 2002 and 2001, advertising revenue from
vendors was recognized in the amounts of $9 million,
$15 million, $79 million and $27 million
respectively. These revenues resulted from purchases at market
rates pursuant to executed binding agreements. However, in
connection with Charter's restatement announced in April
2003, we reversed all advertising revenues (approximately
$17 million) from two set-top terminal manufacturers
recognized in 2000. Based on a reassessment of the underlying
structure of the arrangements during 2000, the prices paid for
the set-top terminals and the advertising revenue recognized
were determined to be in excess of fair value.
Pricing for Our Products and
Services
Our revenues are derived principally from the
monthly fees our customers pay for the services we offer. A
one-time installation fee, which is often waived during certain
promotional periods for a standard installation, is charged to
new customers. The prices we charge vary based on the level of
service the customer chooses and the particular geographic
market. Most of our pricing is reviewed and adjusted on an
annual basis.
In accordance with the Federal Communications
Commission's rules, the prices we charge for cable-related
equipment, such as set-top terminals and remote control devices,
and for installation services are based on actual costs plus a
permitted rate of return.
Although our cable service offerings vary across
the markets we serve because of various factors including
competition and regulatory factors, our services, when offered
on a stand-alone basis, are typically offered at monthly price
ranges, excluding franchise fees and other taxes, as follows:
Service
Price Range as of
September 30, 2004
Analog video packages
$
8.00
-
$
54.00
Premium channel
$
10.00
-
$
15.00
Pay-per-view (per movie or event)
$
3.95
-
$
179.00
Digital video packages (including high-speed data
    service for higher tiers)
$
34.00
-
$
112.00
High-speed data service
$
21.95
-
$
49.99
Video on demand (per selection)
$
0.99
-
$
12.99
High definition television
$
3.99
-
$
6.99
Digital video recorder
$
9.99
In addition, from time to time we offer free
service or reduced-price service during promotional periods in
order to attract new customers. There is no assurance that these
customers will remain as customers when the period of free
service expires.
Our Network Technology
We have substantially completed the build-out of
our systems to a minimum bandwidth of 550 megahertz or greater,
which enables us to:
•
offer digital television, high-speed data
    services and other advanced services;
•
offer up to 82 analog channels, and even more
    channels when our bandwidth is used for digital signal
    transmission; and
•
permit two-way communication for Internet access
    and interactive services, and potentially, telephony services.
As part of the upgrade of our systems during the
last several years and as a result of system sales, we reduced
the number of headends that serve our customers from 1,138 at
January 1, 2001 to 744 at September 30, 2004. Because
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headends are the control centers of a cable
system, where incoming signals are amplified, converted,
processed and combined for transmission to the customer,
reducing the number of headends reduces related equipment,
service personnel and maintenance expenditures. We expect that
headend consolidation, together with our other upgrades, will
allow us to provide enhanced picture quality and greater system
reliability. As a result of the upgrade, approximately 84% of
our customers were served by headends serving at least 10,000
customers as of September 30, 2004.
The following table sets forth the technological
capacity of our systems as of September 30, 2004:
550 Megahertz
860 Megahertz
Less than
to
750
to
Two-way
Two-way
550 Megahertz
660 Megahertz
Megahertz
870 Megahertz
Capability
Enabled
8
%
5%
42%
45%
92%
87%
See "— Products and Services"
for statistics regarding the approximate number of our customers
who purchase the various services enabled by these upgrades.
As of September 30, 2004, our cable systems
consisted of approximately 220,200 strand miles, including
approximately 48,400 strand miles of fiber optic cable, passing
approximately 12.1 million households and serving
approximately 6.3 million customers.
We adopted the hybrid fiber coaxial cable
("HFC") architecture as the standard for our systems
upgrades. HFC architecture combines the use of fiber optic cable
with coaxial cable. Fiber optic cable is a communication medium
that uses glass fibers to transmit signals over long distances
with minimum signal loss or distortion. Fiber optic cable has
excellent broadband frequency characteristics, noise immunity
and physical durability and can carry hundreds of video, data
and voice channels over extended distances. Coaxial cable is
less expensive and requires a more extensive signal
amplification in order to obtain the desired transmission levels
for delivering channels. In most systems, we deliver our signals
via fiber optic cable from the headend to a group of nodes, and
use coaxial cable to deliver the signal from individual nodes to
the homes passed served by that node. Our system design enables
a maximum of 500 homes passed to be served by a single node.
Currently, our average node serves approximately 385 homes
passed. Our system design provides for six strands of fiber to
each node, with two strands activated and four strands reserved
for spares and future services. We believe that this hybrid
network design provides high capacity and superior signal
quality. The design also provides reserve capacity for the
addition of future services.
The primary advantages of HFC architecture over
traditional coaxial-only cable networks include:
•
increased bandwidth capacity, for more channels
    and other services;
•
dedicated bandwidth for two-way services, which
    avoids reverse signal interference problems that can occur with
    two-way communication capability; and
•
improved picture quality and service reliability.
We currently maintain a national network
operations center to monitor our data networks and to further
our strategy of providing high quality service. Monitoring
previously done by our regional operations centers has been
migrated to our national network operations center. Centralized
monitoring becomes increasingly important as we increase the
number of customers utilizing two-way high-speed data service.
Our local dispatch centers focus primarily on monitoring the HFC
plant, also replacing our existing regional operating centers.
Management of Our Systems
Many of the functions associated with our
financial management are centralized, including accounting,
billing, finance and acquisitions, payroll, accounts payable and
benefits administration, information system design and support,
internal audit, purchasing, marketing, programming contract
administration and Internet service, network and circuits
administration.
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To improve efficiency and operational consistency
throughout our systems, we have consolidated from three
divisions and ten regions to five operating divisions,
eliminating certain layers of middle management. Each division
is supported by operational, financial, marketing and
engineering functions. The reorganization has facilitated the
establishment of and adherence to standard practices, Charter
branding throughout our systems and improved internal
communication. We believe these improvements enhance consistency
of service delivery.
Customer Care
Historically, we have fielded customer service
requests, inquiries and complaints through a large number of
small customer service centers throughout the country. As a
consequence of our aggressive acquisition program in 1999
through 2001, the number of these service centers grew rapidly
and in 2000 was in excess of 300 service centers. We believe
that maintaining such a large number of service centers hindered
our ability to maximize the consistency of our service delivery
and related customer satisfaction due to the logistical
challenges and poor economies of scale inherent in maintaining
and supervising such a large number of service centers.
In an effort to better serve our customers, we
are consolidating our local customer care functions by operating
technologically advanced, high-volume customer contact centers,
and as a result we have closed and expect to continue to close a
number of local payment and customer service centers. By
establishing regional customer contact centers, we are able to
service our customers 24 hours a day, seven days a week and
utilize technologically advanced equipment that we believe
enhances interactions with our customers. Our customer care
specialists receive specialized training to develop customer
contact skills and product knowledge that are targeted towards
prompt and responsive resolution of customer complaints and
customer retention, as well as towards selling additional and
higher levels of service to our customers. As of
September 30, 2004, we had 36 customer service locations,
and our 14 largest customer service locations serviced
approximately 95% of our customers.
Sales and Marketing
In the third quarter of 2004, Charter shifted
primary responsibility for implementing sales and marketing
strategies to the divisional and system level offices with a
single corporate team in place to insure compliance with certain
guidelines established by the corporate marketing department
designed to promote consistency in campaigns and promotion of
our national brand. Our marketing efforts are intended to
promote good interaction, quick information flow and sharing of
best practices between our corporate office and our field
offices, which make strategic decisions as to when and how
various marketing programs will be rolled out to customers.
Due to our focus in 2003 on certain other
operational matters and due to certain financial constraints, we
reduced spending in 2003 on marketing our products and services.
We expect to reduce marketing spending again during the fourth
quarter of 2004. For the nine months ended September 30,
2004, we had marketing expenditures of $99 million.
We monitor government regulation, customer
perception, competition, pricing and product preferences, among
other factors, to increase our responsiveness to our customers.
Our coordinated marketing techniques include door-to-door
solicitation, telemarketing, media advertising, e-marketing,
direct mail solicitation and retail locations. In 2004 we have
also increased our focus on marketing and selling our services
through consumer electronics retailers and other retailers that
sell televisions or cable modems.
In January 2004, we introduced the first national
branding campaign in Charter's history. The "Get
Hooked" branding initiative has been a key focal point of
our national marketing campaigns throughout 2004, designed to
promote our long-term objective of increasing our cash flow
through deeper market penetration and growth in revenue per
customer. In 2004 our corporate team produced eight national
marketing campaigns employing the "Get Hooked" Charter
brand designed to:
•
Promote customer awareness and loyalty;
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•
Attract former customers and households that have
    never subscribed to our services;
•
Promote our advanced services (such as DVR, high
    definition television, VOD and SVOD) with the goal that our
    customers will view their cable connection as one-stop shopping
    for video, voice, high-speed data and interactive services;
•
Promote our bundling of digital video and
    high-speed data services and pricing strategies; and
•
Announce the launch of our advanced services as
    they become available in our systems.
Programming
General
We believe that offering a wide variety of
programming is an important factor that influences a
customer's decision to subscribe to and retain our cable
services. We rely on market research, customer demographics and
local programming preferences to determine channel offerings in
each of our markets. We obtain basic and premium programming
from a number of suppliers, usually pursuant to a written
contract. Our programming contracts generally continue for a
fixed period of time, usually from three to ten years, and are
subject to negotiated renewal. Some program suppliers offer
financial incentives to support the launch of a channel and
ongoing marketing support or launch fees. We also negotiate
volume discount pricing structures. Programming costs are
usually payable each month based on calculations performed by us
and are subject to adjustment based on the results of periodic
audits by the programmers.
Costs
Programming tends to be made available to us for
a license fee, which is generally paid based on the number of
customers to whom we make such programming available. Such
license fees may include "volume" discounts available
for higher numbers of customers, as well as discounts for
channel placement or service penetration. Some channels are
available without cost to us for a limited period of time, after
which we pay for the programming. For home shopping channels, we
receive a percentage of the amount our customers spend on home
shopping purchases.
Our cable programming costs have increased, in
every year we have operated, in excess of customary inflationary
and cost-of-living type increases. We expect them to continue to
increase due to a variety of factors, including:
•
annual increases imposed by programmers;
•
additional programming being provided to
    customers as a result of system rebuilds and bandwidth
    reallocation, both of which increase channel capacity; and
•
increased cost for certain previously discounted
    programming.
In particular, sports programming costs have
increased significantly over the past several years. In
addition, contracts to purchase sports programming sometimes
contain built-in cost increases for programming added during the
term of the contract.
Historically, we have been able to absorb
increased programming costs through increased prices to our
customers. However, with the impact of competition and other
marketplace factors, there is no assurance that we will be able
to continue to do so. In order to maintain or mitigate reduction
of margins despite increasing programming costs, we plan to
continue to migrate certain program services from our analog
level of service to our digital tiers. We expect that this
migration will result in enhanced quality of programming offered
on digital tiers and provide our video customers more value and
more choice. Additionally, as we migrate our programming to our
digital tier packages certain programming that was previously
available to all of our customers via an analog signal, may be
part of an elective digital tier package. As a result, the
customer base upon which we pay programming fees will
proportionately decrease, and the overall expense for providing
that service would likewise decrease. Reductions in the size of
certain programming customer bases may result in the loss of
specific volume discount benefits. We
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plan to seek to renegotiate the terms of our
agreements with certain programmers as these agreements come due
for renewal.
As measured by programming costs, and excluding
premium services (substantially all of which were renegotiated
and renewed in 2003), as of September 30, 2004
approximately 33% of our current programming contracts are
scheduled to expire by the end of 2004, and approximately
another 12% by the end of 2005. There can be no assurance that
these agreements will be renewed on favorable or comparable
terms. To the extent that we are unable to reach agreement with
certain programmers on terms that we believe are reasonable, we
may be forced to remove such programming channels from our
line-up by the programmers, which could result in a further loss
of customers. In addition, our inability to fully pass these
programming cost increases on to our customers would have an
adverse impact on our cash flow and operating margins.
Franchises
As of September 30, 2004, our systems
operated pursuant to a total of approximately 4,200 franchises,
permits and similar authorizations issued by local and state
governmental authorities. Each franchise is awarded by a
governmental authority and such governmental authority often
must approve a transfer to another party. Most franchises are
subject to termination proceedings in the event of a material
breach. In addition, most franchises require us to pay the
granting authority a franchise fee of up to 5.0% of revenues as
defined in the various agreements, provided that revenue is
derived from a "cable service," which is the maximum
amount that may be charged under the applicable federal law. We
are entitled to and generally do pass this fee through to the
customer.
Prior to the scheduled expiration of most
franchises, we initiate renewal proceedings with the granting
authorities. This process usually takes three years but can take
a longer period of time. The Communications Act provides for an
orderly franchise renewal process in which granting authorities
may not unreasonably withhold renewals. In connection with the
franchise renewal process, many governmental authorities require
the cable operator to make certain commitments. Historically we
have been able to renew our franchises without incurring
significant costs, although any particular franchise may not be
renewed on commercially favorable terms or otherwise. Our
failure to obtain renewals of our franchises, especially those
in the major metropolitan areas where we have the most
customers, would have a material adverse effect on our
consolidated financial condition, results of operations or our
liquidity, including our ability to comply with our debt
covenants. Approximately 28% of our franchises covering
approximately 30% of our video customers expire on or before
December 31, 2006. We expect to renew substantially all of
these franchises.
Under the Telecommunications Act of 1996 (the
"1996 Telecom Act"), state and local authorities are
prohibited from limiting, restricting or conditioning the
provision of telecommunications services. They may, however,
impose "competitively neutral" requirements and manage
the public rights-of-way. Granting authorities may not require a
cable operator to provide telecommunications services or
facilities, other than institutional networks, as a condition of
an initial franchise grant, a franchise renewal, or a franchise
transfer. The 1996 Telecom Act also limits franchise fees to an
operator's cable-related revenues and clarifies that they
do not apply to revenues that a cable operator derives from
providing new telecommunications services. In a March 2002
decision, the Federal Communications Commission
("FCC") held that revenue derived from the provision
of cable modem service should not be added to franchise fee
payments already limited by federal law to 5% of traditional
cable service revenue. The same decision tentatively limited
local franchising authority regulation of cable modem service.
On October 6, 2003, the United States Court of Appeals for
the Ninth Circuit vacated in part the FCC's March 2002
decision and remanded for further proceedings. The Ninth Circuit
affirmed the portion of the FCC's March 2002 decision
holding that cable modem service is not a "cable
service." Although the Ninth Circuit's decision should
not subject cable operators to additional cable franchise fee
requirements for the provision of cable modem service, it could
possibly result in other telecommunications regulation.
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Competition
We face competition in the areas of price,
services, and service reliability. We compete with other
providers of television signals and other sources of home
entertainment. In addition, as we continue to expand into
additional services such as high-speed Internet access and
telephony, we face competition from other providers of each type
of service. We operate in a very competitive business
environment, which can adversely affect our business and
operations.
In terms of competition for customers, we view
ourselves as a member of the broadband communications industry,
which encompasses multi-channel video for television and related
broadband services, such as high-speed data and other
interactive video services. In the broadband industry, our
principal competitor for video services throughout our territory
is direct broadcast satellite ("DBS"), and, in markets
where it is available, our principal competitor for data
services is digital subscriber line ("DSL"). We do not
consider other cable operators to be significant one-on-one
competitors in the market overall, as traditional overbuilds are
infrequent and spotty geographically (although in a particular
market, a cable operator overbuilder would likely be a
significant competitor at the local level). As of
September 30, 2004, we are aware of traditional overbuild
situations impacting approximately 5% of our total homes passed
and potential overbuilds in areas servicing approximately 2% of
our total homes passed.
Although cable operators tend not to be direct
competitors for customers, their relative size may affect the
competitive landscape in terms of how a cable company competes
against non-cable competitors in the marketplace as well as in
relationships with vendors who deal with cable operators. For
example, a larger cable operator might have better access to and
pricing for the multiple types of services cable companies
offer. Also, a larger entity might have different access to
financial resources and acquisition opportunities.
Our key competitors include:
Direct Broadcast Satellite
Direct broadcast satellite (DBS) is a significant
competitor to cable systems. The DBS industry has grown rapidly
over the last several years, far exceeding the growth rate of
the cable television industry, and now serves approximately
24 million subscribers nationwide. DBS service allows the
subscriber to receive video and high-speed Internet access
services directly via satellite using a relatively small dish
antenna, although DBS providers have indicated that they may not
continue to promote their high-speed Internet services on a
going forward basis. Consistent with increasing consolidation in
the communications industry, News Corp., one of the world's
largest media companies, recently acquired a controlling
interest in DIRECTV, Inc. ("DirecTV"), the largest
domestic DBS company. This business combination could
significantly strengthen DirecTV's competitive posture,
particularly through favorable programming arrangements with
various News Corp. affiliates and subsidiaries, such as the Fox
television network. In addition to the two established DBS
providers, DirecTV and EchoStar Communications Corporation
("EchoStar"), a third DBS provider, Rainbow DBS, a
division of Cablevision Systems Corp., commenced offering
service in the fall of 2003. Additionally, EchoStar and DirecTV
both have entered into joint marketing agreements with major
telecommunications companies to offer bundled packages combining
phone service, DSL and DBS services.
Video compression technology and high powered
satellites allow DBS providers to offer more than 200 digital
channels from a single 32 transponder satellite, thereby
surpassing the typical analog cable system. In 2003, major DBS
competitors offered a greater variety of channel packages, and
were especially competitive at the lower end pricing, such as a
monthly price of approximately $30 for 75 channels compared to
approximately $40 for the closest comparable package in most of
our markets. In addition, while we continue to believe that the
initial investment by a DBS customer exceeds that of a cable
customer, the initial equipment cost for DBS has decreased
substantially, as the DBS providers have aggressively marketed
offers to new customers of incentives for discounted or free
equipment, installation and multiple units. DBS providers are
able to offer service nationwide and are able to establish a
national image and branding with standardized offerings, which
together with their ability to avoid franchise fees of
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up to 5% of revenues and property tax, leads to
greater efficiencies and lower costs in the lower tiers of
service. However, we believe that most consumers continue to
prefer our stronger local presence in our markets. We believe
that cable-delivered VOD and SVOD service are superior to DBS
service because cable headends can store thousands of titles
which customers can access and control independently, whereas
DBS technology can only make available a much smaller number of
titles with DVR-like customer control. We also believe that our
higher tier products, particularly our bundled premium packages,
are price-competitive with DBS packages and that many consumers
prefer our ability to economically bundle video packages with
data packages. Further, cable providers have the potential in
some areas to provide a more complete "whole house"
communications package when combining video, high-speed data and
voice. We believe that this ability to bundle, combined with the
introduction of more new products that DBS cannot readily offer
(local high definition television and local interactive
television) differentiates us from DBS competitors and could
enable us to win back some of our former customers who migrated
to satellite. However, joint marketing arrangements between DBS
providers and telecommunications carriers allow similar bundling
of services in certain areas.
DBS companies historically were prohibited from
retransmitting popular local broadcast programming. However, a
change to the copyright laws in 1999 eliminated this legal
impediment. As a result, DBS companies now may retransmit such
programming, once they have secured retransmission consent from
the popular broadcast stations they wish to carry, and honor
mandatory carriage obligations of less popular broadcast
stations in the same television markets. In response to the
legislation, DirecTV and EchoStar have begun carrying the major
network stations in the nation's top television markets.
DBS, however, is limited in the local programming it can provide
because of the current capacity limitations of satellite
technology. DBS companies do not offer local broadcast
programming in every U.S. market, although the number of
markets covered is increasing.
DirecTV (through an affiliate) is now providing
two-way high-speed Internet access services in some areas.
Another satellite company called WildBlue Communications, Inc.
(formerly iSKY, Inc.) reports that it plans to deliver two-way
high-speed Internet access to residential and small business
markets in the contiguous United States and portions of Canada
in early 2005 using the Ka-band and spot beam technology.
EchoStar is offering its video programming services with the
Internet services provided by EarthLink, an Internet service
provider, using digital subscriber line technology. In addition,
EchoStar may expand into dish-based broadband service offerings.
DSL and Other Broadband
    Services
The deployment of DSL allows Internet access to
subscribers at data transmission speeds greater than those
available over conventional telephone lines. DSL service
therefore is competitive with high-speed Internet access over
cable systems. Most telephone companies which already have
plant, an existing customer base, and other operational
functions in place (such as, billing, service personnel, etc.)
offer DSL service. DSL actively markets its service, and many
providers have offered promotional pricing with a one-year
service agreement. The FCC has initiated a rulemaking proceeding
that could materially reduce existing regulation of DSL service,
essentially freeing such service from traditional
telecommunications regulation. It is also possible that federal
legislation could reduce regulation of Internet services offered
by incumbent telephone companies. Legislative action and the
FCC's decisions and policies in this area are subject to
change. We expect DSL to remain a significant competitor to our
data services.
DSL and other forms of high-speed Internet access
provide competition to our own provision of Internet access. For
example, as discussed above, satellite-based delivery options
are available. In addition, local wireless Internet services
have recently begun to operate in many markets using available
unlicensed radio spectrum. This service option, popularly known
as "wi-fi", offers another alternative to cable-based
Internet access.
High-speed Internet access facilitates the
streaming of video into homes and businesses. As the quality and
availability of video streaming over the Internet improves,
video streaming likely will compete with the traditional
delivery of video programming services over cable systems. It is
possible that
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programming suppliers will consider bypassing
cable operators and market their services directly to the
consumer through video streaming over the Internet.
We believe that pricing for residential and
commercial data services on our system is generally comparable
to that for similar DSL services and that some residential
customers prefer our ability to bundle data services with video
services. However, DSL providers may currently be in a better
position to offer data services to businesses since their
networks tend to be more complete in commercial areas. They also
have the ability to bundle telephony with data services for a
higher percentage of their customers, and that ability is
appealing to many consumers. Joint marketing arrangements
between DSL providers and DBS providers may allow some
additional bundling of services. Moreover, major telephone
companies, such as SBC and Verizon, are now deploying fiber deep
into their networks that will enable them to offer video
services over their networks, in addition to established voice
and Internet services.
Broadcast Television
Cable television has long competed with broadcast
television, which consists of television signals that the viewer
is able to receive without charge using an "off-air"
antenna. The extent of such competition is dependent upon the
quality and quantity of broadcast signals available through
"off-air" reception compared to the services provided
by the local cable system. Traditionally, cable television has
provided a higher picture quality and more channel offerings
than broadcast television. However, the recent licensing of
digital spectrum by the FCC will provide traditional
broadcasters with the ability to deliver high definition
television pictures and multiple digital-quality program
streams, as well as advanced digital services such as
subscription video and data transmission. Walt Disney Co. has
deployed a movie service that bypasses cable through direct
access to homes by data streams sent over the television
broadcast spectrum.
Traditional Overbuilds
Cable systems are operated under non-exclusive
franchises granted by local authorities. More than one cable
system may legally be built in the same area. It is possible
that a franchising authority might grant a second franchise to
another cable operator and that such a franchise might contain
terms and conditions more favorable than those afforded us. In
addition, entities willing to establish an open video system,
under which they offer unaffiliated programmers
non-discriminatory access to a portion of the system's
cable system, may be able to avoid local franchising
requirements. Well-financed businesses from outside the cable
industry, such as public utilities that already possess fiber
optic and other transmission lines in the areas they serve, may
over time become competitors. There are a number of cities that
have constructed their own cable systems, in a manner similar to
city-provided utility services. There also has been interest in
traditional overbuilds by private companies. Constructing a
competing cable system is a capital intensive process which
involves a high degree of risk. We believe that in order to be
successful, a competitor's overbuild would need to be able
to serve the homes and businesses in the overbuilt area on a
more cost-effective basis than we can. Any such overbuild
operation would require either significant access to capital or
access to facilities already in place that are capable of
delivering cable television programming.
As of September 30, 2004, we are aware of
overbuild situations impacting approximately 5% of our total
homes passed and potential overbuild situations in areas
servicing approximately 2% of our total homes passed, together
representing a total of approximately 7% of our homes passed.
Additional overbuild situations may occur in other systems. In
response to such overbuilds, these systems have been designated
priorities for the upgrade of cable plant and the launch of new
and enhanced services. As of September 30, 2004, we have
upgraded many of these systems to at least 750 megahertz two-way
HFC architecture.
Telephone Companies and
    Utilities
The competitive environment has been
significantly affected by technological developments and
regulatory changes enacted under the 1996 Telecom Act, which was
designed to enhance competition in the cable television and
local telephone markets. Federal cross-ownership restrictions
historically limited entry by local telephone companies into the
cable business. The 1996 Telecom Act modified this cross-
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ownership restriction, making it possible for
local exchange carriers, who have considerable resources, to
provide a wide variety of video services competitive with
services offered by cable systems.
Telephone companies can lawfully enter the cable
television business, and although activity in this area
historically has been quite limited, recent announcements by
telephone companies indicate a growing interest in offering a
video product. Local exchange carriers do already provide
facilities for the transmission and distribution of voice and
data services, including Internet services, in competition with
our existing or potential interactive services ventures and
businesses. In addition, major telephone companies, such as SBC
and Verizon, are now deploying fiber into their networks that
will enable them to offer video services over their networks, in
addition to established voice and Internet services. We cannot
predict the likelihood of success of the broadband services
offered by our competitors or the impact on us of such
competitive ventures. The large scale entry of major telephone
companies as direct competitors in the video marketplace could
adversely affect the profitability and valuation of established
cable systems.
As we expand our offerings to include Internet
access and other telecommunications services, we will be subject
to competition from other telecommunications providers. The
telecommunications industry is highly competitive and includes
competitors with greater financial and personnel resources, who
have brand name recognition and long-standing relationships with
regulatory authorities and customers. Moreover, mergers, joint
ventures and alliances among franchises, wireless or private
cable operators, local exchange carriers and others may result
in providers capable of offering cable television, Internet, and
telecommunications services in direct competition with us. For
example, major local exchange carriers have entered into
arrangements with EchoStar and DirecTV in which they will market
packages combining phone service, DSL and DBS services.
Additionally, we are subject to competition from
utilities which possess fiber optic transmission lines capable
of transmitting signals with minimal signal distortion.
Utilities are also developing broadband over power line
technology, which will allow the provision of Internet and other
broadband services to homes and offices.
Private Cable
Additional competition is posed by satellite
master antenna television systems, or SMATV systems, serving
multiple dwelling units, or MDUs, such as condominiums,
apartment complexes, and private residential communities. These
private cable systems may enter into exclusive agreements with
such MDUs, which may preclude operators of franchise systems
from serving residents of such private complexes. Private cable
systems can offer both improved reception of local television
stations and many of the same satellite-delivered program
services that are offered by cable systems. SMATV systems
currently benefit from operating advantages not available to
franchised cable systems, including fewer regulatory burdens and
no requirement to service low density or economically depressed
communities. Exemption from regulation may provide a competitive
advantage to certain of our current and potential competitors.
Wireless Distribution
Cable systems also compete with wireless program
distribution services such as multi-channel multipoint
distribution systems or "wireless cable," known as
MMDS, which uses low-power microwave frequencies to transmit
television programming over-the-air to paying customers.
Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital
compression technology increases significantly the channel
capacity of their systems. Both analog and digital MMDS
services, however, require unobstructed "line of
sight" transmission paths and MMDS ventures have been quite
limited to date.
The FCC has completed its auction of Multichannel
Video Distribution & Data Service ("MVDDS")
licenses. MVDDS is a new terrestrial video and data fixed
wireless service that the FCC hopes will spur competition in the
cable and DBS industries.
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Properties
Our principal physical assets consist of cable
distribution plant and equipment, including signal receiving,
encoding and decoding devices, headend reception facilities,
distribution systems and customer drop equipment for each of our
cable systems.
Our cable plant and related equipment are
generally attached to utility poles under pole rental agreements
with local public utilities and telephone companies, and in
certain locations are buried in underground ducts or trenches.
We own or lease real property for signal reception sites and own
most of our service vehicles.
Historically our subsidiaries have owned the real
property and buildings for our data centers, customer contact
centers and our divisional administrative offices. Since early
2003 we have reduced our total real estate portfolio square
footage by approximately 17% and have decreased our operating
annual lease costs by approximately 30%. We plan to continue
reducing our number of administrative offices and lease the
space, where possible, while attempting to sell those existing
locations that we believe are no longer required. Our
subsidiaries generally have leased space for business offices
throughout our operating divisions. Our headend and tower
locations are located on owned or leased parcels of land, and we
generally own the towers on which our equipment is located.
Charter Holdco owns the real property and building for our
principal executive offices.
The physical components of our cable systems
require maintenance as well as periodic upgrades to support the
new services and products we introduce. See
"Business — Our Network Technology." We
believe that our properties are generally in good operating
condition and are suitable for our business operations.
Employees
As of September 30, 2004, we had
approximately 15,550 full-time equivalent employees. At
September 30, 2004, approximately 100 of our employees were
represented by collective bargaining agreements. We have never
experienced a work stoppage.
The corporate office, which includes employees of
Charter and Charter Holdco, is responsible for coordinating and
overseeing our operations. The corporate office performs certain
financial and administrative functions on a centralized basis
such as accounting, billing, finance and acquisitions, payroll
and benefit administration, information system design and
support, internal audit, purchasing, marketing and programming
contract administration. The corporate office performs these
services on a cost reimbursement basis pursuant to a management
services agreement. See "Certain Relationships and Related
Transactions — Transactions Arising Out of Our
Organizational Structure and Mr. Allen's Investment in
Charter and Its Subsidiaries — Intercompany Management
Arrangements."
Legal Proceedings
Securities Class Actions and Derivative
    Suits
Fourteen putative federal class action lawsuits
(the "Federal Class Actions") were filed against
Charter and certain of its former and present officers and
directors in various jurisdictions allegedly on behalf of all
purchasers of Charter's securities during the period from
either November 8 or November 9, 1999 through July 17
or July 18, 2002. Unspecified damages were sought by the
plaintiffs. In general, the lawsuits alleged that Charter
utilized misleading accounting practices and failed to disclose
these accounting practices and/or issued false and misleading
financial statements and press releases concerning
Charter's operations and prospects. The Federal
Class Actions were specifically and individually identified
in public filings made by Charter prior to the date of this
prospectus.
In October 2002, Charter filed a motion with the
Judicial Panel on Multidistrict Litigation (the
"Panel") to transfer the Federal Class Actions to the
Eastern District of Missouri. On March 12, 2003, the Panel
transferred the six Federal Class Actions not filed in the
Eastern District of Missouri to that
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district for coordinated or consolidated pretrial
proceedings with the eight Federal Class Actions already
pending there. The Panel's transfer order assigned the
Federal Class Actions to Judge Charles A. Shaw. By virtue
of a prior court order, StoneRidge Investment Partners LLC
became lead plaintiff upon entry of the Panel's transfer
order. StoneRidge subsequently filed a Consolidated Amended
Complaint. The Court subsequently consolidated the Federal
Class Actions into a single action (the "Consolidated
Federal Class Action") for pretrial purposes. On
June 19, 2003, following a status and scheduling conference
with the parties, the Court issued a Case Management Order
setting forth a schedule for the pretrial phase of the
Consolidated Federal Class Action. Motions to dismiss the
Consolidated Amended Complaint were filed. On February 10,
2004, in response to a joint motion made by StoneRidge and
Defendants Charter, Vogel and Allen, the Court entered an order
providing, among other things, that: (1) the parties who
filed such motion, engage in a mediation within ninety
(90) days; and (2) all proceedings in the Consolidated
Federal Class Actions were stayed until May 10, 2004.
On May 11, 2004, the Court extended the stay in the
Consolidated Federal Class Action for an additional sixty
(60) days. On July 12, 2004, the parties submitted a
joint motion to again extend the stay, this time until
September 10, 2004. The Court granted that extension on
July 20, 2004. On August 5, 2004, Stoneridge, Charter
and the individual defendants who were the subject of the suit
entered into a Memorandum of Understanding (described more fully
below) setting forth agreements in principle to settle the
Consolidated Federal Class Action.
The Consolidated Federal Class Action is
entitled:
•
In re Charter Communications, Inc. Securities
    Litigation, MDL Docket No. 1506 (All Cases), StoneRidge
    Investments Partners, LLC, Individually and On Behalf of All
    Others Similarly Situated, v. Charter Communications, Inc.,
    Paul Allen, Jerald L. Kent, Carl E. Vogel, Kent Kalkwarf, David
    G. Barford, Paul E. Martin, David L. McCall, Bill Shreffler,
    Chris Fenger, James H. Smith, III, Scientific-Atlanta,
    Inc., Motorola, Inc. and Arthur Andersen, LLP, Consolidated Case
    No. 4:02-CV-1186-CAS.
On September 12, 2002, a shareholders
derivative suit (the "State Derivative Action") was
filed in the Circuit Court of the City of St. Louis, State
of Missouri (the "Missouri State Court"), against
Charter and its then current directors, as well as its former
auditors. A substantively identical derivative action was later
filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their
fiduciary duties by failing to establish and maintain adequate
internal controls and procedures. Unspecified damages, allegedly
on Charter's behalf, are sought by the plaintiffs.
The consolidated State Derivative Action is
entitled:
•
Kenneth Stacey, Derivatively on behalf of Nominal
    Defendant Charter Communications, Inc., v. Ronald L.
    Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William Savoy, John H. Tory, Carl E. Vogel, Larry W. Wangberg,
    Arthur Andersen, LLP and Charter Communications, Inc.
On March 12, 2004, an action substantively
identical to the State Derivative Action was filed in the
Missouri State Court, against Charter and certain of its current
and former directors, as well as its former auditors. The
plaintiffs in that case alleged that the individual defendants
breached their fiduciary duties by failing to establish and
maintain adequate internal controls and procedures. Unspecified
damages, allegedly on Charter's behalf, were sought by
plaintiffs. On July 14, 2004, the Court consolidated this
case with the State Derivative Action.
This action is entitled:
•
Thomas Schimmel, Derivatively on behalf on
    Nominal Defendant Charter Communications, Inc., v. Ronald
    L. Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William D. Savoy, John H. Tory, Carl E. Vogel, Larry W.
    Wangberg, and Arthur Andersen, LLP, and Charter Communications,
    Inc.
Separately, on February 12, 2003, a
shareholders derivative suit (the "Federal Derivative
Action"), was filed against Charter and its then current
directors in the United States District Court for the Eastern
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District of Missouri. The plaintiff in that suit
alleged that the individual defendants breached their fiduciary
duties and grossly mismanaged Charter by failing to establish
and maintain adequate internal controls and procedures.
Unspecified damages, allegedly on Charter's behalf, were
sought by the plaintiffs.
The Federal Derivative Action is entitled:
•
Arthur Cohn, Derivatively on behalf of Nominal
    Defendant Charter Communications, Inc., v. Ronald L.
    Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman,
    William Savoy, John H. Tory, Carl E. Vogel, Larry W. Wangberg,
    and Charter Communications, Inc.
On August 5, 2004, Charter entered into
Memoranda of Understanding setting forth agreements in principle
regarding settlement of the Consolidated Federal
Class Action, the State Derivative Action(s) and the
Federal Derivative Action (the "Actions"). In exchange
for a release of all claims by plaintiffs against Charter and
its former and present officers and directors named in the
Actions, Charter will pay to the plaintiffs a combination of
cash and equity collectively valued at $144 million, which
will include the fees and expenses of plaintiffs' counsel.
Of this amount, $64 million will be paid in cash (by
Charter's insurance carriers) and the balance will be paid
in shares of Charter Class A common stock having an
aggregate value of $40 million and ten-year warrants to
purchase shares of Charter Class A common stock having an
aggregate warrant value of $40 million. The warrants would
have an exercise price equal to 150% of the fair market value
(as defined) of Charter Class A common stock as of the date
of the entry of the order of final judgment approving the
settlement. In addition, Charter expects to issue additional
shares of its Class A common stock to its insurance carrier
having an aggregate value of $5 million. As part of the
settlements, Charter will also commit to a variety of corporate
governance changes, internal practices and public disclosures,
some of which have already been undertaken and none of which are
inconsistent with measures Charter is taking in connection with
the recent conclusion of the SEC investigation described below.
The settlement of each of the lawsuits is conditioned upon,
among other things, the parties' approval and execution of
definitive settlement agreements with respect to the matters
described above, judicial approval of the settlements by the
Court following notice to the class, and dismissal of the
consolidated derivative actions now pending in Missouri State
Court, which are related to the Federal Derivative Action.
In addition to the Federal Class Actions,
the State Derivative Action, the new Missouri State Court
derivative action and the Federal Derivative Action, six
putative class action lawsuits were filed against Charter and
certain of its then current directors and officers in the Court
of Chancery of the State of Delaware (the "Delaware
Class Actions"). The lawsuits were filed after the
filing of a Schedule 13D amendment by Mr. Allen
indicating that he was exploring a number of possible
alternatives with respect to restructuring or expanding his
ownership interest in Charter. We believe the plaintiffs
speculated that Mr. Allen might have been contemplating an
unfair bid for shares of Charter or some other sort of going
private transaction on unfair terms and generally alleged that
the defendants breached their fiduciary duties by participating
in or acquiescing to such a transaction. The lawsuits, which are
substantively identical, were brought on behalf of
Charter's securities holders as of July 29, 2002, and
sought unspecified damages and possible injunctive relief.
However, no such transaction by Mr. Allen has been
presented. On April 30, 2004, orders of dismissal without
prejudice were entered in each of the Delaware
Class Actions.
The Delaware Class Actions consist of:
•
Eleanor Leonard, v. Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August 12, 2002;
•
Helene Giarraputo, on behalf of herself and all
    others similarly situated, v. Paul G. Allen, Carl E. Vogel,
    Marc B. Nathanson, Ronald L. Nelson, Nancy B. Peretsman, William
    Savoy, John H. Tory, Larry W. Wangberg, and Charter
    Communications, Inc., filed on August 13, 2002;
•
Ronald D. Wells, Whitney Counsil and Manny
    Varghese, on behalf of themselves and all others similarly
    situated, v. Charter Communications, Inc., Ronald L.
    Nelson, Paul G. Allen, Marc B.
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Nathanson, Nancy B. Peretsman, William Savoy,
    John H. Tory, Carl E. Vogel, Larry W. Wangberg, filed on
    August 13, 2002;
•
Gilbert Herman, on behalf of himself and all
    others similarly situated, v. Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August 14, 2002;
•
Stephen Noteboom, on behalf of himself and all
    others similarly situated, v. Paul G. Allen, Larry W.
    Wangberg, John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy
    B. Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on August 16, 2002; and
•
John Fillmore on behalf of himself and all others
    similarly situated, v. Paul G. Allen, Larry W. Wangberg,
    John H. Tory, Carl E. Vogel, Marc B. Nathanson, Nancy B.
    Peretsman, Ronald L. Nelson, William Savoy, and Charter
    Communications, Inc., filed on October 18, 2002.
Government Investigations
In August 2002, Charter became aware of a grand
jury investigation being conducted by the
U.S. Attorney's Office for the Eastern District of
Missouri into certain of its accounting and reporting practices,
focusing on how Charter reported customer numbers, and its
reporting of amounts received from digital set-top terminal
suppliers for advertising. The U.S. Attorney's Office
has publicly stated that Charter is not a target of the
investigation. Charter has also been advised by the
U.S. Attorney's office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July 24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July 25, 2003, one of the former officers who was indicted
entered a guilty plea. The trial for the other three former
officers is scheduled to begin on February 7, 2005. Charter
is fully cooperating with the investigation.
On November 4, 2002, Charter received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January 23,
2003, and subsequently served document and testimony subpoenas
on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charter's
prior reports with respect to its determination of the number of
customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings
with certain vendors, including programmers and digital set-top
terminal suppliers. On July 27, 2004, the SEC and Charter
reached a final agreement to settle the investigation. In the
Settlement Agreement and Cease and Desist Order, Charter agreed
to entry of an administrative order prohibiting any future
violations of United States securities laws and requiring
certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing,
and the SEC assessed no fine against Charter.
Indemnification
Charter is generally required to indemnify each
of the named individual defendants in connection with the
matters described above pursuant to the terms of its bylaws and
(where applicable) such individual defendants' employment
agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC
investigation and the above described lawsuits, some of
Charter's current and former directors and current and
former officers have been advanced certain costs and expenses
incurred in connection with their defense.
Other Litigation
In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina Court of Common Pleas (the
"South Carolina Class Action"), purportedly on
behalf of a class of Charter Holdco's customers, alleging
that Charter Holdco improperly charged them a wire maintenance
fee without request or permission. They also claimed that Charter
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Holdco improperly required them to rent analog
and/or digital set-top terminals even though their television
sets were "cable ready." A substantively identical
case was filed in the Superior Court of Athens —
Clarke County, Georgia by Emma S. Tobar on March 26, 2002
(the "Georgia Class Action"), alleging a
nationwide class for these claims. Charter Holdco removed the
South Carolina Class Action to the United States District
Court for the District of South Carolina in November 2001, and
moved to dismiss the suit in December 2001. The federal judge
remanded the case to the South Carolina Court of Common Pleas in
August 2002 without ruling on the motion to dismiss. The
plaintiffs subsequently moved for a default judgment, arguing
that upon return to state court, Charter Holdco should have, but
did not file a new motion to dismiss. The state court judge
granted the plaintiff's motion over Charter Holdco's
objection in September 2002. Charter Holdco immediately appealed
that decision to the South Carolina Court of Appeals and the
South Carolina Supreme Court, but those courts ruled that until
a final judgment was entered against Charter Holdco, they lacked
jurisdiction to hear the appeal.
In January 2003, the Court of Common Pleas
granted the plaintiffs' motion for class certification. In
October and November 2003, Charter Holdco filed motions
(a) asking that court to set aside the default judgment,
and (b) seeking dismissal of plaintiffs' suit for
failure to state a claim. In January 2004, the Court of Common
Pleas granted in part and denied in part Charter Holdco's
motion to dismiss for failure to state a claim. It also took
under advisement Charter Holdco's motion to set aside the
default judgment. In April 2004, the parties to both the Georgia
and South Carolina Class Actions participated in a
mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the
mediator's proposal and reached a tentative settlement,
subject to final documentation and court approval. As a result
of the tentative settlement, we recorded a special charge of
$9 million in our consolidated statement of operations in
the first quarter of 2004. On July 8, 2004, the Superior
Court of Athens — Clarke County, Georgia granted a
motion to amend the Tobar complaint to add Nicholls, Barber and
April Jones as plaintiffs in the Georgia Class Action and
to add any potential class members in South Carolina. The court
also granted preliminary approval of the proposed settlement on
that date. On August 2, 2004, the parties submitted a joint
request to the South Carolina Court of Common Pleas to stay the
South Carolina Class Action pending final approval of the
settlement and on August 17, 2004, that court granted the
parties' request. On November 10, 2004, the court
granted final approval of the settlement, rejecting positions
advanced by two objectors to the settlement. One of the
objectors had recently filed a similar, but not identical,
lawsuit.
The South Carolina Class Action was entitled:
•
Nikki Nicholls and Geraldine M. Barber, on behalf
    of themselves and all others similarly situated v. Charter
    Communications Holding Company, LLC and City of Spartanburg
    filed on October 29, 2001.
The Georgia Class Action is now entitled:
•
Emma S. Tobar, Nikki Nicholls, Geraldine M.
    Barber and April Jones, on behalf of themselves and all others
    similarly situated v. Charter Communications Holding
    Company, LLC, et al, originally filed on March 26,
    2002.
Outcome
In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims are not expected
to have a material adverse effect on our consolidated financial
condition, results of operations or our liquidity.
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REGULATION AND LEGISLATION
The following summary addresses the key
regulatory and legislative developments affecting the cable
industry. Cable system operations are extensively regulated by
the FCC, some state governments and most local governments. A
failure to comply with these regulations could subject us to
substantial penalties. Our business can be dramatically impacted
by changes to the existing regulatory framework, whether
triggered by legislative, administrative, or judicial rulings.
Congress and the FCC have expressed a particular interest in
increasing competition in the communications field generally and
in the cable television field specifically. The 1996 Telecom Act
altered the regulatory structure governing the nation's
communications providers. It removed barriers to competition in
both the cable television market and the local telephone market.
At the same time, the FCC has pursued spectrum licensing options
designed to increase competition to the cable industry by
wireless multichannel video programming distributors. We could
be materially disadvantaged in the future if we are subject to
new regulations that do not equally impact our key competitors.
Congress and the FCC have frequently revisited the subject of
communications regulation, and they are likely to do so in the
future. In addition, franchise agreements with local governments
must be periodically renewed, and new operating terms may be
imposed. Future legislative, regulatory, or judicial changes
could adversely affect our operations. We can provide no
assurance that the already extensive regulation of our business
will not be expanded in the future.
Cable Rate Regulation
The cable industry has operated under a federal
rate regulation regime for more than a decade. The regulations
currently restrict the prices that cable systems charge for
basic service and associated equipment. All other cable
offerings are now universally exempt from rate regulation.
Although rate regulation operates pursuant to a federal formula,
local governments, commonly referred to as local franchising
authorities, are primarily responsible for administering this
regulation. The majority of our local franchising authorities
have never certified to regulate basic cable rates, but they
retain the right to do so (and order rate reductions and
refunds), except in those specific communities facing
"effective competition." Federal law defines effective
competition as existing in a variety of circumstances that
historically were rarely satisfied, but are increasingly likely
to be satisfied with the recent increase in DBS competition.
There have been frequent calls to impose expanded
rate regulation on the cable industry. Confronted with rapidly
increasing cable programming costs, it is possible that Congress
may adopt new constraints on the retail pricing or packaging of
cable programming. Such constraints could adversely affect our
operations. In response to Congressional sensitivity to the
cable industry's practice of bundling programming into
large tiers, the FCC recently conduced an inquiry into the
advisability of mandating the a la carte offering of programming
services. Although the FCC recommended against an a la carte
mandate, it is still possible that new marketing restrictions
could be adopted in the future.
The federal rate regulations also require cable
operators to maintain a "geographically uniform" rate
within each community, except in those communities facing
effective competition. As we attempt to respond to a changing
marketplace with competitive pricing practices, we may face
legal restraints and challenges that impede our ability to
compete.
Must Carry/ Retransmission Consent
Federal law currently includes "must
carry" regulations, which require cable systems to carry
certain local broadcast television stations that the cable
operator would not select voluntarily. Alternatively, popular
commercial television stations can prohibit cable carriage
unless the cable operator first negotiates for
"retransmission consent," which may be conditioned on
significant payments or other concessions. Either option has a
potentially adverse effect on our business. The burden
associated with must carry could increase significantly if the
FCC requires cable systems to simultaneously carry both the
analog and digital signals of each television station, as the
broadcast industry transitions from an analog to a digital
format.
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The burden could also increase significantly if
the FCC requires cable systems to carry multiple program streams
included within a single digital broadcast transmission.
Although the FCC tentatively ruled against this expansion in a
2001 ruling, it is reviewing the issue and could reach a
contrary result in the near future. If these expanded must-carry
requirements were adopted, we would have less freedom over our
distribution capacity.
Access Channels
Local franchise agreements often require cable
operators to set aside certain channels for public, educational
and governmental access programming. Federal law also requires
cable systems to designate a portion of their channel capacity
for commercial leased access by unaffiliated third parties.
Increased activity in this area could further burden the channel
capacity of our cable systems.
Access to Programming
The FCC recently extended a regulation
prohibiting video programmers affiliated with cable companies
from favoring cable operators over new competitors and requiring
such programmers to sell their satellite-delivered programming
to other multichannel video distributors. This provision limits
the ability of vertically integrated cable programmers to offer
exclusive programming arrangements to cable companies. DBS
providers traditionally had no similar restriction on exclusive
programming, but the FCC recently imposed that restriction as
part of its approval of the DirecTV-News Corp. merger. The FCC
has also adopted regulations to avoid unreasonable conduct in
retransmission consent negotiations between broadcasters and
multichannel video programming distributors, including cable and
DBS. It imposed special conditions on the DirectTV-News Corp.
merger, including a requirement that Fox affiliated broadcast
stations enter into commercial arbitration for disputes over
retransmission consent. Given the heightened competition and
media consolidation that Charter faces, it is possible that we
will find it increasingly difficult to gain access to popular
programming at favorable terms. Such difficulty could adversely
impact our business.
Ownership Restrictions
Federal regulation of the communications field
traditionally included a host of ownership restrictions, which
limited the size of certain media entities and restricted their
ability to enter into competing enterprises. Through a series of
legislative, regulatory, and judicial actions, most of these
restrictions recently were eliminated or substantially relaxed.
For example, historic restrictions on local exchange carriers
offering cable service within their telephone service area, as
well as those prohibiting broadcast stations from owning cable
systems within their broadcast service area, no longer exist.
Changes in this regulatory area, including some still subject to
judicial review, could alter the business landscape in which we
operate, as formidable new competitors (including electric
utilities, local exchange carriers, and broadcast/media
companies) may increasingly choose to offer cable services. The
relaxation of ownership restrictions could, for example,
simplify transactions such as the one that would have resulted
from Comcast Corporation's bid for Walt Disney Company had
it been accepted, notwithstanding overlapping cable and
broadcast properties.
The FCC previously adopted regulations precluding
any cable operator from serving more than 30% of all domestic
multichannel video subscribers and from devoting more than 40%
of the activated channel capacity of any cable system to the
carriage of affiliated national video programming services.
These cable ownership restrictions were invalidated by the
courts, and the FCC is now considering adoption of replacement
regulations.
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Internet Service
Over the past several years, proposals have been
advanced at the FCC and Congress that would require cable
operators offering Internet service to provide
non-discriminatory access to unaffiliated Internet service
providers. Several local franchising authorities actually
adopted mandatory "open access" requirements, but
various federal courts rejected each of these actions, relying
on different legal theories. It remains unclear today precisely
what regulatory regime ultimately will be applied to the cable
industry's high-speed Internet service. The FCC has ruled
that cable modem service is an interstate information service,
rather than a cable or telecommunications service. This
classification left cable modem service exempt from the burdens
associated with traditional cable and telecommunications
regulation. The United States Court of Appeals for the Ninth
Circuit however, vacated in part the FCC's ruling and
remanded for further proceedings. The Ninth Circuit held that
cable modem service is not "cable service," but is
part "telecommunications service" and part
"information service." That decision has been appealed
to the Supreme Court, which has agreed to hear the case. The
Ninth Circuit decision, if not overturned, could potentially
result in adverse regulatory treatment, including the imposition
of "open access" requirements on the cable
industry's Internet access service.
Although the FCC previously suggested that
regulatory forbearance of cable modem service would be
appropriate, regardless of the technical classification
ultimately assigned to it, a number of technology companies
continue to press the FCC to subject cable modem service to
certain "nondiscrimination principles." The final
regulatory status of cable modem service remains uncertain. Its
outcome could materially affect our business. It could also
affect whether local franchising authorities can collect
franchise fees on cable modem service and whether cable systems
will have any payment obligations to the federal
government's universal service fund.
As the Internet has matured, it has become the
subject of increasing regulatory interest. There is now a host
of federal laws affecting Internet service, including the
Digital Millennium Copyright Act, which affords copyright owners
certain rights against us that could adversely affect our
relationship with any customer accused of violating copyright
laws. Recently enacted Anti-Spam legislation also imposes new
obligations on our operations. The adoption of new Internet
regulations could adversely affect our business.
Phone Service
The 1996 Telecom Act created a more favorable
regulatory environment for us to provide telecommunications
services. In particular, it limited the regulatory role of local
franchising authorities and established requirements ensuring
that we could interconnect with other telephone companies to
provide a viable service. Many implementation details remain
unresolved, and there are substantial regulatory changes being
considered that could impact, in both positive and negative
ways, our primary telecommunications competitors and our own
entry into the field of phone service. The FCC and state
regulatory authorities are considering, for example, whether
common carrier regulation traditionally applied to incumbent
local exchange carriers should be modified. The FCC recently
decided that alternative voice technologies, like certain types
of VOIP, should be regulated only at the federal level, rather
than by individual states. As the FCC generally does not favor
extensive regulation of such services, this decision appears to
be a positive development for VOIP offerings. It is unclear how
these regulatory matters ultimately will be resolved and how
they will affect our potential expansion into phone service.
Pole Attachments
The Communications Act requires most utilities to
provide cable systems with access to poles and conduits and
simultaneously regulates the rates charged for this access. The
Act specific that significantly higher rates apply if the cable
plant is providing telecommunications service, as well as
traditional cable service. The FCC has clarified that a cable
operator's favorable pole rates are not endangered by the
provision of Internet access. Although that determination was
upheld by the United States Supreme Court, a subsequent decision
by the United States Court of Appeals for the Ninth Circuit
regarding the proper
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regulatory classification of Internet service has
once again created controversy in this area. The U.S. Supreme
Court has agreed to hear an appeal of that decision. It remains
possible that the underlying pole attachment formula, or its
application to Internet and telecommunications offerings, will
be modified in a manner that substantially increases our pole
attachment costs.
Cable Equipment
The FCC has undertaken several steps to promote
competition in the delivery of cable equipment and compatibility
with new digital technology. The FCC has expressly ruled that
cable customers must be allowed to purchase set-top terminals
from third parties and established a multi-year phase-in during
which security functions (which would remain in the
operator's exclusive control) would be unbundled from the
basic converter functions, which could then be provided by third
party vendors. The first phase of implementation has already
passed. A prohibition on cable operators leasing digital set-top
terminals that integrate security and basic navigation functions
is currently scheduled to go into effect as of July 1, 2006.
The FCC recently adopted rules implementing an
agreement between major cable operators and manufacturers of
consumer electronics on "plug and play" specifications
for one-way digital televisions. The rules require cable
operators to provide "CableCard" security modules and
support to customer owned digital televisions and similar
devices already equipped with built-in set-top terminal
functionality. Cable operators must support basic home recording
rights and copy protection rules for digital programming
content. The FCC has adopted companion "broadcast
flag" rules, requiring cable carriage of a code embedded in
digital broadcast programming that will regulate the further use
of copyright programming.
The FCC is conducting additional related
rulemakings, and the cable and consumer electronics industries
are currently negotiating an agreement that would establish
additional "plug and play" specifications for two-way
digital televisions.
The FCC rules are subject to challenge and
inter-industry negotiations are ongoing. It is unclear how this
process will develop and how it will affect our offering of
cable equipment and our relationship with our customers.
Other Communications Act Provisions and FCC
Regulatory Matters
In addition to the Communications Act provisions
and FCC regulations noted above, there are other statutory
provisions and FCC regulations affecting our business. The
Communications Act, for example, includes cable-specific privacy
obligations. The Act carefully limits our ability to collect and
disclose personal information.
FCC regulations include a variety of additional
areas, including, among other things: (1) equal employment
opportunity obligations; (2) customer service standards;
(3) technical service standards; (4) mandatory
blackouts of certain network, syndicated and sports programming;
(5) restrictions on political advertising;
(6) restrictions on advertising in children's
programming; (7) restrictions on origination cablecasting;
(8) restrictions on carriage of lottery programming;
(9) sponsorship identification obligations;
(10) closed captioning of video programming;
(11) licensing of systems and facilities;
(12) maintenance of public files; and (13) emergency
alert systems.
It is possible that Congress or the FCC will
expand or modify its regulation of cable systems in the future,
and we cannot predict at this time how that might impact our
business. For example, there have been recent discussions about
imposing "indecency" restrictions directly on cable
programming.
Copyright
Cable systems are subject to federal copyright
licensing covering carriage of television and radio broadcast
signals. The possible modification or elimination of this
compulsory copyright license is the
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subject of continuing legislative review and
could adversely affect our ability to obtain desired broadcast
programming. We cannot predict the outcome of this legislative
activity. Moreover, the Copyright Office has not yet provided
any guidance as to the how the compulsory copyright license
should apply to newly offered digital broadcast signals.
Copyright clearances for non-broadcast
programming services are arranged through private negotiations.
Cable operators also must obtain music rights for locally
originated programming and advertising from the major music
performing rights organizations. These licensing fees have been
the source of litigation in the past, and we cannot predict with
certainty whether license fee disputes may arise in the future.
Franchise Matters
Cable systems generally are operated pursuant to
nonexclusive franchises granted by a municipality or other state
or local government entity in order to cross public
rights-of-way. Cable franchises generally are granted for fixed
terms and in many cases include monetary penalties for
noncompliance and may be terminable if the franchisee fails to
comply with material provisions.
The specific terms and conditions of cable
franchises vary materially between jurisdictions. Each franchise
generally contains provisions governing cable operations,
franchise fees, system construction, maintenance, technical
performance, and customer service standards. A number of states
subject cable systems to the jurisdiction of centralized state
government agencies, such as public utility commissions.
Although local franchising authorities have considerable
discretion in establishing franchise terms, there are certain
federal protections. For example, federal law caps local
franchise fees and includes renewal procedures designed to
protect incumbent franchisees from arbitrary denials of renewal.
Even if a franchise is renewed, however, the local franchising
authority may seek to impose new and more onerous requirements
as a condition of renewal. Similarly, if a local franchising
authority's consent is required for the purchase or sale of
a cable system, the local franchising authority may attempt to
impose more burdensome requirements as a condition for providing
its consent.
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MANAGEMENT
Directors and Executive Officers of
Registrant
The persons listed below are directors of Charter.
Directors
Position(s)
Paul G. Allen
Chairman of the board of directors
W. Lance Conn
Director
Jonathan L. Dolgen
Director
Charles M. Lillis
Director
Robert P. May
Director
David C. Merritt
Director
Marc B. Nathanson
Director
Jo Allen Patton
Director
John H. Tory
Director
Carl E. Vogel
Director, President and Chief Executive Officer
Larry W. Wangberg
Director
The following sets forth certain biographical
information as of September 30, 2004 with respect to the
directors listed above, except in the case Mr. May and
Mr. Dolgen, whose biographical information is set forth as
of October 21, 2004, the date that each was elected to our
board of directors.
Paul G. Allen
, 51,
has been Chairman of our Board of Directors since July 1999, and
Chairman of the Board of Directors of Charter Investment, Inc.
(a predecessor to, and currently an affiliate of, Charter) since
December 1998. Mr. Allen, co-founder of Microsoft
Corporation, has been a private investor for more than
15 years, with interests in over 50 technology,
telecommunications, content and biotech companies.
Mr. Allen's investments include Vulcan Inc., Vulcan
Productions, Inc., the Portland Trail Blazers NBA and Seattle
Seahawks NFL franchises, and investments in DreamWorks LLC and
Oxygen Media. In addition, Mr. Allen is a director of
Vulcan Programming Inc., Vulcan Ventures, Vulcan Inc., Vulcan
Cable III Inc., numerous privately held companies and,
until its sale in May 2004 to an unrelated third party, TechTV
L.L.C.
W. Lance Conn
,
36, was elected to our Board of Directors in September 2004.
Since July 2004, Mr. Conn has served as Executive Vice
President, Investment Management for Vulcan Inc., the investment
and project management company that oversees a diverse
multi-billion dollar portfolio of investments by Paul G. Allen.
Prior to joining Vulcan Inc., Mr. Conn was employed by
America Online, Inc., an interactive online services company,
from March 1996 to May 2003. From 1997 to 2000, Mr. Conn
served in various senior business development roles at America
Online. In 2000, Mr. Conn began supervising all of America
Online's European investments, alliances and business
initiatives. In 2002 he became Senior Vice President of American
Online U.S. where he led a company-wide effort to restructure
and optimize America Online's operations. From September
1994 until February 1996, Mr. Conn was an attorney with the
Shaw Pittman law firm in Washington, D.C. Mr. Conn
holds a J.D. degree from the University of Virginia, a
master's degree in history from the University of
Mississippi and an A.B. in history from Princeton University.
Jonathan L. Dolgen
,
59, was elected to our Board of Directors in October 2004. Since
July 2004, Mr. Dolgen has been a Senior Advisor to Viacom,
Inc. ("Viacom") a worldwide entertainment and media
company, where he provides advisory services to the current
Chairman and Chief Executive of Viacom, or others designated by
him, on an as requested basis. From April 1994 to July 2004,
Mr. Dolgen served as Chairman and Chief Executive Officer
of the Viacom Entertainment Group, a unit of Viacom, where he
oversaw various operations of Viacom's businesses, which
during 2003 and 2004 primarily included the operations engaged
in motion picture production and distribution, television
production and distribution, regional theme parks, theatrical
exhibition and publishing. Mr. Dolgen began his career in
the
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entertainment industry in 1976 and until joining
the Viacom Entertainment Group, served in executive positions at
Columbia Pictures Industries, Inc., Twentieth Century Fox and
Fox, Inc., and Sony Pictures Entertainment. Mr. Dolgen
holds a B.S. degree from Cornell University and a J.D. degree
from New York University.
Charles M. Lillis
,
62, was elected to our Board of Directors in October 2003.
Presently, he is the Managing Partner of Lone Tree Capital, a
private equity partnership he co-founded in 2002.
Mr. Lillis served as Chairman and Chief Executive Officer
of MediaOne Group, Inc. from June 1998 to May 2000. He served as
Chief Executive Officer of MediaOne while it was a tracking
stock company from November 1995 to May 1997. Prior to that, he
held various senior management positions at US WEST,
MediaOne's predecessor. Before joining US WEST, he served
as Dean of the University of Colorado's College of Business
and as a professor at Washington State University. In addition,
he is a director and serves on the audit committees of
SuperValu, Inc. and Williams Companies. Mr. Lillis is also
Chairman of the University of Washington Business Advisory
Board, a member of the University of Washington Foundation
Board, and a former member of the University of Colorado
Foundation Board. Mr. Lillis is a graduate of the
University of Washington, Seattle, with an M.B.A., and he holds
a doctorate of Philosophy in Business from the University of
Oregon, in Eugene.
Robert P. May
, 55,
was elected to our Board of Directors in October 2004.
Mr. May has served on the Board of Directors of HealthSouth
Corporation, a national provider of healthcare services since
October 2002, and has been its Chairman since July 2004.
Mr. May also served as HealthSouth Corporation's
Interim Chief Executive Officer from March 2003 until May of
2004, and as Interim President of its Outpatient and Diagnostic
Division from August 2003 to January 2004. From March 2001 until
March 2003, Mr. May was principal of RPM Systems, a
strategic and private investing consulting firm. From March 1999
to March 2001, Mr. May served on the Board of Directors and
was Chief Executive Officer of PNV Inc., a national
telecommunications company. PNV Inc. filed for bankruptcy in
December 2000. Prior to his employment at PNV Inc., Mr. May
was Chief Operating Officer and a member of the Board of
Directors of Cablevision Systems Corporation from 1996 to 1998,
and from 1973 to 1993 he held several senior executive positions
with Federal Express Corporation, including President, Business
Logistics Services. Mr. May was educated at Curry College
and Boston College and attended Harvard Business School's
Program for Management Development.
David C. Merritt
,
50, was elected to our Board of Directors in July 2003, and was
also appointed as Chairman of the Audit Committee at that time.
Since October 2003, Mr. Merritt has been a Managing
Director of Salem Partners, LLC, an investment banking firm. He
was a Managing Director in the Entertainment Media Advisory
Group at Gerard Klauer Mattison & Co., Inc., a company
that provides financial advisory services to the entertainment
and media industries from January 2001 through April 2003. Prior
to that, he served as Chief Financial Officer of CKE Associates,
Ltd., a privately held company with interests in talent
management, film production, television production, music and
new media from July 1999 to November 2001. He also served as a
director of Laser-Pacific Media Corporation from January 2001
until October 2003 and served as Chairman of its audit
committee. During December 2003, he became a director of Outdoor
Channel Holdings, Inc. Mr. Merritt joined KPMG LLP in 1975
and served in a variety of capacities during his years with the
firm, including national partner in charge of the media and
entertainment practice and before joining CKE Associates,
Mr. Merritt was an audit and consulting partner of KPMG LLP
for 14 years. Mr. Merritt holds a B.S. degree in
Business and Accounting from California State
University — Northridge.
Marc B. Nathanson
,
59, has been a director of Charter since January 2000.
Mr. Nathanson is the Chairman of Mapleton Investments LLC,
an investment vehicle formed in 1999. He also founded and served
as Chairman and Chief Executive Officer of Falcon Holding Group,
Inc., a cable operator, and its predecessors, from 1975 until
1999. He served as Chairman and Chief Executive Officer of
Enstar Communications Corporation, a cable operator, from 1988
until November 1999. Prior to 1975, Mr. Nathanson held
executive positions with Teleprompter Corporation, Warner Cable
and Cypress Communications Corporation. In 1995, he was
appointed by the President of the United States to the
Broadcasting Board of Governors, and from 1998 through September
2002, served as its Chairman.
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Mr. Nathanson holds a Bachelors degree in
Mass Communications from the University of Denver and a Masters
degree in Political Science from University of California/
Santa Barbara.
Jo Allen Patton
, 46,
has been a director of Charter since April 2004. Ms. Patton
joined Vulcan Inc. as Vice President in 1993, and since that
time has served as an officer and director of many affiliates of
Mr. Allen, including in her current position as President
and Chief Executive Officer of Vulcan Inc. since July 2001.
Vulcan Inc. is the investment and project management company
founded by Mr. Allen to oversee a diverse multi-billion
dollar portfolio of investments, real estate, sports teams,
entertainment and charitable projects. Ms. Patton is also
President of Vulcan Productions, an independent feature film and
documentary production company, Vice Chair of First &
Goal, Inc., which developed and operates the Seattle Seahawks
NFL stadium, and serves as Executive Director of the six Paul G.
Allen Foundations. Ms. Patton is a co-founder of the
Experience Music Project museum, as well as the Science Fiction
Museum and Hall of Fame. Ms. Patton is the sister of
Mr. Allen.
John H. Tory
, 50,
has been a director of Charter since December 2001.
Mr. Tory served as the Chief Executive Officer of Rogers
Cable Inc., Canada's largest broadband cable operator, from
1999 until 2003. From 1995 to 1999 Mr. Tory was President
and Chief Executive Officer of Rogers Media Inc., a broadcasting
and publishing company. Prior to joining Rogers, Mr. Tory
was a Managing Partner and member of the executive committee at
Tory Tory DesLauriers & Binnington, one of
Canada's largest law firms. Mr. Tory serves on the
Board of Directors of a number of Canadian companies, including
Cara Operations Limited. Mr. Tory was educated at
University of Toronto Schools, Trinity College (University of
Toronto) and Osgoode Hall Law School.
Carl E. Vogel
, 46,
has been a director of Charter and its President and Chief
Executive Officer since October 2001. Mr. Vogel has more
than 20 years experience in telecommunications and the
subscription television business. He was a Senior Vice President
of Liberty Media Corp. from November 1999 until October 2001,
and Chief Executive Officer of Liberty Satellite and Technology,
a distributor of Internet data and other content via satellite,
from April 2000 until October 2001. Prior to joining Liberty,
Mr. Vogel was an Executive Vice President and Chief
Operating Officer of Field Operations for AT&T Broadband and
Internet Services with responsibility for managing operations of
all of AT&T's cable broadband properties from June 1999
until November 1999. From June 1998 to June 1999, when the
business of Primestar Inc. was sold, Mr. Vogel served as
Chief Executive Officer of Primestar Inc., a national provider
of subscription television services, and from 1997 to 1998, he
served as Chief Executive Officer of Star Choice Communications.
From 1994 through 1997, Mr. Vogel served as the President
and Chief Operating Officer of EchoStar Communications. He began
his career at Jones Intercable in 1983. Mr. Vogel serves as
a director and member of the Executive Committee of the National
Cable & Telecommunications Association, CableLabs and
Digeo, Inc. and serves as a director of Women in Cable and
Telecommunications. Mr. Vogel holds a B.S. degree in
Finance and Accounting from St. Norbert College. His employment
agreement provides that he will serve on our Board of Directors.
See "— Employment Arrangements."
Larry W. Wangberg
,
62, has been a director of Charter since January 2002. From
August 1997 to May 2004, Mr. Wangberg was a director of
TechTV L.L.C., a cable television network controlled by Paul
Allen. He also served as its Chairman and Chief Executive
Officer from August 1997 through July 2002. In May 2004, TechTV
was sold to an unrelated third party. Prior to joining TechTV
L.L.C., Mr. Wangberg was Chairman and Chief Executive
Officer of StarSight Telecast Inc., an interactive navigation
and program guide company, which later merged with Gemstar
International, from 1994 to 1997. Mr. Wangberg was Chairman
and Chief Executive Officer of Times Mirror Cable Television and
Senior Vice President of its corporate parent, Times Mirror Co.,
from 1983 to 1994. He currently serves on the boards of Autodesk
Inc., and ADC Telecommunications. Mr. Wangberg holds a
bachelor's degree in Mechanical Engineering and a
master's degree in Industrial Engineering, both from the
University of Minnesota.
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Director Compensation
Commencing in July 2003, each member of our Board
receives an annual retainer of $40,000 in cash plus restricted
stock, vesting one year after the date of grant, with a value on
the date of grant of $50,000. In addition, the Audit Committee
chair receives $25,000 per year, and the chair of each other
committee receives $10,000 per year. All committee members also
receive $1,000 for attendance at each committee meeting. Each of
our directors is entitled to reimbursement for costs incurred in
connection with attendance at Board and Committee meetings.
Except for Mr. Nathanson, directors who were
not employees did not receive additional compensation in 2002 or
the first half of 2003. Mr. Vogel, who was our President
and Chief Executive Officer in 2003, was the only director who
was also an employee during 2003. Mr. Vogel is party to an
employment agreement with Charter, which is summarized in
"— Employment Agreements." He did not
receive any additional compensation for serving as a director or
attending any meeting of the Board of Directors during 2003.
Marc B. Nathanson entered into a letter agreement
with Charter for a term that expired in November 2002. Under
this agreement, Mr. Nathanson served as Vice-Chairman and
as a director of Charter. During the term of this agreement,
Mr. Nathanson received a benefit equal to approximately
$200,000 per year, which Charter paid to a company controlled by
Mr. Nathanson Mr. Nathanson continues to hold the
title of Vice Chairman, a non-salaried non-executive position
with Charter.
Our Bylaws provide that all directors are
entitled to indemnification to the maximum extent permitted by
law from and against any claims, damages, liabilities, losses,
costs or expenses incurred in connection with or arising out of
the performance by them of their duties for us or our
subsidiaries.
Executive Officers
The following persons are executive officers of
Charter Communications, Inc.
Executive Officers
Position
Paul G. Allen
Chairman of the Board of Directors
Carl E. Vogel
President and Chief Executive Officer
Derek Chang
Executive Vice President of Finance and Strategy
    and interim co-Chief Financial Officer
Thomas A. Cullen
Executive Vice President of Advanced Services and
    Business Development
Wayne H. Davis
Executive Vice President and Chief Technical
    Officer
Michael J. Lovett
Executive Vice President, Operations and Customer
    Care
Paul E. Martin
Senior Vice President, Principal Accounting
    Officer and interim co-Chief Financial Officer
Steven A. Schumm
Executive Vice President — Chief
    Administrative Officer
Curtis S. Shaw
Executive Vice President, General Counsel and
    Secretary
Information regarding our executive officers who
do not serve as directors is set forth below.
Derek Chang
, 36,
Executive Vice President of Finance and Strategy and interim
co-Chief Financial Officer. Mr. Chang joined Charter in
December 2003 as Executive Vice President of Finance and
Strategy and was appointed interim co-Chief Financial Officer in
August 2004. Prior to joining us, Mr. Chang was Executive
Vice President of the Yankees Entertainment and Sports (YES)
Network, a regional sports programming network in New York where
he headed corporate development and financing activities from
the company's inception in 2001 until January 2003. Prior
to joining YES, he was the Chief Financial Officer and Co-Chief
Operating Officer of GlobalCenter, the web hosting subsidiary of
Global Crossing. Mr. Chang worked for TCI Communications/
AT&T Broadband in Denver from 1997 to 2000, ultimately as
Executive Vice President of Corporate Development, where he
directed mergers and acquisitions
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activities and managed a multi-billion dollar
portfolio of cable joint ventures. He was with InterMedia
Partners in San Francisco from 1994 to 1997 where he held a
number of positions and was ultimately Treasurer. Mr. Chang
received a B.A. degree from Yale University and an M.B.A. from
the Stanford University Graduate School of Business.
Thomas A. Cullen
,
45, Executive Vice President of Advanced Services and Business
Development. Mr. Cullen joined Charter as Senior Vice
President of Advanced Services and Business Development in
August 2003 and was promoted to Executive Vice President in
August 2004. From January 2001 to October 2002, Mr. Cullen
was General Partner of Lone Tree Capital, a private equity
partnership focused on investment opportunities in the
technology and communications sector. From March 1997 to June
2000, Mr. Cullen was President of MediaOne Ventures. Prior
to that, Mr. Cullen served in several capacities with
MediaOne Internet Services including Vice President from April
1998 to June 2000 and Vice President of Business Development
from September 1995 to March 1997. Mr. Cullen is a member
of the Colorado State University Global Leadership Council. He
is also a member of the board of directors of the Cable &
Telecommunications Association for Marketing (CTAM).
Mr. Cullen is a graduate of Northern Arizona University
with a B.S. degree in Business Administration. He earned a
Master of Business Administration from the University of
Colorado.
Wayne H. Davis
, 50,
Executive Vice President and Chief Technical Officer. Prior to
his current position, Mr. Davis served as Senior Vice
President, Engineering and Technical Operations, and as
Assistant to the President/ Vice President of Management
Services, prior to that, he was Vice President of Engineering/
Operations for our National Region from December 2001. Before
joining Charter, Mr. Davis held the position of Vice
President of Engineering for Comcast Corporation, Inc. Prior to
that, he held various engineering positions including Vice
President of Engineering for Jones Intercable Inc. He began his
career in the cable industry in 1980. He attended the State
University of New York at Albany. Mr. Davis serves as an
advisory board member of Cedar Point Communications, and as a
board member of @Security Broadband Corp., a company in which
Charter owns an equity investment interest. Mr. Davis is
also a member of the Society of Cable Telecommunications
Engineers.
Michael J. Lovett
,
43, Executive Vice President, Operations and Customer Care.
Mr. Lovett was promoted to his current position in
September 2004. Prior to that he served as Senior Vice
President, Midwest Division Operations and as Senior Vice
President of Operations Support, since joining Charter in August
2003. Mr. Lovett was Chief Operating Officer of Voyant
Technologies, Inc., a voice conferencing hardware/ software
solutions provider, from December 2001 to August 2003. From
November 2000 to December 2001, he was Executive Vice President
of Operations for OneSource, Inc., a startup delivering
management/ monitoring of firewalls and virtual private
networks. Prior to that, Mr. Lovett was Regional Vice
President at AT&T from June 1999 to November 2000 where he
was responsible for operations. Mr. Lovett was Senior Vice
President at Jones Intercable from October 1989 to June 1999
where he was responsible for operations in nine states.
Mr. Lovett began his career in cable television at Centel
Corporation where he held a number of positions.
Paul E. Martin
, 44,
Senior Vice President, Interim Co-Chief Financial Officer and
Principal Accounting Officer. Mr. Martin has been employed
by Charter since March 2000, when he joined the Company as Vice
President and Corporate Controller. In April 2002,
Mr. Martin was promoted to Senior Vice President and
Principal Accounting Officer and in August 2004 was named
interim co-Chief Financial Officer. Prior to joining us in March
2000, Mr. Martin was Vice President and Controller for
Operations and Logistics for Fort James Corporation, a
manufacturer of paper products. From 1995 to February 1999,
Mr. Martin was Chief Financial Officer of Rawlings Sporting
Goods Company, Inc. Mr. Martin received a B.S. degree with
honors in Accounting from the University of Missouri —
St. Louis.
Steven A. Schumm
,
51, Executive Vice President — Chief Administrative
Officer. Prior to joining Charter Investment, Inc. in 1998,
Mr. Schumm was a partner of Ernst & Young LLP for
14 years where he was Managing Partner of Ernst &
Young's St. Louis office and a member of the
Ernst & Young National Tax Committee. Mr. Schumm
joined Ernst & Young in 1974 and served in a variety of
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capacities during his years with the firm.
Mr. Schumm earned a B.S. degree in Business Administration
from Saint Louis University. Mr. Schumm served as our
Interim Chief Financial Officer from December 2002 to January
2004.
Curtis S. Shaw
, 56,
Executive Vice President, General Counsel and Secretary.
Mr. Shaw was promoted to Executive Vice President in
October 2003. Prior to joining Charter Investment as Senior Vice
President, General Counsel and Secretary in 1997, Mr. Shaw
served as corporate counsel to NYNEX from 1988 through 1996.
Since 1973, Mr. Shaw has practiced as a corporate lawyer,
specializing in mergers and acquisitions, joint ventures, public
offerings, financings, and federal securities and antitrust law.
Mr. Shaw received a B.A. degree with honors in Economics
from Trinity College and a J.D. degree from Columbia University
School of Law.
Compensation Committee Interlocks and Insider
Participation
Until April 27, 2004, when Mr. Savoy
resigned from the board, our Compensation Committee was
comprised of Messrs. Allen, Savoy and Nathanson. In 2003,
Nancy Peretsman and Ronald Nelson served as the Option Plan
Committee that administered the 1999 Charter Communications
Option Plan and the Charter Communications, Inc. 2001 Stock
Incentive Plan until July 2003 when Mr. Nelson resigned and
was replaced by Mr. Merritt. Mr. Lillis replaced
Ms. Peretsman on the Option Plan Committee in July 2004.
No member of the Compensation Committee or the
Option Plan Committee was an officer or employee of the Company
or any of its subsidiaries during 2003, except for
Mr. Allen who served as a non-employee chairman of the
Compensation Committee. Also, Mr. Nathanson was an officer
of certain of our subsidiaries prior to their acquisition by the
Company in 1999 and held the title of Vice-Chairman of the
Compensation Committee, a non-executive, non-salaried position,
in 2003. Mr. Allen is the 100% owner and a director of
Vulcan Inc. and certain of its affiliates, which employed
Mr. Savoy, one of our directors until April 27, 2004,
as an executive officer in the past. Mr. Allen also was a
director of and indirectly owned 98% of TechTV, of which
Mr. Wangberg, one of our directors, was a director until
the sale of TechTV to an unrelated third party in May 2004.
Transactions between us and members of the Compensation
Committee are more fully described in "— Director
Compensation" and in "Certain Relationships and
Related Transactions — Other Miscellaneous
Relationships."
During 2003, (1) none of our executive
officers served on the compensation committee of any other
company that has an executive officer currently serving on our
board of directors, Compensation Committee or Option Plan
Committee and (2) except for Carl Vogel who serves as a
director of Digeo, Inc., an entity of which Paul Allen is a
director and by virtue of his position as Chairman of the board
of directors of Digeo, Inc. is also a non-employee executive
officer, none of our executive officers served as a director of
another entity, one of whose executive officers served on our
Compensation Committee or Option Plan Committee.
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Executive Compensation
Summary Compensation
Table
The following table sets forth information
regarding the compensation to those executive officers listed
below for services rendered for the fiscal years ended
December 31, 2001, 2002 and 2003. These officers consist of
the Chief Executive Officer, each of the other four most highly
compensated executive officers as of December 31, 2003, and
one other highly compensated executive officer who served during
2003 but was not an executive officer on December 31, 2003.
Long-Term
Compensation Award
Annual Compensation
Restricted
Securities
Year
Other Annual
Stock
Underlying
All Other
Name and Principal
Ended
Compensation
Awards
Options
Compensation
Position
Dec. 31
Salary($)
Bonus($)(1)
($)
($)(2)
(#)
($)(3)
Carl E. Vogel(4)
2003
1,000,000
150,000
30,345
(14)
—
750,000
12,639
(16)
President and Chief
2002
980,769
330,000
(9)
214,961
(14)
—
1,000,000
10,255
(16)
Executive Officer
2001
207,692
546,000
(9)
—
513,000
3,400,000
8,996
(16)
Steven A. Schumm
2003
448,077
45,000
—
—
250,000
9,889
Executive Vice President
2002
436,058
588,000
(10)
—
—
300,000
5,255
and Chief Administrative
2001
435,000
402,000
(10)
—
—
165,000
5,250
Officer
Curtis S. Shaw(5)
2003
275,782
37,500
—
—
250,000
9,411
(17)
Executive Vice President,
2002
249,711
281,500
(11)
—
—
100,000
3,096
General Counsel and Secretary
2001
245,000
236,000
(11)
—
—
149,000
5,250
Wayne H. Davis(6)
2003
212,885
47,500
—
—
225,000
581
(18)
Executive Vice President,
Engineering and Chief Technical Officer
Margaret A. Bellville(7)
2003
581,730
203,125
30,810
(15)
—
—
109,139
(19)
Former Executive Vice
2002
9,615
150,000
(12)
—
—
500,000
—
President, Chief Operating Officer
Stephen E. Silva(8)
2003
213,005
—
—
—
—
134,345
(20)
Former Executive Vice
2002
294,231
196,000
(13)
—
—
150,000
5,255
President Corporate
2001
235,385
380,000
(13)
—
347,760
290,000
5,250
Development and Chief Technology Officer
(1)
Includes senior management bonuses for 2003 under
    the 2003 senior management incentive plan. Mr. Vogel's
    and Ms. Bellville's bonuses were determined in
    accordance with the terms of their respective employment
    agreements. The bonus amounts for Messrs. Vogel and Silva
    for 2001 include the value of the vested portion of grants of
    restricted stock during 2001 under our 2001 Stock Incentive
    Plan, calculated based on the fair market values of the vested
    shares on the grant date, which pursuant to the terms of the
    plan is the average of the high and low trading price on the
    grant date. These restricted stock grants made in 2001
    immediately vested as to twenty-five percent (25%) of the
    shares, with the remaining shares vesting in 36 equal monthly
    installments commencing approximately 15 months from the
    grant date. Also, where indicated in the footnotes below, the
    bonuses for 2002 and 2001 include "stay" bonuses in
    the form of principal and interest forgiven under the
    employee's promissory note. In 2002, all the remaining
    principal and accrued interest on these notes was forgiven as
    provided by the terms of the notes, so that at December 31,
    2002, these notes were no longer outstanding.
(2)
Includes the grants of restricted stock made
    during 2001 under the Charter Communications, Inc. 2001 Stock
    Incentive Plan, as described above. The total grant amounts
    were: (i) Carl E. Vogel, 50,000 shares as of
    October 8, 2001 and (ii) Stephen E. Silva,
    36,000 shares as of October 18, 2001. Under the terms
    of the restricted stock agreement, the employee is entitled to
    any cash and/or stock
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dividends on the unvested restricted shares. The
    value as of the date of grant based on the closing market price
    of those shares vested immediately is disclosed in the
    "Bonus" column of the table. At December 31,
    2003, based on a per share closing market price of $4.02 for
    Class A common stock, the total number (and value) of
    Mr. Vogel's outstanding unvested restricted stock was
    23,959 shares ($96,315). Mr. Silva's shares of
    unvested restricted stock were cancelled upon his resignation,
    effective July 1, 2003.
(3)
Except as noted for Mr. Vogel,
    Ms. Bellville, Mr. Shaw, Mr. Davis and
    Mr. Silva in notes 16, 17, 18, 19 and 20 below
    respectively, these amounts consist of matching contributions
    under our 401(k) plan. The 2002 amounts also include premiums
    for supplemental life insurance available to executives, and the
    2003 amounts include long-term disability available to
    executives.
(4)
Mr. Vogel became the Chief Executive Officer
    of Charter in October 2001.
(5)
Mr. Shaw was promoted to Executive Vice
    President in October 2003.
(6)
Mr. Davis was promoted to Senior Vice
    President, Engineering and Technical Operations in March 2003
    and to Executive Vice President and Chief Technical Officer in
    August 2004.
(7)
Ms. Bellville became the Chief Operating
    Officer of Charter in December 2002 and terminated her
    employment, effective September 30, 2004.
(8)
Mr. Silva terminated his employment,
    effective July 1, 2003. See "— Employment
    Arrangements" for additional information.
(9)
Includes: (i) for 2001, $171,000,
    representing the value based on the fair market value on
    October 8, 2001, the original grant date, of
    12,500 shares of Class A common stock, the vested
    portion of Mr. Vogel's restricted stock grant;
    (ii) for 2001, a one-time signing bonus of $250,000; and
    (iii) $330,000 and $125,000 awarded as a bonus for services
    performed in 2002 and 2001, respectively.
(10)
Includes a "stay" bonus representing
    the principal and interest forgiven under employee's
    promissory note, amounting to $363,000 and $342,000,
    respectively, for 2002 and 2001; and $225,000 and $60,000
    awarded as a bonus for services performed in 2002 and 2001,
    respectively.
(11)
Includes a "stay" bonus representing
    the principal and interest forgiven under employee's
    promissory note, amounting to $181,500 and $171,000,
    respectively, for 2002 and 2001; and $100,000 and $65,000
    awarded as a bonus for services performed in 2002 and 2001,
    respectively.
(12)
Includes a one-time signing bonus of $150,000
    pursuant to an employment agreement.
(13)
Includes: (i) $116,000 for 2001,
    representing the value based on the fair market value on
    October 18, 2001, the original grant date, of
    9,000 shares of Class A common stock, the vested
    portion of Mr. Silva's restricted stock grant;
    (ii) a "stay" bonus representing the principal
    and interest forgiven under employee's promissory note,
    amounting to $121,000 and $114,000, respectively for 2002 and
    2001; and (iii) $75,000 and $150,000 awarded as a bonus for
    services performed in 2002 and 2001, respectively.
(14)
Amount attributed to personal use of the
    corporate airplane in 2003 and $100,000 attributed to personal
    use and commuting in the corporate airplane in 2002 and $114,961
    for purchase of a car in 2002.
(15)
Includes $26,010 attributed to personal use of
    the corporate airplane and $4,800 for car allowance.
(16)
Includes (i) for 2003, $2,639 paid as
    premium for long-term disability available for executives and
    $10,000 as reimbursement for tax advisory services;
    (ii) for 2002, $255 paid as premiums for supplemental life
    insurance available for executives and $10,000 as reimbursement
    for tax advisory services; and (iii) for 2001, $7,500 as
    reimbursement for legal expenses and $1,496 for COBRA expenses.
(17)
Includes for 2003, $2,287 attributed to personal
    use of the corporate airplane.
(18)
Includes for 2003, $581 attributed to personal
    use of the corporate airplane.
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(19)
Includes for 2003, $2,955 paid as premium for
    long-term disability insurance available to executives, $5,000
    as reimbursement for tax advisory services, $7,500 for legal
    services and $93,684 paid in relation to relocation expenses.
(20)
Includes for 2003, $128,769 paid in severance,
    $5,000 paid in matching contributions under our 401(k) plan,
    $576 paid as premium for long-term disability insurance
    available to executives.
2003 Option
Grants
The following table shows individual grants of
options made to individuals named in the Summary Compensation
Table during 2003. All such grants were made under the 2001
Stock Incentive Plan and the exercise price was based upon the
fair market value of the Class A common stock on the
respective grant dates.
Potential Realizable
Value at Assumed
Annual Rate of
Number of
% of Total
Stock Price
Securities
Options
Appreciation For
Underlying
Granted to
Option Term(2)
Options
Employees
Exercise
Expiration
Name
Granted(#)(1)
In 2003
Price ($/Sh)
Date
5%($)
10%($)
Carl E. Vogel
750,000
9.39
%
$
4.30
10/28/13
2,025,827
5,133,843
Margaret A. Bellville(3)
—
—
—
—
—
—
Steven A. Schumm
250,000
3.13
%
4.13
12/19/13
648,548
1,643,547
Curtis S. Shaw
250,000
3.13
%
4.30
10/28/13
675,276
1,711,281
Wayne H. Davis
225,000
2.82
%
1.60
04/29/13
225,695
571,954
Stephen E. Silva(4)
—
—
—
—
—
—
(1)
Options are transferable under limited
    conditions, primarily to accommodate estate planning purposes.
    These options generally vest in four equal installments
    commencing on the first anniversary following the grant date.
(2)
This column shows the hypothetical gains on the
    options granted based on assumed annual compound price
    appreciation of 5% and 10% over the full ten-year term of the
    options. The assumed rates of 5% and 10% appreciation are
    mandated by the SEC and do not represent our estimate or
    projection of future prices.
(3)
Ms. Bellville's employment terminated
    on September 30, 2004 and she received no options in 2003.
(4)
Mr. Silva's employment terminated in
    2003 and he received no options in 2003.
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2003 Aggregated Option
Exercises and Option Value
The following table sets forth, for the
individuals named in the Summary Compensation Table,
(i) information concerning options exercised during 2003,
(ii) the number of shares of our Class A common stock
underlying unexercised options at year-end 2003, and
(iii) the value of unexercised "in-the-money"
options (i.e., the positive spread between the exercise price of
outstanding options and the market value of our Class A
common stock) on December 31, 2003.
Number of Securities
Underlying Unexercised
Value of Unexercised In-the-
Options at December 31,
Money Options at
Shares
2003 (#)(1)
December 31, 2003 ($)(2)
Acquired on
Value
Name
Exercise (#)
Realized($)
Exercisable
Unexercisable
Exercisable
Unexercisable
Carl E. Vogel
—
—
1,970,833
3,179,167
234,000
936,000
Margaret A. Bellville
—
—
250,000
250,000
611,250
611,250
Steven A. Schumm
—
—
912,136
585,545
70,200
280,800
Curtis S. Shaw
—
—
310,332
413,668
23,400
93,600
Wayne H. Davis
—
—
20,000
295,000
11,700
592,425
Stephen E. Silva
—
—
367,916
277,084
35,100
140,400
(1)
Options granted prior to 2001 and under the 1999
    Charter Communications Option Plan, when vested, are exercisable
    for membership units of Charter Holdco which are immediately
    exchanged on a one-for-one basis for shares of our Class A
    common stock upon exercise of the option. Options granted under
    the 2001 Stock Incentive Plan and after 2000 are exercisable for
    shares of our Class A common stock.
(2)
Based on a per share market value (closing price)
    of $4.02 as of December 31, 2003 for our Class A
    common stock.
Option/ Stock Incentive
Plans
The Plans.
We have
granted stock options, restricted stock and other incentive
compensation pursuant to two plans — the 1999 Charter
Communications Option Plan and the 2001 Stock Incentive Plan.
The 1999 Charter Communications Option Plan provided for the
grant of options to purchase membership units in Charter Holdco
to current and prospective employees and consultants of Charter
Holdco and its affiliates and to our current and prospective
non-employee directors. Membership units received upon exercise
of any options are immediately exchanged for shares of our
Class A common stock on a one-for-one basis.
The 2001 Stock Incentive Plan provides for the
grant of non-qualified stock options, stock appreciation rights,
dividend equivalent rights, performance units and performance
shares, share awards, phantom stock and/or shares of restricted
stock (not to exceed 3,000,000 shares) as each term is
defined in the 2001 Stock Incentive Plan. Employees, officers,
consultants and directors of the Company and its subsidiaries
and affiliates are eligible to receive grants under the 2001
Stock Incentive Plan. Generally, options expire 10 years
from the grant date. Unless sooner terminated by our board of
directors, the 2001 Stock Incentive Plan will terminate on
February 12, 2011, and no option or award can be granted
thereafter.
Together, the plans allow for the issuance of up
to a total of 90,000,000 shares of our Class A common
stock (or units exchangeable for our Class A common stock).
Any shares covered by options that are terminated under the 1999
Charter Communications Option Plan will be transferred to the
2001 Stock Incentive Plan, and no new options will be granted
under the 1999 Charter Communications Option Plan. At
September 30, 2004, 903,970 shares had been issued
under the plans upon exercise of options, 160,645 had been
issued upon vesting of restricted stock granted under the plans,
and 2,104,978 shares were subject to future vesting under
restricted stock agreements. Of the remaining
86,830,407 shares covered by the plans, as of
September 30, 2004, 28,213,409 were subject to outstanding
options (34% of which were vested) and 58,616,998 remained
eligible for future grant. Of the 58,616,998 shares
remaining there are 6,663,600
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Table of Contents
performance units granted under Charter's
Long-Term Incentive Program as of September 30, 2004, which
will be issued on the third anniversary of the date of grant
conditional upon Charter's performance against certain
financial targets approved by Charter's Board of Directors
at the time of the award.
In July 2003, we amended the plans to authorize
the repricing of options, which could include reducing the
exercise price per share of any outstanding option, permitting
the cancellation, forfeiture or tender of outstanding options in
exchange for other awards or for new options with a lower
exercise price per share, or repricing or replacing any
outstanding options by any other method.
In January 2004, the Compensation Committee of
our board of directors approved our Long-Term Incentive Program,
or LTIP, which is a program administered under the 2001 Stock
Incentive Plan. Employees of the Company and its subsidiaries
whose pay classifications exceeded a certain level were eligible
to receive stock options, and more senior level employees were
eligible to receive stock options and performance shares. Under
the LTIP, the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance units vest
on the third anniversary of the grant date and shares of
Class A common stock are issued, conditional upon our
performance against financial performance measures targets
established by our management and approved by the board of
directors as of the time of the award. No awards were made under
the LTIP in 2003.
The Option Plan Committee of our board of
directors administers and authorizes grants and awards under the
2001 Stock Incentive Plan to any eligible individuals. The
Option Plan Committee determines the terms of each stock option
grant, restricted stock grant or other award at the time of
grant, including the exercise price to be paid for the shares,
the vesting schedule for each option, the price, if any, to be
paid by the grantee for the restricted stock, the restrictions
placed on the shares, and the time or times when the
restrictions will lapse. The Option Plan Committee also has the
power to accelerate the vesting of any grant or extend the term
thereof.
Upon a change of control of the Company, the
Option Plan Committee can shorten the exercise period of any
option, have the survivor or successor entity assume the options
with appropriate adjustments, or cancel options and pay out in
cash. If an optionee's or grantee's employment is
terminated without "cause" or for "good
reason" following a "change in control" (as those
terms are defined in the plans), unless otherwise provided in an
agreement, with respect to such optionee's or
grantee's awards under the plans, all outstanding options
will become immediately and fully exercisable, all outstanding
stock appreciation rights will become immediately and fully
exercisable, the restrictions on the outstanding restricted
stock will lapse, and all of the outstanding performance shares
will vest and the restrictions on all of the outstanding
performance shares will lapse as if all performance objectives
had been satisfied at the maximum level.
February 2004 Option
Exchange.
In January 2004, we began an
option exchange program in which we offered employees of the
Company and its subsidiaries the right to exchange all stock
options (vested and unvested) under the 1999 Charter
Communications Option Plan and 2001 Stock Incentive Plan that
had an exercise price over $10 per share for shares of
restricted Class A common stock or, in some instances,
cash. Based on a sliding exchange ratio, which varied depending
on the exercise price of an employee's outstanding options,
if exchange for tendered options, we issued to that employee
shares of restricted stock in the exchange. If, based on the
exchange ratios, an employee would have received 400 or fewer
shares of restricted stock in exchange for tendered options, we
instead paid to the employee cash in an amount equal to the
number of shares the employee would have received multiplied by
$5.00. The offer applied to options to purchase a total of
22,929,573 shares of Class A common stock, or
approximately 48% of our 47,882,365 total options (vested and
unvested) issued and outstanding as of December 31, 2003.
Participation by employees was voluntary. Those members of our
board of directors who were not also employees of the Company or
any of its subsidiaries were not eligible to participate in the
exchange offer.
In the closing of the exchange offer on
February 20, 2004, we accepted for cancellation eligible
options to purchase approximately 18,137,664 shares of our
Class A common stock. In exchange, we granted approximately
1,966,686 shares of restricted stock, including 460,777
performance shares to eligible employees of the rank of senior
vice president and above, and paid a total cash amount of
approximately $4 million (which amount includes applicable
withholding taxes) to those employees who
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Table of Contents
received cash rather than shares of restricted
stock. The restricted stock was granted on February 25,
2004. Employees tendered approximately 79% of the options
eligible to be exchanged under the program.
The cost of the stock option exchange program was
approximately $12 million, with a 2004 cash compensation
expense of approximately $4 million and a non-cash
compensation expense of approximately $8 million to be
expensed ratably over the three-year vesting period of the
restricted stock issued in the exchange.
Employment
Arrangements
Mr. Vogel is currently employed under an
employment agreement that was signed in 2001 and terminates on
December 31, 2005. Of the other individuals named in the
Summary Compensation Table, Ms. Bellville is no longer an
employee, but served until September 30, 2004 under the
terms of an employment agreement signed in April 2003 and
Mr. Silva is no longer an employee, but served until July
of 2003 under the terms of an employment agreement signed in
2001.
Mr. Vogel is employed as President and Chief
Executive Officer, earning a base annual salary of $1,000,000
and is eligible to receive an annual bonus of up to $500,000, a
portion based on personal performance goals and a portion based
on company performance measured against criteria established by
the board with Mr. Vogel. Pursuant to his employment
agreement, Mr. Vogel was granted 3,400,000 options to
purchase Class A common stock and 50,000 shares of
restricted stock under our 2001 Stock Incentive Plan. In the
February 2004 option exchange Mr. Vogel exchanged his 3,400,000
options for 340,000 shares of restricted stock and 340,000
performance shares. Mr Vogel's 50,000 restricted shares
vested 25% on the grant date, with the remainder vesting in 36
equal monthly installments beginning December 2002. The 340,000
shares of restricted stock vest over a three-year period, with
one-third of the shares vesting on each of the first three
anniversaries of the grant date. The 340,000 performance shares
vest at the end of a three-year period if certain financial
criteria are met. Mr. Vogel's agreement provides that
if Mr. Vogel is terminated without cause or if
Mr. Vogel terminates the agreement for good reason
(including, in the event Mr. Vogel is required to report,
directly or indirectly, to persons other than the board), he is
entitled to his aggregate base salary due during the remainder
of the term and full prorated benefits and bonus for the year in
which termination occurs. Mr. Vogel's agreement
includes a covenant not to compete for the balance of the
initial term or any renewal term, but no more than one year in
the event of termination without cause or by Mr. Vogel with
good reason. Mr. Vogel's agreement entitles him to
participate in any disability insurance, pensions or other
benefit plans afforded to employees generally or to our
executives, including our LTIP. We agreed to reimburse
Mr. Vogel annually for the cost of term life insurance in
the amount of $5 million, although he declined this
reimbursement in 2001, 2002 and 2003. Mr. Vogel is entitled
to reimbursement of fees and dues for his membership in a
country club of his choice, which he declined in 2001, 2002 and
2003 and reimbursement for up to $10,000 per year for tax,
legal and financial planning services. His agreement also
provides for a car and associated expenses for
Mr. Vogel's use. Mr. Vogel's agreement
provides for automatic one-year renewals and also provides that
we will cause him to be elected to our board of directors
without any additional compensation.
Ms. Bellville was employed as Executive Vice
President, Chief Operating Officer. Until her resignation in
September 2004, she was employed under an employment agreement
entered into as of April 27, 2003, that would have
terminated on September 1, 2007. Her annual base salary was
$625,000 and she was eligible to receive an annual bonus in an
amount to be determined by our board of directors, with a
contractual minimum for 2003 of $203,125. Commencing in 2004,
Ms. Bellville would have been eligible to receive a target
annual bonus equal to 100% of her base salary for the applicable
year at the discretion of the board of directors, 50% to be
based on personal performance goals and 50% to be based on
overall company performance. Under a prior offer letter dated
December 3, 2002, Ms. Bellville was granted 500,000
options to purchase shares of our Class A common stock,
which vested 25% on the date of the grant (December 9,
2002), with the balance to vest in 36 equal installments
commencing January 2003. Ms. Bellville's employment
agreement provided that if she was terminated without cause or
if she terminated the agreement for good reason (including due
to a change in control or if Ms. Bellville was required to
report, directly or indirectly, to persons other than the Chief
Executive Officer), we would pay
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Table of Contents
Ms. Bellville an amount equal to the
aggregate base salary due to Ms. Bellville during the
remainder of the term, or renewal term and a full prorated bonus
for the year in which the termination occurs, within thirty days
of termination. Ms. Bellville's agreement included a
covenant not to compete for the balance of the initial term or
any renewal term, but no more than one year, in the event of
termination without cause or by her with good reason. Her
agreement further provided that she was entitled to participate
in any disability insurance, pension or other benefit plan
afforded to employees generally or to our executives, including
our LTIP. Ms. Bellville was entitled to a monthly car
allowance and reimbursement for all business expenses associated
with the use of such car. Ms. Bellville's agreement
provided that she was entitled to the reimbursement of dues for
her membership in a country club of her choice, and
reimbursement for up to $5,000 per year for tax, legal and
financial planning services. Her base salary may have been
increased at the discretion of our board of directors.
Ms. Bellville's agreement provided for automatic
one-year renewals.
On September 16, 2004, Charter entered into
an agreement with Ms. Bellville governing the terms and
conditions of her resignation as an officer and employee of the
Company. Under the terms of this agreement, Ms. Bellville
will have the right to receive 65 weeks of base pay based
on an annual base of $625,000, plus usual compensation for all
accrued vacation and other leave time. Her options to purchase
700,000 shares of Class A common stock will continue
to vest during the salary continuation period.
Ms. Bellville will have 60 days after the expiration
of the salary continuation period to exercise any outstanding
vested options at the applicable exercise prices established at
each grant date. To date, Ms. Bellville has exercised her
options to purchase 350,000 shares. Ms. Bellville is
entitled to receive relocation benefits under the Company's
current relocation policy with respect to a move to a specified
geographic area and will be provided outplacement assistance for
6 months following the date of her separation from the
Company. Her resignation was effective September 30, 2004.
The Agreement provided that the previously existing Employment
Agreement would terminate, except for certain ongoing
obligations on Ms. Bellville's part concerning
confidentiality, non-solicitation and non-disparagement. The
contractual restriction on her ability to solicit current
Charter employees does not apply to persons who, at the time of
solicitation, have not worked for Charter in the prior
6 months and are not receiving severance from Charter. In
addition, the non-competition provisions of her Employment
Agreement were waived. Under the Agreement, Ms. Bellville
waived a right to any bonus or incentive plan and released the
Company from any claims arising out of or based upon any facts
occurring prior to the date of the Agreement, but the Company
will continue to provide Ms. Bellville certain
indemnification rights for that period.
Mr. Silva was employed as Executive Vice
President — Corporate Development and Chief Technology
Officer. Until his resignation in July 2003, he received a base
salary of $300,000 and was eligible to receive an annual bonus
of up to 50% of base, according to our Executive Bonus Policy in
accordance with past practices, and additional bonuses at the
discretion of the board. Pursuant to his employment agreement,
Mr. Silva received 36,000 shares of restricted stock
under our 2001 Stock Incentive Plan. Under his agreement,
Mr. Silva's restricted shares vested 25% on the grant
date, with the remainder to vest in 36 equal monthly
installments beginning December 2002. Mr. Silva's
agreement provided that he was eligible for any disability
insurance, pension or other benefit plan offered to employees
generally or to our executives. Mr. Silva's agreement
also provided that, to the extent we did not provide life
insurance in an amount at least equal to the unpaid amount of
his base salary through the end of the term of his agreement, we
would continue to pay his estate an amount equal to his base
salary in installments through the end of the term.
In addition to the indemnification provisions
which apply to all employees under our bylaws, each of these
agreements provides that we will indemnify and hold harmless
each employee to the maximum extent permitted by law from and
against any claims, damages, liabilities, losses, costs or
expenses in connection with or arising out of the performance by
the applicable employee of his or her duties. Each of the above
agreements also contains confidentiality and non-solicitation
provisions.
Mr. Chang is employed under the terms
contained in an offer letter effective December 2, 2003
providing for an annual base salary of $400,000 and eligibility
for an annual incentive target of 100% of the
116
Table of Contents
base salary (based on a combination of personal
performance goals and overall company performance).
Mr. Chang is also eligible to participate in our 2001 Stock
Incentive Plan. Under this plan, Mr. Chang was granted
350,000 options to purchase Class A common stock and 50,000
restricted shares on December 9, 2003. Mr. Chang is
also entitled to participate in our LTIP. Mr. Chang's
agreement provides that one half of each of his unvested
restricted shares would immediately vest, and one half of his
unvested options of the initial option grant would vest if
(1) there is a change in our current Chief Executive
Officer, (2) there is a change in reporting relationship to
anyone other than the Chief Executive Officer, (3) there is
a requirement that the employee relocate, (4) there is a
change of control of the Company or (5) if terminated
without cause. In addition, Mr. Chang would be entitled to
eighteen months of full severance benefits at his current
compensation rate, plus the pro rata portion of his bonus
amounts within thirty days after termination because of any of
these events.
From January 5, 2004 until his resignation
in August 2004, Michael P. Huseby was employed as Charter's
Chief Financial Officer under the terms of a letter agreement
dated January 5, 2004. The terms contained in such letter
agreement were essentially the same as those contained in
Mr. Chang's letter agreement.
We have established separation guidelines which
generally apply to all employees in situations where management
determines that an employee is entitled to severance benefits.
Severance benefits are granted solely in management's
discretion and are not an employee entitlement or guaranteed
benefit. The guidelines provide that persons employed at the
level of Senior Vice President may be eligible to receive
between six and fifteen months of severance benefits and persons
employed at the level of Executive Vice President may be
eligible to receive between nine and eighteen months of
severance benefits in the event of separation under certain
circumstances generally including the elimination of a position,
work unit or general staff reduction. Separation benefits are
contingent upon the signing of a separation agreement containing
certain provisions including a release of all claims against us.
Severance amounts paid under these guidelines are distinct and
separate from any one-time, special or enhanced severance
programs that may be approved by us from time to time.
Limitation of Directors'
Liability and Indemnification Matters
Our certificate of incorporation limits the
liability of directors to the maximum extent permitted by
Delaware law. The Delaware General Corporation Law provides that
a corporation may eliminate or limit the personal liability of a
director for monetary damages for breach of fiduciary duty as a
director, except for liability for:
(1) any breach of the director's duty
    of loyalty to the corporation and its stockholders;
(2) acts or omissions not in good faith or
    which involve intentional misconduct or a knowing violation of
    law;
(3) unlawful payments of dividends or
    unlawful stock purchases or redemptions; or
(4) any transaction from which the director
    derived an improper personal benefit.
Our bylaws provide that we will indemnify all
persons whom we may indemnify pursuant thereto to the fullest
extent permitted by law.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors,
officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the
SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
We have reimbursed certain of our current and
former directors, officers and employees in connection with
their defense of certain legal actions. See "Certain
Relationships and Related Transactions — Other
Miscellaneous Relationships — Indemnification
Advances."
117
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain
information regarding beneficial ownership of the Company's
Class A common stock as of October 31, 2004 by:
•
each person serving as a director of the Company;
•
the current chief executive officer and the other
    individuals named in the Summary Compensation Table;
•
all persons serving as directors and officers of
    the Company, as a group; and
•
each person known by us to own beneficially 5% or
    more of the outstanding Class A common stock.
With respect to the percentage of voting power
set forth in the following table:
•
each holder of Class A common stock is
    entitled to one vote per share; and
•
each holder of Class B common stock is
    entitled to (i) ten votes per share of Class B common
    stock held by such holder and its affiliates and (ii) ten
    votes per share of Class B Common Stock for which
    membership units in Charter Holdco held by such holder and its
    affiliates are exchangeable.
Class A
Shares
Unvested
Receivable
Class B
Restricted
on Exercise
Class A
Shares
Number of
Class A
of Vested
Shares
Issuable
Class A Shares
Shares
Options or
Receivable on
Number of
upon
% of
(Voting and
(Voting
Other
Exercise of
Class B
Exchange or
% of
Voting
Investment
Power
Convertible
Convertible
Shares
Conversion of
Equity
Power
Name and Address of Beneficial Owner
Power)(1)
Only)(2)
Securities(3)
Sr. Notes
Owned
Units(4)
(4)(5)
(5)(6)
Paul G. Allen(7)
29,126,463
15,823
10,000
50,000
368,318,494
57.18
%
92.54
%
Charter Investment, Inc.(8)
222,818,858
42.22
%
*
Vulcan Cable III Inc.(9)
116,313,173
27.61
%
*
Carl E. Vogel
88,541
691,459
400,000
34,786
*
*
John H. Tory
14,182
15,823
40,000
*
*
Marc B. Nathanson
389,882
15,823
50,000
46,382
*
*
Charles M. Lillis(10)
11,429
18,416
*
*
David C. Merritt
9,882
15,823
*
*
Jo Allen Patton(11)
10,977
*
*
W. Lance Conn(12)
19,231
*
*
Robert P. May(13)
0
19,685
*
*
Jonathan L. Dolgen(13)
0
19,685
*
*
Larry W. Wangberg
12,882
15,823
40,000
*
*
Curtis S. Shaw
5,000
438,416
*
*
Steven A. Schumm(14)
12,440
108,768
182,500
4,638
*
*
Wayne H. Davis
250
8,000
76,250
*
*
All current directors and executive officers as a
    group (17 persons)
29,706,951
1,030,050
1,400,916
88,125
50,000
339,132,031
57.51
%
92.54
%
Margaret A. Bellville(15)
375,000
*
*
Stephen E. Silva(16)
479,833
*
*
Mark Cuban(17)
19,000,000
6.23
%
*
Wallace R. Weitz & Company(18)
32,549,600
10.67
%
*
UBS Americas Inc.(19)
19,520,000
6.4
%
*
*
Less than 1%.
(1)
Includes shares for which the named person has
    sole voting and investment power; or shared voting and
    investment power with a spouse. Does not include shares that may
    be acquired through exercise of options.
(2)
Includes unvested shares of restricted stock
    issued under the Charter Communications, Inc. 2001 Stock
    Incentive Plan (including those issued in the February 2004
    option exchange for those eligible
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Table of Contents
employees who elected to participate), as to
    which the applicable director or employee has sole voting power
    but not investment power.
(3)
Includes shares of Class A common stock
    issuable upon exercise of options that have vested or will vest
    on or before December 30, 2004 under the 1999 Charter
    Communications Option Plan and the 2001 Stock Incentive Plan.
(4)
Beneficial ownership is determined in accordance
    with Rule 13d-3 under the Exchange Act. The beneficial
    owners at September 30, 2004 of Class B common stock,
    Charter Holdco membership units and convertible senior notes of
    Charter are deemed to be beneficial owners of an equal number of
    shares of Class A common stock because such holdings are
    either convertible into Class A shares (in the case of
    Class B shares and convertible senior notes) or
    exchangeable (directly or indirectly) for Class A shares
    (in the case of the membership units) on a one-for-one basis.
    Unless otherwise noted, the named holders have sole investment
    and voting power with respect to the shares listed as
    beneficially owned. An issue has arisen as to whether the
    documentation for the Bresnan transaction was correct and
    complete with regard to the ultimate ownership of the CC VIII,
    LLC membership interests following the consummation of the
    Bresnan put transaction on June 6, 2003. See "Certain
    Relationships and Related Party Transactions —
    Transactions Arising Out of Our Organizational Structure and
    Mr. Allen's Investment in Charter and Its
    Subsidiaries — Equity Put Rights —
    CC VIII."
(5)
The calculation of this percentage assumes for
    each person that:
•
304,890,987 shares of Class A common
    stock are issued and outstanding as of October 31, 2004;
•
50,000 shares of Class B common stock
    held by Mr. Allen have been converted into shares of
    Class A common stock;
•
the acquisition by such person of all shares of
    Class A common stock that such person or affiliates of such
    person has the right to acquire upon exchange of membership
    units in subsidiaries or conversion of Series A Convertible
    Redeemable Preferred Stock or 5.75% or 4.75% convertible
    senior notes;
•
the acquisition by such person of all shares that
    may be acquired upon exercise of options to purchase shares or
    exchangeable membership units that have vested or will vest by
    December 30, 2004; and
•
that none of the other listed persons or entities
    has received any shares of Class A common stock that are
    issuable to any of such persons pursuant to the exercise of
    options or otherwise.
A person is deemed to have the right to acquire
shares of Class A common stock with respect to options
vested under the 1999 Charter Communications Option Plan. When
vested, these options are exercisable for membership units of
Charter Holdco, which are immediately exchanged on a one-for-one
basis for shares of Class A common stock. A person is also
deemed to have the right to acquire shares of Class A
common stock issuable upon the exercise of vested options under
the 2001 Stock Incentive Plan.
(6)
The calculation of this percentage assumes that
    Mr. Allen's equity interests are retained in the form
    that maximizes voting power (i.e., the 50,000 shares of
    Class B common stock held by Mr. Allen have not been
    converted into shares of Class A common stock; that the
    membership units of Charter Holdco owned by each of Vulcan
    Cable III Inc. and Charter Investment, Inc. have not been
    exchanged for shares of Class A common stock).
(7)
The total listed includes:
•
222,818,858 membership units in Charter Holdco
    held by Charter Investment, Inc.; and
•
116,313,173 membership units in Charter Holdco
    held by Vulcan Cable III Inc.
The listed total excludes 24,273,943 shares
    of Class A common stock issuable upon exchange of units of
    Charter Holdco, which may be issuable to Charter Investment,
    Inc. (which is owned by Mr. Allen) as a consequence of the
    closing of his purchase of the membership interests in CC VIII,
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LLC that were put to Mr. Allen and were
    purchased by him on June 6, 2003. An issue has arisen
    regarding the ultimate ownership of such CC VIII, LLC membership
    interests following the consummation of such put transaction.
    See "Certain Relationships and Related Party
    Transactions — Transactions Arising Out of Our
    Organizational Structure and Mr. Allen's Investment in
    Charter and Its Subsidiaries — Equity Put
    Rights — CC VIII."
The address of this person is: 505 Fifth Avenue
    South, Suite 900, Seattle, WA 98104.
(8)
Includes 222,818,858 membership units in Charter
    Holdco which are exchangeable for shares of Class B common
    stock on a one-for-one basis, which are convertible to shares of
    Class A common stock on a one-for-one basis. The address of
    this person is Charter Plaza, 12405 Powerscourt Drive,
    St. Louis, MO 63131.
(9)
Includes 116,313,173 membership units in Charter
    Holdco which are exchangeable for shares of Class B common
    stock on a one-for-one basis, which are convertible to shares of
    Class A common stock on a one-for-one basis. The address of
    this person is: 505 Fifth Avenue South, Suite 900, Seattle,
    WA 98104.
(10)
Mr. Lillis was granted 11,429 shares of
    restricted Class A common stock on October 3, 2003,
    which vested fully on October 3, 2004. He was granted
    18,416 shares of restricted Class A common stock on
    October 3, 2004, which will vest fully on October 3,
    2005.
(11)
Ms. Patton was appointed to the board of
    directors of the Company on April 27, 2004 and was granted
    10,997 shares on that date which will vest fully on
    April 27, 2005.
(12)
Mr. Conn was elected to the Board of
    Directors of the Company on September 24, 2004 and was
    granted 19,231 shares on September 30, 2004, which
    will vest fully on September 30, 2005.
(13)
Mr. May and Mr. Dolgen were elected to
    the Board of Directors of the Company on October 21, 2004
    and were granted 19,685 shares on October 21, 2004 which
    will fully vest on October 21, 2005.
(14)
Includes 1,000 shares for which
    Mr. Schumm has shared investment and voting power.
(15)
Ms. Bellville resigned from the Company
    effective September 30, 2004. Under the terms of her
    separation agreement, her options will continue to vest until
    December 31, 2005, and all vested options are exercisable
    until sixty (60) days thereafter.
(16)
Mr. Silva's 21,000 shares of
    unvested restricted stock were cancelled upon his resignation,
    effective July 1, 2003. Under the terms of his severance,
    his options will continue to vest until October 15, 2004,
    and all vested options will be exercisable until sixty
    (60) days thereafter.
(17)
The equity ownership reported in this table is
    based upon holder's Schedule 13G filed with the SEC
    May 19, 2003. The address of this person is: 5424 Deloache,
    Dallas, Texas 75220.
(18)
The equity ownership reported in this table, for
    both the named holder and its president and primary owner,
    Wallace R. Weitz, is based upon holders' Schedule 13F
    filed with the SEC on November 5, 2004, and reflects the
    holders' ownership in its capacity as an investment advisor
    and not ownership for its own account. The address of this
    person is: 1125 South 103rd Street, Suite 600, Omaha,
    Nebraska 68124-6008.
(19)
The equity ownership reported in this table is
    based upon holder's Schedule 13G filed with the SEC
    February 19, 2004. The address of this person is: 677
    Washington Blvd., Stamford, Connecticut 06901. This person
    disclaims beneficial ownership of all of these shares. In
    addition, these shares include all of the shares described in
    footnote 18 above.
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CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The following sets forth certain transactions in
which we are involved and in which the directors, executive
officers and affiliates of Charter or us have or may have a
material interest. The transactions fall generally into three
broad categories:
•
Transactions in which Mr. Allen has an
    interest that arise directly out of Mr. Allen's
    investment in Charter and Charter
    Holdco.
A large number of the
    transactions described below arise out of Mr. Allen's
    direct and indirect (through Charter Investment, Inc., or the
    Vulcan entities, each of which Mr. Allen controls)
    investment in Charter and its subsidiaries, as well as
    commitments made as consideration for the investments themselves.
•
Transactions with third party providers of
    products, services and content in which Mr. Allen has a
    material interest.
Mr. Allen has
    numerous investments in the areas of technology and media. We
    have a number of commercial relationships with third parties in
    which Mr. Allen has an interest.
•
Other Miscellaneous
    Transactions.
We have a limited number
    of transactions in which certain of the officers, directors and
    principal shareholders of Charter and its subsidiaries, other
    than Mr. Allen, have an interest.
A number of our debt instruments and those of our
subsidiaries require delivery of fairness opinions for
transactions with Mr. Allen or his affiliates involving
more than $50 million. Such fairness opinions have been
obtained whenever required. All of our transactions with
Mr. Allen or his affiliates have been considered for
approval either by the board of directors of Charter or a
committee of the board of directors and, in compliance with
corporate governance requirements, all related party
transactions are considered by Charter's Audit Committee
comprised entirely of independent directors. All of our
transactions with Mr. Allen or his affiliates have been
deemed by the board of directors or a committee of the board of
directors to be in our best interest. Except where noted below,
we do not believe that these transactions present any unusual
risks for us that would not be present in any similar commercial
transaction.
The chart below summarizes certain information
with respect to these transactions. Additional information
regarding these transactions is provided following the chart.
Transaction
Interested Related Party
Description of Transaction
Intercompany Management Arrangements
Paul G. Allen
Our subsidiaries of Charter Holdco paid Charter
    approximately $69 million, $79 million,
    $84 million and $65 million for management services
    rendered in 2001, 2002 and 2003 and the nine months ended
    September 30, 2004, respectively.
Mutual Services Agreement
Paul G. Allen
Charter paid Charter Holdco approximately
    $51 million, $70 million, $73 million and
    $54 million for services rendered in 2001, 2002, 2003 and
    the nine months ended September 30, 2004, respectively.
Management Agreement
Paul G. Allen
No fees were paid in 2001, 2002, 2003 or 2004,
    although total management fees payable to Charter Investment,
    Inc., exclusive of interest, were approximately $14 million
    at December 31, 2001 and 2002, 2003 and September 30,
    2004.
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Transaction
Interested Related Party
Description of Transaction
Tax Provisions of Charter Holdco's Operating
    Agreement
Paul G. Allen
In 2001 and 2002, the operating agreement of
    Charter Holdco allocated certain of our tax losses to entities
    controlled by Paul Allen.
Channel Access Agreement
Paul G. Allen
At Vulcan Ventures' request, we will provide
    Vulcan Ventures with exclusive rights for carriage on eight of
    our digital cable channels as partial consideration for a prior
    capital contribution of $1.3 billion.
Equity Put Rights
Paul G. Allen
Certain sellers of cable systems that we acquired
    were granted, or previously had, the right, as described below,
    to put to Paul Allen equity in us (in the case of Rifkin and
    Falcon), Charter Holdco (in the case of Rifkin) and CC VIII, LLC
    (in the case of Bresnan) issued to such sellers in connection
    with such acquisitions.
Funding Commitment of Vulcan Inc.
Paul G. Allen
Pursuant to a commitment letter dated
    April 14, 2003, Vulcan Inc., which is an affiliate of Paul
    Allen, agreed to lend, under certain circumstances, or cause an
    affiliate to lend to Charter Holdings or any of its subsidiaries
    a total amount of up to $300 million, which amount includes
    a subfacility of up to $100 million for the issuance of
    letters of credit. In November 2003, the commitment was
    terminated. We incurred expenses to Vulcan Inc. totaling
    $5 million in connection with the commitment prior to
    termination.
High Speed Access Corp. Asset Purchase Agreement
Paul G. Allen
In February 2002, our subsidiary purchased
    certain assets of High Speed Access for $78 million, plus
    the delivery of 37,000 shares of High Speed Access
    Series D preferred stock and certain warrants. In
    connection with the transaction, High Speed Access also
    purchased 38,000 shares of its Series D preferred
    stock from Vulcan Ventures for approximately $8 million,
    and all of Vulcan Ventures' shares of High Speed Access
    common stock.
High Speed Access Corp.
Paul G. Allen
In January 2002, we granted a royalty free right
    to use intellectual property purchased by Charter Communications
    Holding Company, LLC, received approximately $4 million in
    management fees and approximately $17 million in revenues
    and paid approximately $2 million under agreements that
    have terminated.
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Transaction
Interested Related Party
Description of Transaction
TechTV Carriage Agreement
Paul G. Allen William D. Savoy Larry W. Wangberg
We recorded approximately $9 million,
    $4 million, $1 million and $5 million from TechTV
    under the Carriage Agreement in 2001, 2002, 2003 and the nine
    months ended September 30, 2004, respectively, related to
    launch incentives as a reduction of programming expense. We paid
    TechTV approximately $0, $0.2 million, $80,600 and
    $1 million in 2001, 2002, 2003 and the nine months ended
    September 30, 2004, respectively.
Oxygen Media Corporation Carriage Agreement
Paul G. Allen
We paid Oxygen Media approximately
    $3 million, $6 million, $9 million and
    $10 million under a carriage agreement in exchange for
    programming in 2001, 2002, 2003 and the nine months ended
    September 30, 2004, respectively.
We recorded approximately $2 million,
    $1 million and $1 million in 2002, 2003 and the nine
    months ended September 30, 2004, respectively, from Oxygen
    Media related to launch incentives as a reduction of programming
    expense.
We hold warrants to
    purchase 2.4 million shares of Oxygen Media common
    stock and received the rights to receive unregistered shares of
    Oxygen Media common stock to be issued on or prior to
    February 2, 2005 at a guaranteed fair market value of
    $34 million. We recognized approximately $3 million,
    $6 million, $9 million and $10 million as a
    reduction of programming expense in 2001, 2002, 2003 and the
    nine months ended September 30, 2004, respectively, in
    recognition of the guaranteed value of the investment.
Portland Trail Blazers Carriage Agreement
Paul G. Allen
We paid approximately $1 million for rights
    to carry the cable broadcast of certain Trail Blazers basketball
    games in both 2001 and 2002, and approximately $135,200 in 2003
    and $73,500 for the nine months ended September 30, 2004.
Action Sports Cable Network Carriage Agreement
Paul G. Allen
We paid approximately $0.4 million and
    $1 million for rights to carry its programming in 2001 and
    2002, respectively.
Click2learn, Inc. Software License Agreement
Paul G. Allen
We paid approximately $250,000, $57,100 and $0
    under the Software License Agreement in 2002, 2003 and the nine
    months ended September 30, 2004, respectively.
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Transaction
Interested Related Party
Description of Transaction
Digeo, Inc. Broadband Carriage Agreement
Paul G. Allen William D. Savoy Carl E. Vogel
We paid Digeo approximately $0, $3 million,
    $4 million and $2 million for customized development
    of the i-channels and the local content tool kit in 2001, 2002,
    2003 and the nine months ended September 30, 2004,
    respectively. We entered into a license agreement in 2004 for
    the Digeo software that runs DVR units purchased from a third
    party. We executed a binding term sheet in 2004 for the purchase
    of up to 70,000 DVR units and a related software license, both
    subject to satisfaction of certain conditions.
USA Networks/ Home Shopping Network
Paul G. Allen William D. Savoy
For the year ended December 31, 2001, we
    received approximately $12 million from USA Networks under
    the affiliation agreement and for commissions from USA Networks
    for home shopping sales generated by its customers and/or
    promotion of the Home Shopping Network. For the year ended
    December 31, 2001, we paid USA Networks approximately
    $39 million for cable television programming.
Viacom Networks
Jonathan L. Dolgen
We are party to certain affiliation agreements
    with networks of Viacom, pursuant to which Viacom provides
    Charter with programming for distribution via our cable systems.
    For the years ended December 31, 2001, 2002 and
    2003 and for the nine months ended September 30, 2004,
    Charter paid Viacom approximately $147 million,
    $177 million, $188 million and $146 million,
    respectively, for programming, and Charter recorded as
    receivables approximately $11 million, $5 million,
    $5 million and $2 million from Viacom for launch
    incentives and marketing support for the years ended
    December 31, 2001, 2002 and 2003 and the nine months ended
    September 30, 2004, respectively.
ADC Telecommunications Inc
Larry W. Wangberg
We paid $759,600 and $60,100 and $263,900 to
    purchase certain access/network equipment in 2002, 2003 and the
    nine months ended September 30, 2004, respectively.
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Transaction
Interested Related Party
Description of Transaction
HDNet and HDNet Movies Network
Mark Cuban
Charter Holdco is party to an agreement to carry
    two around-the-clock, high-definition networks, HDNet and HDNet
    Movies. We paid HDNet and HDNet Movies approximately $21,900 in
    2003 and $323,900 in the nine months ended September 30,
    2004.
Office lease agreement
David L. McCall
We paid $117,600, $117,600, $189,200 and $43,400
    in 2001, 2002, 2003 and the nine months ended September 30,
    2004, respectively, under an office lease agreement to a
    partnership controlled by Mr. McCall.
Construction Services
David L. McCall
In 2001, 2002 and 2003, we paid $571,600,
    $644,800 and $381,300, respectively, to a construction company
    controlled by Mr. McCall's brother and $462,100,
    $3 million and $373,800, respectively, to a construction
    company controlled by Mr. McCall's son.
Lease Arrangements
Marc B. Nathanson
We paid approximately $127,000, $76,000 and
    $16,600 in 2001, 2002 and 2003, respectively, to companies
    controlled by Mr. Nathanson under a warehouse lease agreement
    and in 2001 we paid approximately $204,000 in rent under an
    office lease agreement and a payment of $639,000 to terminate
    such lease.
Charter airplane
Howard L. Wood
In 2001, Mr. Wood received a benefit of
    $118,500 for the cost of two individuals to operate an airplane
    for a company controlled by Mr. Wood. In addition,
    Mr. Wood also used Charter's airplane for occasional
    personal use in 2001, a benefit valued at $12,500 for the year
    ended December 31, 2001.
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Transaction
Interested Related Party
Description of Transaction
Payment for relatives' services
Howard L. Wood Jerald R. Kent Carl E. Vogel
In 1999, one of Mr. Wood's daughters,
    received a bonus in the form of a three- year promissory note
    bearing interest at 7% per year. The amount of principal
    and interest forgiven on this note for the year ended
    December 31, 2001, was $85,500, and the outstanding balance
    on the note was forgiven effective as of February 22, 2002.
    Another daughter of Mr. Wood received approximately $70,200
    during the year ended December 31, 2001 for event planning
    services performed by her company. In 2001, a travel agency
    owned and operated by Mr. Kent's mother-in-law
    received approximately $132,000 for travel arrangements made for
    Charter by her company. Since June 2003, Mr. Vogel's
    brother-in-law has been an employee of Charter Holdco and has
    received a salary commensurate with his position in the
    engineering department.
Replay TV Joint Venture
Paul G. Allen
Charter Communications Ventures received
    management fees of $1 million for the year ended
    December 31, 2001.
Enstar Limited Partnership Systems Purchase and
    Management Services
Charter officers who were appointed by a Charter
    subsidiary (as general partner) to serve as officers of Enstar
    limited partnerships
Certain of our subsidiaries purchased certain
    assets of the Enstar Limited Partnerships for approximately
    $63 million. We also earned approximately $2 million,
    $1 million, $469,300 and $0 in 2001, 2002, 2003, and the
    nine months ended September 30, 2004, respectively, by
    providing management services to the Enstar Limited Partnerships.
Indemnification Advances
Directors and current and former officers named
    in certain legal proceedings
Charter has reimbursed certain of its current and
    former directors and executive officers a total of approximately
    $3 million, $8 million and $2.6 million for costs
    incurred in connection with certain litigation matters in 2002,
    2003 and the nine months ended September 30, 2004,
    respectively.
The following sets forth additional information
regarding the transactions summarized above.
Transactions Arising Out of Our Organizational
Structure and Mr. Allen's Investment in Charter and
Its Subsidiaries
As noted above, a number of our related party
transactions arise out of Mr. Allen's investment in
Charter and its subsidiaries, including us. Some of these
transactions are with Charter Investment, Inc. and Vulcan
Ventures (both owned 100% by Mr. Allen), Charter
(controlled by Mr. Allen) and Charter
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Holdco (approximately 47% owned by us and 53%
owned by other affiliates of Mr. Allen). See
"Summary — Organizational Structure" for
more information regarding the ownership by Mr. Allen and
certain of his affiliates.
Intercompany Management
    Arrangements
Charter is a party to management arrangements
with Charter Holdco and certain of its subsidiaries. Under these
agreements, Charter provides management services for the cable
systems owned or operated by its subsidiaries. These management
agreements provide for reimbursement to Charter for all costs
and expenses incurred by it attributable to the ownership and
operation of the managed cable systems (referred to as
"company expenses"), plus an additional management fee
to cover additional costs incurred by Charter that are not in
the nature of company expenses (such as corporate overhead,
administration and salary expense). The management agreements
covering the CC VI and CC VII companies limit the management fee
portion payable to Charter to 5% of their respective gross
revenues. Under the arrangement covering all of our other
operating subsidiaries, there is no limit on the dollar amount
or percentage of revenues payable as management fees, except for
CC VIII, LLC, where the operating agreement limits management
fees payable to amounts allowed under the CC VIII Credit
Agreement.
However, the total amount paid by Charter Holdco
and all of its subsidiaries is limited to the amount necessary
to reimburse Charter for all of its expenses, costs, losses,
liabilities and damages paid or incurred by it in connection
with the performance of its services under the various
management agreements and in connection with its corporate
overhead, administration, salary expense and similar items. The
expenses subject to reimbursement include fees Charter is
obligated to pay under the mutual services agreement with
Charter Investment, Inc. Payment of management fees by
Charter's operating subsidiaries is subject to certain
restrictions under the credit facilities and indentures of such
subsidiaries and the indentures governing the Charter Holdings
public debt. If any portion of the management fee due and
payable is not paid, it is deferred by Charter and accrued as a
liability of such subsidiaries. Any deferred amount of the
management fee will bear interest at the rate of 10% per
year, compounded annually, from the date it was due and payable
until the date it is paid. For the years ended December 31,
2001, 2002 and 2003 and the nine months ended September 30,
2004, the subsidiaries of Charter Holdings paid approximately
$69 million, $79 million, $84 million and
$65 million, respectively, in management fees to Charter.
Mutual Services Agreement
Charter, Charter Holdco and Charter Investment,
Inc. are parties to a mutual services agreement whereby each
party shall provide rights and services to the other parties as
may be reasonably requested for the management of the entities
involved and their subsidiaries, including the cable systems
owned by their subsidiaries all on a cost-reimbursement basis.
The officers and employees of each party are available to the
other parties to provide these rights and services, and all
expenses and costs incurred in providing these rights and
services are paid by Charter. Each of the parties will indemnify
and hold harmless the other parties and their directors,
officers and employees from and against any and all claims that
may be made against any of them in connection with the mutual
services agreement except due to its or their gross negligence
or willful misconduct. The mutual services agreement expires on
November 12, 2009, and may be terminated at any time by any
party upon thirty days' written notice to the other. For
the years ended December 31, 2001, 2002 and 2003 and the
nine months ended September 30, 2004, Charter paid
approximately $51 million, $70 million,
$73 million and $54 million to Charter Holdco for
services rendered pursuant to the mutual services agreement. All
such amounts are reimbursable to Charter pursuant to a
management arrangement with our subsidiaries. See
"— Intercompany Management Arrangements."
The accounts and balances related to these services eliminate in
consolidation. Charter Investment, Inc. no longer provides
services pursuant to this agreement.
Previous Management Agreement with Charter
    Investment, Inc.
Prior to November 12, 1999, Charter
Investment, Inc. provided management and consulting services to
our operating subsidiaries for a fee equal to 3.5% of the gross
revenues of the systems then owned, plus
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reimbursement of expenses. The balance of
management fees payable under the previous management agreement
was accrued with payment at the discretion of Charter
Investment, Inc., with interest payable on unpaid amounts. For
the years ended December 31, 2001, 2002 and 2003, and the
nine months ended September 30, 2004, Charter's
subsidiaries did not pay any fees to Charter Investment, Inc. to
reduce management fees payable. As of December 31, 2001,
2002 and 2003 and September 30, 2004, total management fees
payable by our subsidiaries to Charter Investment, Inc. were
approximately $14 million, exclusive of any interest that
may be charged.
Charter Communications Holding Company, LLC
    Limited Liability Agreement — Taxes
The limited liability company agreement of
Charter Holdco contains special provisions regarding the
allocation of tax losses and profits among its
members — Vulcan Cable III Inc., Charter
Investment, Inc. and us. In some situations, these provisions
may cause us to pay more tax than would otherwise be due if
Charter Holdco had allocated profits and losses among its
members based generally on the number of common membership
units. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations —
Critical Accounting Policies and Estimates — Income
Taxes."
Vulcan Ventures Channel Access
    Agreement
Vulcan Ventures, an entity controlled by
Mr. Allen, Charter, Charter Investment and Charter Holdco
are parties to an agreement dated September 21, 1999
granting to Vulcan Ventures the right to use up to eight of our
digital cable channels as partial consideration for a prior
capital contribution of $1.325 billion. Specifically, at
Vulcan Ventures' request, we will provide Vulcan Ventures
with exclusive rights for carriage of up to eight digital cable
television programming services or channels on each of the
digital cable systems with local and to the extent available,
national control of the digital product owned, operated,
controlled or managed by Charter or its subsidiaries now or in
the future of 550 megahertz or more. If the system offers
digital services but has less than 550 megahertz of capacity,
then the programming services will be equitably reduced. Upon
request of Vulcan Ventures, we will attempt to reach a
comprehensive programming agreement pursuant to which it will
pay the programmer, if possible, a fee per digital video
customer. If such fee arrangement is not achieved, then we and
the programmer shall enter into a standard programming
agreement. The initial term of the channel access agreement was
10 years, and the term extends by one additional year (such
that the remaining term continues to be 10 years) on each
anniversary date of the agreement unless either party provides
the other with notice to the contrary at least 60 days
prior to such anniversary date. To date, Vulcan Ventures has not
requested to use any of these channels. However, in the future
it is possible that Vulcan Ventures could require us to carry
programming that is less profitable to us than the programming
that we would otherwise carry and our results would suffer
accordingly.
Equity Put Rights
CC VIII.
As part of
the acquisition of the cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000, CC
VIII, Charter's indirect limited liability company
subsidiary, issued, after adjustments, 24,273,943 Class A
preferred membership units (collectively, the "CC VIII
interest") with a value and an initial capital account of
approximately $630 million to certain sellers affiliated
with AT&T Broadband, subsequently owned by Comcast
Corporation (the "Comcast sellers"). While held by the
Comcast sellers, the CC VIII interest was entitled to a 2%
priority return on its initial capital account and such priority
return was entitled to preferential distributions from available
cash and upon liquidation of CC VIII. While held by the Comcast
sellers, the CC VIII interest generally did not share in the
profits and losses of CC VIII. Mr. Allen granted the
Comcast sellers the right to sell to him the CC VIII interest
for approximately $630 million plus 4.5% interest annually
from February 2000 (the "Comcast put right"). In April
2002, the Comcast sellers exercised the Comcast put right in
full, and this transaction was consummated on June 6, 2003.
Accordingly, Mr. Allen has become the holder of the CC VIII
interest, indirectly through an affiliate. Consequently, subject
to the matters referenced in the next paragraph, Mr. Allen
generally thereafter will be allocated his pro rata share (based
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on number of membership interests outstanding) of
profits or losses of CC VIII. In the event of a liquidation of
CC VIII, Mr. Allen would be entitled to a priority
distribution with respect to the 2% priority return (which will
continue to accrete). Any remaining distributions in liquidation
would be distributed to CC V Holdings, LLC and Mr. Allen in
proportion to CC V Holdings, LLC's capital account and
Mr. Allen's capital account (which will equal the
initial capital account of the Comcast sellers of approximately
$630 million, increased or decreased by
Mr. Allen's pro rata share of CC VIII's profits
or losses (as computed for capital account purposes) after
June 6, 2003). The limited liability company agreement of
CC VIII does not provide for a mandatory redemption of the CC
VIII interest.
An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the CC VIII
interest following consummation of the Comcast put right.
Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead would receive the preferred equity
interests in CC VIII represented by the CC VIII interest. As
part of the last-minute changes to the Bresnan transaction
documents, a draft amended version of the Charter Holdco limited
liability company agreement was prepared, and contract
provisions were drafted for that agreement that would have
required an automatic exchange of the CC VIII interest for
24,273,943 Charter Holdco membership units if the Comcast
sellers exercised the Comcast put right and sold the
CC VIII interest to Mr. Allen or his affiliates.
However, the provisions that would have required this automatic
exchange did not appear in the final version of the Charter
Holdco limited liability company agreement that was delivered
and executed at the closing of the Bresnan transaction. The law
firm that prepared the documents for the Bresnan transaction
brought this matter to the attention of Charter and
representatives of Mr. Allen in 2002.
Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs. Merritt, Tory and Wangberg) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a "scrivener's
error" had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr. Allen should be required to
contribute the CC VIII interest to Charter Holdco in
exchange for 24,273,943 Charter Holdco membership units. The
Special Committee also recommended to the board of directors of
Charter that, to the extent the contract reformation is
achieved, the board of directors should consider whether the
CC VIII interest should ultimately be held by Charter
Holdco or Charter Holdings or another entity owned directly or
indirectly by them.
Mr. Allen disagrees with the Special
Committee's determinations described above and has so
notified the Special Committee. Mr. Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days' prior notice to the other.
In addition, the Special Committee and Mr. Allen have
determined to utilize the Delaware Court of Chancery's
program for mediation of complex business disputes in an effort
to resolve the CC VIII interest dispute. If the Special
Committee and Mr. Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr. Allen and his
affiliates seeking contract reformation,
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declaratory relief as to the respective rights of
the parties regarding this dispute and alternative forms of
legal and equitable relief. The ultimate resolution and
financial impact of the dispute are not determinable at this
time.
Rifkin.
On
September 14, 1999, Mr. Allen and Charter Holdco
entered into a put agreement with certain sellers of the Rifkin
cable systems that received a portion of their purchase price in
the form of 3,006,202 Class A preferred membership units of
Charter Holdco. This put agreement allowed these holders to
compel Charter Holdco to redeem their Class A preferred
membership units at any time before September 14, 2004 at
$1.00 per unit, plus accretion thereon at 8% per year
from September 14, 1999. Mr. Allen had guaranteed the
redemption obligation of Charter Holdco. These units were put to
Charter Holdco for redemption, and were redeemed on
April 18, 2003 for a total price of approximately
$3.9 million.
Mr. Allen also was a party to a put
agreement with certain sellers of the Rifkin cable systems that
received a portion of their purchase price in the form of shares
of Class A common stock of Charter. Under this put
agreement, such holders have the right to sell to Mr. Allen
any or all of such shares of Charter's Class A common
stock at $19 per share (subject to adjustments for stock
splits, reorganizations and similar events), plus interest at a
rate of 4.5% per year, compounded annually from
November 12, 1999. Approximately 4.6 million shares
were put to Mr. Allen under these agreements prior to their
expiration on November 12, 2003.
Falcon.
Mr. Allen also was a party to a put agreement with certain
sellers of the Falcon cable systems (including
Mr. Nathanson, one of our directors) that received a
portion of their purchase price in the form of shares of
Class A common stock of Charter. Under the Falcon put
agreement, such holders had the right to sell to Mr. Allen
any or all shares of Class A common stock received in the
Falcon acquisition at $25.8548 per share (subject to
adjustments for stock splits, reorganizations and similar
events), plus interest at a rate of 4.5% per year,
compounded annually from November 12, 1999. Approximately
19.4 million shares were put to Mr. Allen under these
agreements prior to their expiration on November 12, 2003.
Previous Funding Commitment of Vulcan
    Inc.
Effective April 14, 2003, our subsidiary,
Charter Communications VII, LLC entered into a commitment letter
with Vulcan Inc., which is an affiliate of Paul Allen, under
which Vulcan Inc. agreed to lend, under certain circumstances,
or cause an affiliate to lend initially to Charter
Communications VII, LLC, or another subsidiary of Charter
Holdings, up to $300 million, which amount included a
subfacility of up to $100 million for the issuance of
letters of credit. No amounts were ever drawn under the
commitment letter. In November 2003, the commitment was
terminated. We incurred expenses to Vulcan Inc. totaling
$5 million in connection with the commitment (including an
extension fee) prior to termination.
Allocation of Business Opportunities with
    Mr. Allen
As described under "— Third Party
Business Relationships in which Mr. Allen has an
Interest" in this section, Mr. Allen and a number of
his affiliates have interests in various entities that provide
services or programming to our subsidiaries. Given the diverse
nature of Mr. Allen's investment activities and
interests, and to avoid the possibility of future disputes as to
potential business, Charter and Charter Holdco, under the terms
of their respective organizational documents, may not, and may
not allow their subsidiaries, to engage in any business
transaction outside the cable transmission business except for
the Digeo, Inc. joint venture; a joint venture to develop a
digital video recorder set-top terminal; an existing investment
in Cable Sports Southeast, LLC, a provider of regional sports
programming; as an owner of the business of Interactive
Broadcaster Services Corporation or, Chat TV, an investment in
@Security Broadband Corp., a company developing broadband
security applications; and incidental businesses engaged in as
of the closing of Charter's initial public offering in
November 1999. This restriction will remain in effect until all
of the shares of Charter's high-vote Class B
common stock have been converted
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into shares of Charter Class A common stock
due to Mr. Allen's equity ownership falling below
specified thresholds.
Should Charter or Charter Holdco or any of their
subsidiaries wish to pursue, or allow their subsidiaries to
pursue, a business transaction outside of this scope, it must
first offer Mr. Allen the opportunity to pursue the
particular business transaction. If he decides not to pursue the
business transaction and consents to Charter or its subsidiaries
engaging in the business transaction, they will be able to do
so. In any such case, the restated certificate of incorporation
of Charter and the limited liability company agreement of
Charter Holdco would need to be amended accordingly to modify
the current restrictions on the ability of such entities to
engage in any business other than the cable transmission
business. The cable transmission business means the business of
transmitting video, audio, including telephony, and data over
cable systems owned, operated or managed by Charter, Charter
Holdco or any of their subsidiaries from time to time.
Under Delaware corporate law, each director of
Charter, including Mr. Allen, is generally required to
present to Charter, any opportunity he or she may have to
acquire any cable transmission business or any company whose
principal business is the ownership, operation or management of
cable transmission businesses, so that we may determine whether
we wish to pursue such opportunities. However, Mr. Allen
and the other directors generally will not have an obligation to
present other types of business opportunities to Charter and
they may exploit such opportunities for their own account.
Also, conflicts could arise with respect to the
allocation of corporate opportunities between us and
Mr. Allen and his affiliates in connection with his
investments in businesses in which we are permitted to engage
under Charter's restated certificate of incorporation and
our limited liability company agreement. Certain of the
indentures of Charter and its subsidiaries, including the
indenture governing the original notes and the new notes,
require the applicable issuer of notes to obtain, under certain
circumstances, approval of the board of directors of Charter
and, where a transaction is valued at or in excess of
$50 million, a fairness opinion with respect to
transactions in which Mr. Allen has an interest. We have
not instituted any other formal plan or arrangement to address
potential conflicts of interest.
The restrictive provisions of the organizational
documents described above may limit our ability to take
advantage of attractive business opportunities. Consequently,
our ability to offer new products and services outside of the
cable transmission business and enter into new businesses could
be adversely affected, resulting in an adverse effect on our
growth, financial condition and results of operations.
Mirror Notes
Charter is a holding company and its principal
assets are its equity interest in Charter Holdco and certain
mirror notes payable by Charter Holdco to Charter, which have
the same principal amount and terms as those of Charter's
convertible senior notes. In 2003, Charter Holdco paid to
Charter $68 million related to interest on the mirror
notes. In connection with our repurchase of approximately
$477 million of our outstanding 4.75% senior
convertible notes due 2006 and approximately $132 million
of our outstanding 5.75% senior convertible notes due 2005,
$520 million of CCH II 10.25% senior notes were
transferred (through a series of distributions) by CCH II
to Charter Holdco, which in turn assigned those CCH II
senior notes to us in exchange for the cancellation of mirror
notes of each series having a principal amount equal to the
amount of convertible notes of that series repurchased by us. As
part of the closing of that transaction, Charter Holdco also
paid to Charter cash in the amount of $10 million, which
represented the sum of (a) all accrued and unpaid interest
on the portions of the mirror notes transferred by Charter to
Charter Holdco, to, but not including, the date of the closing,
on the basis set forth in the mirror notes, (b) an amount
equal to the total amount of cash payable by Charter in lieu of
fractional interests in the 10.25% CCH II senior notes
which would have otherwise been due to the holders as a
consequence of the exchange and (c) the costs and expenses
relating to such transactions. In addition, in connection with
our recent sale of $862.5 million principal amount of
5.875% convertible senior notes due 2009, Charter Holdco issued
to us mirror notes in identical principal amount in exchange for
the proceeds of that offering, purchased and pledged certain
U.S. government securities to us as security for the mirror
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notes (which were in turn repledged by us to the
trustee of for the benefit of holders of our 5.875% convertible
notes and which we expect to use to fund the first six interest
payments on the notes), agreed to lend common units to us, the
terms of which will, to the extent practicable, mirror the terms
of the shares offered hereby, and agreed to redeem the remaining
$588 million principal amount of the mirror notes in
respect of our 5.75% convertible senior notes due 2005
concurrently with our December 23, 2004 redemption of our
5.75% convertible senior notes.
Third Party Business Relationships in Which
Mr. Allen has an Interest
As previously noted, Mr. Allen has extensive
investments in the areas of media and technology. We have a
number of commercial relationships with third parties in which
Mr. Allen has an interest. Mr. Allen or his affiliates
own equity interests or warrants to purchase equity interests in
various entities with which we do business or which provide us
with products, services or programming. Mr. Allen owns 100%
of the equity of Vulcan Ventures Incorporated and Vulcan Inc.
and is the president of Vulcan Ventures. Mr. Savoy serves
as a consultant to, and is a former vice president and director
of Vulcan Ventures. The various cable, media, Internet and
telephony companies in which Mr. Allen has invested may
mutually benefit one another. We can give no assurance, nor
should you expect, that any of these business relationships will
be successful, that we will realize any benefits from these
relationships or that we will enter into any business
relationships in the future with Mr. Allen's
affiliated companies.
Mr. Allen and his affiliates have made, and
in the future likely will make, numerous investments outside of
us and our business. We cannot assure you that, in the event
that we or any of our subsidiaries enter into transactions in
the future with any affiliate of Mr. Allen, such
transactions will be on terms as favorable to us as terms we
might have obtained from an unrelated third party.
In February 2001, Charter entered into certain of
the purchase agreements related to the AT&T transactions and
in June 2001, it assigned its rights and obligations under these
contracts to certain of its subsidiaries which purchased the
assets from AT&T. In August 2001, the systems acquired in
the Cable USA transaction by Charter and Charter Holdco, were
contributed through Charter Holdings to certain of its
subsidiaries, which are now our subsidiaries and which own and
operate these systems.
High Speed Access
High Speed Access Corp. has been a provider of
high-speed Internet access services over cable modems. During
the period from 1997 to 2000, certain Charter entities entered
into Internet-access related service agreements, and both Vulcan
Ventures, an entity owned by Mr. Allen, and Charter Holdco
made equity investments in High Speed Access.
On February 28, 2002, our subsidiary, CC
Systems, purchased from High Speed Access the contracts and
associated assets, and assumed related liabilities, that served
our customers, including a customer contact center, network
operations center and provisioning software. At the closing,
certain of our subsidiaries paid $78 million to High Speed
Access and delivered 37,000 shares of High Speed
Access's Series D convertible preferred stock and all
of the warrants to buy High Speed Access common stock owned by
Charter Holdco (which had been acquired pursuant to two network
services agreements which were cancelled in connection with this
transaction, as described below), and High Speed Access
purchased 38,000 shares of its Series D Preferred
Stock from Vulcan Ventures for $8 million. Additional
purchase price adjustments were made as provided in the asset
purchase agreement. Charter Holdco obtained a fairness opinion
from a qualified investment-banking firm regarding the valuation
of the assets purchased. Concurrently with the closing of the
transaction, High Speed Access also purchased all of its common
stock held by Vulcan Ventures.
In conjunction with the High Speed Access asset
purchase, on February 28, 2002, Charter Communications
Holding Company granted High Speed Access the right to use
certain intellectual property sold by High Speed Access to
Charter Holdco. High Speed Access does not pay any fees under
the agreement. The domestic portion of the license terminated on
June 30, 2002, and the international portion of the license
will expire on February 2, 2005. Prior to closing the asset
purchase, Charter
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performed certain management services formerly
performed by High Speed Access, for which it received
approximately $4 million in January and February 2002.
Concurrently with the asset purchase, all of the other
agreements between Charter Holdco and High Speed Access Corp.
(other than the license agreement described above), namely the
programming content agreement, the services agreement, the
systems access agreement, the 1998 network services
agreement and the May 2000 network services agreement, were
terminated. The revenues we earned from High Speed Access for
the year ended December 31, 2002 were approximately
$17 million. In addition, for the year ended
December 31, 2002, we paid High Speed Access approximately
$2 million under the 1998 network services agreement
and the 2000 network services agreement, representing a per
customer fee to High Speed Access according to agreed pricing
terms and compensation for services exceeding certain minimum
thresholds.
Immediately prior to the asset purchase, Vulcan
Ventures beneficially owned approximately 37%, and Charter
Holdco and its subsidiaries beneficially owned approximately
13%, of the common stock of High Speed Access (including the
shares of common stock which could be acquired upon conversion
of the Series D preferred stock, and upon exercise of the
warrants owned by Charter Holdco). Following the consummation of
the asset purchase, neither Charter Holdco nor Vulcan Ventures
beneficially owned any securities of, or were otherwise
affiliated with, High Speed Access.
On May 12, 2000, Charter entered into a
five-year network services agreement with High Speed Access,
which was assigned by Charter Communications, Inc. to Charter
Holdco on August 1, 2000. With respect to each system
launched or intended to be launched, we paid a per customer fee
to High Speed Access according to agreed pricing terms. In
addition, we compensated High Speed Access for services
exceeding certain minimum thresholds. For the year ended
December 31, 2001, we paid High Speed Access approximately
$13 million under this agreement and a 1998 network
services agreement.
In 2001, Charter Holdco was a party to a systems
access and investment agreement with Vulcan Ventures and High
Speed Access and a related network services agreement with High
Speed Access. These agreements provided High Speed Access with
exclusive access to certain of our homes passed. The term of the
network services agreement was, as to a particular cable system,
five years from the date revenue billing commenced for that
cable system. The programming content agreement provided each of
Vulcan Ventures and High Speed Access with a license to use
certain content and materials of the other on a non-exclusive,
royalty-free basis. The revenues we earned from High Speed
Access for the year ended December 31, 2001 were
approximately $8 million.
Under the above described transactions, we also
earned certain warrants to purchase High Speed Access stock.
These warrants were cancelled in February 2002 in connection
with the asset purchase described above. As a result of the
transaction with High Speed Access described above, we neither
paid to, nor received, any amounts from High Speed Access in
2003.
TechTV, Inc.
TechTV, Inc. ("TechTV") operated a
cable television network that offered programming mostly related
to technology. Pursuant to an affiliation agreement that
originated in 1998 and that terminates in 2008, TechTV has
provided us with programming for distribution via its cable
systems. The affiliation agreement provides, among other things,
that TechTV must offer Charter certain terms and conditions that
are no less favorable in the affiliation agreement than are
given to any other distributor that serves the same number of or
fewer TechTV viewing customers. Additionally, pursuant to the
affiliation agreement, we were entitled to incentive payments
for channel launches through December 31, 2003.
In March 2004, Charter Holdco entered into
agreements with Vulcan Programming and TechTV, which provide for
(i) Charter Holdco and TechTV to amend the affiliation
agreement which, among other things, revises the description of
the TechTV network content, provides for Charter Holdco to waive
certain claims against TechTV relating to alleged breaches of
the affiliation agreement and provides for TechTV to make
payment of outstanding launch receivables due to Charter Holdco
under the affiliation agreement, (ii) Vulcan Programming to
pay approximately $10 million and purchase over a 24-month
period, at fair market rates, $2 million of advertising
time across various cable networks on Charter cable
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systems in consideration of the agreements,
obligations, releases and waivers under the agreements and in
settlement of the aforementioned claims and (iii) TechTV to
be a provider of content relating to technology and video gaming
for Charter's interactive television platforms through
December 31, 2006 (exclusive for the first year). For the
years ended December 31, 2001, 2002 and 2003 and the nine
months ended September 30, 2004, we recognized
approximately $9 million, $4 million, $1 million
and $5 million, respectively, of the Vulcan Programming
payment as an offset to programming expense and paid
approximately $0, $0.2 million, $80,600 and
$1 million, respectively, to TechTV under the affiliation
agreement.
We believe that Vulcan Programming, which is 100%
owned by Mr. Allen, owned an approximate 98% equity
interest in TechTV at the time of the transaction. Until
September 2003, Mr. Savoy, a former Charter director, was
the president and director of Vulcan Programming and was a
director of TechTV. Mr. Wangberg, one of Charter's
directors, was the chairman, chief executive officer and a
director of TechTV. Mr. Wangberg resigned as the chief
executive officer of TechTV in July 2002. He remained a director
of TechTV along with Mr. Allen until Vulcan Programming
sold TechTV to an unrelated third party in May 2004.
Oxygen Media Corporation
Oxygen Media LLC ("Oxygen") provides
programming content aimed at the female audience for
distribution over cable systems and satellite. On July 22,
2002, Charter Holdco entered into a carriage agreement with
Oxygen, whereby we agreed to carry programming content from
Oxygen. Under the carriage agreement, we currently make Oxygen
programming available to approximately 5 million of our
video customers. The term of the carriage agreement was
retroactive to February 1, 2000, the date of launch of
Oxygen programming by us, and runs for a period of five years
from that date. For the years ended December 31, 2001, 2002
and 2003 and the nine months ended September 30, 2004, we
paid Oxygen approximately $3 million, $6 million,
$9 million and $10 million, respectively, for
programming content. In addition, Oxygen pays us marketing
support fees for customers launched after the first year of the
term of the carriage agreement up to a total of $4 million.
We recorded approximately $2 million, $1 million and
$1 million related to these launch incentives as a
reduction of programming expense for each of the years ended
December 31, 2002 and 2003 and the nine months ended
September 30, 2004, respectively.
Concurrently with the execution of the carriage
agreement, Charter Holdco entered into an equity issuance
agreement pursuant to which Oxygen's parent company, Oxygen
Media Corporation ("Oxygen Media"), granted a
subsidiary of Charter Holdco a warrant to
purchase 2.4 million shares of Oxygen Media common
stock for an exercise price of $22.00 per share. Charter
Holdco was also to receive unregistered shares of Oxygen Media
common stock with a guaranteed fair market value on the date of
issuance of $34 million, on or prior to February 2,
2005, with the exact date to be determined by Oxygen Media.
We recognize the guaranteed value of the
investment over the life of the carriage agreement as a
reduction of programming expense. For the years ended
December 31, 2001, 2002 and 2003 and the nine months ended
September 30, 2004, we recorded approximately
$3 million, $6 million, $9 million and
$10 million, respectively, as a reduction of programming
expense. The carrying value of our investment in Oxygen was
approximately $4 million, $10 million,
$19 million and $29 million as of December 31,
2001, 2002, 2003 and September 30, 2004, respectively.
In August 2004, Charter Holdco and Oxygen entered
into agreements that amend and renew the carriage agreement. The
amendment to the carriage agreement (a) revises the number
of our customers to which Oxygen programming must be carried and
for which we must pay, (b) releases Charter Holdco from any
claims related to the failure to achieve distribution benchmarks
under the carriage agreement, (c) requires Oxygen to make
payment on outstanding receivables for marketing support fees
due to us under the affiliation agreement; and (d) requires
that Oxygen provide its programming content to us on economic
terms no less favorable than Oxygen provides to any other cable
or satellite operator having
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fewer subscribers than us. The renewal of the
carriage agreement (a) extends the period that we will
carry Oxygen programming to our customers through
January 31, 2008, and (b) requires license fees to be
paid based on customers receiving Oxygen programming, rather
than for specific customer benchmarks.
In August 2004, Charter Holdco and Oxygen also
amended the equity issuance agreement to provide for the
issuance of 1 million shares of Oxygen Preferred Stock with
a liquidation preference of $33.10 per share plus accrued
dividends to Charter Holdco on February 1, 2005 in place of
the $34 million of unregistered shares of Oxygen Media
common stock. The preferred stock is convertible into common
stock after December 31, 2007 at a conversion ratio, the
numerator of which is the liquidation preference and the
denominator which is the fair market value per share of Oxygen
Media common stock on the conversion date.
As of September 30, 2004, through Vulcan
Programming, Mr. Allen owned an approximate 31% interest in
Oxygen assuming no exercises of outstanding warrants or
conversion or exchange of convertible or exchangeable securities.
Marc Nathanson has an indirect beneficial
interest of less than 1% in Oxygen.
Portland Trail Blazers and Action Sports
    Cable Network
On October 7, 1996, the former owner of our
Falcon cable systems entered into a letter agreement and a cable
television agreement with Trail Blazers Inc. for the cable
broadcast in the metropolitan area surrounding Portland, Oregon
of pre-season, regular season and playoff basketball games of
the Portland Trail Blazers, a National Basketball Association
basketball team. Mr. Allen is the 100% owner of the
Portland Trail Blazers and Trail Blazers Inc. After the
acquisition of the Falcon cable systems in November 1999, we
continued to operate under the terms of these agreements until
their termination on September 30, 2001. Under the letter
agreement, Trail Blazers Inc. was paid a fixed fee for each
customer in areas directly served by the Falcon cable systems.
Under the cable television agreement, we shared subscription
revenues with Trail Blazers Inc. For the years ended
December 31, 2001, 2002 and 2003 and the nine months ended
September 30, 2004, we paid approximately $1 million,
$1 million, $135,200 and $73,500, respectively, in
connection with the cable broadcast of Portland Trail Blazers
basketball games under the October 1996 cable television
agreement and subsequent local cable distribution agreements.
On July 1, 2001, Charter Holdco and Action
Sports Cable Network ("Action Sports"), which is 100%
owned by Mr. Allen, entered into a new carriage agreement
for a five-year term, which became effective on October 1,
2001 with the expiration of the previous agreement. Under the
July 2001 carriage agreement, Charter Holdco pays Action Sports
a fixed fee for each customer receiving the Action Sports
programming, which covers sporting events in the Pacific
Northwest, including the Portland Trail Blazers, the Seattle
Seahawks, a National Football League football team, and the
Portland Fire, a Women's National Basketball Association
basketball team. On November 5, 2002, Action Sports, which
is 100% owned by Mr. Allen, announced that it was
discontinuing its business following its failure to obtain an
acceptable carriage agreement with AT&T Cable, the cable
television provider in Portland, Oregon. Action Sports service
was terminated on November 5, 2002 and Charter Holdco
ceased carriage of the service. For the years ended
December 31, 2001 and 2002, we paid Action Sports
approximately $0.4 million and $1 million,
respectively, for rights to carry its programming. We believe
that the failure of this network will not materially affect our
business or results of operations.
Click2learn
Charter Holdco executed a Software License
Agreement with Click2learn, Inc. ("Click2learn")
effective September 30, 2002. Since October 1999, Charter
Holdco has purchased professional services, software and
maintenance from Click2learn, a company which provides
enterprise software for organizations seeking to capture, manage
and disseminate knowledge throughout their extended enterprise.
As of December 31, 2003, Mr. Allen owned an
approximate 21% interest in Click2learn through
616,120 shares held of record by Vulcan Ventures and
387,096 shares issuable upon exercise of a warrant issued
to Vulcan Ventures. Mr. Allen owns 100% of Vulcan Ventures.
For the years ended December 31,
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2002 and 2003 and the nine months ended
September 30, 2004, we paid approximately $250,000, $57,100
and $0, respectively, to Click2learn.
Digeo, Inc.
On March 2, 2001, a subsidiary of Charter,
Charter Communications Ventures, LLC ("Charter
Ventures") entered into a broadband carriage agreement with
Digeo Interactive, LLC ("Digeo Interactive"), a wholly
owned subsidiary of Digeo, Inc. ("Digeo"), an entity
controlled by Paul Allen. The carriage agreement provided that
Digeo Interactive would provide to Charter a "portal"
product, which would function as the television-based Internet
portal (the initial point of entry to the Internet) for
Charter's customers who received Internet access from
Charter. The agreement term was for 25 years and Charter
agreed to use the Digeo portal exclusively for six years. Before
the portal product was delivered to Charter, Digeo terminated
development of the portal product.
On September 27, 2001, Charter and Digeo
Interactive amended the broadband carriage agreement. According
to the amendment, Digeo Interactive would provide to Charter the
content for enhanced "Wink" interactive television
services, known as Charter Interactive Channels
("i-channels"). In order to provide the i-channels,
Digeo Interactive sublicensed certain Wink technologies to
Charter. Charter is entitled to share in the revenues generated
by the i-channels. Currently, our digital video customers who
receive i-channels receive the service at no additional charge.
On September 28, 2002, Charter entered into
a second amendment to its broadband carriage agreement with
Digeo Interactive. This amendment supersedes the amendment of
September 27, 2001. It provides for the development by
Digeo Interactive of future features to be included in the Basic
i-TV service provided by Digeo and for Digeo's development
of an interactive "toolkit" to enable Charter to
develop interactive local content. Furthermore, Charter may
request that Digeo Interactive manage local content for a fee.
The amendment provides for Charter to pay for development of the
Basic i-TV service as well as license fees for customers who
receive the service, and for Charter and Digeo to split certain
revenues earned from the service. In 2001, 2002, 2003 and the
nine months ended September 30, 2004, we paid Digeo
Interactive approximately $0, $3 million, $4 million
and $2 million, respectively, for customized development of
the i-channels and the local content tool kit. We received no
revenues under the broadband carriage agreement in 2003. This
amendment expired pursuant to its terms on December 31,
2003. Digeo Interactive is continuing to provide the Basic i-TV
service on a month-to-month basis.
On June 30, 2003, Charter Holdco entered
into an agreement with Motorola, Inc. for the purchase of
100,000 digital video recorder ("DVR") units. The
software for these DVR units is being supplied by Digeo
Interactive, LLC ("Digeo Interactive"), a wholly owned
subsidiary of Digeo, Inc. ("Digeo"), under a license
agreement entered into in April 2004. Under the license
agreement Digeo Interactive granted to Charter Holdco the right
to use Digeo's proprietary software for the number of DVR
units that Charter deploys from a maximum of 10 headends through
year-end 2004. This maximum number of headends was increased
from 10 to 15 pursuant to a letter agreement executed on
June 11, 2004 and was increased again from 15 to 20
pursuant to a second letter agreement dated August 4, 2004.
The license granted for each unit deployed under the agreement
is valid for five years. In addition, Charter will pay certain
other fees including a per-headend license fee and maintenance
fees. Total license and maintenance fees during the term of the
agreement are expected to be approximately $3 million. The
agreement provides that Charter is entitled to receive contract
terms, considered on the whole, and license fees, considered
apart from other contract terms, no less favorable than those
accorded to any other Digeo customer. In April 2004, the Company
launched DVR service utilizing the Digeo proprietary software in
its Rochester, Minnesota market.
In May 2004, Charter Holdco entered into a
binding term sheet with Digeo Interactive for the purchase of
70,000 Digeo PowerKey DVR units. The term sheet provides that
the parties will proceed in good faith to negotiate, prior to
year-end 2004, definitive agreements for the purchase of the DVR
units and that the parties will enter into a license agreement
for Digeo's proprietary software on terms substantially
similar to the terms of the license agreement described above.
Total purchase price and
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license and maintenance fees during the term of
the definitive agreements are expected to be approximately
$40 million. The term sheet and any definitive agreements
will be terminable at no penalty to Charter in certain
circumstances.
In April 2004, we launched DVR service in our
Rochester, Minnesota market using a broadband media center that
is an integrated set-top terminal with a cable converter, DVR
hard drive and connectivity to other consumer electronics
devices (such as stereos, MP3 players, and digital cameras).
Charter and Digeo entered into a letter agreement
effective September 28, 2004 amending the April 2004
license agreement to reduce certain fees payable to Digeo by
Charter and to increase the maximum number of headends in which
Charter has the right to deploy the DVR units from a maximum of
20 by year end 2004, to a maximum of 30 by June 30, 2005.
In March 2001, Charter Ventures and Vulcan
Ventures Incorporated formed DBroadband Holdings, LLC for the
sole purpose of purchasing equity interests in Digeo. In
connection with the execution of the broadband carriage
agreement, DBroadband Holdings, LLC purchased an equity interest
in Digeo funded by contributions from Vulcan Ventures
Incorporated. The equity interest is subject to a priority
return of capital to Vulcan Ventures up to the amount
contributed by Vulcan Ventures on Charter Ventures' behalf.
Charter Ventures has a 100% profit interest in DBroadband
Holdings, LLC. Vulcan Ventures also agreed to make, through
January 24, 2004, certain additional contributions through
DBroadband Holdings, LLC to acquire additional equity in Digeo
as necessary to maintain Charter Ventures' pro rata
interest in Digeo in the event of certain future Digeo equity
financings by the founders of Digeo. These additional equity
interests are also subject to a priority return of capital to
Vulcan Ventures up to amounts contributed by Vulcan Ventures on
Charter Ventures' behalf. DBroadband Holdings, LLC is
therefore not included in our consolidated financial statements.
Pursuant to an amended version of this arrangement, in 2003,
Vulcan Ventures contributed a total of $29 million to
Digeo, $7 million of which was contributed on Charter
Ventures' behalf, subject to Vulcan Ventures'
aforementioned priority return. Since the formation of
DBroadband Holdings, LLC, Vulcan Ventures has contributed
approximately $224 million to Digeo, of which approximately
$56 million was contributed on Charter Ventures'
behalf.
We believe that Vulcan Ventures, an entity
controlled by Mr. Allen, owns an approximate 67% equity
interest in Digeo, Inc., on a fully-converted basis.
Messrs. Allen and Vogel are directors of Digeo.
Mr. Vogel owns options to purchase 10,000 shares
of Digeo common stock.
Other Miscellaneous Relationships
Viacom Networks
Pursuant to certain affiliation agreements with
networks of Viacom, Inc. ('Viacom'), including
MTV, MTV2, Nickelodeon, VH1, TVLand, CMT, Spike TV, Comedy
Central, Viacom Digital Suite, CBS-owned and operated broadcast
stations, Showtime, The Movie Channel, and Flix, Viacom provides
Charter with programming for distribution via our cable systems.
The affiliation agreements provide for, among other things,
rates and terms of carriage, advertising on the Viacom networks,
which Charter can sell to local advertisers and marketing
support. For the years ended December 31, 2001, 2002 and
2003 and the nine months ended September 30, 2004, Charter
paid Viacom approximately $147 million, $177 million,
$188 million and $146 million, respectively, for
programming. Charter recorded approximately $11 million,
$5 million, $5 million and $2 million as
receivables from Viacom networks related to launch incentives
for certain channels and marketing support, respectively, for
the years ended December 31, 2001, 2002 and 2003 and the
nine months ended September 30, 2004. Mr. Dolgen is a
Senior Advisor to Viacom, and from April 1994 to
July 2004, served as Chairman and Chief Executive Officer
of the Viacom Entertainment Group.
ADC Telecommunications Inc.
Charter and Charter Holdco purchase certain
equipment for use in our business from ADC Telecommunications,
which provides broadband access and network equipment.
Mr. Wangberg serves as a
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director for ADC Telecommunications. For the
years ended December 31, 2002 and 2003 and the nine months
ended September 30, 2004, we paid $759,600, $60,100 and
$263,900, respectively, to ADC Telecommunications under this
arrangement.
HDNet and HDNet Movies
    Network
On January 10, 2003 we signed an agreement
to carry two around-the-clock, high-definition networks, HDNet
and HDNet Movies. HDNet Movies delivers a commercial-free
schedule of full-length feature Ñlms converted from 35mm to
high-definition, including titles from an extensive library of
Warner Bros. Films. HDNet Movies will feature a mix of
theatrical releases, made-for-TV movies, independent films and
shorts. The HDNet channel features a variety of HDTV
programming, including live sports, sitcoms, dramas, action
series, documentaries, travel programs, music concerts and
shows, special events, and news features including the popular
HDNet World Report. HDNet also offers a selection of classic and
recent television series. We paid HDNet and HDNet Movies
approximately $21,900 in 2003 and $323,900 for the nine months
ended September 30, 2004. We believe that entities
controlled by Mr. Cuban owned approximately 81% of HDNet as
of September 30, 2004. As of September 30, 2004, we
believe that Mark Cuban, co-founder and president of HDNet,
owned approximately 19,000,000 shares, or 6.2% of the total
common equity in Charter based on a Schedule 13G filed with
the SEC on May 19, 2003.
Affiliate Leases and
    Agreements
David L. McCall, who served as Senior Vice
President — Operations — Eastern Division
during 2002 and January 2003, is a partner in a partnership that
leases office space to us under a lease agreement, which expires
December 31, 2010. The partnership received approximately
$117,600, $117,600, $189,200 and $43,400 pursuant to such lease
and related agreements for the years ended December 31,
2001, 2002, 2003 and the nine months ended September 30,
2004, respectively. In addition, during 2001, 2002 and 2003, we
paid approximately $571,600, $644,800 and $381,300,
respectively, for construction services to a construction
company controlled by Mr. McCall's brother under a
construction agreement that expired on December 31, 2003.
We also paid approximately $462,100, $3 million and
$373,800 during 2001, 2002 and 2003, respectively, for
construction services to a construction company controlled by
Mr. McCall's son under several agreements, the last of
which expired January 31, 2004.
Companies controlled by Mr. Nathanson, a
director of Charter, leased certain office space in Pasadena,
California, and warehouse space in Riverside, California, to our
subsidiaries. For the Pasadena office lease, which Charter
terminated in April 2001 in exchange for a payment of $639,000,
total rent of $204,000 was paid from January 1, 2001 to
April 2001. For the years ended December 31, 2001, 2002 and
2003, total rent paid for the Riverside warehouse space was
approximately $127,000, $76,000 and $16,600, respectively, under
a lease agreement which expired March 15, 2003.
Charter Airplane
Howard L. Wood resigned as a director of Charter
in December 2001. In 2001, the benefit to a company controlled
by Mr. Wood that owned an airplane for the full annual cost
of two individuals qualified to operate the plane, who were
otherwise available to Charter in connection with its own flight
operations, was approximately $118,500 for annual compensation
to the pilots. Charter was entitled to reimbursement for these
amounts. In addition, Mr. Wood also used Charter's
airplane for occasional personal use in 2001, a benefit valued
at $12,500 for the year ended December 31, 2001.
Payments for Relative's
    Services
Additionally, in 1999, one of
Mr. Wood's daughters, who resigned as a Vice President
of Charter Holdco in February 2002, received a bonus in the form
of a three-year promissory note bearing interest at 7% per
year. One-third of the original outstanding principal amount of
the note and interest were forgiven as long as she remained
employed by Charter Holdco at the end of each of the first three
anniversaries of the issue date in February 1999. The amount of
principal and interest forgiven on this note for the year
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ended December 31, 2001, was $85,500, and
the outstanding balance on the note was forgiven effective as of
February 22, 2002. Another daughter of Mr. Wood
received approximately $70,200 during the year ended
December 31, 2001 for event planning services performed by
her company.
Since June 2003, Charter Holdco has employed the
brother-in-law of Carl E. Vogel, Charter's President, Chief
Executive Officer and a director. Mr. Vogel's
brother-in-law receives a salary commensurate with his position
in our engineering department.
Travel Service
Jerald L. Kent resigned as President, Chief
Executive Officer and a director of Charter in September 2001.
In 2001 a travel agency owned and operated by
Mr. Kent's mother-in-law received approximately
$132,000 during the year ended 2001 for travel arrangements made
for Charter by her company.
Replay TV Joint Venture
Charter Communications Ventures was party to a
joint venture with General Instrument Corporation (doing
business as Broadband Communications Sector of Motorola, Inc.),
Replay TV Inc. and Interval Research Corporation, an entity
controlled by Mr. Allen, to develop and integrate digital
video recording capabilities in advanced digital set-top
terminals. The joint venture focused on creating a set-top based
digital recording platform designed for storing video, audio and
Internet content. Prior to the dissolution of the joint venture
in 2001, Charter Communications Ventures received management
fees of approximately $1 million for the year ended
December 31, 2001, which is included in other revenues in
the accompanying consolidated statement of operations.
Purchase of Certain Enstar Limited
    Partnership Systems; Management Fees
In April 2002, Interlink Communications Partners,
LLC, Rifkin Acquisition Partners, LLC and Charter Communications
Entertainment I, LLC, each an indirect, wholly owned
subsidiary of Charter Holdings, completed the cash purchase of
certain assets of Enstar Income Program II-2, L.P., Enstar
Income/ Growth Program Six-A, L.P., Enstar Income Program IV-1,
L.P., Enstar Income Program IV-2, L.P., and Enstar Income
Program IV-3, L.P., serving approximately 21,600 customers, for
a total cash sale price of approximately $48 million. In
September 2002, Charter Communications Entertainment I, LLC
purchased all of Enstar Income Program II-1, L.P.'s
Illinois cable television systems, serving approximately 6,400
customers, for a cash sale price of $15 million. Enstar
Communications Corporation, a direct subsidiary of Charter
Holdco is a general partner of the Enstar limited partnerships
but does not exercise control over them. The purchase prices
were allocated to assets acquired based on fair values,
including approximately $41 million assigned to franchises
and $4 million assigned to other intangible assets
amortized over a useful life of three years.
In addition, Enstar Cable Corporation, the
manager of the Enstar limited partnerships through a management
agreement, engaged Holdco to manage the Enstar limited
partnerships. Pursuant to the management agreement, Charter
Holdco provides management services to the Enstar limited
partnerships in exchange for management fees. The Enstar limited
partnerships also purchase basic and premium programming for
their systems at cost from Charter Communications Holding
Company, LLC. For the years ended December 31, 2001, 2002,
2003 and the nine months ended September 30, 2004, Charter
Holdco earned approximately $2 million, $1 million,
$469,300 and $0, respectively, by providing management services
to the Enstar limited partnerships. In September 2003 the Enstar
limited partnerships completed sales of all their remaining
assets, and as a result no further management fees were paid in
2004. In November 2004, the Enstar limited partnerships were
dissolved.
All of the executive officers of Charter (with
the exception of Mr. Allen), Charter Holdco and Charter
Holdings act as officers of Enstar Communications Corporation.
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Indemnification Advances
Pursuant to Charter's bylaws (and the
employment agreements of certain of our current and former
officers), Charter is obligated (subject to certain limitations)
to indemnify and hold harmless, to the fullest extent permitted
by law, any officer, director or employee against all expense,
liability and loss (including, among other things,
attorneys' fees) reasonably incurred or suffered by such
officer, director or employee as a result of the fact that he or
she is a party or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding by reason
of the fact that he or she is or was a director, officer or
employee of Charter. In addition, Charter is obligated to pay,
as an advancement of its indemnification obligation, the
expenses (including attorneys' fees) incurred by any
officer, director or employee in defending any such action, suit
or proceeding in advance of its final disposition, subject to an
obligation to repay those amounts under certain circumstances.
Pursuant to these indemnification arrangements and as an
advancement of costs, Charter has reimbursed certain of its
current and former directors and executive officers a total of
approximately $3 million, $8 million and
$2.6 million in respect of invoices received in 2002, 2003
and the nine months ended September 30, 2004, respectively,
in connection with their defense of certain legal actions
described herein. See "Business — Legal
Proceedings." Those current and former directors and
officers include: Paul G. Allen, David C. Andersen, David G.
Barford, Mary Pat Blake, J. Christian Fenger, Kent D. Kalkwarf,
Ralph G. Kelly, Jerald L. Kent, Paul E. Martin, David L. McCall,
Ronald L. Nelson, Nancy B. Peretsman, John C. Pietri, William D.
Savoy, Steven A. Schumm, Curtis S. Shaw, William J. Shreffer,
Stephen E. Silva, James Trey Smith and Carl E. Vogel. These
amounts have been submitted to Charter's director and
officer insurance carrier for reimbursement. The carrier has
raised various objections to portions of these amounts, and
Charter is in negotiations with the carrier regarding their
reimbursement.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
As of September 30, 2004 and
December 31, 2003, our total debt was approximately
$18.5 billion and $18.6 billion, respectively. A table
of our other indebtedness as of September 30, 2004 is
summarized below (dollars in millions):
Actual
September 30,
Pro Forma
Start date for
2004
September 30, 2004
cash interest
Interest
payment on
Face
Accreted
Face
Accreted
payment
discount
Maturity
value
value(a)
value
value
dates
notes
date(b)
Charter Communications, Inc.:
5.750% convertible senior notes due 2005
$
588
$
588
$
—
$
—
4/15 & 10/15
10/15/05
4.750% convertible senior notes due 2006
156
156
156
156
12/1 & 6/1
6/1/06
5.875% convertible senior notes due 2009
—
—
863
829
5/16 & 11/16
11/16/09
Charter Holdings:
8.250% senior notes due 2007
451
451
451
451
4/1 & 10/1
4/1/07
8.625% senior notes due 2009
1,244
1,242
1,244
1,242
4/1 & 10/1
4/1/09
9.920% senior discount notes due 2011
1,108
1,108
1,108
1,108
4/1 & 10/1
10/1/04
4/1/11
10.000% senior notes due 2009
640
640
640
640
4/1 & 10/1
4/1/09
10.250% senior notes due 2010
318
318
318
318
1/15 & 7/15
1/15/10
11.750% senior discount notes due 2010
450
435
450
435
1/15 & 7/15
7/15/05
1/15/10
10.750% senior notes due 2009
874
874
874
874
4/1 & 10/1
10/1/09
11.125% senior notes due 2011
500
500
500
500
1/15 & 7/15
1/15/11
13.500% senior discount notes due 2011
675
571
675
571
1/15 & 7/15
7/15/06
1/15/11
9.625% senior notes due 2009
640
638
640
638
5/15 & 11/15
11/15/09
10.000% senior notes due 2011
710
708
710
708
5/15 & 11/15
5/15/11
11.750% senior discount notes due 2011
939
780
939
780
5/15 & 11/15
11/15/06
5/15/11
12.125% senior discount notes due 2012
330
252
330
252
1/15 & 7/15
7/15/07
1/15/12
CCH II:
10.250% senior notes due 2010
1,601
1,601
1,601
1,601
3/15 & 9/15
9/15/10
CCO Holdings:
8.750% senior notes due 2013
500
500
500
500
5/15 & 11/15
11/15/13
Senior floating rate notes due 2010
—
—
550
550
3/15, 6/15, 9/15 & 12/15
12/15/10
Charter Operating:
8% senior second lien notes due 2012
1,100
1,100
1,100
1,100
4/30 & 10/30
4/30/12
8 3/8% senior second lien notes due 2014
400
400
400
400
4/30 & 10/30
4/30/14
Renaissance:
10.000% senior discount notes due 2008
114
116
114
116
4/15 & 10/15
10/15/03
4/15/08
CC V Holdings:
11.875% senior discount notes due 2008
113
113
113
113
6/1 & 12/1
6/1/04
12/1/08
Credit Facilities
Charter Operating
5,393
5,393
4,993
4,993
$
18,844
$
18,484
$
19,269
$
18,875
(a)
The accreted value presented above represents the
    face value of the notes less the original issue discount at the
    time of sale plus the accretion to the balance sheet date.
(b)
In general, the obligors have the right to redeem
    all of the notes set forth in the above table (except with
    respect to the 5.875% convertible senior notes due 2009 and the
    Charter Holdings notes with terms of eight years) in whole or
    part at their option, beginning at various times prior to their
    stated maturity dates, subject to certain conditions, upon the
    payment of the outstanding principal amount (plus a specified
    redemption premium) and all accrued and unpaid interest. We have
    called for redemption the remaining 5.75% convertible senior
    notes due 2005, and expect to consummate that redemption on
    December 23, 2004. While we are required to redeem the
    CC V Holdings notes under the circumstances described
    in "— Outstanding Notes —
    CC V Holdings, LLC Notes" and "Charter
    Communications Operating, LLC Notes," we are not required
    to redeem any of the other notes described above prior to their
    stated maturity dates. For additional information, see
    Note 9 to our consolidated financial statements as of
    December 31, 2003 and 2002 and for each of the three years
    in the period ended December 31, 2003 included elsewhere in
    this prospectus.
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As of September 30, 2004 and
December 31, 2003, long-term debt totaled approximately
$18.5 billion and $18.6 billion, respectively. This
debt was comprised of approximately $5.4 billion and
$7.2 billion of credit facility debt, $12.3 billion
and $10.6 billion principal amount of high-yield notes and
$744 million and $774 million principal amount of
convertible senior notes at September 30, 2004 and
December 31, 2003, respectively.
As of September 30, 2004 and
December 31, 2003, the weighted average interest rate on
the credit facility debt was approximately 6.6% and 5.4%,
respectively, the weighted average interest rate on the
high-yield notes was approximately 10.3%, and the weighted
average interest rate on the convertible senior notes was
approximately 5.5%, resulting in a blended weighted average
interest rate of 8.8% and 8.2%, respectively. The interest rate
on approximately 85% and 80% of the total principal amount of
our debt was effectively fixed, including the effects of our
interest rate hedge agreements as of September 30, 2004 and
December 31, 2003, respectively. The fair value of our
credit facility debt was approximately $5.3 billion and
$6.9 billion at September 30, 2004 and
December 31, 2003, respectively. The fair value of our
high-yield notes was $10.6 billion and $9.9 billion at
September 30, 2004 and December 31, 2003,
respectively. The fair value of our convertible senior notes was
$651 million and $732 million at September 30,
2004 and December 31, 2003, respectively. The fair value of
high-yield notes is based on quoted market prices, and the fair
value of the credit facilities is based on dealer quotations.
The following description is merely a summary of
certain material provisions of the amended and restated Charter
Operating credit facilities and the public notes of our
subsidiaries (collectively, the "Debt Agreements").
The summary does not restate the terms of the Debt Agreements in
their entirety, nor does it describe all terms of the Debt
Agreements. The agreements and instruments governing each of the
Debt Agreements are complicated and you should consult such
agreements and instruments for more detailed information
regarding the Debt Agreements.
Credit Facilities
Amended and Restated Charter Operating
    Credit Facilities — General
The Charter Operating credit facilities were
amended and restated concurrently with the sale of
$1.5 billion senior second lien notes in April 2004,
among other things, to defer maturities and increase
availability under these facilities and to enable Charter
Operating to acquire the interests of the lenders under the
CC VI Operating, CC VIII Operating and
Falcon credit facilities.
The amended and restated Charter Operating credit
facilities:
•
increase the availability thereunder from
    $5.1 billion to $6.5 billion; and
•
provide for two term facilities:
(i) a Term A facility with a total
    principal amount of $2.0 billion, of which 12.5% matures in
    2007, 30% matures in 2008, 37.5% matures in 2009 and 20% matures
    in 2010; and
(ii) a Term B facility with a total
    principal amount of $3.0 billion, which shall be repayable
    in 27 equal quarterly installments aggregating in each loan
    year to 1% of the original amount of the Term B facility,
    with the remaining balance due at final maturity in
    2011; and
•
provide for a revolving credit facility, in a
    total amount of $1.5 billion, with a maturity date in 2010.
Amounts under the amended and restated Charter
Operating credit facilities bear interest, at Charter
Operating's election, at a base rate or the Eurodollar
rate, as defined, plus a margin for Eurodollar loans of up to
3.00% for the Term A facility and revolving credit
facility, and up to 3.25% for the Term B facility, and for
base rate loans of up to 2.00% for the Term A facility and
revolving credit facility, and up to 2.25% for the Term B
facility. A quarterly commitment fee of up to .75% is payable on
the average daily unborrowed balance of the revolving credit
facilities.
Obligations arising under the original
$5.1 billion commitment amount (the "Original
Obligations") continue to be guaranteed by
CCO Holdings and by Charter Operating's domestic
subsidiaries, other than
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the non-guarantor subsidiaries (defined below),
existing subsidiaries of Charter Operating precluded from so
guaranteeing by reason of the provisions of other indebtedness
to which they are subject and immaterial subsidiaries. The
"non-guarantor subsidiaries," include
CCO NR Holdings, LLC, and subsidiaries contributed to
CCO NR Holdings, LLC by Charter Holdings in the
organizational restructuring that occurred in June of 2003,
including CC VI Operating, CC VIII Operating
and Falcon and their respective subsidiaries. The Original
Obligations continue to be secured by a pledge of the equity
interests owned by the subsidiary guarantors, as well as a
pledge of CCO Holdings' equity interests in Charter
Operating and its subsidiaries, and intercompany obligations
owing to CCO Holdings by Charter Operating and its
subsidiaries, and intercompany obligations owing to the
subsidiary guarantors. Obligations arising under the amended
commitment amount of $6.5 billion (the "Amended
Obligations") are secured by a lien on all assets of
Charter Operating, to the extent such lien can be perfected
under the Uniform Commercial Code by filing a financing
statement, which assets include capital stock owned by Charter
Operating and intercompany obligations owing to it from its
subsidiaries, CC VI Operating,
CC VIII Operating and Falcon.
At such time as the Charter Holdings Leverage
Ratio, as defined in the indentures governing the Charter
Holdings senior notes and senior discount notes and as certified
by an officer of Charter Holdings, is below 8.75 to 1.0:
(i) the guarantors' guarantees will be amended to
increase the amount guaranteed to include all of the Amended
Obligations; (ii) most of the non-guarantor subsidiaries
will become additional subsidiary guarantors of the Amended
Obligations; and (iii) the guarantees of the Amended
Obligations will be secured by a lien on all assets of the
subsidiary guarantors (including the additional subsidiary
guarantors), to the extent such lien can be perfected under the
Uniform Commercial Code by filing a financing statement;
provided that the guarantee and pledge of such interests by
CC V Holdings, LLC and its subsidiaries will not occur
until the notes issued by CC V Holdings, LLC are
redeemed. The CC V Holdings notes are required to be
redeemed within 45 days after the Charter Holdings leverage
ratio is below 8.75 to 1.0, provided that such ratio remains
below such leverage ratio for the entire 45 day period.
Amended and Restated Charter Operating
    Credit Facilities — Restrictive
    Covenants
The Charter Operating credit facilities contain
representations and warranties, and affirmative and negative
covenants customary for financings of this type. The financial
covenants measure performance against standards set for
leverage, debt service coverage, and interest coverage, tested
as of the end of each quarter. The maximum allowable leverage
ratio is 4.25 to 1.0 until maturity, tested as of the end of
each quarter beginning September 30, 2004. Additionally,
the Charter Operating credit facilities contain provisions
requiring mandatory loan prepayments under specific
circumstances, including when significant amounts of assets are
sold and the proceeds are not reinvested in assets useful in the
business of the borrower within a specified period, and upon the
incurrence of certain indebtedness when the ratio of senior
first lien debt to operating cash flow is greater than 2.0 to
1.0.
The Charter Operating credit facilities permit
Charter Operating and its subsidiaries to make distributions to
pay interest on the Charter Operating senior second lien notes,
the CCH II senior notes, the CCO Holdings senior
notes, the Charter convertible senior notes and the Charter
Holdings senior notes, provided that, among other things, no
default has occurred and is continuing under the amended and
restated Charter Operating credit facilities. Conditions to
future borrowings include absence of a default or an event of
default under the amended and restated Charter Operating credit
facilities and the continued accuracy in all material respects
of the representations and warranties, including the absence
since December 31, 2003 of any event, development or
circumstance that has had or could reasonably be expected to
have a material adverse effect on our business.
The events of default under the Charter Operating
credit facilities include, among other things:
(i) the failure to make payments when due or
    within the applicable grace period,
(ii) the failure to comply with specified
    covenants, including but not limited to a covenant to deliver
    audited financial statements with an unqualified opinion from
    our independent auditors,
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(iii) the failure to pay or the occurrence
    of events that cause or permit the acceleration of other
    indebtedness owing by CCO Holdings, Charter Operating or
    Charter Operating's subsidiaries in amounts in excess of
    $50 million in aggregate principal amount,
(iv) the failure to pay or the occurrence of
    events that result in the acceleration of other indebtedness
    owing by certain of CCO Holdings' direct and indirect
    parent companies in amounts in excess of $200 million in
    aggregate principal amount,
(v) Paul Allen and/or certain of his family
    members and/or their exclusively owned entities (collectively,
    the "Paul Allen Group") ceasing to have the power,
    directly or indirectly, to vote at least 35% of the ordinary
    voting power of Charter Operating,
(vi) the consummation of any transaction
    resulting in any person or group (other than the Paul Allen
    Group) having power, directly or indirectly, to vote more than
    35% of the ordinary voting power of Charter Operating, unless
    the Paul Allen Group holds a greater share of ordinary voting
    power of Charter Operating,
(vii) certain of Charter Operating's
    indirect or direct parent companies having indebtedness in
    excess of $500 million aggregate principal amount which
    remains undefeased three months prior to the final maturity of
    such indebtedness, and
(viii) Charter Operating ceasing to be a
    wholly-owned direct subsidiary of CCO Holdings, except in
    certain very limited circumstances.
Outstanding Notes
Charter Communications, Inc.
    Notes
Charter 5.875% Convertible Senior Notes due
    2009
In November 2004, Charter issued 5.875%
convertible senior notes due 2009 with a total original
principal amount of $862.5 million. The 5.875% convertible
senior notes are unsecured (except with respect to the
collateral as described below) and rank equally with our
existing and future unsubordinated and unsecured indebtedness
(except with respect to the collateral described below), but are
structurally subordinated to all existing and future
indebtedness and other liabilities of our subsidiaries.
The 5.875% convertible senior notes are
convertible at any time at the option of the holder into shares
of Class A common stock at an initial conversion rate of
413.2231 shares per $1,000 principal amount of notes, which is
equivalent to a conversion price of approximately $2.42 per
share, subject to certain adjustments. Specifically, the
adjustments include anti-dilutive provisions, which cause
adjustments to occur automatically based on the occurrence of
specified events to provide protection rights to holders of the
notes. The conversion rate may also be increased (but not to
exceed 462 shares per $1,000 principal amount of notes) upon a
specified change of control transaction. Additionally, Charter
may elect to increase the conversion rate under certain
circumstances when deemed appropriate and subject to applicable
limitations of the Nasdaq stock market. Holders who convert
their notes prior to November 16, 2007 will receive an
early conversion make whole amount in respect of their notes
based on a proportional share of the portfolio of pledged
securities described below, with specified adjustments.
No holder of notes will be entitled to receive
shares of our Class A common stock on conversion to the
extent that receipt of the shares would cause the converting
holder to become, directly or indirectly, a "beneficial
holder" (within the meaning of Section 13(d) of the
Exchange Act and the rules and regulations promulgated
thereunder) of more than 4.9% of the outstanding shares of our
Class A common stock if such conversion would take place
prior to November 16, 2008, or more than 9.9% thereafter.
We may direct holders to deliver notes tendered
for conversion, unless we have called those notes for
redemption, to a financial institution designated by us for
exchange with that financial institution in lieu of conversion,
on substantially the same terms that the holder would have
received on conversion, but if any
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such financial institution does not accept such
notes or does not deliver the required conversion consideration,
we remain obligated to convert the notes.
Interest is payable semi-annually in arrears.
Charter Holdco used a portion of the proceeds from the sale of
the notes to purchase a portfolio of U.S. government securities
in an amount which we believe will be sufficient to make the
first six interest payments on the notes, which were pledged to
us as security for a mirror note and which we have pledged to
the trustee under the indenture governing the notes as security
for our obligations thereunder. We expect to use such securities
to fund the first six interest payments under the notes. Any
holder that converts its notes prior to the third anniversary of
the issue date will be entitled to receive, in addition to the
requisite number of shares upon conversion, an interest make
whole payment equal to the cash proceeds from the sale by the
trustee of that portion of the remaining pledged U.S. government
securities which secure interest payments on the notes so
converted, subject to certain limitations with respect to notes
that have not been sold pursuant to an effective registration
statement under the Securities Act of 1933.
Upon a change of control and certain other
fundamental changes, subject to certain conditions and
restrictions, Charter may be required to repurchase the notes,
in whole or in part, at 100% of their principal amount plus
accrued interest at the repurchase date.
We are required to file with the SEC within
30 days after the issuance of the notes and use our best
efforts to have declared effective within 150 days after
the issuance of the notes, a shelf registration statement for
resale of the notes. We are also obligated to use our reasonable
best efforts to have the registration statement of which this
prospectus forms a part declared effective within 130 days after
the issuance of the notes. In the event we are unable to satisfy
these requirements within specified time periods, liquidated
damages will accrue in respect of the notes. Charter may elect
to accrete the principal amount of the notes in lieu of paying
cash with respect to any liquidated damages that accrue, and may
also elect to defer any interest accruing in respect of any
accreted portion exceeding the original principal amount of the
notes. We will pay no interest on any such deferred interest.
Following the earlier of the sale of the notes
pursuant to an effective registration statement or the date two
years following the issue date, we may redeem the notes in whole
or in part for cash at any time at a redemption price equal to
100% of the aggregate principal amount plus accrued and unpaid
interest, deferred interest and liquidated damages, if any, but
only if for any 20 trading days in any 30 consecutive trading
day period the closing price has exceeded (x) 180% of the
conversion price, if such 30 trading day period begins prior to
November 16, 2007 or (y) 150% of the conversion price,
if such 30 trading period begins thereafter. Holders who convert
notes that we have called for redemption shall receive, in
addition to the early conversion make whole amount, if
applicable, the present value of the interest on the notes
converted that would have been payable for the period from the
later of November 17, 2007 and the redemption date through
the scheduled maturity date for the notes, plus any accrued
deferred interest.
5.75% Convertible Senior Notes due
    2005
In October and November 2000, Charter issued
5.75% convertible senior notes with a total principal
amount at maturity of $750 million. As of
September 30, 2004, there was $588 million in total
principal amount of these notes outstanding. The 5.75%
convertible notes rank equally with any of our future
unsubordinated and unsecured indebtedness, but are structurally
subordinated to all existing and future indebtedness and other
liabilities of our subsidiaries.
The 5.75% convertible notes are convertible at
the option of the holder into shares of Class A common
stock at a conversion rate of 46.3822 shares per $1,000
principal amount of notes, which is equivalent to a price of
$21.56 per share, subject to certain adjustments.
Specifically, the adjustments include anti-dilutive provisions,
which cause adjustments to occur automatically based on the
occurrence of specified events to provide protection rights to
holders of the notes. Additionally, Charter may adjust the
conversion ratio under certain circumstances when deemed
appropriate.
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These notes have been called for redemption at a
price of 101.15% of the outstanding principal amount plus
accrued and unpaid interest through the redemption date, which
is expected to be December 23, 2004.
4.75% Convertible Senior Notes due
    2006
In May 2001, Charter issued
4.75% convertible senior notes with a total principal
amount at maturity of $633 million. As of December 31,
2003, there was $156 million in total principal amount of
these notes outstanding. The 4.75% convertible notes rank
equally with any of our future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of our
subsidiaries.
The 4.75% convertible notes are convertible at
the option of the holder into shares of Class A common
stock at a conversion rate of 38.0952 shares per $1,000
principal amount of notes, which is equivalent to a price of
$26.25 per share, subject to certain adjustments.
Specifically, the adjustments include anti-dilutive provisions,
which automatically occur based on the occurrence of specified
events to provide protection rights to holders of the notes.
Additionally, Charter may adjust the conversion ratio under
certain circumstances when deemed appropriate. These notes are
redeemable at our option at amounts decreasing from 101.9% to
100% of the principal amount, plus accrued and unpaid interest
beginning on June 4, 2004, to the date of redemption.
Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
Charter Communications Holdings, LLC
    Notes
March 1999 Charter Holdings Notes
The March 1999 Charter Holdings notes were issued
under three separate indentures, each dated as of March 17,
1999, among Charter Holdings and Charter Capital, as the
issuers, and BNY Midwest Trust Company, as trustee. Charter
Holdings and Charter Capital exchanged these notes for new March
1999 Charter Holdings notes with substantially similar terms,
except that the new March 1999 Charter Holdings notes are
registered under the Securities Act and, therefore, do not bear
legends restricting their transfer and are not subject to
further registration or special interest obligations.
The March 1999 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
Cash interest on the March 1999 9.920% Charter Holdings notes
did not accrue prior to April 1, 2004.
The March 1999 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the January
2000, January 2001, May 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings' subsidiaries, including the CCH II
notes, the CCO Holdings notes, the Renaissance notes, the CC V
Holdings notes, the Charter Operating notes and the amended and
restated Charter Operating credit facilities.
Charter Holdings and Charter Capital will not
have the right to redeem the March 1999 8.250% Charter Holdings
notes prior to their maturity date on April 1, 2007. On or
after April 1, 2004, Charter Holdings and Charter Capital
may redeem some or all of the March 1999 8.625% Charter Holdings
notes and the March 1999 9.920% Charter Holdings notes at any
time, in each case, at a premium. The optional redemption price
declines to 100% of the principal amount of March 1999 Charter
Holdings notes redeemed, plus accrued and unpaid interest, if
any, for redemption on or after April 1, 2007.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding March 1999 Charter Holdings
notes at 101% of their principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
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The indentures governing the March 1999 Charter
Holdings senior notes contain restrictive covenants that limit
certain transactions or activities by Charter Holdings and its
restricted subsidiaries. All but two of Charter Holdings'
direct and indirect subsidiaries are currently restricted
subsidiaries.
January 2000 Charter Holdings Notes
The January 2000 Charter Holdings notes were
issued under three separate indentures, each dated as of
January 12, 2000, among Charter Holdings and Charter
Capital, as the issuers, and BNY Midwest Trust Company, as
trustee. In June 2000, Charter Holdings and Charter Capital
exchanged these notes for new January 2000 Charter Holdings
notes, with substantially similar terms, except that the new
January 2000 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer and are not subject to further registration or
special interest obligations.
The January 2000 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2000 11.75% Charter
Holdings notes will not accrue prior to January 15, 2005.
The January 2000 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2001, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings' subsidiaries, including
the CCH II notes, the CCO Holdings notes, the Renaissance
notes, the CC V Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
Charter Holdings and Charter Capital will not
have the right to redeem the January 2000 10.00% Charter
Holdings notes prior to their maturity date on April 1,
2009. On or after January 15, 2005, Charter Holdings and
Charter Capital may redeem some or all of the January 2000
10.25% Charter Holdings notes and the January 2000 11.75%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2000 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January 15, 2008.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2000 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2000 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 Charter
Holdings notes. See "— Summary of restrictive
covenants under the Charter Holdings high-yield note
indentures."
January 2001 Charter Holdings Notes
The January 2001 Charter Holdings notes were
issued under three separate indentures, each dated as of
January 10, 2001, each among Charter Holdings and Charter
Capital, as the issuers, and BNY Midwest Trust Company, as
trustee. In March 2001, Charter Holdings and Charter Capital
exchanged these notes for new January 2001 Charter Holdings
notes, with substantially similar terms, except that the new
January 2001 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer, and are not subject to further registration or
special interest obligations.
The January 2001 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2001 13.500% Charter
Holdings notes will not accrue prior to January 15, 2006.
The January 2001 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2000, May 2001 and January 2002 Charter
Holdings
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notes. They are structurally subordinated to the
obligations of Charter Holdings' subsidiaries, including
the CCH II notes, the CCO Holdings notes, the Renaissance
notes, the CC V Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
Charter Holdings and Charter Capital will not
have the right to redeem the January 2001 10.750% Charter
Holdings notes prior to their maturity date on October 1,
2009. On or after January 15, 2006, Charter Holdings and
Charter Capital may redeem some or all of the January 2001
11.125% Charter Holdings notes and the January 2001 13.500%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January 15, 2009.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2001 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 and January
2000 Charter Holdings notes. See "— Summary of
restrictive covenants under the Charter Holdings high-yield note
indentures."
May 2001 Charter Holdings Notes
The May 2001 Charter Holdings notes were issued
under three separate indentures, each among Charter Holdings and
Charter Capital, as the issuers, and BNY Midwest Trust Company,
as trustee. In September 2001, Charter Holdings and Charter
Capital exchanged substantially all of these notes for new May
2001 Charter Holdings notes, with substantially similar terms,
except that the new May 2001 Charter Holdings notes are
registered under the Securities Act and, therefore, do not bear
legends restricting their transfer, and are not subject to
further registration or special interest obligations.
The May 2001 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
Cash interest on the May 2001 11.750% Charter Holdings notes
will not accrue prior to May 15, 2006.
The May 2001 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the March 1999,
January 2000, January 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings' subsidiaries, including the CCH II
notes, the CCO Holdings notes, the Renaissance notes, the
CC V Holdings notes, the amended and restated Charter
Operating credit facilities and the Charter Operating notes.
Charter Holdings and Charter Capital will not
have the right to redeem the May 2001 9.625% Charter Holdings
notes prior to their maturity date on November 15, 2009.
Before May 15, 2004, Charter Holdings and Charter Capital
may redeem up to 35% of the May 2001 10.000% Charter Holdings
notes and the May 2001 11.750% Charter Holdings notes, in each
case, at a premium with proceeds of certain offerings of equity
securities. In addition, on or after May 15, 2006, Charter
Holdings and Charter Capital may redeem some or all of the May
2001 10.000% Charter Holdings notes and the May 2001 11.750%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the May 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
May 15, 2009.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding May 2001 Charter Holdings notes
at 101% of their total principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
The indentures governing the May 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the
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March 1999, January 2000 and January 2001 Charter
Holdings notes. See "— Summary of restrictive
covenants under the Charter Holdings high-yield note
indentures."
January 2002 Charter Holdings Notes
The January 2002 Charter Holdings notes were
issued under three separate indentures, each among Charter
Holdings and Charter Capital, as the issuers, and BNY Midwest
Trust Company, as trustee, two of which were supplements to the
indentures for the May 2001 Charter Holdings notes. In July
2002, Charter Holdings and Charter Capital exchanged
substantially all of these notes for new January 2002 Charter
Holdings notes, with substantially similar terms, except that
the new January 2002 notes are registered under the Securities
Act and, therefore, do not bear legends restricting their
transfer and are not subject to further registration or special
interest obligations.
The January 2002 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. Cash interest on the January 2002 12.125% Charter
Holdings notes will not accrue prior to January 15, 2007.
The January 2002 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with the current and future unsecured and unsubordinated
debt of Charter Holdings, including the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. They are
structurally subordinated to the obligations of Charter
Holdings' subsidiaries, including the CCH II notes,
the CCO Holdings notes, the Renaissance notes, the CC V Holdings
notes, the Charter Operating amended and restated credit
facilities and the Charter Operating notes.
The Charter Holdings 12.125% senior discount
notes are redeemable at the option of the issuers at amounts
decreasing from 106.063% to 100% of accreted value beginning
January 15, 2007. At any time prior to January 15,
2005, the issuers may redeem up to 35% of the total principal
amount of the 12.125% senior discount notes at a redemption
price of 112.125% of the accreted value under certain conditions.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2002 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2002 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. See
"— Summary of restrictive covenants under the
Charter Holdings high-yield note indentures."
Summary of Restrictive Covenants Under the
    Charter Holdings High-Yield Note Indentures
The limitations on incurrence of debt and
issuance of preferred stock contained in Charter Holdings'
indentures permit Charter Holdings and its subsidiaries to incur
additional debt or issue preferred stock, so long as there is no
default under the Charter Holdings indentures. These limitations
restrict the incurrence of debt unless, after giving pro forma
effect to the incurrence, the Charter Holdings Leverage Ratio
would be below 8.75 to 1.0. In addition, regardless of whether
that leverage ratio test could be met, so long as no default
exists or would result from the incurrence or issuance, Charter
Holdings and its restricted subsidiaries are permitted to issue:
•
up to $3.5 billion of debt under credit
    facilities,
•
up to $75 million of debt incurred to
    finance the purchase or capital lease of new assets,
•
up to $300 million of additional debt for
    any purpose,
•
additional debt in an amount equal to 200% of new
    cash equity proceeds received by Charter Holdings and its
    restricted subsidiaries since March 1999, the date of our first
    indenture, and not allocated for restricted payments or
    permitted investments, and
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•
other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
The restricted subsidiaries of Charter Holdings
are generally not permitted to issue debt securities
contractually subordinated in right of payment to other debt of
the issuing subsidiary or preferred stock, in either case in any
public or Rule 144A offering.
The Charter Holdings indentures permit Charter
Holdings and its restricted subsidiaries to incur debt under one
category, and later reclassify that debt into another category.
The Charter Operating credit facilities generally impose more
restrictive limitations on incurring new debt than Charter
Holdings' indentures, so our subsidiaries that are subject
to the Charter Operating credit facilities may not be permitted
to utilize the full debt incurrence that would otherwise be
available under the Charter Holdings indenture covenants.
Generally, under Charter Holdings'
high-yield indentures:
•
Charter Holdings and its restricted subsidiaries
    are generally permitted to pay dividends on equity interests,
    repurchase interests, or make other specified restricted
    payments only if, after giving pro forma effect to the
    transaction, the Charter Holdings Leverage Ratio would be below
    8.75 to 1.0 and if no default exists or would exist as a
    consequence of such incurrence. If those conditions are met,
    restricted payments in a total amount of up to 100% of Charter
    Holdings' consolidated EBITDA, as defined, minus 1.2 times
    its consolidated interest expense, plus 100% of new cash and
    non-cash equity proceeds received by Charter Holdings and not
    allocated to the debt incurrence covenant or to permitted
    investments, all cumulatively from March 1999, the date of the
    first Charter Holdings indenture, plus $100 million.
In addition, Charter Holdings may make
distributions or restricted payments, so long as no default
exists or would be caused by transactions:
•
to repurchase management equity interests in
    amounts not to exceed $10 million per fiscal year,
•
regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in Charter Holdings or its restricted
    subsidiaries, or
•
to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
Charter Holdings and its restricted subsidiaries
may not make investments except permitted investments if there
is a default under the indentures or if, after giving effect to
the transaction, the Charter Holdings Leverage Ratio would be
below 8.75 to 1.0.
Permitted investments include:
•
investments by Charter Holdings in restricted
    subsidiaries or by restricted subsidiaries in Charter Holdings,
•
investments in productive assets (including
    through equity investments) aggregating up to $150 million
    since March 1999,
•
investments aggregating up to 100% of new cash
    equity proceeds received by Charter Holdings since March 1999
    and not allocated to the debt incurrence or restricted payments
    covenant, and
•
other investments aggregating up to
    $50 million since March 1999.
Charter Holdings is not permitted to grant liens
on its assets other than specified permitted liens. Permitted
liens include liens securing debt and other obligations incurred
under our and our subsidiaries' credit facilities, liens
securing the purchase price of new assets, and liens of up to
$50 million incurred in the ordinary course of business.
The lien covenant does not restrict liens on assets of
subsidiaries of Charter Holdings.
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Charter Holdings and Charter Capital, its
co-issuer, are generally not permitted to sell all or
substantially all of their assets or merge with or into other
companies unless their leverage ratio after any such transaction
would be no greater than their leverage ratio immediately prior
to the transaction, or unless after giving effect to the
transaction, the Charter Holdings Leverage Ratio would be below
8.75 to 1.0, no default exists, and the surviving entity is a
U.S. entity that assumes the Charter Holdings notes.
Charter Holdings and its restricted subsidiaries
may generally not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60 days or productive assets. Charter Holdings and
its restricted subsidiaries are then required within
365 days after any asset sale either to commit to use the
net cash proceeds over a specified threshold to acquire assets,
including current assets, used or useful in their businesses or
use the net cash proceeds to repay debt, or to offer to
repurchase the Charter Holdings notes with any remaining
proceeds.
Charter Holdings and its restricted subsidiaries
may generally not engage in sale and leaseback transactions
unless, at the time of the transaction, Charter Holdings could
have incurred secured indebtedness in an amount equal to the
present value of the net rental payments to be made under the
lease, and the sale of the assets and application of proceeds is
permitted by the covenant restricting asset sales.
Charter Holdings' restricted subsidiaries
may generally not enter into restrictions on their ability to
make dividends or distributions or transfer assets to Charter
Holdings on terms that are materially more restrictive than
those governing their debt, lien, asset sale, lease and similar
agreements existing when they entered into the indentures,
unless those restrictions are on customary terms that will not
materially impair Charter Holdings' ability to repay the
high-yield notes.
The restricted subsidiaries of Charter Holdings
are generally not permitted to guarantee or pledge assets to
secure debt of Charter Holdings, unless the guarantying
subsidiary issues a guarantee of the notes of comparable
priority and tenor, and waives any rights of reimbursement,
indemnity or subrogation arising from the guarantee transaction
for at least one year.
The indentures also restrict the ability of
Charter Holdings and its restricted subsidiaries to enter into
certain transactions with affiliates involving consideration in
excess of $15 million without a determination by the board
of directors of Charter Holdings that the transaction is on
terms no less favorable than arms length, or transactions with
affiliates involving over $50 million without receiving an
independent opinion as to the fairness of the transaction
addressed to the holders of the Charter Holdings notes.
CCH II, LLC Notes
In September 2003, CCH II and CCH II
Capital Corp. jointly issued approximately $1.6 billion
total principal amount of 10.25% senior notes due 2010. The
CCH II notes are general unsecured obligations of
CCH II and CCH II Capital Corp. They rank equally with
all other current or future unsubordinated obligations of
CCH II and CCH II Capital Corp. The CCH II notes
are structurally subordinated to all obligations of subsidiaries
of CCH II, including the CCO Holdings notes, the
Renaissance notes, the CC V Holdings notes, the amended and
restated CCO credit facilities and the notes.
Interest on the CCH II notes accrues at
10.25% per annum, from September 23, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each March 15 and September 15, commencing on
March 15, 2004.
At any time prior to September 15, 2006, the
issuers of the CCH II notes may redeem up to 35% of the
total principal amount of the CCH II notes on a pro rata
basis at a redemption price equal to 110.25% of the principal
amount of CCH II notes redeemed, plus any accrued and
unpaid interest.
On or after September 15, 2008, the issuers
of the CCH II notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 105.125% to a
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redemption price on or after September 15,
2009 of 100.0% of the principal amount of the CCH II notes
redeemed, plus, in each case, any accrued and unpaid interest.
In the event of specified change of control
events, CCH II must offer to purchase the outstanding
CCH II notes from the holders at a purchase price equal to
101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
The indenture governing the CCH II notes
contains restrictive covenants that limit certain transactions
or activities by CCH II and its restricted subsidiaries,
including the covenants summarized below. As of the issue date,
all but two of CCH II's direct and indirect
subsidiaries were restricted subsidiaries.
The covenant in the indenture governing the
CCH II notes that restricts incurrence of debt and issuance
of preferred stock permits CCH II and its subsidiaries to
incur or issue specified amounts of debt or preferred stock, if,
after giving effect to the incurrence, CCH II could meet a
leverage ratio (ratio of consolidated debt to four times EBITDA
from the most recent fiscal quarter for which internal financial
reports are available) of 5.5 to 1.0.
In addition, regardless of whether the leverage
ratio could be met, so long as no default exists or would result
from the incurrence or issuance, CCH II and its restricted
subsidiaries are permitted to incur or issue:
•
up to $9.75 billion of debt under credit
    facilities, including debt under credit facilities outstanding
    on the issue date of the CCH II notes,
•
up to $75 million of debt incurred to
    finance the purchase or capital lease of new assets,
•
up to $300 million of additional debt for
    any purpose, and
•
other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
The restricted subsidiaries of CCH II are
generally not permitted to issue debt securities contractually
subordinated to other debt of the issuing subsidiary or
preferred stock, in either case in any public or Rule 144A
offering.
The CCH II indenture permits CCH II and
its restricted subsidiaries to incur debt under one category,
and later reclassify that debt into another category. Our and
our subsidiaries' credit agreements generally impose more
restrictive limitations on incurring new debt than the
CCH II indenture, so we and our subsidiaries that are
subject to credit agreements are not permitted to utilize the
full debt incurrence that would otherwise be available under the
CCH II indenture covenants.
Generally, under the CCH II indenture,
CCH II and its restricted subsidiaries are permitted to pay
dividends on equity interests, repurchase interests, or make
other specified restricted payments only if CCH II can
incur $1.00 of new debt under the leverage ratio test, which
requires that CCH II meet a 5.5 to 1.0 leverage ratio after
giving effect to the transaction, and if no default exists or
would exist as a consequence of such incurrence. If those
conditions are met, restricted payments in a total amount of up
to 100% of CCH II's consolidated EBITDA, as defined, minus
1.3 times its consolidated interest expense, plus 100% of new
cash and non-cash equity proceeds received by CCH II and
not allocated to the debt incurrence covenants, all cumulatively
from the fiscal quarter commenced July 1, 2003, plus
$100 million.
In addition, CCH II may make distributions
or restricted payments, so long as no default exists or would be
caused by transactions:
•
to repurchase management equity interests in
    amounts not to exceed $10 million per fiscal year;
•
regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in CCH II or its restricted subsidiaries;
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•
regardless of the existence of any default, to
    pay interest when due on Charter Holdings notes, to pay, so long
    as there is no default, interest on the convertible senior notes
    (including the notes) of Charter, to purchase, redeem or
    refinance, so long as CCH II could incur $1.00 of
    indebtedness under the 5.5 to 1.0 leverage ratio test referred
    to above and there is no default, Charter Holdings notes,
    Charter notes, and other direct or indirect parent company notes
    (including the CCH II notes);
•
to make distributions in connection with the
    private exchanges pursuant to which the CCH II notes were
    issued; and
•
other specified restricted payments including
    merger fees up to 1.25% of the transaction value, repurchases
    using concurrent new issuances, and certain dividends on
    existing subsidiary preferred equity interests.
The indenture governing the CCH II notes
restricts CCH II and its restricted subsidiaries from
making investments, except specified permitted investments, or
creating new unrestricted subsidiaries, if there is a default
under the indenture or if CCH II could not incur $1.00 of
new debt under the 5.5 to 1.0 leverage ratio test
described above after giving effect to the transaction.
Permitted investments include:
•
investments by CCH II and its restricted
    subsidiaries in CCH II and in other restricted
    subsidiaries, or entities that become restricted subsidiaries as
    a result of the investment;
•
investments aggregating up to 100% of new cash
    equity proceeds received by CCH II since September 23,
    2003 to the extent the proceeds have not been allocated to the
    restricted payments covenant described above;
•
investments resulting from the private exchanges
    pursuant to which the CCH II notes were issued;
•
other investments up to $750 million
    outstanding at any time; and
•
certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
CCH II is not permitted to grant liens on
its assets other than specified permitted liens. Permitted liens
include liens securing debt and other obligations incurred under
our amended and restated CCO credit facilities, liens securing
the purchase price of new assets, and liens up to
$50 million incurred in the ordinary course of business.
The lien covenant does not restrict liens on assets of
subsidiaries of CCH II.
CCO Holdings, LLC Notes
8 3/4% Senior Notes due 2013
In November 2003, CCO Holdings and CCO Holdings
Capital Corp. jointly issued $500 million total principal
amount of 8 3/4% senior notes due 2013. The CCO
Holdings notes are general unsecured obligations of CCO Holdings
and CCO Holdings Capital Corp. They rank equally with all other
current or future unsubordinated obligations of CCO Holdings and
CCO Holdings Capital Corp. The CCO Holdings notes are
structurally subordinated to all obligations of subsidiaries of
CCO Holdings, including the Renaissance notes, the
CC V Holdings notes, the Charter Operating senior
second lien notes and the amended and restated Charter Operating
credit facilities.
Interest on the CCO Holdings senior notes accrues
at 8 3/4% per year, from November 10, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each May 15 and November 15, commencing on
May 15, 2004.
At any time prior to November 15, 2006, the
issuers of the CCO Holdings senior notes may redeem up to 35% of
the total principal amount of the CCO Holdings senior notes to
the extent of public equity proceeds they have received on a pro
rata basis at a redemption price equal to 108.75% of the
principal amount of CCO Holdings senior notes redeemed, plus any
accrued and unpaid interest.
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On or after November 15, 2008, the issuers
of the CCO Holdings notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 104.375% to a redemption price on or after
November 15, 2011 of 100.0% of the principal amount of the
CCO Holdings senior notes redeemed, plus, in each case, any
accrued and unpaid interest.
In the event of specified change of control
events, CCO Holdings senior must offer to purchase the
outstanding CCO Holdings senior notes from the holders at a
purchase price equal to 101% of the total principal amount of
the notes, plus any accrued and unpaid interest.
The indenture governing the CCO Holdings senior
notes contains restrictive covenants that limit certain
transactions or activities by CCO Holdings and its restricted
subsidiaries, including the covenants summarized below. As of
the issue date, all but two of CCO Holdings' direct and
indirect subsidiaries were restricted subsidiaries.
The covenant in the indenture governing the CCO
Holdings senior notes that restricts incurrence of debt and
issuance of preferred stock permits CCO Holdings and its
subsidiaries to incur or issue specified amounts of debt or
preferred stock, if, after giving pro forma effect to the
incurrence or issuance, CCO Holdings could meet a leverage ratio
(ratio of consolidated debt to four times EBITDA, as defined,
from the most recent fiscal quarter for which internal financial
reports are available) of 4.5 to 1.0.
In addition, regardless of whether the leverage
ratio could be met, so long as no default exists or would result
from the incurrence or issuance, CCO Holdings and its restricted
subsidiaries are permitted to incur or issue:
•
up to $9.75 billion of debt under credit
    facilities, including debt under credit facilities outstanding
    on the issue date of the CCO Holdings senior notes;
•
up to $75 million of debt incurred to
    finance the purchase or capital lease of new assets;
•
up to $300 million of additional debt for
    any purpose; and
•
other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt, and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
The restricted subsidiaries of CCO Holdings are
generally not permitted to issue debt securities contractually
subordinated to other debt of the issuing subsidiary or
preferred stock, in either case in any public or Rule 144A
offering.
The CCO Holdings indenture permits CCO Holdings
and its restricted subsidiaries to incur debt under one
category, and later reclassify that debt into another category.
The amended and restated Charter Operating credit facilities
generally impose more restrictive limitations on incurring new
debt than CCO Holdings' indenture, so our subsidiaries that
are subject to credit facilities are not permitted to utilize
the full debt incurrence that would otherwise be available under
the CCO Holdings indenture covenants.
Generally, under CCO Holdings' indenture:
•
CCO Holdings and its restricted subsidiaries are
    permitted to pay dividends on equity interests, repurchase
    interests, or make other specified restricted payments only if
    CCO Holdings can incur $1.00 of new debt under the leverage
    ratio test, which requires that CCO Holdings meet a 4.5 to 1.0
    leverage ratio after giving effect to the transaction, and if no
    default exists or would exist as a consequence of such
    incurrence. If those conditions are met, restricted payments are
    permitted in a total amount of up to 100% of CCO Holdings'
    consolidated EBITDA, as defined, minus 1.3 times its
    consolidated interest expense, plus 100% of new cash and
    appraised non-cash equity proceeds received by CCO Holdings and
    not allocated to the debt incurrence covenant, all cumulatively
    from the fiscal quarter commenced on October 1, 2003, plus
    $100 million.
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In addition, CCO Holdings may make distributions
or restricted payments, so long as no default exists or would be
caused by the transaction:
•
to repurchase management equity interests in
    amounts not to exceed $10 million per fiscal year;
•
to pay, regardless of the existence of any
    default, pass-through tax liabilities in respect of ownership of
    equity interests in Charter Holdings or its restricted
    subsidiaries;
•
to pay, regardless of the existence of any
    default, interest when due on Charter Holdings notes and our
    notes;
•
to pay, so long as there is no default, interest
    on the Charter convertible notes;
•
to purchase, redeem or refinance Charter Holdings
    notes, our notes, Charter notes, and other direct or indirect
    parent company notes, so long as CCO Holdings could incur $1.00
    of indebtedness under the 4.5 to 1.0 leverage ratio test
    referred to above and there is no default; or
•
to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
The indenture governing the CCO Holdings senior
notes restricts CCO Holdings and its restricted subsidiaries
from making investments, except specified permitted investments,
or creating new unrestricted subsidiaries, if there is a default
under the indenture or if CCO Holdings could not incur $1.00 of
new debt under the 4.5 to 1.0 leverage ratio test described
above after giving effect to the transaction.
Permitted investments include:
•
investments by CCO Holdings and its restricted
    subsidiaries in CCO Holdings and in other restricted
    subsidiaries, or entities that become restricted subsidiaries as
    a result of the investment,
•
investments aggregating up to 100% of new cash
    equity proceeds received by CCO Holdings since November 10,
    2003 to the extent the proceeds have not been allocated to the
    restricted payments covenant described above,
•
other investments up to $750 million
    outstanding at any time, and
•
certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
CCO Holdings is not permitted to grant liens on
its assets other than specified permitted liens. Permitted liens
include liens securing debt and other obligations incurred under
our subsidiaries' credit facilities, liens securing the
purchase price of new assets, liens up to $50 million and
liens incurred in the ordinary course of business. The lien
covenant does not restrict liens on assets of subsidiaries of
CCO Holdings.
CCO Holdings and CCO Holdings Capital, its
co-issuer, are generally not permitted to sell all or
substantially all of their assets or merge with or into other
companies unless their leverage ratio after any such transaction
would be no greater than their leverage ratio immediately prior
to the transaction, or unless CCO Holdings and its subsidiaries
could incur $1.00 of new debt under the 4.50 to 1.0 leverage
ratio test described above after giving effect to the
transaction, no default exists, and the surviving entity is a
U.S. entity that assumes the CCO Holdings senior notes.
CCO Holdings and its restricted subsidiaries may
generally not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60 days or productive assets. CCO Holdings and its
restricted subsidiaries are then required within 365 days
after any asset sale either to commit to use the net cash
proceeds over a specified threshold to acquire assets, including
current assets, used or useful in their
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businesses or use the net cash proceeds to repay
debt, or to offer to repurchase the CCO Holdings senior notes
with any remaining proceeds.
CCO Holdings and its restricted subsidiaries may
generally not engage in sale and leaseback transactions unless,
at the time of the transaction, CCO Holdings could have incurred
secured indebtedness in an amount equal to the present value of
the net rental payments to be made under the lease, and the sale
of the assets and application of proceeds is permitted by the
covenant restricting asset sales.
CCO Holdings' restricted subsidiaries may
generally not enter into restrictions on their ability to make
dividends or distributions or transfer assets to CCO Holdings on
terms that are materially more restrictive than those governing
their debt, lien, asset sale, lease and similar agreements
existing when they entered into the indenture, unless those
restrictions are on customary terms that will not materially
impair CCO Holdings' ability to repay the high-yield notes.
The restricted subsidiaries of CCO Holdings are
generally not permitted to guarantee or pledge assets to secure
debt of CCO Holdings, unless the guarantying subsidiary issues a
guarantee of the notes of comparable priority and tenor, and
waives any rights of reimbursement, indemnity or subrogation
arising from the guarantee transaction for at least one year.
The indenture also restricts the ability of CCO
Holdings and its restricted subsidiaries to enter into certain
transactions with affiliates involving consideration in excess
of $15 million without a determination by the board of
directors that the transaction is on terms no less favorable
than arms-length, or transactions with affiliates involving over
$50 million without receiving an independent opinion as to
the fairness of the transaction to the holders of the CCO
Holdings notes.
Senior Floating Rate Notes due
    2010
On December 1, 2004, our subsidiaries, CCO
Holdings and CCO Holdings Capital Corp., agreed to issue and
sell $550 million senior floating rate notes due 2010 in a
private transaction. The notes are expected to be issued on
December 15, 2004, and will have an annual interest rate of
LIBOR plus 4.125%, payable quarterly, and will otherwise have
terms substantially consistent with the CCO Holdings 8 3/4%
senior notes due 2010 described above.
Charter Communications Operating, LLC
    Notes
On April 27, 2004, Charter Operating and
Charter Communications Operating Capital Corp. jointly issued
$1.1 billion of 8% senior second lien notes due 2012
and $400 million of 8 3/8% senior second lien
notes due 2014, for total gross proceeds of $1.5 billion.
The Charter Operating notes were sold in a
private transaction that was not subject to the registration
requirements of the Securities Act of 1933. The Charter
Operating notes are not expected to have the benefit of any
exchange or other registration rights, except in specified
limited circumstances.
On the issue date of the Charter Operating notes,
because of restrictions contained in the Charter Holdings
indentures, there were no Charter Operating note guarantees,
even though Charter Operating's immediate parent, CCO
Holdings, and certain of our subsidiaries were obligors and/or
guarantors under the amended and restated Charter Operating
credit facilities. Upon the occurrence of the guarantee and
pledge date (generally, the fifth business day after the Charter
Holdings leverage ratio is certified to be below 8.75 to 1.0),
CCO Holdings and those subsidiaries of Charter Operating that
are then guarantors of, or otherwise obligors with respect to,
indebtedness under the amended and restated Charter Operating
credit facilities and related obligations will be required to
guarantee the Charter Operating notes. The note guarantee of
each such guarantor will be:
•
a senior obligation of such guarantor;
•
structurally senior to the outstanding senior
    notes of CCO Holdings and CCO Holdings Capital Corp. (except in
    the case of CCO Holdings' note guarantee, which is
    structurally
pari passu
with
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such senior notes), the outstanding senior notes
    of CCH II and CCH II Capital Corp., the outstanding
    senior notes and senior discount notes of Charter Holdings and
    the outstanding convertible senior notes of Charter (but subject
    to provisions in the Charter Operating indenture that permit
    interest and, subject to meeting the 4.25 to 1.0 leverage ratio
    test, principal payments to be made thereon); and
•
senior in right of payment to any future
    subordinated indebtedness of such guarantor.
All the subsidiaries of Charter Operating (except
CCO NR Sub, LLC, and certain other subsidiaries that are not
deemed material and are designated as nonrecourse subsidiaries
under the amended and restated Charter Operating credit
facilities) are restricted subsidiaries of Charter Operating
under the Charter Operating notes. Unrestricted subsidiaries
generally will not be subject to the restrictive covenants in
the Charter Operating indenture.
In the event of specified change of control
events, Charter Operating must offer to purchase the Charter
Operating notes at a purchase price equal to 101% of the total
principal amount of the Charter Operating notes repurchased plus
any accrued and unpaid interest thereon.
The limitations on incurrence of debt contained
in the indenture governing the Charter Operating notes permit
Charter Operating and its restricted subsidiaries that are
guarantors of the Charter Operating notes to incur additional
debt or issue shares of preferred stock if, after giving pro
forma effect to the incurrence, Charter Operating could meet a
leverage ratio test (ratio of consolidated debt to four times
EBITDA, as defined, from the most recent fiscal quarter for
which internal financial reports are available) of
4.25 to 1.0.
In addition, regardless of whether the leverage
ratio test could be met, so long as no default exists or would
result from the incurrence or issuance, Charter Operating and
its restricted subsidiaries are permitted to incur or issue:
•
up to $6.5 billion of debt under credit
    facilities (but such incurrence is permitted only by Charter
    Operating and its restricted subsidiaries that are guarantors of
    the Charter Operating notes, so long as there are such
    guarantors), including debt under credit facilities outstanding
    on the issue date of the Charter Operating notes;
•
up to $75 million of debt incurred to
    finance the purchase or capital lease of assets;
•
up to $300 million of additional debt for
    any purpose, and
•
other items of indebtedness for specific purposes
    such as refinancing of existing debt and interest rate swaps to
    provide protection against fluctuation in interest rates and,
    subject to meeting the leverage ratio test, debt existing at the
    time of acquisition of a restricted subsidiary.
The Charter Operating indenture provides that
Charter Operating will not pay, or permit its subsidiaries to
pay, any interest or principal on $361 million of
intercompany loans received by it and its subsidiaries in
November 2003 from CCO Holdings, all of which shall become a
common equity capital contribution to Charter Operating on the
guarantee and pledge date.
The indenture governing the Charter Operating
notes permits Charter Operating to incur debt under one of the
categories above, and later reclassify the debt into a different
category. The amended and restated Charter Operating credit
facilities generally impose more restrictive limitations on
incurring new debt than the Charter Operating indenture, so our
subsidiaries that are subject to the amended and restated
Charter Operating credit facilities are not permitted to utilize
the full debt incurrence that would otherwise be available under
the Charter Operating indenture covenants.
Generally, under Charter Operating's
indenture Charter Operating and its restricted subsidiaries are
permitted to pay dividends on equity interests, repurchase
interests, or make other specified restricted payments only if
Charter Operating could incur $1.00 of new debt under the
leverage ratio test, which requires that Charter Operating meet
a 4.25 to 1.0 leverage ratio after giving effect to the
transaction, and if no default exists or would exist as a
consequence of such incurrence. If those conditions are met,
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restricted payments are permitted in a total
amount of up to 100% of Charter Operating's consolidated
EBITDA, as defined, minus 1.3 times its consolidated interest
expense, plus 100% of new cash and appraised non-cash equity
proceeds received by Charter Operating and not allocated to the
debt incurrence covenant, all cumulatively from the fiscal
quarter commenced April 1, 2004, plus $100 million.
In addition, Charter Operating may make
distributions or restricted payments, so long as no default
exists or would be caused by the transaction:
•
to repurchase management equity interests in
    amounts not to exceed $10 million per fiscal year;
•
regardless of the existence of any default, to
    pay pass-through tax liabilities in respect of ownership of
    equity interests in Charter Operating or its restricted
    subsidiaries;
•
to pay, regardless of the existence of any
    default, interest when due on the Charter Holdings notes, the
    CCO Holdings notes, and our notes;
•
to pay, so long as there is no default, interest
    on the Charter convertible notes;
•
to purchase, redeem or refinance the Charter
    Holdings notes, our notes, the CCO Holdings notes, the Charter
    notes, and other direct or indirect parent company notes, so
    long as Charter Operating could incur $1.00 of indebtedness
    under the 4.25 to 1.0 leverage ratio test referred to above and
    there is no default, or
•
to make other specified restricted payments
    including merger fees up to 1.25% of the transaction value,
    repurchases using concurrent new issuances, and certain
    dividends on existing subsidiary preferred equity interests.
The indenture governing the Charter Operating
notes restricts Charter Operating and its restricted
subsidiaries from making investments, except specified permitted
investments, or creating new unrestricted subsidiaries, if there
is a default under the indenture or if Charter Operating could
not incur $1.00 of new debt under the 4.25 to 1.0 leverage ratio
test described above after giving effect to the transaction.
Permitted investments include:
•
investments by Charter Operating and its
    restricted subsidiaries in Charter Operating and in other
    restricted subsidiaries, or entities that become restricted
    subsidiaries as a result of the investment,
•
investments aggregating up to 100% of new cash
    equity proceeds received by Charter Operating since
    April 27, 2004 to the extent the proceeds have not been
    allocated to the restricted payments covenant described above,
•
other investments up to $750 million
    outstanding at any time, and
•
certain specified additional investments, such as
    investments in customers and suppliers in the ordinary course of
    business and investments received in connection with permitted
    asset sales.
Charter Operating and its restricted subsidiaries
are not permitted to grant liens senior to the liens securing
the Charter Operating notes, other than permitted liens, on
their assets to secure indebtedness or other obligations, if,
after giving effect to such incurrence, the senior secured
leverage ratio (generally, the ratio of obligations secured by
first priority liens to four times EBITDA, as defined, from the
most recent fiscal quarter for which internal financial reports
are available) would exceed 3.75 to 1.0. Permitted liens include
liens securing indebtedness and other obligations under
permitted credit facilities, liens securing the purchase price
of new assets, liens securing amounts up to $50 million,
and liens incurred in the ordinary course of business.
Charter Operating and Charter Communications
Operating Capital Corp., its co-issuer, are generally not
permitted to sell all or substantially all of their assets or
merge with or into other companies unless their leverage ratio
after any such transaction would be no greater than their
leverage ratio immediately prior to the transaction, or unless
Charter Operating and its subsidiaries could incur $1.00 of new
debt
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under the 4.25 to 1.0 leverage ratio test
described above after giving effect to the transaction, no
default exists, and the surviving entity is a U.S. entity
that assumes the Charter Operating notes.
Charter Operating and its restricted subsidiaries
generally may not otherwise sell assets or, in the case of
restricted subsidiaries, issue equity interests, unless they
receive consideration at least equal to the fair market value of
the assets or equity interests, consisting of at least 75% in
cash, assumption of liabilities, securities converted into cash
within 60 days or productive assets. Charter Operating and
its restricted subsidiaries are then required within
365 days after any asset sale either to commit to use the
net cash proceeds over a specified threshold to acquire assets,
including current assets, used or useful in their businesses or
use the net cash proceeds to repay debt, or to offer to
repurchase the Charter Operating notes with any remaining
proceeds.
Charter Operating and its restricted subsidiaries
may generally not engage in sale and leaseback transactions
unless, at the time of the transaction, Charter Operating could
have incurred secured indebtedness in an amount equal to the
present value of the net rental payments to be made under the
lease, and the sale of the assets and application of proceeds is
permitted by the covenant restricting asset sales.
Charter Operating's restricted subsidiaries
may generally not enter into restrictions on their ability to
make dividends or distributions or transfer assets to Charter
Operating on terms that are materially more restrictive than
those governing their debt, lien, asset sale, lease and similar
agreements existing when Charter Operating entered into the
indenture governing the Charter Operating Senior second lien
notes unless those restrictions are on customary terms that will
not materially impair Charter Operating's ability to repay
the Charter Operating notes.
The restricted subsidiaries of Charter Operating
are generally not permitted to guarantee or pledge assets to
secure debt of Charter Operating, unless the guarantying
subsidiary issues a guarantee of the notes of comparable
priority and tenor, and waives any rights of reimbursement,
indemnity or subrogation arising from the guarantee transaction
for at least one year.
The indenture also restricts the ability of
Charter Operating and its restricted subsidiaries to enter into
certain transactions with affiliates involving consideration in
excess of $15 million without a determination by the board
of directors that the transaction is on terms no less favorable
than arms-length, or transactions with affiliates involving over
$50 million without receiving an independent opinion as to
the fairness of the transaction to the holders of the Charter
Operating notes.
Charter Operating and its restricted subsidiaries
are generally not permitted to transfer equity interests in
restricted subsidiaries unless the transfer is of all of the
equity interests in the restricted subsidiary or the restricted
subsidiary remains a restricted subsidiary and net proceeds of
the equity sale are applied in accordance with the asset sales
covenant.
Until the guarantee and pledge date, the Charter
Operating notes are secured by a second-priority lien on all of
Charter Operating's assets that secure the obligations of
Charter Operating under the Charter Operating credit facility
and specified related obligations. The collateral secures the
obligations of Charter Operating with respect to the
8% senior second lien notes due 2012 and the
8 3/8% senior second lien notes due 2014 on a ratable
basis. The collateral consists of substantially all of Charter
Operating's assets in which security interests may be
perfected under the Uniform Commercial Code by filing a
financing statement (including capital stock and intercompany
obligations), including, but not limited to:
•
all of the capital stock of all of Charter
    Operating's direct subsidiaries, including, but not limited
    to, CCO NR Holdings, LLC; and
•
all intercompany obligations owing to Charter
    Operating including, but not limited to, intercompany notes from
    CC VI Operating, CC VIII Operating and Falcon, which notes are
    supported by the same guarantees and collateral that supported
    these subsidiaries' credit facilities prior to the
    amendment and restatement of the Charter Operating credit
    facilities.
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On and after the guarantee and pledge date, the
collateral for the Charter Operating notes will consist of all
of Charter Operating's and its subsidiaries' assets
that secure the obligations of Charter Operating or any
subsidiary of Charter Operating with respect to the Charter
Operating credit facility and the related obligations or certain
other indebtedness on such date. It is currently contemplated
that, as of the guarantee and pledge date, such collateral will
consist of the capital stock of Charter Operating held by
CCO Holdings, all of the intercompany obligations owing to
CCO Holdings by Charter Operating or any subsidiary of Charter
Operating, and substantially all of Charter Operating's and
the guarantors' assets (other than the assets of
CCO Holdings) in which security interests may be perfected
under the Uniform Commercial Code by filing a financing
statement (including capital stock and intercompany
obligations), including, but not limited to:
•
with certain exceptions, all capital stock
    (limited in the case of capital stock of foreign subsidiaries,
    if any, to 66% of the capital stock of first tier foreign
    Subsidiaries) held by Charter Operating or any
    guarantor; and
•
with certain exceptions, all intercompany
    obligations owing to Charter Operating or any guarantor.
In addition, within a time frame specified under
the Charter Operating credit facility (45 days after
Charter Holdings satisfies the Leverage Condition, as defined),
Charter Operating will be required to redeem, or cause to be
redeemed, in full the notes outstanding under the
CC V indenture. Within five business days after the
redemption, and provided that such Leverage Condition remains
satisfied, CC V Holdings, LLC and its subsidiaries
will be required to guarantee the Charter Operating credit
facility and the related obligations and to secure those
guarantees with first-priority liens, and to guarantee the notes
and to secure the Charter Operating senior second lien notes
with second-priority liens, on substantially all of their assets
in which security interests may be perfected under the Uniform
Commercial Code by filing a financing statement (including
capital stock and intercompany obligations). In addition, if
Charter Operating or its subsidiaries exercise any option to
redeem in full the notes outstanding under the Renaissance
indenture, then, provided that the Leverage Condition remains
satisfied, the Renaissance entities will be required to provide
corresponding guarantees of the amended and restated Charter
Operating credit facilities and related obligations and note
guarantees and to secure the Charter Operating notes and the
amended and restated Charter Operating credit facilities and
related obligations with corresponding liens.
In the event that additional liens are granted by
Charter Operating or its subsidiaries to secure obligations
under the amended and restated Charter Operating credit
facilities or the related obligations, second priority liens on
the same assets will be granted to secure the Charter Operating
notes, which liens will be subject to the provisions of an
intercreditor agreement. Notwithstanding the foregoing sentence,
no such second priority liens need be provided if the time such
lien would otherwise be granted is not during a guarantee and
pledge availability period (when the Leverage Condition is
satisfied), but such second priority lien will be required to be
provided in accordance with the foregoing sentence on or prior
to the fifth business day of the commencement of the next
succeeding guarantee and pledge availability period.
CC V Holdings, LLC Notes
On December 10, 1998, CC V Holdings, LLC,
formerly known as Avalon Cable LLC, and
CC V Holdings Finance, Inc. (formerly Avalon Cable
Holdings Finance, Inc.) (collectively the
"CC V Issuers") jointly issued
$196.0 million total principal amount at maturity of
11.875% senior discount notes due 2008. On July 22,
1999, the issuers exchanged $196.0 million of the original
issued and outstanding CC V Holdings notes for an
equivalent amount of new CC V Holdings notes. The form
and terms of the new CC V Holdings notes are substantially
identical to the original CC V Holdings notes except
that they are registered under the Securities Act and,
therefore, are not subject to the same transfer restrictions.
The CC V Holdings notes are guaranteed by certain
subsidiaries of CC V Holdings. The Charter Operating
credit facilities require us to redeem the
CC V Holdings notes within 45 days after the
first date that the Charter Holdings leverage ratio is less than
8.75 to 1.0.
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In the event of specified change of control
events, holders of the CC V Holdings notes have the
right to sell their CC V Holdings notes to the issuers of the CC
V Holdings notes at 101% of the total principal amount of the
CC V Holdings notes, plus accrued and unpaid interest,
if any, to the date of purchase.
Our acquisition of Avalon triggered this right.
In January 2000, we completed change of control offers in which
we repurchased $16.3 million total accreted value of the
11.875% notes at a purchase price of 101% of accreted value
as of January 28, 2000. The repurchase price of
$11 million was funded with proceeds of the sale of the
January 2000 Charter Holdings notes.
On December 1, 2003, the issuers redeemed at
par value an amount equal to $369.79 per $1,000 in
principal amount at maturity of each senior discount note then
outstanding. Based on the amount outstanding on December 1,
2003, the redemption amount was $67 million.
There were no current payments of cash interest
on the CC V Holdings notes before December 1, 2003. The
CC V Holdings notes accreted in value at a rate of
11.875% per year, compounded semi-annually, to a total
principal amount of $180 million on December 1, 2003.
At December 31, 2003, after principal repayments in the
fourth quarter of 2003, the total principal amount outstanding
was $113 million. Since December 1, 2003, cash
interest on the CC V Holdings notes:
•
accrues at the rate of 11.875% per year on
    the principal amount at maturity; and
•
is payable semi-annually in arrears on
    June 1 and December 1 of each year, commencing
    June 1, 2004.
After December 1, 2003, the issuers of the
CC V Holdings notes may redeem the
CC V Holdings notes, in whole or in part, at a
specified premium. The optional redemption price declines to
100% of the principal amount of the CC V Holdings
notes redeemed, plus accrued and unpaid interest, if any, for
redemptions on or after December 1, 2006.
The limitations on incurrence of debt contained
in the indenture governing the CC V Holdings notes
permit the CC V Issuers and their restricted
subsidiaries to incur additional debt or issue shares of
preferred stock, so long as we are not in default under the
CC V Holdings indenture:
•
if, after giving effect to the incurrence, the
    CC V Issuers could meet a leverage ratio (ratio of
    consolidated debt to four times consolidated cash flow from the
    most recent quarter) of 6.5 to 1.0, and, regardless of whether
    the leverage ratio could be met,
•
up to approximately $346 million of debt
    under a credit facility,
•
up to $10 million of debt incurred to
    finance the purchase of new assets,
•
up to $15 million of additional
    debt, and
•
other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
The indenture governing the CC V Holdings notes
permits the CC V Issuers to incur debt under one of
the categories above, and reclassify the debt into a different
category.
•
Under the indenture governing the CC V Holdings
    notes, the CC V Issuers and their restricted
    subsidiaries are permitted to pay dividends on equity interests,
    repurchase interests, make restricted investments, or make other
    specified restricted payments only if CC V Holdings could, after
    giving effect thereto, incur $1.00 of additional debt under the
    leverage ratio test, which would require that the CC V Issuers
    meet the 6.5 to 1.0 leverage ratio of the indebtedness covenant
    and no default would exist or result as a consequence thereof.
    If those conditions are met, the CC V Issuers and their
    restricted subsidiaries are permitted to make restricted
    payments in a total amount not to exceed the result of 100% of
    the CC V Issuers' consolidated cash flow, minus 1.4 times
    their consolidated interest expense, plus 100% of new equity
    proceeds received by the CC V Issuers, plus returns on certain
    investments, all cumulatively from January 1, 1999. The CC
    V Issuers and their restricted subsidiaries may make permitted
    investments up to $10 million and other specified
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permitted investments, restricted payments up to
    $5 million, and other specified restricted payments without
    meeting the foregoing test.
•
The CC V Issuers and their restricted
    subsidiaries are not permitted to grant liens on their assets
    other than specified permitted liens. Permitted liens include
    liens securing debt permitted by the covenant limiting
    incurrence of debt, liens securing amounts up to the greater of
    $15 million or 5% of total assets, certain existing liens
    and specified liens incurred in the ordinary course of business.
•
The CC V Issuers are generally not permitted to
    sell or otherwise dispose of all or substantially all of their
    assets or merge with or into other companies unless the CC V
    Issuers and their subsidiaries could incur $1.00 of additional
    debt under the leverage ratio test described above, after giving
    effect to the transaction.
•
The CC V Issuers and their subsidiaries may
    generally not otherwise sell assets or, in the case of
    restricted subsidiaries, equity interests, unless they receive
    consideration at least equal to the fair market value of the
    assets or equity interests, with at least 75% of the
    consideration for such sale consisting of a controlling interest
    in a permitted business or assets useful in a permitted business
    or cash, assumption of liabilities or securities promptly
    converted into cash. The CC V Issuers and their restricted
    subsidiaries are then required within 360 days after any
    asset sale either to commit to use the net cash proceeds over a
    specified threshold either to acquire assets, including
    controlling assets in permitted businesses, make capital
    expenditures or use the net cash proceeds to repay debt, or to
    offer to repurchase the CC V Holdings notes with any remaining
    proceeds.
•
The CC V Issuers and their restricted
    subsidiaries may not engage in sale and leaseback transactions
    unless, at the time of the transaction, the applicable CC V
    Issuer or restricted subsidiary could have incurred indebtedness
    under the leverage ratio test described above in an amount equal
    to the present value of the net rental payments to be made under
    the lease, the gross proceeds of the sale are at least equal to
    the fair market value of the subject property, and the sale of
    the assets and application of proceeds is permitted by the
    covenant restricting asset sales.
•
The CC V Issuers' restricted subsidiaries
    may not enter into restrictions on their abilities to make
    dividends or distributions or transfer assets to the CC V
    Issuers except under documents governing debt, asset sales,
    leases and like transactions permitted by the indenture.
•
The restricted subsidiaries of the CC V Issuers
    are generally not permitted to guarantee or pledge assets to
    secure debt of the CC V Issuers, unless the
    guarantying subsidiary issues a guarantee of the
    CC V Holdings notes, and waives any rights of
    reimbursement, indemnity or subrogation arising from the
    guarantee transaction.
•
The CC V Issuers and their restricted
    subsidiaries are generally not permitted to transfer equity
    interests in restricted subsidiaries unless the transfer is of
    all of the equity interests in the restricted subsidiary or the
    restricted subsidiary remains a restricted subsidiary and net
    proceeds of the equity sale are applied in accordance with the
    asset sales covenant. Restricted subsidiaries of the
    CC V Issuers are not permitted to issue equity
    interests if as a result, the issuing subsidiary would no longer
    be a restricted subsidiary.
•
The indenture governing the CC V Holdings notes
    also restricts the ability of the CC V Issuers and their
    restricted subsidiaries to enter into certain transactions with
    affiliates involving over $2.5 million without a
    determination by the board of directors that the transaction is
    on terms no less favorable than arms-length, or transactions
    with affiliates involving consideration in excess of
    $10 million with affiliates without receiving an
    independent opinion as to the fairness of the transaction to the
    holders of the CC V Holdings notes.
Renaissance Media Notes
The 10% senior discount notes due 2008 were
issued by Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Holdings Capital
Corporation, with
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Renaissance Media Group LLC as guarantor and the
United States Trust Company of New York as trustee. Renaissance
Media Group LLC, which is the direct or indirect parent company
of these issuers, is now a subsidiary of Charter Operating. The
Renaissance 10% notes and the Renaissance guarantee are
unsecured, unsubordinated debt of the issuers and the guarantor,
respectively. In October 1998, the issuers of the Renaissance
notes exchanged $163 million of the original issued and
outstanding Renaissance notes for an equivalent value of new
Renaissance notes. The form and terms of the new Renaissance
notes are the same in all material respects as the form and
terms of the original Renaissance notes except that the issuance
of the new Renaissance notes was registered under the Securities
Act.
There was no payment of any interest in respect
of the Renaissance notes prior to October 15, 2003. Since
October 15, 2003, interest on the Renaissance notes is
payable semi-annually in arrears in cash at a rate of
10% per year. On April 15, 2003, the Renaissance notes
became redeemable at the option of the issuers thereof, in whole
or in part, initially at 105% of their principal amount at
maturity, plus accrued interest, declining to 100% of the
principal amount at maturity, plus accrued interest, on or after
April 15, 2006.
Our acquisition of Renaissance triggered change
of control provisions of the Renaissance notes that required us
to offer to purchase the Renaissance notes at a purchase price
equal to 101% of their accreted value on the date of the
purchase, plus accrued interest, if any. In May 1999, we made an
offer to repurchase the Renaissance notes, and holders of
Renaissance notes representing 30% of the total principal amount
outstanding at maturity tendered their Renaissance notes for
repurchase.
The limitations on incurrence of debt contained
in the indenture governing the Renaissance notes permit
Renaissance Media Group and its restricted subsidiaries to incur
additional debt, so long as they are not in default under the
indenture:
•
if, after giving effect to the incurrence,
    Renaissance Media Group could meet a leverage ratio (ratio of
    consolidated debt to four times consolidated EBITDA, as defined,
    from the most recent quarter) of 6.75 to 1.0, and, regardless of
    whether the leverage ratio could be met,
•
up to the greater of $200 million or 4.5
    times Renaissance Media Group's consolidated annualized
    EBITDA, as defined,
•
up to an amount equal to 5% of Renaissance Media
    Group's consolidated total assets to finance the purchase
    of new assets,
•
up to two times the sum of (a) the net cash
    proceeds of new equity issuances and capital contributions, and
    (b) 80% of the fair market value of property received by
    Renaissance Media Group or an issuer as a capital contribution,
    in each case received after the issue date of the Renaissance
    notes and not allocated to make restricted payments, and
•
other items of indebtedness for specific purposes
    such as intercompany debt, refinancing of existing debt and
    interest rate swaps to provide protection against fluctuation in
    interest rates.
The indenture governing the Renaissance notes
permits us to incur debt under one of the categories above, and
reclassify the debt into a different category.
•
Under the indenture governing the Renaissance
    notes, Renaissance Media Group and its restricted subsidiaries
    are permitted to pay dividends on equity interests, repurchase
    interests, make restricted investments, or make other specified
    restricted payments only if Renaissance Media Group could incur
    $1.00 of additional debt under the debt incurrence test, which
    requires that Renaissance Media Group meet the 6.75 to 1.0
    leverage ratio after giving effect to the transaction of the
    indebtedness covenant and that no default exists or would occur
    as a consequence thereof. If those conditions are met,
    Renaissance Media Group and its restricted subsidiaries are
    permitted to make restricted payments in a total amount not to
    exceed the result of 100% of Renaissance Media Group's
    consolidated EBITDA, as defined, minus 130% of its consolidated
    interest expense, plus 100% of new cash equity proceeds received
    by Renaissance Media Group and not allocated to the indebtedness
    covenant, plus returns on certain investments, all cumulatively
    from June 1998.
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Renaissance Media Group and its restricted
    subsidiaries may make permitted investments up to
    $2 million in related businesses and other specified
    permitted investments, restricted payments up to
    $10 million, dividends up to 6% each year of the net cash
    proceeds of public equity offerings, and other specified
    restricted payments without meeting the foregoing test.
•
Renaissance Media Group and its restricted
    subsidiaries are not permitted to grant liens on their assets
    other than specified permitted liens, unless corresponding liens
    are granted to secure the Renaissance notes. Permitted liens
    include liens securing debt permitted to be incurred under
    credit facilities, liens securing debt incurred under the
    incurrence of indebtedness test, in amounts up to the greater of
    $200 million or 4.5 times Renaissance Media Group's
    consolidated EBITDA, as defined, liens as deposits for
    acquisitions up to 10% of the estimated purchase price, liens
    securing permitted financings of new assets, liens securing debt
    permitted to be incurred by restricted subsidiaries, and
    specified liens incurred in the ordinary course of business.
•
Renaissance Media Group and the issuers of the
    Renaissance notes are generally not permitted to sell or
    otherwise dispose of all or substantially all of their assets or
    merge with or into other companies unless their consolidated net
    worth after any such transaction would be equal to or greater
    than their consolidated net worth immediately prior to the
    transaction, or unless Renaissance Media Group could incur $1.00
    of additional debt under the debt incurrence test, which would
    require them to meet a leverage ratio of 6.75 to 1.00 after
    giving effect to the transaction.
•
Renaissance Media Group and its subsidiaries may
    generally not otherwise sell assets or, in the case of
    subsidiaries, equity interests, unless they receive
    consideration at least equal to the fair market value of the
    assets, consisting of at least 75% cash, temporary cash
    investments or assumption of debt. Charter Holdings and its
    restricted subsidiaries are then required within 12 months
    after any asset sale either to commit to use the net cash
    proceeds over a specified threshold either to acquire assets
    used in their own or related businesses or use the net cash
    proceeds to repay debt, or to offer to repurchase the
    Renaissance notes with any remaining proceeds.
•
Renaissance Media Group and its restricted
    subsidiaries may generally not engage in sale and leaseback
    transactions unless the lease term does not exceed three years
    or the proceeds are applied in accordance with the covenant
    limiting asset sales.
•
Renaissance Media Group's restricted
    subsidiaries may generally not enter into restrictions on their
    abilities to make dividends or distributions or transfer assets
    to Renaissance Media Group except those not more restrictive
    than is customary in comparable financings.
•
The restricted subsidiaries of Renaissance Media
    Group are not permitted to guarantee or pledge assets to secure
    debt of the Renaissance Media Group or its restricted
    subsidiaries, unless the guarantying subsidiary issues a
    guarantee of the Renaissance notes of comparable priority and
    tenor, and waives any rights of reimbursement, indemnity or
    subrogation arising from the guarantee transaction.
•
Renaissance Media Group and its restricted
    subsidiaries are generally not permitted to issue or sell equity
    interests in restricted subsidiaries, except sales of common
    stock of restricted subsidiaries so long as the proceeds of the
    sale are applied in accordance with the asset sale covenant, and
    issuances as a result of which the restricted subsidiary is no
    longer a restricted subsidiary and any remaining investment in
    that subsidiary is permitted by the covenant limiting restricted
    payments.
•
The indenture governing the Renaissance Notes
    also restricts the ability of Renaissance Media Group and its
    restricted subsidiaries to enter into certain transactions with
    affiliates involving consideration in excess of $2 million
    without a determination by the disinterested members of the
    board of directors that the transaction is on terms no less
    favorable than arms length, or transactions with affiliates
    involving over $4 million with affiliates without receiving
    an independent opinion as to the fairness of the transaction to
    Renaissance Media Group.
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All of these covenants are subject to additional
specified exceptions. In general, the covenants of the amended
and restated Charter Operating credit facilities are more
restrictive than those of our indentures.
Cross-Defaults
Our indentures and those of certain of our
subsidiaries include various events of default, including
cross-default provisions. Under these provisions, a failure by
any of the issuers or any of their restricted subsidiaries to
pay at the final maturity thereof the principal amount of other
indebtedness having a principal amount of $100 million or
more (or any other default under any such indebtedness resulting
in its acceleration) would result in an event of default under
the indenture governing the applicable notes. The
CC V Holdings indenture contains events of default
that include a cross-default in the event of acceleration of, or
failure to make payments when due or within the applicable grace
period, by the CC V Issuers or any of their restricted
subsidiaries, on any indebtedness of $5 million or more.
The Renaissance indenture contains a similar cross-default
provision with a $10 million threshold that applies to the
issuers of the Renaissance notes and their restricted
subsidiaries. As a result, an event of default related to the
failure to repay principal at maturity or the acceleration of
the indebtedness under the Charter Holdings notes, Charter
Operating notes, the Charter Operating credit facilities or the
CC V Holdings or Renaissance indentures could cause a
cross-default under our subsidiaries' indentures.
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DESCRIPTION OF CAPITAL STOCK AND MEMBERSHIP
UNITS
General
Our capital stock and the provisions of our
restated certificate of incorporation and bylaws are as
described below. These summaries are qualified by reference to
the restated certificate of incorporation and the bylaws, copies
of which have been filed with the Securities and Exchange
Commission.
Our authorized capital stock consists of
1.750 billion shares of Class A common stock, par
value $.001 per share, 750 million shares of
Class B common stock, par value $.001 per share, and
250 million shares of preferred stock, par value
$.001 per share.
Our restated certificate of incorporation and
Charter Communications Holding Company, LLC's amended and
restated limited liability company agreement contain provisions
that are designed to cause the number of shares of our common
stock that are outstanding to equal the number of common
membership units of Charter Communications Holding Company, LLC
owned by Charter and to cause the value of a share of common
stock to be equal to the value of a common membership unit.
These provisions are meant to allow a holder of our common stock
to easily understand the economic interest that such
holder's common shares represent of Charter Communications
Holding Company, LLC's business.
In particular, provisions in our restated
certificate of incorporation provide that:
(1) at all times the number of shares of our
    common stock outstanding will be equal to the number of Charter
    Communications Holding Company, LLC common membership units
    owned by Charter.
(2) Charter will not hold any assets other
    than, among other allowable assets:
•
working capital and cash held for the payment of
    current obligations and receivables from Charter Communications
    Holding Company, LLC;
•
common membership units of Charter Communications
    Holding Company, LLC; and
•
obligations and equity interests of Charter
    Communications Holding Company, LLC that correspond to
    obligations and equity interests issued by Charter;
(3) Charter will not borrow any money or
    enter into any capital lease unless Charter Communications
    Holding Company, LLC enters into the same arrangements with
    Charter so that Charter's liability flows through to
    Charter Communications Holding Company, LLC.
Provisions in Charter Communications Holding
Company, LLC's amended and restated limited liability
company agreement provide that, upon the contribution by Charter
of assets acquired through the issuance of common stock by
Charter, Charter Communications Holding Company, LLC will issue
to Charter that number of common membership units as equals the
number of shares of common stock issued by Charter. In the event
of the contribution by Charter of assets acquired through the
issuance of indebtedness or preferred interests of Charter,
Charter Communications Holding Company, LLC will issue to
Charter a corresponding obligation or interest, respectively to
allow Charter to pass through to Charter Communications Holding
Company, LLC these liabilities or preferred interests. Such
liabilities or preferred interest of Charter Communication
Holding Company, LLC will be assets of Charter, in addition to
the Class B common units of Charter Communications Holding
Company, LLC that are held by Charter.
Common Stock
As of September 30, 2004, there were
304,803,455 shares of Class A common stock issued and
outstanding and 50,000 shares of Class B common stock
issued and outstanding. If, as described below, all shares of
Class B common stock convert to shares of Class A
common stock as a result of dispositions by Mr. Allen and
his affiliates, the holders of Class A common stock will be
entitled to elect all members of the board of directors, other
than any members elected separately by the holders of any
preferred shares with the right to vote, of which there are
currently none outstanding.
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Voting
Rights.
The holders of
Class A common stock and Class B common stock
generally have identical rights, except:
•
each Class A common shareholder is entitled
    to one vote per share; and
•
each Class B common shareholder is entitled
    to a number of votes based on the number of outstanding
    Class B common stock and Charter Communications Holding
    Company, LLC membership units exchangeable for Class B
    common stock. For example, Mr. Allen is entitled to ten
    votes for each share of Class B common stock held by him or
    his affiliates and ten votes for each membership unit held by
    him or his affiliates; and
•
the Class B common shareholders have the
    sole power to vote to amend or repeal the provisions of our
    restated certificate of incorporation relating to:
(1) the activities in which Charter may
    engage;
(2) the required ratio of outstanding shares
    of common stock to outstanding membership units owned by
    Charter; and
(3) the restrictions on the assets and
    liabilities that Charter may hold.
The effect of the provisions described in the
final bullet point is that holders of Class A common stock
have no right to vote on these matters. These provisions allow
Mr. Allen, for example, to amend the restated certificate
of incorporation to permit Charter to engage in currently
prohibited business activities without having to seek the
approval of holders of Class A common stock.
The voting rights relating to the election of
Charter's board of directors are as follows:
•
The Class B common shareholders, voting
    separately as a class, are entitled to elect all but one member
    of our board of directors.
•
Class A and Class B common
    shareholders, voting together as one class, are entitled to
    elect the remaining member of our board of directors who is not
    elected by the Class B common shareholders.
•
Class A common shareholders and Class B
    common shareholders are not entitled to cumulate their votes in
    the election of directors.
•
In addition, Charter may issue one or more series
    of preferred stock that entitle the holders of such preferred
    stock to elect directors.
Other than the election of directors and any
matters where Delaware law or Charter's restated
certificate of incorporation or bylaws requires otherwise, all
matters to be voted on by shareholders must be approved by a
majority of the votes cast by the holders of shares of
Class A common stock and Class B common stock present
in person or represented by proxy, voting together as a single
class, subject to any voting rights granted to holders of any
preferred stock.
Amendments to Charter's restated certificate
of incorporation that would adversely alter or change the
powers, preferences or special rights of the Class A common
stock or the Class B common stock must be approved by a
majority of the votes entitled to be cast by the holders of the
outstanding shares of the affected class, voting as a separate
class. In addition, the following actions by Charter must be
approved by the affirmative vote of the holders of at least a
majority of the voting power of the outstanding Class B
common stock, voting as a separate class:
•
the issuance of any Class B common stock
    other than to Mr. Allen and his affiliates and other than
    pursuant to specified stock splits and dividends;
•
the issuance of any stock other than Class A
    common stock (and other than Class B common stock as
    described above); and
•
the amendment, modification or repeal of any
    provision of its restated certificate of incorporation relating
    to capital stock or the removal of directors.
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Charter will lose its rights to manage the
business of Charter Communications Holding Company, LLC and
Charter Investment, Inc. will become the sole manager of Charter
Communications Holding Company, LLC if at any time a court holds
that the holders of the Class B common stock no longer:
•
have the number of votes per share of
    Class B common stock described above;
•
have the right to elect, voting separately as a
    class, all but one member of Charter's board of directors,
    except for any directors elected separately by the holders of
    preferred stock; or
•
have the right to vote as a separate class on
    matters that adversely affect the Class B common stock with
    respect to:
(1) the issuance of equity securities of
    Charter other than the Class A common stock; or
(2) the voting power of the Class B
    common stock.
These provisions are contained in the amended and
restated limited liability company agreement of Charter
Communications Holding Company, LLC. The Class B common
stock could lose these rights if a holder of Class A common
stock successfully challenges in a court proceeding the voting
rights of the Class B common stock. In any of these
circumstances, Charter would also lose its 100% voting control
of Charter Communications Holding Company, LLC as provided in
Charter Communications Holding Company, LLC's amended and
restated limited liability company agreement. These provisions
exist to assure Mr. Allen that he will be able to control
Charter Communications Holding Company, LLC in the event he was
no longer able to control Charter through his ownership of
Class B common stock. These events could have a material
adverse impact on our business and the market price of the
Class A common stock and the Notes. See "Risk
Factors — Risks Related to Our Business."
Dividends.
Holders of Class A common stock and Class B common
stock will share ratably (based on the number of shares of
common stock held) in any dividend declared by our board of
directors, subject to any preferential rights of any outstanding
preferred stock. Dividends consisting of shares of Class A
common stock and Class B common stock may be paid only as
follows:
•
shares of Class A common stock may be paid
    only to holders of Class A common stock;
•
shares of Class B common stock may be paid
    only to holders of Class B common stock; and
•
the number of shares of each class of common
    stock payable per share of such class of common stock shall be
    equal in number.
Our restated certificate of incorporation
provides that we may not pay a stock dividend unless the number
of outstanding Charter Communications Holding Company, LLC
common membership units are adjusted accordingly. This provision
is designed to maintain the equal value between shares of common
stock and membership units and the one-to-one exchange ratio.
Conversion of Class B Common
Stock.
Each share of outstanding
Class B common stock will automatically convert into one
share of Class A common stock if, at any time,
Mr. Allen or any of his affiliates sells any shares of
common stock of Charter or membership units of Charter
Communications Holding Company, LLC and as a result of such
sale, Mr. Allen and his affiliates no longer own directly
and indirectly common stock and other equity interests in
Charter and membership units in Charter Communications Holding
Company, LLC that in total represent at least:
•
20% of the sum of the values, calculated as of
    November 12, 1999, of the shares of Class B common
    stock directly or indirectly owned by Mr. Allen and his
    affiliates and the shares of Class B common stock for which
    outstanding Charter Communications Holding Company, LLC
    membership units directly or indirectly owned by Mr. Allen
    and his affiliates were exchangeable on that date, and
•
5% of the sum of the values, calculated as of the
    measuring date, of shares of outstanding common stock and other
    equity interests in Charter and the shares of Charter common
    stock for which outstanding Charter Communications Holding
    Company, LLC membership units are exchangeable on such date.
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These provisions exist to assure that
Mr. Allen will no longer be able to control Charter if
after sales of his equity interests he owns an insignificant
economic interest in our business. The conversion of all
Class B common stock in accordance with these provisions
would not trigger Charter Communications Holding Company,
LLC's limited liability company agreement provisions
described above whereby Charter would lose its management rights
and special voting rights relating to Charter Communications
Holding Company, LLC in the event of an adverse determination of
a court affecting the rights of the Class B common stock.
Each holder of a share of Class B common
stock has the right to convert such share into one share of
Class A common stock at any time on a one-for-one basis. If
a Class B common shareholder transfers any shares of
Class B common stock to a person other than an authorized
Class B common shareholder, these shares of Class B
common stock will automatically convert into shares of
Class A common stock. Authorized Class B common
shareholders are Paul G. Allen entities controlled by
Mr. Allen, Mr. Allen's estate, any organization
qualified under Section 501(c)(3) of the Internal Revenue
Code that is Mr. Allen's beneficiary upon his death
and certain trusts established by or for the benefit of
Mr. Allen. In this context "controlled" means the
ownership of more than 50% of the voting power and economic
interest of an entity and "transfer" means the
transfer of record or beneficial ownership of any such share of
Class B common stock.
Other Rights.
Shares of Class A common stock will be treated equally in
the event of any merger or consolidation of Charter so that:
•
each class of common shareholders will receive
    per share the same kind and amount of capital stock, securities,
    cash and/or other property received by any other class of common
    shareholders, provided that any shares of capital stock so
    received may differ in a manner similar to the manner in which
    the shares of Class A common stock and Class B common
    stock differ; or
•
each class of common shareholders, to the extent
    they receive a different kind (other than as described above) or
    different amount of capital stock, securities, cash and/or other
    property than that received by any other class of common
    shareholders, will receive for each share of common stock they
    hold, stock, securities, cash and/or either property having a
    value substantially equivalent to that received by such other
    class of common shareholders.
Upon Charter's liquidation, dissolution or
winding up, after payment in full of the amounts required to be
paid to preferred shareholders, if any, all common shareholders,
regardless of class, are entitled to share ratably in any assets
and funds available for distribution to common shareholders.
No shares of any class of common stock are
subject to redemption or have preemptive right to purchase
additional shares of common stock.
Preferred Stock
Charter's board of directors is authorized,
subject to the approval of the holders of the Class B
common stock, to issue from time to time up to a total of
250 million shares of preferred stock in one or more series
and to fix the numbers, powers, designations, preferences, and
any special rights of the shares of each such series thereof,
including:
•
dividend rights and rates;
•
conversion rights;
•
voting rights;
•
terms of redemption (including any sinking fund
    provisions) and redemption price or prices;
•
liquidation preferences; and
•
the number of shares constituting and the
    designation of such series.
Pursuant to their authority the board of
directors has designated 1 million of the above-described
250 million shares as Series A Convertible Redeemable
Preferred Stock ("Series A Preferred Stock").
Holders of the Series A Preferred Stock have no voting
rights but are entitled to receive cumulative cash
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dividends at an annual rate of 5.75%, payable
quarterly. If for any reason Charter fails to pay the dividends
on the Series A Preferred Stock on a timely basis, the
dividend rate on each share increases to an annual rate of 7.75%
until the payment is made. The Series A Preferred Stock is
redeemable by Charter at its option on or after August 31,
2004 and must be redeemed by Charter at any time upon a change
of control, or if not previously redeemed or converted, on
August 31, 2008. The Series A Preferred Stock is
convertible, in whole or in part, at the option of the holders
on or before August 31, 2008, into shares of common stock
at an initial conversion rate equal to a conversion price of
$24.71 per share of common stock, subject to certain
customary adjustments. The redemption price per share of
Series A Preferred Stock is the liquidation preference of
$100, subject to certain customary adjustments. At
September 30, 2003, there were 545,259 shares of
Series A Preferred Stock outstanding, with an aggregate
liquidation preference of approximately $54.5 million.
These shares are convertible into approximately 2.2 million
shares of Class A common stock.
Charter has no present plans to issue any other
shares of preferred stock.
Options
As of September 30, 2004, options to
purchase a total of 2,863,779 membership units in Charter
Communications Holding Company, LLC were outstanding pursuant to
the 1999 Charter Communications Option Plan, and options to
purchase a total of 25,349,630 shares of Class A
common stock were outstanding pursuant to Charter's 2001
Stock Incentive Plan. Of these options, 10,332,398 have vested.
The membership units received upon exercise of any of the
options under the 1999 Charter Communications Option Plan are
automatically exchanged for shares of our Class A common
stock on a one-for-one basis. In addition, a portion of the
unvested options will vest each month. There are also additional
options outstanding to purchase an aggregate of
289,268 shares of Class A common stock, which were
issued to a consultant outside of the plan.
Convertible Notes
We have outstanding $862.5 million principal
amount of our 5.875% convertible senior notes due 2009, which
are convertible (at approximately $2.42 per share) into a total
of approximately 356 million shares of our Class A
common stock. We also have outstanding approximately
$588 million principal amount of our 5.75% senior
convertible notes due 2005, which are convertible (at
approximately $21.56 per share) into a total of
approximately 27.3 million shares of Class A common
stock, and approximately $156 million principal amount of
its 4.75% senior convertible notes due 2006, which are
convertible (at approximately $26.25 per share) into a
total of approximately 5.9 million shares of Class A
common stock. However, we have called for redemption all of the
5.75% convertible senior notes due 2005.
Anti-takeover Effects of Provisions of
Charter's Restated Certificate of Incorporation and
Bylaws
Provisions of Charter's restated certificate
of incorporation and bylaws may be deemed to have an
anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a shareholder might consider in
its best interest, including those attempts that might result in
a premium over the market price for the shares held by
shareholders.
Special Meeting of
Shareholders.
Our bylaws provide
that, subject to the rights of holders of any series of
preferred stock, special meetings of our shareholders may be
called only by the chairman of our board of directors, our chief
executive officer or a majority of our board of directors.
Advance Notice Requirements For Shareholder
Proposals And Director
Nominations.
Our bylaws provide
that shareholders seeking to bring business before an annual
meeting of shareholders, or to nominate candidates for election
as directors at an annual meeting of shareholders, must provide
timely prior written notice of their proposals. To be timely, a
shareholder's notice must be received at our principal
executive offices not less than 45 days nor more than
70 days prior to the first anniversary of the date on which
we first mailed our proxy statement for the prior year's
annual meeting. If, however, the date of the annual meeting is
more than 30 days before or after the anniversary date of
the prior year's annual meeting, notice by the shareholder
must be received not less than 90 days prior to the annual
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meeting or by the 10th day following the public
announcement of the date of the meeting, whichever occurs later,
and not more than 120 days prior to the annual meeting. Our
bylaws specify requirements as to the form and content of a
shareholder's notice. These provisions may limit
shareholders in bringing matters before an annual meeting of
shareholders or in making nominations for directors at an annual
meeting of shareholders.
Authorized But Unissued
Shares.
The authorized but
unissued shares of Class A common stock are available for
future issuance without shareholder approval and, subject to
approval by the holders of the Class B common stock, the
authorized but unissued shares of Class B common stock and
preferred stock are available for future issuance. These
additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and
preferred stock could render more difficult or discourage an
attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
Membership Units of Charter Communications
Holding Company
The Charter Communications Holding Company, LLC
limited liability company agreement provides for three separate
classes of common membership units designed Class A,
Class B and Class C and one class of preferred
membership units designated Class A. As of
September 30, 2004, there were 643,985,486 Charter
Communications Holding Company, LLC common membership units
issued and outstanding, 304,853,455 of which were held by
Charter.
Class A Common Membership
Units.
As of September 30,
2004, there were a total of 324,300,479 issued and outstanding
Class A common membership units, consisting of
217,585,246 units owned by Charter Investment, Inc. and
106,715,233 units owned by Vulcan Cable III Inc.
Class B Common Membership
Units.
As of September 30,
2004, there were a total of 304,853,455 issued and outstanding
Class B common membership units, all of which are owned by
Charter.
Class C Common Membership
Units.
As of September 30,
2004, there were a total of 14,831,552 issued and
outstanding Class C common membership units, consisting of
5,233,612 units owned by Charter Investment, Inc. and
9,597,940 units owned by Vulcan Cable III Inc.
In addition, Charter Investment, Inc., an
affiliate of Mr. Allen owns 24,273,943 units of
CC VIII, LLC membership units. An issue has arisen
regarding the ultimate ownership of such CC VIII, LLC
membership interests following Mr. Allen's acquisition
of those interests on June 6, 2003. See "Certain
Relations and Related Transactions — Transactions
Arising out of Our Organizational Structure and
Mr. Allen's Investment in Charter Communications, Inc.
and Its Subsidiaries — Equity Put Rights —
CC VIII."
Convertible Preferred Membership
Units.
As of September 30,
2004, there were a total of 545,259 issued and outstanding
convertible preferred membership units. These units are owned by
Charter and mirror the terms of Charter's Series A
Preferred Stock.
Any matter requiring a vote of the members of
Charter Communications Holding Company, LLC requires the
affirmative vote of a majority of the Class B common
membership units. Charter owns all Class B common
membership units and therefore controls Charter Communications
Holding Company, LLC. Because Mr. Allen owns high
vote Class B common stock of Charter that entitles him
to approximately 93% of the voting power of the outstanding
common stock of Charter, Mr. Allen controls us and through
us has voting control of Charter Communications Holding Company,
LLC.
The net cash proceeds that Charter receives from
any issuance of shares of common stock will be immediately
transferred to Charter Communications Holding Company, LLC in
exchange for membership units equal in number to the number of
shares of common stock issued by Charter.
Exchange Agreement
Charter is a party to an agreement permitting
Vulcan Cable III Inc., Charter Investment, Inc. and any
other affiliate of Mr. Allen to exchange at any time on a
one-for-one basis any or all of their Charter
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Holdco common membership units for shares of
Class B common stock. This exchange may occur directly or,
at the election of the exchanging holder, indirectly through a
tax-free reorganization such as a share exchange or a statutory
merger of any Allen-controlled entity with and into Charter or a
wholly owned subsidiary of Charter. In the case of an exchange
in connection with a tax-free share exchange or a statutory
merger, shares of Class A common stock held by
Mr. Allen or the Allen-controlled entity will also be
exchanged for Class B common stock. Mr. Allen
currently owns shares of Class A common stock as a result
of the exercise of put rights granted to sellers in the Falcon
acquisition and the Rifkin acquisition.
Charter Holdco common membership units held by
Mr. Allen and his affiliates are exchangeable at any time
for shares of our Class B common stock, which is then
convertible into shares of Class A common stock. The
exchange agreement and the Charter Communications Option Plan
state that common membership units are exchangeable for shares
of common stock at a value equal to the fair market value of the
common membership units. The exchange ratio of common membership
units to shares of Class A common stock will be one to one
because Charter and Charter Holdco have been structured so that
the fair market value of a share of the Class A common
stock equals the fair market value of a common membership unit
owned by Charter.
Our organizational documents achieve this result
by:
•
limiting the assets and liabilities that Charter
    may hold; and
•
requiring the number of shares of our common
    stock outstanding at any time to equal the number of common
    membership units owned by Charter.
If we fail to comply with these provisions or
they are changed, the exchange ratio may vary from one to one
and will then be based on a pre-determined formula contained in
the exchange agreements and the 1999 Charter Communications
Option Plan. This formula will be based on the then current
relative fair market values of common membership units and
common stock.
Special Tax Allocation Provisions.
Charter Communications Holding Company,
LLC's amended and restated limited liability company
agreement contains a number of provisions affecting allocation
of net tax losses and net tax profits to its members. In some
situations, these provisions could result in Charter having to
pay income taxes in an amount that is more or less than it would
have had to pay if these provisions did not exist. For
additional information see "Management's Discussion
and Analysis of Financial Condition and Results of
Operations — Critical Accounting Policies and
Estimates — Income Taxes."
Other Material Terms of the Amended and
Restated Limited Company Agreement of Charter Communications
Holding Company, LLC
General.
Charter Communications Holding Company, LLC's amended and
restated limited liability company agreement contains provisions
that permit each member (and its officers, directors, agents,
shareholders, members, partners or affiliates) to engage in
businesses that may compete with the businesses of Charter
Communications Holding Company, LLC or any subsidiary. However,
the directors of Charter, including Mr. Allen, are subject
to fiduciary duties under Delaware corporate law that generally
require them to present business opportunities in the cable
transmission business to Charter.
The amended and restated limited liability
company agreement restricts the business activities that Charter
Communications Holding Company, LLC may engage in.
Transfer
Restrictions.
The amended and
restated limited liability company agreement restricts the
ability of each member to transfer its membership interest
unless specified conditions have been met. These conditions
include:
•
the transfer will not result in the loss of any
    license or regulatory approval or exemption that has been
    obtained by Charter Communications Holding Company, LLC and is
    materially useful in its business as then conducted or proposed
    to be conducted;
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•
the transfer will not result in a material and
    adverse limitation or restriction on the operations of Charter
    Communications Holding Company, LLC and its subsidiaries taken
    as a whole;
•
the proposed transferee agrees in writing to be
    bound by the limited liability company agreement; and
•
except for a limited number of permitted
    transfers under the limited liability company agreement, the
    transfer has been approved by the manager in its sole discretion.
Amendments to the Limited Liability Company
Agreement.
Any amendment to the
limited liability company agreement generally may be adopted
only upon the approval of a majority of the Class B common
membership units. The agreement may not be amended in a manner
that adversely affects the rights of any class of common
membership units without the consent of holders holding a
majority of the membership units of that class.
Registration Rights
Holders of Class B Common
Stock.
Charter, Mr. Allen,
Charter Investment, Inc. and Vulcan Cable III Inc., are
parties to a registration rights agreement. The agreement gives
Mr. Allen and his affiliates the right to cause us to
register the shares of Class A common stock issued to them
upon conversion of any shares of Class B common stock that
they may hold.
This registration rights agreement provides that
each eligible holder is entitled to unlimited
"piggyback" registration rights permitting them to
include their shares of Class A common stock in
registration statements filed by us. These holders may also
exercise their demand rights causing us, subject to specified
limitations, to register their Class A shares, provided
that the amount of shares subject to each demand has a market
value at least equal to $50 million or, if the market value
is less than $50 million, all of the Class A shares of
the holders participating in the offering are included in such
registration. We are obligated to pay the costs associated with
all such registrations.
Holders may elect to have their shares registered
pursuant to a shelf registration statement if at the time of the
election, Charter is eligible to file a registration statement
on Form S-3 and the amount of shares to be registered has a
market value equal to at least $100 million on the date of
the election.
All shares of Class A common stock issuable
to the registration rights holders in exchange for Charter
Communications Holding Company, LLC membership units and upon
conversion of outstanding Class B common stock and
conversion of Class B common stock issuable to the
registration rights holders upon exchange of Charter
Communications Holding Company, LLC membership units are subject
to the registration rights described above.
Transfer Agent and Registrar
The transfer agent and registrar for our
Class A common stock is Mellon Investor Services, LLC.
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SHARES ELIGIBLE FOR FUTURE SALE
In addition to the 150 million shares of
Class A common stock offered hereby, as of
September 30, 2004, we had 304,803,455 shares of
Class A common stock issued and outstanding, all of which
are eligible for immediate resale (subject to limitations of
Rule 144 in the case of shares held by affiliates).
As of September 30, 2004, the following
additional shares of Class A common stock are or will be
issuable after giving effect to this offering and the
anticipated redemption of our 5.75% convertible senior notes due
2005:
•
339,132,031 shares of Class A common
    stock will be issuable upon conversion of Class B common
    stock issuable upon exchange of Charter Communications Holding
    Company, LLC membership units held by Vulcan Cable III Inc.
    and Charter Investment, Inc. These membership units are
    exchangeable for shares of Class B common stock on a
    one-for-one basis. Shares of Class B common stock are
    convertible into shares of Class A common stock on a
    one-for-one basis.
•
24,273,943 shares of Class A common
    stock may be issuable upon the exchange of Charter
    Communications Holding Company, LLC membership units potentially
    issuable in exchange for CC VIII, LLC membership units held by
    an affiliate of Mr. Allen. An issue has arisen regarding
    the ultimate ownership of such CC VIII, LLC membership interests
    following Mr. Allen's acquisition of those interests
    on June 6, 2003. See"Certain Relations and Related
    Transactions — Transactions Arising out of Our
    Organizational Structure and Mr. Allen's Investment in
    Charter Communications, Inc. and Its Subsidiaries —
    Equity Put Rights — CC VIII."
•
50,000 shares of Class A common stock
    will be issuable upon conversion of outstanding Class B
    common stock on a one-for-one basis.
•
Up to 90,000,000 shares of Class A
    common stock (or units exchangeable for Class A common
    stock) are authorized for issuance pursuant to Charter's
    2001 Stock Incentive Plan and 1999 Charter Communications Option
    Plan. At September 30, 2004, 903,970 shares had been
    issued under the plans upon exercise of options,
    160,645 shares had been issued upon vesting of restricted
    stock grants, and 2,104,978 shares are subject to future
    vesting under restricted stock agreements. Of the remaining
    86,830,407 shares covered by the plans, as of
    September 30, 2004, 28,213,409 were subject to outstanding
    options (34% of which were vested) and 58,616,998 remain
    eligible for future grant. Of the 58,616,998 shares
    remaining there are 6,663,600 performance units granted under
    Charter's long-term incentive program as of
    September 30, 2004, which will be issued on the third
    anniversary of the date of grant conditional upon Charter's
    performance against financial targets approved by the board of
    directors at the time of the awards.
•
356,404,924 shares of Class A common
    stock are issuable upon conversion of our 5.875% convertible
    senior notes due 2009.
•
An aggregate of 8,145,909 shares of
    Class A common stock would be issuable upon conversion of
    our 4.75% convertible senior notes due 2006 and our
    Series A convertible redeemable preferred stock.
•
Upon consummation of the settlement of our
    outstanding class action lawsuits as more fully described in
    "Business — Legal Proceedings", an as yet
    undetermined number of shares will issued to the claimants and
    carriers (having an aggregate value of $45 million, as
    determined by the applicable formula), together with warrants to
    purchase an additional undetermined number of shares (which
    warrants will have a value of $40 million, as determined by
    the applicable formula).
All of the shares of Class A common stock
issuable upon exchange of Charter Communications Holding
Company, LLC membership units and upon conversion of shares of
our Class B common stock are subject to demand and
piggyback registration rights.
All of the shares of Class A common stock
issuable upon conversion of outstanding convertible senior notes
due 2006 and convertible preferred stock would be eligible for
immediate resale. Shares issuable
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upon conversion of the 5.875% Convertible Notes
due 2009 are expected to be eligible for resale pursuant to a
resale shelf registration statement required to become effective
on or before April 21, 2005. All of the shares issuable to
claimants pursuant to the settlements will be eligible for
immediate resale and, upon filing of an anticipated shelf
registration statement for the issuance of warrant shares, all
of the shares issuable upon exercise of the warrants will also
be eligible for immediate resale.
A registration statement on Form S-8
covering the Class A common stock issuable pursuant to the
exercise of options under the 1999 Charter Communications Option
Plan was filed with the Securities and Exchange Commission in
May 2000 and registration statements on Form S-8 covering
shares issuable under the 2001 Stock Incentive Plan were filed
in May 2001 and November 2003. The shares of Class A common
stock covered by the Form S-8 registration statements
generally may be resold in the public market without restriction
or limitation, except in the case of our affiliates who
generally may only resell such shares in accordance with the
provisions of Rule 144 of the Securities Act of 1933.
The sale of a substantial number of shares of
Class A common stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for
the Class A common stock. In addition, any such sale or
perception could make it more difficult for us to sell equity
securities or equity related securities in the future at a time
and price that we deem appropriate.
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CERTAIN UNITED STATES TAX CONSIDERATIONS FOR
NON-UNITED STATES HOLDERS
The following is a general discussion of certain
U.S. federal income and estate tax consequences of the ownership
and disposition of our Class A common stock by a person
that is not a "United States person" for U.S. federal
income tax purposes (a "non-U.S. holder"). For this
purpose, a "United States person" is a citizen or
resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate,
the income of which is subject to U.S. federal income taxation
regardless of its source, or a trust the administration of which
is subject to the primary supervision of a U.S. court and which
has one or more United States persons who have the authority to
control all substantial decisions of the trust or that was in
existence on, August 20, 1996, was treated as a United
States person under the Internal Revenue Code of 1986, as
amended (the "Code"), on that date and has made a
valid election to be treated as a United States person under the
Code. The discussion does not consider specific facts and
circumstances that may be relevant to a particular non-U.S.
holder's tax position. Special rules may apply to certain
non-U.S. holders, such as dealers in securities, banks,
insurance companies, tax-exempt organizations, persons holding
their shares as part of a "straddle,"
"hedge," or "conversion transaction,"
persons who acquire shares as compensation, "controlled
foreign corporations," "passive foreign investment
companies," "foreign personal holding companies,"
and corporations that accumulate earnings to avoid U.S. federal
income tax, that are subject to special treatment under the
Code. This discussion is limited to beneficial owners of the
Class A common stock who hold the Class A common stock
as capital assets. It does not address any aspect of state,
local, or foreign law, persons who hold Class A common
stock through a partnership or other pass-through entity, or
persons who are former citizens or long-term residents of the
United States.
Accordingly, each non-U.S. holder is urged to
consult its own tax advisor with respect to the United States
tax consequences of the ownership and disposition of
Class A common stock, as well as any tax consequences that
may arise under the laws of any state, municipality, foreign
country or other taxing jurisdiction.
Dividends
In general, distributions paid to a Non-U.S.
Holder of Class A common stock will constitute a dividend
for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits determined under
U.S. federal income tax principles. We do not anticipate paying
cash dividends on our capital stock in the foreseeable future.
See "Dividend Policy."
Dividends paid to a non-U.S. holder of our
Class A common stock ordinarily will be subject to
withholding of U.S. federal income tax at a 30 percent
rate, or at a lower rate under an applicable income tax treaty
that provides for a reduced rate of withholding. To claim the
benefit of a lower treaty rate, a non-U.S. holder must properly
file with the payor an IRS Form W-8BEN, or successor form,
or, in the case of payments made outside the United States with
respect to an offshore account, comply with certain documentary
evidence procedures, directly, or under certain circumstances,
through an intermediary. If, however, the dividends are
effectively connected with the conduct by the non-U.S. holder of
a trade or business within the United States and, where a tax
treaty applies, are attributable to a United States permanent
establishment of the non-U.S. holder, then the dividends will be
exempt from the withholding tax described above, provided that
an IRS Form W-8ECI, or successor form, is furnished to the
payor. Such dividends will instead be taxed on a net basis at
applicable graduated individual or corporate rates. If, however,
the dividends are effectively connected with the conduct by the
non-U.S. holder of a trade or business within the United States,
but are not attributable to a United States permanent
establishment of the non-U.S. holder, a recipient will be
required to file a U.S. tax return and should file an IRS
Form 8833 claiming benefits of the tax treaty with respect
to dividends not attributable to a United States permanent
establishment
.
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Effectively connected dividends received by a
foreign corporation may, under certain circumstances, be subject
as well to a "branch profits" tax at a rate of 30% or
a lower applicable treaty rate. A non-United States Holder who
furnished the payor with an IRS Form W-8ECI or successor
form must also provide a United States tax identification number.
A non-U.S. holder of our Class A common
stock that is eligible for a reduced rate of U.S. withholding
tax pursuant to an income tax treaty may obtain a refund of any
amounts withheld in excess of the tax treaty rate by filing an
appropriate claim for a refund with the Internal Revenue
Services (the "IRS").
Gain on Disposition of Class A Common
Stock
A non-U.S. holder generally will not be subject
to United States federal income tax in respect of a gain
realized on a disposition of our Class A common stock,
provided that (a) the gain is not effectively connected
with a trade or business conducted by the non-U.S. holder in the
United States, (b) in the case of a non-U.S. holder who is
an individual, such holder is present in the United States for
less than 183 days in the taxable year of the sale and
other conditions are met, and (c) we are not nor have been
a "United States real property holding corporation"
for United States federal income tax purposes (a
"USRPHC"). We believe that we were not, are not
currently, and are not likely to become a USRPHC. If we were to
become a USRPHC, gain recognized on the sale or other
disposition of Class A common stock by a non-United States
holder generally would be subject to United States federal
income tax (and withholding) unless (i) our Class A
common stock continues to be "regularly traded on an
established securities market" at any time during the
calendar year of disposition within the meaning of the Code and
(ii) such non-United States holder does not actually or
constructively own more than 5% of the Class A common stock at
any time during the shorter of the five-year period preceding
the disposition or such non-United States holder's holding
period.
If a non-U.S. holder is engaged in the conduct of
a trade or business in the United States, gain on the
disposition of our Class A common stock that is effectively
connected with the conduct of such trade or business and, where
an income tax treaty applies, is attributable to a United States
permanent establishment, will be taxed on a net basis at
applicable graduated individual or corporate rates. Effectively
connected gain of a foreign corporation may, under certain
circumstances, be subject as well to a "branch
profits" tax at a rate of 30 percent or a lower
applicable treaty rate.
U.S. Information Reporting Requirements and
Backup Withholding Tax
U.S. information reporting on IRS Form 1099
and backup withholding tax will not apply to dividends paid on
our Class A common stock to a non-U.S. holder, provided
that non-U.S. holder provides an IRS Form W-8BEN (or
satisfies certain certification documentary evidence
requirements for establishing that it is a non-United States
person under U.S. Treasury regulations) or otherwise establishes
an exemption. Distributions on our Class A common stock
will, however, be reported to the IRS and to the non-U.S. holder
on IRS Form 1042-S.
Information reporting and backup withholding also
generally will not apply to a payment of the proceeds of a sale
of our Class A common stock affected outside the United
States by a foreign office of a foreign broker. However,
information reporting requirements (but not backup withholding)
will apply to a payment of the proceeds of a sale of our
Class A common stock effected outside the United States by
a foreign office of a broker if the broker (i) is a United
States person, (ii) derives 50 percent or more of its
gross income for certain periods from the conduct of a trade or
business in the United States, (iii) is a "controlled
foreign corporation" as to the United States, or
(iv) is a foreign partnership that, at any time during its
taxable year, is 50 percent or more (by income or capital
interest) owned by United States persons or is engaged in the
conduct of a U.S. trade or business, unless in any such case the
broker has documentary evidence in its records that the holder
is a non-U.S. holder and certain conditions are met, or the
holder otherwise establishes an exemption. Payment by a United
States office of a broker of the
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proceeds of a sale of our Class A common
stock will be subject to both backup withholding and information
reporting unless the holder certifies its non-U.S. status under
penalties of perjury or otherwise establishes an exemption.
Any amounts withheld under the backup withholding
rules may be allowed as a refund or a credit against that
holder's U.S. federal income tax liability provided the
required information is furnished to the IRS.
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SHARE LENDING AGREEMENT
Prior to this offering of our Class A common
stock, we sold $862.5 million in aggregate principal amount
of 5.875% convertible senior notes due 2009 in a private
placement pursuant to Rule 144A under the Securities Act.
To make the purchase of 5.875% convertible notes
more attractive to prospective investors, we entered into a
share lending agreement, dated November 22, 2004, with
Citigroup Global Markets Inc. ("Citigroup"), as agent
for Citigroup Global Markets Limited ("CGML"), as
borrower, under which we agreed to loan to CGML up to
150,000,000 shares of our Class A common stock on one
or more occasions prior to November 16, 2006 or, if
earlier, the date as of which all of the 5.875% convertible
notes cease to be outstanding as the result of conversion,
repurchase, redemption or otherwise. We will receive a loan fee
of $.001 per share for each share that we loan to CGML,
payable at the time such share is borrowed. Citigroup Global
Markets Holdings Inc. guaranteed the obligations of CGML under
the share lending agreement.
Under the agreement, CGML agreed that it will not
transfer or dispose of the borrowed shares except for the
purpose of directly or indirectly facilitating the hedging of
the 5.875% convertible notes by holders. Except in limited
circumstances, any borrowed shares that are returned to us
cannot be reborrowed.
Share loans under the agreement will terminate
and the borrowed shares must be returned to us:
•
if and when CGML in its discretion terminates all
    or any portion of a loan at any time;
•
if and when we terminate any or all of the
    outstanding loans upon a default by CGML under the share lending
    agreement, including a breach by CGML of any of its
    representations and warranties, covenants or agreements under
    such agreement or the bankruptcy of CGML; or
•
on November 16, 2009, the termination date
    for the share lending agreement or, sooner, if and when all of
    the 5.875% convertible senior notes have been converted, repaid,
    redeemed or are otherwise no longer outstanding.
We will not otherwise have the right to terminate
any loan of borrowed shares.
Any shares that we loan to CGML will be issued
and outstanding for corporate law purposes, and accordingly, the
holders of the borrowed shares will have all of the rights of a
holder of our outstanding shares of Class A common stock,
including the right to vote the shares on all matters submitted
to a vote of our stockholders and the right to receive any
dividends or other distributions that we may pay or make on our
outstanding shares of Class A common stock. However, under
the share lending agreement, CGML has agreed:
•
to pay to us an amount equal to any cash
    dividends that we pay on the borrowed shares, and
•
to pay or deliver to us any other distribution,
    in liquidation or otherwise, that we make on the borrowed shares.
CGML has also agreed under the share lending
agreement that it will not vote any borrowed shares of which it
is the record owner, and it will not transfer or dispose of any
borrowed shares except pursuant to a registration statement that
is effective under the Securities Act of 1933, as amended.
If the credit ratings of Citigroup Global Markets
Holdings Inc., the guarantor of CGML's obligations under
the share lending agreement, decline below a specified level,
CGML has agreed under the share lending agreement to post and
maintain with Citigroup, as collateral agent on our behalf,
collateral in the form of cash, government securities,
certificates of deposit, high grade commercial paper of
U.S. issuers or money market shares with a market value at
least equal to 100% of the market value of the borrowed shares
as security for the obligation of CGML to return the borrowed
shares to us when required.
In view of the contractual undertakings of CGML
in the share lending agreement, which have the effect of
substantially eliminating the economic dilution that would
otherwise result from the issuance of the borrowed shares, we
believe that under U.S. generally accepted accounting
principles currently in
179
Table of Contents
effect, the borrowed shares will not be
considered outstanding for the purpose of computing and
reporting our earnings per share.
CGML, through Citigroup as principal or agent, is
offering for sale pursuant to this prospectus the entire
150,000,000 shares it is entitled to borrow under the share
lending agreement. We have been advised by CGML that it or its
affiliates intend to use the short sales of our Class A
common stock pursuant to this prospectus to facilitate the
establishment by the holders of our 5.875% convertible senior
notes of hedged positions with respect to the 5.875% convertible
senior notes.
We have agreed to use our reasonable best efforts
to cause the registration statement of which this prospectus
forms a part to become effective within 130 days after
November 22, 2004, the issue date of the convertible notes.
If on April 1, 2005, such registration statement is not
declared effective, which we refer to as an effectiveness
default, liquidated damages will accrue on the 5.875%
convertible senior notes from and including the day following
such default, to but excluding the earlier of (i) the date
two years following the original issue date of the convertible
notes and (ii) the day on which the applicable default has
been cured. Upon the occurrence and during the continuance of an
effectiveness default, we will be required to pay liquidated
damages in cash to all holders of the convertible notes at a
rate per month equal to .50% of the accreted principal amount of
their convertible notes, such damages accruing daily and paid
monthly.
The existence of the share lending agreement and
the short positions established in connection with facilitating
the hedging of the 5.875% convertible senior notes could have
the effect of causing the market price of our Class A
common stock to be lower over the term of the share lending
agreement than it would have been had we not entered into the
agreement, but we believe that entering into the share lending
agreement was in our best interests and the best interests of
our shareholders as it facilitated the sale of the convertible
notes on terms more favorable to us than we could have otherwise
obtained.
180
Table of Contents
UNDERWRITING
The shares of our Class A common stock
offered by this prospectus are shares that we have agreed to
loan to CGML, an affiliate of Citigroup, pursuant to a share
lending agreement described in "Share Lending
Agreement." Citigroup also acted as an initial purchaser
for the private placement pursuant to Rule 144A under the
Securities Act of $862.5 million in principal amount of our
5.875% convertible senior notes due 2009 issued on
November 22, 2004. See "Share Lending Agreement."
CGML, through Citigroup as principal or agent, is offering for
sale pursuant to this prospectus the entire
150,000,000 shares CGML is entitled to borrow under the
share lending agreement. We have been advised by CGML that it or
its affiliates intends to use the short sales of our
Class A common stock pursuant to this prospectus to
facilitate transactions by which investors in such convertible
notes will hedge their investments in convertible notes. See
"Share Lending Agreement." We will not receive any
proceeds from the sale of shares of our Class A common
stock pursuant to this prospectus, but will receive a loan fee
of $0.001 per share for each share loaned under the share
lending agreement.
The underwriting agreement provides that the
obligations of Citigroup to borrow the shares included in this
offering are subject to approval of legal matters by counsel and
to other customary conditions.
The underwriter proposes to offer the shares of
our Class A common stock initially at the public offering
price set forth on the cover page of this prospectus. If all of
the shares are not sold at the initial offering price, the
underwriter may change the public offering price and the other
selling terms.
The Class A common stock is quoted on the
Nasdaq National Market under the symbol "CHTR."
The following table summarizes the compensation
that we are to pay to the underwriter in connection with this
offering.
Per Share
Total
Underwriting Discounts and Commissions paid by us
$
0
$
0
Expenses payable by us
$
$
In connection with the offering, Citigroup as
underwriter may purchase and sell shares of Class A common
stock in the open market. These transactions may include
stabilizing transactions, which consist of bids for or purchases
of shares in the open market while the offering is in progress.
This activity may have the effect of preventing
or retarding a decline in the market price of the Class A
common stock. They may also cause the price of the Class A
common stock to be higher than the price that would otherwise
exist in the open market in the absence of these transactions.
The underwriter may conduct these transactions on the Nasdaq
National Market or in the over-the-counter market, or otherwise.
If the underwriter commences any of these transactions, it may
discontinue them at any time.
We estimate that our portion of the total
expenses of this offering will be
$                    .
The underwriter has performed investment banking
and advisory services for us from time to time for which it has
received customary fees and expenses. The underwriter may, from
time to time, engage in transactions with and perform services
for us in the ordinary course of its business. The underwriter
also was an initial purchaser of the convertible notes.
A prospectus in electronic format may be made
available on the website maintained by the underwriter.
We have agreed to indemnify the underwriter
against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments the
underwriter may be required to make because of any of those
liabilities.
181
Table of Contents
LEGAL MATTERS
The validity of the securities offered by this
prospectus will be passed upon for Charter Communications, Inc.
by Irell & Manella, LLP. Weil, Gotshal &
Manges LLP represented the underwriter in this offering.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The consolidated financial statements of Charter
Communications, Inc. and subsidiaries as of December 31,
2003 and 2002 and for the three year periods ended
December 31, 2003, which are included in Charter
Communications, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 2003, have been audited by
KPMG LLP, an independent registered public accounting firm,
as stated in their report included in this prospectus, which
includes explanatory paragraphs regarding the adoption,
effective January 1, 2002, of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" and, effective January 1, 2003, of
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," as amended
by Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation —
Transition and Disclosure — an amendment to FASB
Statement No. 123." The consolidated financial
statements referred to above have been included in this
prospectus in reliance upon the authority of KPMG LLP as experts
in giving said report.
182
Table of Contents
INDEX TO FINANCIAL STATEMENTS
Page
Audited Financial Statements:
Report of Independent Registered Public
    Accounting Firm
F-2
Consolidated Balance Sheets as of
    December 31, 2003 and 2002
F-3
Consolidated Statements of Operations for the
    Years Ended December 31, 2003, 2002 and 2001
F-4
Consolidated Statements of Changes in
    Shareholders' Equity (Deficit) for the Years Ended
    December 31, 2003, 2002 and 2001
F-5
Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2003, 2002 and 2001
F-6
Notes to Consolidated Financial Statements
F-7
Unaudited Financial Statements:
Consolidated Balance Sheets as of
    September 30, 2004 and December 31, 2003
F-55
Consolidated Statements of Operations for the
    Three and Nine Months Ended September 30, 2004 and 2003
F-56
Consolidated Statements of Cash Flows for the
    Nine Months Ended September 30, 2004 and 2003
F-57
Notes to Consolidated Financial Statements
F-58
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors
Charter Communications, Inc.:
We have audited the accompanying consolidated
balance sheets of Charter Communications, Inc. and subsidiaries
(the "Company") as of December 31, 2003 and 2002,
and the related consolidated statements of operations, changes
in shareholders' equity (deficit), and cash flows for each
of the three years in the period ended December 31, 2003.
These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Charter Communications, Inc.
and subsidiaries as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the
United States of America.
As discussed in Note 3 to the consolidated
financial statements, effective January 1, 2002, the
Company adopted Statement of Financial Accounting Standards
No. 142,
Goodwill and Other Intangible Assets.
As discussed in Note 19 to the consolidated
financial statements, effective January 1, 2003, the
Company adopted Statement of Financial Accounting Standards
No. 123,
Accounting for Stock-Based Compensation,
as
amended by Statement of Financial Accounting Standards
No. 148,
Accounting for Stock-Based
Compensation — Transition and Disclosure —
an amendment of FASB Statement No. 123.
/s/ KPMG LLP
St. Louis, Missouri
March 1, 2004
F-2
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except share
data)
December 31,
2003
2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
127
$
321
Accounts receivable, less allowance for doubtful
    accounts of $17 and $19, respectively
189
259
Receivables from related party
—
8
Prepaid expenses and other current assets
34
45
Total current assets
350
633
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
    depreciation of $3,950 and $2,634, respectively
7,014
7,679
Franchises, net of accumulated amortization of
    $3,445 and $3,452, respectively
13,680
13,727
Total investment in cable properties, net
20,694
21,406
OTHER NONCURRENT ASSETS
320
345
Total assets
$
21,364
$
22,384
LIABILITIES AND SHAREHOLDERS' EQUITY
    (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses
$
1,235
$
1,345
Total current liabilities
1,235
1,345
LONG-TERM DEBT
18,647
18,671
DEFERRED MANAGEMENT FEES — RELATED PARTY
14
14
OTHER LONG-TERM LIABILITIES
899
1,212
MINORITY INTEREST
689
1,050
PREFERRED STOCK — REDEEMABLE;
    $.001 par value; 1 million shares authorized; 545,259
    and 505,664 shares issued and outstanding, respectively
55
51
SHAREHOLDERS' EQUITY (DEFICIT):
Class A Common stock; $.001 par value;
    1.75 billion shares authorized; 295,038,606, and
    294,536,830 shares issued and outstanding, respectively
—
—
Class B Common stock; $.001 par value;
    750 million shares authorized; 50,000 shares issued
    and outstanding
—
—
Preferred stock; $.001 par value;
    250 million shares authorized; no non-redeemable shares
    issued and outstanding
—
—
Additional paid-in capital
4,700
4,697
Accumulated deficit
(4,851
)
(4,609
)
Accumulated other comprehensive loss
(24
)
(47
)
Total shareholders' equity (deficit)
(175
)
41
Total liabilities and shareholders' equity
    (deficit)
$
21,364
$
22,384
The accompanying notes are an integral part of
these consolidated financial statements.
F-3
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in millions, except per share and
share data)
Year Ended December 31,
2003
2002
2001
REVENUES
$
4,819
$
4,566
$
3,807
COSTS AND EXPENSES:
Operating (excluding depreciation and
    amortization)
1,952
1,807
1,486
Selling, general and administrative
940
963
826
Depreciation and amortization
1,479
1,439
2,693
Impairment of franchises
—
4,638
—
Gain on sale of system
(21
)
—
—
Option compensation expense (income), net
4
5
(5
)
Special charges, net
21
36
18
Unfavorable contracts and other settlements
(72
)
—
—
4,303
8,888
5,018
Income (loss) from operations
516
(4,322
)
(1,211
)
OTHER INCOME AND EXPENSES:
Interest expense, net
(1,557
)
(1,503
)
(1,310
)
Gain (loss) on derivative instruments and hedging
    activities, net
65
(115
)
(50
)
Gain on debt exchange, net
267
—
—
Loss on equity investments
(3
)
(3
)
(54
)
Other, net
(13
)
(1
)
(5
)
(1,241
)
(1,622
)
(1,419
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(725
)
(5,944
)
(2,630
)
MINORITY INTEREST
377
3,176
1,461
Loss before income taxes and cumulative effect of
    accounting change
(348
)
(2,768
)
(1,169
)
INCOME TAX BENEFIT
110
460
12
Loss before cumulative effect of accounting change
(238
)
(2,308
)
(1,157
)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX
—
(206
)
(10
)
Net loss
(238
)
(2,514
)
(1,167
)
Dividends on preferred stock —
    redeemable
(4
)
(3
)
(1
)
Net loss applicable to common stock
$
(242
)
$
(2,517
)
$
(1,168
)
LOSS PER COMMON SHARE, basic and diluted
$
(0.82
)
$
(8.55
)
$
(4.33
)
Weighted average common shares outstanding, basic
    and diluted
294,597,519
294,440,261
269,594,386
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY (DEFICIT)
(Dollars in millions)
Accumulated
Total
Class A
Class B
Additional
Other
Shareholders'
Common
Common
Paid-In
Accumulated
Comprehensive
Equity
Stock
Stock
Capital
Deficit
Income (Loss)
(Deficit)
BALANCE, December 31, 2000
$
—
$
—
$
3,691
$
(924
)
$
—
$
2,767
Issuance of common stock related to acquisitions
—
—
2
—
—
2
Net proceeds from issuance of common stock
—
—
1,218
—
—
1,218
Redeemable securities reclassified as equity
—
—
9
—
—
9
Contributions from Charter Investment,
    Inc.
—
—
25
—
—
25
Changes in fair value of interest rate agreements
—
—
—
—
(17
)
(17
)
Option compensation expense, net
—
—
(3
)
—
—
(3
)
Loss on issuance of equity by subsidiary
—
—
(253
)
—
—
(253
)
Stock options exercised
—
—
5
—
—
5
Dividends on preferred stock —
    redeemable
—
—
—
(1
)
—
(1
)
Net loss
—
—
—
(1,167
)
—
(1,167
)
BALANCE, December 31, 2001
—
—
4,694
(2,092
)
(17
)
2,585
Issuance of common stock related to acquisitions
—
—
2
—
—
2
Changes in fair value of interest rate agreements
—
—
—
—
(30
)
(30
)
Option compensation expense, net
—
—
2
—
—
2
Loss on issuance of equity by subsidiary
—
—
(1
)
—
—
(1
)
Dividends on preferred stock —
    redeemable
—
—
—
(3
)
—
(3
)
Net loss
—
—
—
(2,514
)
—
(2,514
)
BALANCE, December 31, 2002
—
—
4,697
(4,609
)
(47
)
41
Changes in fair value of interest rate agreements
—
—
—
—
23
23
Option compensation expense, net
—
—
2
—
—
2
Issuance of common stock related to acquisitions
—
—
2
—
—
2
Loss on issuance of equity by subsidiary
—
—
(1
)
—
—
(1
)
Dividends on preferred stock —
    redeemable
—
—
—
(4
)
—
(4
)
Net loss
—
—
—
(238
)
—
(238
)
BALANCE, December 31, 2003
$
—
$
—
$
4,700
$
(4,851
)
$
(24
)
$
(175
)
The accompanying notes are an integral part of
these consolidated financial statements.
F-5
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Dollars in millions)
Year Ended December 31,
2003
2002
2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(238
)
$
(2,514
)
$
(1,167
)
Adjustments to reconcile net loss to net cash
    flows from operating activities:
Minority interest
(377
)
(3,176
)
(1,461
)
Depreciation and amortization
1,479
1,439
2,693
Impairment of franchises
—
4,638
—
Option compensation expense (income), net
4
5
(5
)
Noncash interest expense
414
395
295
Loss on equity investments
3
3
54
Loss (gain) on derivative instruments and
    hedging activities, net
(65
)
115
50
Gain on debt exchange, net
(267
)
—
—
Gain on sale of system
(21
)
—
—
Deferred income taxes
(110
)
(460
)
(12
)
Cumulative effect of accounting change, net
—
206
10
Unfavorable contracts and other settlements
(72
)
—
—
Changes in operating assets and liabilities, net
    of effects from acquisitions:
Accounts receivable
70
27
(73
)
Prepaid expenses and other current assets
5
26
(11
)
Accounts payable and accrued expenses and other
(69
)
47
111
Receivables from and payables to related party,
    including deferred management fees
9
(3
)
—
Other operating activities
—
—
5
Net cash flows from operating activities
765
748
489
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(854
)
(2,167
)
(2,913
)
Change in accounts payable and accrued expenses
    related to capital expenditures
(33
)
(55
)
(88
)
Proceeds from sale of system
91
—
—
Payments for acquisitions, net of cash acquired
—
(139
)
(1,755
)
Purchases of investments
(11
)
(12
)
(3
)
Other investing activities
(10
)
10
(15
)
Net cash flows from investing activities
(817
)
(2,363
)
(4,774
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
—
2
1,223
Borrowings of long-term debt
738
4,106
7,310
Repayments of long-term debt
(1,368
)
(2,134
)
(4,290
)
Proceeds from issuance of debt
529
—
—
Payments for debt issuance costs
(41
)
(40
)
(87
)
Net cash flows from financing activities
(142
)
1,934
4,156
NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS
(194
)
319
(129
)
CASH AND CASH EQUIVALENTS, beginning of period
321
2
131
CASH AND CASH EQUIVALENTS, end of period
$
127
$
321
$
2
CASH PAID FOR INTEREST
$
1,111
$
1,103
$
994
NONCASH TRANSACTIONS:
Issuance of debt by CCH II, LLC
$
1,572
$
—
$
—
Retirement of debt
1,866
—
—
Reclassification of redeemable securities to
    equity and minority interest
—
—
1,105
Exchange of cable system for acquisition
—
—
25
Issuances of preferred stock —
    redeemable, as payment for acquisitions
4
—
51
Issuances of equity as partial payments for
    acquisitions
2
—
2
The accompanying notes are an integral part of
these consolidated financial statements.
F-6
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
1.
Organization and Basis of
    Presentation
Charter Communications, Inc.
("Charter") is a holding company whose principal
assets at December 31, 2003 are the 46% controlling common
equity interest in Charter Communications Holding Company, LLC
("Charter Holdco") and "mirror" notes that
are payable by Charter Holdco to Charter which have the same
principal amount and terms as those of Charter's
convertible senior notes. Charter Holdco is the sole owner of
Charter Communications Holdings, LLC ("Charter
Holdings"). The consolidated financial statements include
the accounts of Charter, Charter Holdco, Charter Holdings and
all of their wholly owned subsidiaries where the underlying
operations reside, collectively referred to herein as the
"Company." The Company consolidates Charter Holdco on
the basis of voting control. Charter Holdco's limited
liability agreement provides that so long as Charter's
Class B common stock retains its special voting rights,
Charter will maintain 100% voting interest in Charter Holdco.
Voting control gives Charter full authority and control over the
operations of Charter Holdco. All significant intercompany
accounts and transactions among consolidated entities have been
eliminated. The Company is a broadband communications company
operating in the United States. The Company offers its customers
traditional video programming (analog and digital video) as well
as high-speed data services and in some areas advanced broadband
services such as high definition television, video on demand,
telephony and interactive television. The Company sells its
video programming, high-speed data and advanced broadband
services on a subscription basis.
The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Areas
involving significant judgments and estimates include
capitalization of labor and overhead costs; depreciation and
amortization costs; impairments of property, plant and
equipment, franchises and goodwill; income taxes; and
contingencies. Actual results could differ from those estimates.
Restatement of 2001
Results.
In 2002, the Company restated
its consolidated financial statements for 2001 and prior. The
restatements were primarily related to the following categories:
(i) launch incentives from programmers; (ii) customer
incentives and inducements; (iii) capitalized labor and
overhead costs; (iv) customer acquisition costs;
(v) rebuild and upgrade of cable systems;
(vi) deferred tax liabilities/franchise assets; and
(vii) other adjustments. These adjustments reduced revenue
by $146 million and decreased consolidated net loss by
$11 million for the year ended December 31, 2001 and
decreased shareholders' equity by $356 million as of
January 1, 2001. In addition, as a result of certain of
these adjustments, the Company's statement of cash flow was
also restated at the time. Net cash flows from operating
activities for the year ended December 31, 2001 was reduced
by $30 million.
Reclassifications.
Certain 2002 and 2001 amounts have been reclassified to conform
with the 2003 presentation.
2.
Liquidity and Capital Resources
The Company recognized income from operations of
$516 million in 2003 and incurred losses from operations of
$4.3 billion and $1.2 billion in 2002 and 2001,
respectively. The Company's net cash flows from operating
activities were $765 million, $748 million and
$489 million for the years ending December 31, 2003,
2002 and 2001, respectively. The Company has historically
required significant cash to fund capital expenditures and debt
service costs. Historically, the Company has funded these
requirements through cash flows from operating activities,
borrowing under the credit facilities of the Company's
subsidiaries, by issuances of debt and equity securities and by
cash on hand. The mix of funding sources
F-7
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
changes from period to period, but for the year
ended December 31, 2003, approximately 80% of the
Company's funding requirements were satisfied from cash
flows from operating activities and 20% was from cash on hand.
For the year ended December 31, 2003, the Company received
$91 million from the sale of the Port Orchard, Washington
cable system. Additionally, the Company had net cash flows used
in financing activities of $142 million, reflecting a net
repayment of debt, and reduced cash on hand by $194 million.
The Company expects that cash on hand, cash flows
from operating activities and the funds available under its
subsidiaries' credit facilities will be adequate to meet
its 2004 cash needs. However, these credit facilities are
subject to certain restrictive covenants, portions of which are
subject to the operating results of the Company's
subsidiaries. The Company expects to maintain compliance with
these covenants in 2004. If the Company's actual operating
results do not result in compliance with these covenants, or if
other events of noncompliance occur, funding under the credit
facilities may not be available and defaults on some or
potentially all debt obligations could occur. Additionally, no
assurances can be given that the Company will not experience
liquidity problems because of adverse market conditions or other
unfavorable events. Further, cash flows from operating
activities and amounts available under credit facilities may not
be sufficient to permit the Company to satisfy its principal
repayment obligations that come due in 2005 and thereafter.
The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions up to its
formulaic capacity to Charter Holdco for payment of interest on
the convertible senior notes, only if, after giving effect to
the distribution, Charter Holdings can incur additional debt
under the leverage ratio of 8.75 to 1.0, there is no default
under the indentures and other specified tests are met. However,
in the event that Charter Holdings could not incur any
additional debt under the 8.75 to 1.0 leverage ratio, the
indentures governing the Charter Holdings notes permit Charter
Holdings and its subsidiaries to make specified investments in
Charter Holdco or Charter, up to its formulaic capacity, if
there is no default under the indentures. There were no defaults
under the Charter Holdings indentures and other specified tests
were met for the quarter ended December 31, 2003. However,
Charter Holdings did not meet the leverage ratio test at
December 31, 2003, and as a result, distributions from
Charter Holdings to Charter will be restricted until that test
is met. Charter's ability to make payments on its
convertible senior notes is dependent on Charter Holdco's
liquidity or on the ability for it to obtain distributions from
Charter Holdings and the Company's other subsidiaries
making distributions, loans, or payments to Charter Holdco, and
on Charter Holdco paying or distributing such funds to Charter.
As of December 31, 2003, Charter Holdco had
$41 million in cash on hand and is owed $37 million in
intercompany loans, which are available to Charter Holdco to
service interest on Charter's convertible senior notes,
which is scheduled to be approximately $43 million in 2004.
Accordingly, Charter's ability to make interest payments,
or principal payments at maturity in 2005 and 2006, with respect
to its currently outstanding convertible senior notes is
contingent upon it obtaining additional financing or receiving
distributions or other payments from its subsidiaries.
On October 1, 2003 the Company closed on the
sale of its Port Orchard, Washington system for approximately
$91 million, resulting in a $21 million gain recorded
as gain on sale of system in the Company's consolidated
statement of operations. On March 1, 2004, the Company
closed the sale of cable systems in Florida, Pennsylvania,
Maryland, Delaware and West Virginia with Atlantic Broadband
Finance, LLC. The Company anticipates that an additional closing
for a cable system in New York will occur during the first
quarter of 2004. After giving effect to the sale of the New York
system, net proceeds will be approximately $735 million,
subject to post-closing adjustments. The Company will use these
proceeds to repay bank debt.
F-8
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The Company's long-term financing structure
as of December 31, 2003 includes $7.2 billion of
credit facility debt, $10.6 billion of high-yield notes and
$774 million of convertible senior debentures.
Approximately $188 million of this financing matures during
2004, and the Company expects to fund this through availability
under its credit facilities. Note 9 summarizes the
Company's current availability under its credit facilities
and its long-term debt.
3.
Summary of Significant Accounting
    Policies
Cash Equivalents
The Company considers all highly liquid
investments with original maturities of three months or less to
be cash equivalents. These investments are carried at cost,
which approximates market value.
Property, Plant and Equipment
Property, plant and equipment are recorded at
cost, including all material, labor and certain indirect costs
associated with the construction of cable transmission and
distribution facilities. Costs associated with initial customer
installations and the additions of network equipment necessary
to enable advanced services are capitalized. Costs capitalized
as part of initial customer installations include materials,
labor, and certain indirect costs. These indirect costs are
associated with the activities of the Company's personnel
who assist in connecting and activating the new service and
consist of compensation and overhead costs associated with these
support functions. Overhead costs primarily include employee
benefits and payroll taxes, direct variable costs associated
with capitalizable activities, consisting primarily of
installation and construction vehicle costs, the cost of
dispatch personnel and indirect costs directly attributable to
capitalizable activities. The costs of disconnecting service at
a customer's dwelling or reconnecting service to a
previously installed dwelling are charged to operating expense
in the period incurred. Costs for repairs and maintenance are
charged to operating expense as incurred, while equipment
replacement and betterments, including replacement of cable
drops from the pole to the dwelling, are capitalized.
Depreciation is recorded using the straight-line
method over management's estimate of the useful lives of
the related assets as follows:
Cable distribution systems
7-15 years
Customer equipment and installations
3-5 years
Vehicles and equipment
1-5 years
Buildings and leasehold improvements
5-15 years
Furniture and fixtures
5 years
Franchises
Franchise rights represent the value attributed
to agreements with local authorities that allow access to homes
in cable service areas acquired through the purchase of cable
systems. Management estimates the fair value of franchise rights
at the date of acquisition and determines if the franchise has a
finite life or an indefinite life as defined by Statement of
Financial Accounting Standards ("SFAS") No. 142,
Goodwill and Other Intangible Assets
. On January 1,
2002, the Company adopted SFAS No. 142, which
eliminates the amortization of goodwill and indefinite lived
intangible assets. Accordingly, beginning January 1, 2002,
all franchises that qualify for indefinite life treatment under
SFAS No. 142 are no longer amortized against earnings
but instead are tested for impairment annually as of
October 1, or more frequently as warranted by events or
changes in circumstances (See Note 7). The Company concluded
F-9
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
that 99% of its franchises qualify for
indefinite-life treatment; however, certain franchises did not
qualify for indefinite-life treatment due to technological or
operational factors that limit their lives. These franchise
costs are amortized on a straight-line basis over 10 years.
Costs incurred in renewing cable franchises are deferred and
amortized over 10 years.
Prior to the adoption of SFAS No. 142,
costs incurred in obtaining and renewing cable franchises were
deferred and amortized using the straight-line method over a
period of 15 years. Franchise rights acquired through the
purchase of cable systems were generally amortized using the
straight-line method over a period of 15 years. The period
of 15 years was management's best estimate of the
useful lives of the franchises and assumed that substantially
all of those franchises that expired during the period would be
renewed but not indefinitely. The Company evaluated the
recoverability of franchises for impairment when events or
changes in circumstances indicated that the carrying amount of
an asset may not be recoverable.
Other Noncurrent Assets
Other noncurrent assets primarily include
goodwill, deferred financing costs and investments in equity
securities. Costs related to borrowings are deferred and
amortized to interest expense using the effective interest
method over the terms of the related borrowings. As of
December 31, 2003 and 2002, other noncurrent assets include
$203 million and $231 million of deferred financing
costs, net of accumulated amortization of $128 million and
$106 million, respectively.
Investments in equity securities are accounted
for at cost, under the equity method of accounting or in
accordance with SFAS No. 115,
Accounting for
Certain Investments in Debt and Equity Securities
. Charter
recognizes losses for any decline in value considered to be
other than temporary. Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive income or loss.
The following summarizes investment information
as of and for the years ended December 31, 2003 and 2002:
Gain (Loss)
Carrying
for the
Value at
Years Ended
December 31,
December 31,
2003
2002
2003
2002
Equity investments, under the cost method
$
30
$
17
$
(2
)
$
—
Equity investments, under the equity method
11
16
(1
)
(5
)
Marketable securities, at market value
—
—
—
2
$
41
$
33
$
(3
)
$
(3
)
Valuation of Property, Plant and
    Equipment
The Company evaluates the recoverability of
property, plant and equipment for impairment when events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Such events or changes in
circumstances could include such factors as changes in
technological advances, fluctuations in the fair value of such
assets, adverse changes in relationships with local franchise
authorities, adverse changes in market conditions or poor
operating results. If a review indicates that the carrying value
of such asset is not recoverable from estimated undiscounted
cash flows, the carrying value of such asset is reduced to its
estimated fair value. While the Company believes that its
estimates of future cash flows are reasonable, different
assumptions regarding such cash flows could materially affect its
F-10
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
evaluations of asset recoverability. No
impairment of property, plant and equipment occurred in 2003,
2002 and 2001.
Derivative Financial
    Instruments
The Company accounts for derivative financial
instruments in accordance with SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities,
as amended, which became effective for the
Company on January 1, 2001. The Company uses interest rate
risk management derivative instruments, such as interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements (collectively referred to herein as interest
rate agreements) as required under the terms of the credit
facilities of the Company's subsidiaries. The
Company's policy is to manage interest costs using a mix of
fixed and variable rate debt. Using interest rate swap
agreements, the Company agrees to exchange, at specified
intervals, the difference between fixed and variable interest
amounts calculated by reference to an agreed-upon notional
principal amount. Interest rate cap agreements are used to lock
in a maximum interest rate should variable rates rise, but
enable the Company to otherwise pay lower market rates. Interest
rate collar agreements are used to limit exposure to and
benefits from interest rate fluctuations on variable rate debt
to within a certain range of rates. The Company does not hold or
issue any derivative financial instruments for trading purposes.
Revenue Recognition
Revenues from residential and commercial video
and high-speed data services are recognized when the related
services are provided. Advertising sales are recognized at
estimated realizable values in the period that the
advertisements are broadcast. Local governmental authorities
impose franchise fees on the Company ranging up to a federally
mandated maximum of 5% of gross revenues as defined in the
franchise agreement. Such fees are collected on a monthly basis
from the Company's customers and are periodically remitted
to local franchise authorities. Franchise fees collected and
paid are reported as revenues on a gross basis with a
corresponding expense pursuant to Emerging Issues Task Force
("EITF") Issue No. 01-14,
Income Statement
Characterization of Reimbursements Received for 'Out of
Pocket' Expenses Incurred
.
Programming Costs
The Company has various contracts to obtain
analog, digital and premium video programming from program
suppliers whose compensation is typically based on a flat fee
per customer. The cost of the right to exhibit network
programming under such arrangements is recorded in operating
expenses in the month the programming is available for
exhibition. Programming costs are paid each month based on
calculations performed by the Company and are subject to
adjustment based on periodic audits performed by the
programmers. Additionally, certain programming contracts contain
launch incentives to be paid by the programmers. The Company
receives these payments related to the promotion and activation
of the programmer's cable television channel and recognizes
the launch incentives on a straight-line basis over the life of
the programming agreement as a reduction of programming expense.
This offset to programming expense was $62 million,
$57 million and $35 million for the years ended
December 31, 2003, 2002 and 2001, respectively. Programming
costs included in the accompanying statement of operations were
$1.2 billion, $1.2 billion and $963 million for
the years ended December 31, 2003, 2002 and 2001,
respectively. As of December 31, 2003 and 2002, the
deferred amount of launch incentives, included in other
long-term liabilities, totaled $148 million and
$210 million, respectively.
F-11
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Advertising Costs
Advertising costs associated with marketing the
Company's products and services are generally expensed as
costs are incurred. Such advertising expense was
$62 million, $60 million and $43 million for the
years ended December 31, 2003, 2002 and 2001, respectively.
Stock-Based Compensation
The Company has historically accounted for
stock-based compensation in accordance with Accounting
Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees
, and related
interpretations, as permitted by SFAS No. 123,
Accounting for Stock-Based Compensation
. On
January 1, 2003, the Company adopted the fair value
measurement provisions of SFAS No. 123 using the
prospective method under which the Company will recognize
compensation expense of a stock-based award to an employee over
the vesting period based on the fair value of the award on the
grant date consistent with the method described in Financial
Accounting Standards Board Interpretation ("FIN")
No. 28,
Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans
. Adoption of
these provisions resulted in utilizing a preferable accounting
method as the consolidated financial statements will present the
estimated fair value of stock-based compensation in expense
consistently with other forms of compensation and other expense
associated with goods and services received for equity
instruments. In accordance with SFAS No. 148,
Accounting for Stock-Based Compensation —
Transition and Disclosure
, the fair value method will be
applied only to awards granted or modified after January 1,
2003, whereas awards granted prior to such date will continue to
be accounted for under APB No. 25, unless they are
modified or settled in cash. Management believes the adoption of
these provisions will not have a material impact on the
consolidated results of operations or financial condition of the
Company. The ongoing effect on consolidated results of
operations or financial condition will be dependent upon future
stock-based compensation awards granted by the Company.
F-12
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
SFAS No. 123 requires pro forma
disclosure of the impact on earnings as if the compensation
expense for these plans had been determined using the fair value
method. The following table presents the Company's net loss
and loss per share as reported and the pro forma amounts that
would have been reported using the fair value method under
SFAS No. 123 for the years presented:
Year Ended December 31,
2003
2002
2001
Net loss applicable to common stock
$
(242
)
$
(2,517
)
$
(1,168
)
Add back stock-based compensation expense
    (income) related to stock options included in reported net loss
    (net of minority interest)
2
2
(2
)
Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
(14
)
(56
)
(56
)
Pro forma
$
(254
)
$
(2,571
)
$
(1,226
)
Loss per common shares, basic and diluted
$
(0.82
)
$
(8.55
)
$
(4.33
)
Add back stock-based compensation expense
    (income) related to stock options included in reported net loss
    (net of minority interest)
0.01
0.01
(0.01
)
Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
(0.05
)
(0.19
)
(0.21
)
Pro forma
$
(0.86
)
$
(8.73
)
$
(4.55
)
The fair value of each option granted is
estimated on the date of grant using the Black-Scholes
option-pricing model. The following weighted average assumptions
were used for grants during the years ended December 31,
2003, 2002 and 2001, respectively: risk-free interest rates of
3.0%, 3.6%, and 4.7%; expected volatility of 93.6%, 64.2% and
56.2%; and expected lives of 3.5 years, 3.3 years and
3.7 years, respectively. The valuations assume no dividends
are paid.
Unfavorable Contracts and Other
    Settlements
The Company recognized $72 million of
benefit for the year ended December 31, 2003 as a result of
the settlement of estimated liabilities recorded in connection
with prior business combinations. The majority of this benefit
(approximately $52 million) is due to the renegotiation of
a major programming contract, for which a liability had been
recorded for the above market portion of the agreement in
conjunction with the Falcon acquisition in 1999 and the Bresnan
acquisition in 2000. The remaining benefit relates to the
reversal of previously recorded liabilities, which, based on an
evaluation of current facts and circumstances, are no longer
required.
Income Taxes
The Company recognizes deferred tax assets and
liabilities for temporary differences between the financial
reporting basis and the tax basis of the Company's assets
and liabilities and expected benefits of utilizing net operating
loss carryforwards. The impact on deferred taxes of changes in
tax rates and tax law, if any, applied to the years during which
temporary differences are expected to be settled, are reflected
in the consolidated financial statements in the period of
enactment (see Note 21).
F-13
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Minority Interest
Minority interest on the consolidated balance
sheets represents the portion of members' equity of Charter
Holdco not owned by Charter, plus preferred membership interests
in two indirect subsidiaries of Charter held by Mr. Paul G.
Allen and certain sellers of the Helicon systems. Minority
interest totaled $689 million and $1.0 billion as of
December 31, 2003 and 2002, respectively, on the
accompanying consolidated balance sheets. Gains or losses
arising from issuances by Charter Holdco of its membership units
are recorded as capital transactions thereby increasing or
decreasing shareholders' equity and decreasing or
increasing minority interest on the consolidated balance sheets.
These losses totaled $1 million, $1 million and
$253 million for the years ended December 31, 2003,
2002 and 2001, respectively, on the accompanying consolidated
statements of changes in shareholders' equity. Operating
losses are allocated to the minority owners based on their
ownership percentage, thereby reducing the Company's net
loss.
Loss per Common Share
Basic loss per common share is computed by
dividing the net loss applicable to common stock by
294,597,519 shares, 294,440,261 shares and
269,594,386 shares for the years ended December 31,
2003, 2002 and 2001, representing the weighted-average common
shares outstanding during the respective periods. Diluted loss
per common share equals basic loss per common share for the
periods presented, as the effect of stock options is
antidilutive because the Company incurred net losses. All
membership units of Charter Holdco are exchangeable on a
one-for-one basis into common stock of Charter at the option of
the holders. Should the holders exchange units for shares, the
effect would not be dilutive.
Segments
SFAS No. 131,
Disclosure about
Segments of an Enterprise and Related Information
,
established standards for reporting information about operating
segments in annual financial statements and in interim financial
reports issued to shareholders. Operating segments are defined
as components of an enterprise about which separate financial
information is available that is evaluated on a regular basis by
the chief operating decisionmaker, or decision making group, in
deciding how to allocate resources to an individual segment and
in assessing performance of the segment.
The Company's operations are managed on the
basis of geographic divisional operating segments. The Company
has evaluated the criteria for aggregation of the geographic
operating segments under paragraph 17 of
SFAS No. 131 and believes it meets each of the
respective criteria set forth. The Company delivers similar
products and services within each of its geographic divisional
operations. Each geographic and divisional service area utilizes
similar means for delivering the programming of the
Company's services; have similarity in the type or class of
customer receiving the products and services; distributes the
Company's services over a unified network; and operates
within a consistent regulatory environment. In addition, each of
the geographic divisional operating segments has similar
economic characteristics. In light of the Company's similar
services, means for delivery, similarity in type of customers,
the use of a unified network and other considerations across its
geographic divisional operating structure, management has
determined that the Company has one reportable segment,
broadband services.
4.
Acquisitions
On February 28, 2002, CC Systems, LLC,
a subsidiary of the Company, and High Speed Access Corp.
("HSA") closed the Company's acquisition from HSA
of the contracts and associated assets, and assumed related
liabilities, that served certain of the Company's
high-speed data customers. At closing, the
F-14
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Company paid approximately $78 million in
cash and delivered 37,000 shares of HSA's
Series D convertible preferred stock and all the warrants
to buy HSA common stock owned by the Company. An additional
$2 million of purchase price was retained to secure
indemnity claims. The purchase price has been allocated to
assets acquired and liabilities assumed based on fair values as
determined in the fourth quarter of 2002 by a third-party
valuation expert, including approximately $8 million
assigned to intangible assets and amortized over an average
useful life of three years and approximately $54 million
assigned to goodwill. In 2003, as part of the finalization of
the HSA acquisition, goodwill was reduced to $52 million.
The finalization of the purchase price did not have a material
effect on amortization expense previously reported. During the
period from 1997 to 2000, certain subsidiaries of the Company
entered into Internet-access related service agreements with
HSA, and both Vulcan Ventures and certain of the Company's
subsidiaries made equity investments in HSA. (See Note 22
for additional information).
In April 2002, Interlink Communications Partners,
LLC, Rifkin Acquisition Partners, LLC and Charter Communications
Entertainment I, LLC, each an indirect, wholly-owned
subsidiary of Charter Holdings, completed the purchase of
certain assets of Enstar Income Program II-2, L.P., Enstar
Income Program IV-3, L.P., Enstar Income/ Growth Program
Six-A, L.P., Enstar Cable of Macoupin County and Enstar IV/PBD
Systems Venture, serving approximately 21,600 (unaudited)
customers, for a total cash purchase price of $48 million.
In September 2002, Charter Communications Entertainment I,
LLC purchased all of Enstar Income Program II-1,
L.P.'s Illinois cable systems, serving approximately 6,400
(unaudited) customers, for a cash purchase price of
$15 million. Enstar Communications Corporation, a direct
subsidiary of Charter Holdco, is a general partner of the Enstar
limited partnerships but does not exercise control over them.
The purchase prices were allocated to assets acquired based on
fair values, including $41 million assigned to franchises
and $4 million assigned to other intangible assets
amortized over a useful life of three years.
The 2002 acquisitions were funded primarily from
borrowings under the credit facilities of the Company's
subsidiaries.
During the second and third quarters in 2001, the
Company acquired cable systems in two separate transactions. In
connection with the acquisitions, the Company paid a total cash
consideration of $1.8 billion, transferred a cable system
valued at $25 million, issued 505,664 shares of
Charter Series A Convertible Redeemable Preferred Stock
valued at $51 million, and in the first quarter of 2003
issued 39,595 additional shares of Series A Convertible
Redeemable Preferred Stock to certain sellers subject to certain
holdback provisions of the acquisition agreement valued at
$4 million. The purchase prices were allocated to assets
acquired and liabilities assumed based on fair values, including
amounts assigned to franchises of $1.5 billion.
The transactions described above were accounted
for using the purchase method of accounting, and, accordingly,
the results of operations of the acquired assets and assumed
liabilities have been included in the consolidated financial
statements from their respective dates of acquisition. The
purchase prices were allocated to assets acquired and
liabilities assumed based on fair values.
The summarized operating results of the Company
that follow are presented on a pro forma basis as if the
following had occurred on January 1, 2001: all acquisitions
and dispositions completed during 2001; the issuance of Charter
Holdings senior notes and senior discount notes in January 2002
and 2001; the issuance of Charter Holdings senior notes and
senior discount notes in May 2001; and the issuance of and sale
by Charter of convertible senior notes and Class A common
stock in May 2001. Adjustments have been made to give effect to
amortization of franchises acquired prior to July 1, 2001,
interest expense,
F-15
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
minority interest, and certain other adjustments.
Pro forma results for the year ended December 31, 2003 and
2002 would not differ significantly from historical results.
Year Ended December 31, 2001
Revenues
$
3,969
Loss from operations
(1,211
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(2,724
)
Net loss
(1,251
)
Loss per common share, basic and diluted
(4.64
)
The unaudited pro forma financial information has
been presented for comparative purposes and does not purport to
be indicative of the consolidated results of operations had
these transactions been completed as of the assumed date or
which may be obtained in the future.
5.
Allowance for Doubtful Accounts
Activity in the allowance for doubtful accounts
is summarized as follows for the years presented:
Year Ended December 31,
2003
2002
2001
Balance, beginning of year
$
19
$
33
$
12
Acquisitions of cable systems
—
—
1
Charged to expense
79
108
95
Uncollected balances written off, net of
    recoveries
(81
)
(122
)
(75
)
Balance, end of year
$
17
$
19
$
33
6.
Property, Plant and Equipment
Property, plant and equipment consists of the
following as of December 31, 2003 and 2002:
2003
2002
Cable distribution systems
$
9,507
$
8,950
Land, buildings and leasehold improvements
583
580
Vehicles and equipment
874
783
10,964
10,313
Less: accumulated depreciation
(3,950
)
(2,634
)
$
7,014
$
7,679
The Company periodically evaluates the estimated
useful lives used to depreciate its assets and the estimated
amount of assets that will be abandoned or have minimal use in
the future. A significant change in assumptions about the extent
or timing of future asset retirements, or in the Company's
use of new technology and upgrade programs, could materially
affect future depreciation expense.
Depreciation expense for the years ended
December 31, 2003, 2002 and 2001 was $1.5 billion,
$1.4 billion and $1.2 billion, respectively.
F-16
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
7.
Franchises and Goodwill
The Company constructs and operates its cable
systems under non-exclusive franchises that are granted by state
or local government authorities for varying lengths of time. As
of December 31, 2003, the Company had approximately 4,400
franchises in areas located throughout the United States. The
Company obtained these franchises primarily through acquisitions
of cable systems accounted for as purchase business
combinations. These acquisitions have primarily been for the
purpose of acquiring existing franchises and related
infrastructure and, as such, the primary asset acquired by the
Company has historically been cable franchises.
On January 1, 2002, the Company adopted
SFAS No. 142, which eliminates the amortization of
indefinite lived intangible assets. Accordingly, beginning
January 1, 2002, all franchises that qualify for indefinite
life treatment under SFAS No. 142 are no longer
amortized against earnings but instead will be tested for
impairment annually, or more frequently as warranted by events
or changes in circumstances. During the first quarter of 2002,
the Company had an independent appraiser perform valuations of
its franchises as of January 1, 2002. Based on the guidance
prescribed in EITF Issue No. 02-7,
Unit of Accounting
for Testing of Impairment of Indefinite-Lived Intangible
Assets
, franchises were aggregated into essentially
inseparable asset groups to conduct the valuations. The asset
groups generally represented geographic clusters of the
Company's cable systems, which management then believed
represented the highest and best use of those assets. Fair value
was determined based on estimated discounted future cash flows
using assumptions that are consistent with internal forecasts.
As a result, the Company determined that franchises were
impaired and recorded the cumulative effect of a change in
accounting principle of $206 million (approximately
$572 million before minority interest effects of
$306 million and tax effects of $60 million). The
effect of adoption was to increase net loss and loss per share
by $206 million and $0.70, respectively. As required by
SFAS No. 142, the standard has not been retroactively
applied to the results for the period prior to adoption.
The Company performed its annual impairment
assessment as of October 1, 2002 using an independent
third-party appraiser and following the guidance of EITF
Issue 02-17,
Recognition of Customer Relationship
Intangible Assets Acquired in a Business Combination
, which
was issued in October 2002 and requires the consideration of
assumptions that marketplace participants would consider, such
as expectations of future contract renewals and other benefits
related to the intangible asset. Revised estimates of future
cash flows and the use of a lower projected long-term growth
rate in the Company's valuation, led to recognition of a
$4.6 billion impairment charge in the fourth quarter of
2002.
The independent third-party appraiser's
valuations as of January 1, 2002, October 1, 2002 and
October 1, 2003 yielded total enterprise values of
approximately $30 billion, $25 billion and
$25 billion, respectively, which included approximately
$2.4 billion, $3.1 billion and $3.2 billion,
respectively, assigned to customer relationships.
SFAS No. 142 does not permit the recognition of
intangible assets not previously recognized. Accordingly, the
impairment included approximately $572 million and
$3.1 billion, before tax effects, attributable to customer
relationships as of January 1, 2002 and October 1,
2002, respectively. The valuation completed at October 1,
2003 showed franchise values in excess of book value and thus
resulted in no impairment. Additionally, as a result of the sale
of the Port Orchard, Washington cable system on October 1,
2003, net carrying value of franchises were reduced by
$42 million.
In determining whether its franchises have an
indefinite life, the Company considered the exclusivity of the
franchise, its expected costs of franchise renewals, and the
technological state of the associated cable systems with a view
to whether or not the Company is in compliance with any
technology upgrading requirements. Certain franchises did not
qualify for indefinite-life treatment due to technological or
F-17
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
operational factors that limit their lives. These
franchise costs will be amortized on a straight-line basis over
10 years.
The effect of the adoption of
SFAS No. 142 as of December 31, 2003 and 2002 is
presented in the following table:
December 31,
2003
2002
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
Amount
Amortization
Amount
Indefinite-lived intangible assets:
Franchises with indefinite lives
$
17,018
$
3,412
$
13,606
$
17,076
$
3,428
$
13,648
Goodwill
52
—
52
54
—
54
$
17,070
$
3,412
$
13,658
$
17,130
$
3,428
$
13,702
Finite-lived intangible assets:
Franchises with finite lives
$
107
$
33
$
74
$
103
$
24
$
79
Franchise amortization expense for each of the
years ended December 31, 2003 and 2002 was $9 million
which represents the amortization relating to franchises that
did not qualify for indefinite-life treatment under
SFAS No. 142, including costs associated with
franchise renewals. The Company expects amortization expense on
franchise assets will decrease to approximately $4 million
annually based on its ability in 2003 to renew franchise
agreements the Company previously classified as having finite
lives without substantial costs. Actual amortization expense to
be reported in future periods could differ from these estimates
as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant
factors. Franchise amortization expense for the year ended
December 31, 2001 was $1.5 billion.
As required by SFAS No. 142, the
standard has not been retroactively applied to the results for
the period prior to adoption. A reconciliation of net loss for
the years ended December 31, 2003, 2002 and 2001, as if
SFAS No. 142 had been adopted as of January 1,
2001, is presented below:
Year Ended December 31,
2003
2002
2001
NET LOSS:
Reported net loss applicable to common stock
$
(242
)
$
(2,517
)
$
(1,168
)
Add back: amortization of indefinite-lived
    franchises
—
—
1,453
Less: minority interest impact
—
—
(808
)
Adjusted net loss applicable to common stock
$
(242
)
$
(2,517
)
$
(523
)
BASIC AND DILUTED LOSS PER COMMON SHARE:
Reported net loss per share
$
(0.82
)
$
(8.55
)
$
(4.33
)
Add back: amortization of indefinite-lived
    franchises
—
—
5.39
Less: minority interest impact
—
—
(3.00
)
Adjusted net loss per share
$
(0.82
)
$
(8.55
)
$
(1.94
)
F-18
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
8.
Accounts Payable and Accrued
    Expenses
Accounts payable and accrued expenses consist of
the following as of December 31, 2003 and 2002:
2003
2002
Accounts payable
$
163
$
185
Capital expenditures
108
141
Accrued interest
277
243
Programming costs
268
282
Franchise related fees
70
70
State sales tax
61
67
Other accrued expenses
288
357
$
1,235
$
1,345
9.
Long-Term Debt
Long-term debt consists of the following as of
December 31, 2003 and 2002:
2003
2002
Face
Accreted
Face
Accreted
Value
Value
Value
Value
Long-Term Debt
Charter Communications, Inc.:
October and November 2000
5.75% convertible senior notes due 2005
$
618
$
618
$
750
$
750
May 2001
4.75% convertible senior notes due 2006
156
156
633
633
Charter Holdings:
March 1999
8.250% senior notes due 2007
451
450
600
599
8.625% senior notes due 2009
1,244
1,242
1,500
1,497
9.920% senior discount notes due 2011
1,108
1,082
1,475
1,307
January 2000
10.000% senior notes due 2009
640
640
675
675
10.250% senior notes due 2010
318
318
325
325
11.750% senior discount notes due 2010
450
400
532
421
January 2001
10.750% senior notes due 2009
874
873
900
900
11.125% senior notes due 2011
500
500
500
500
13.500% senior discount notes due 2011
675
517
675
454
F-19
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
2003
2002
Face
Accreted
Face
Accreted
Value
Value
Value
Value
May 2001
9.625% senior notes due 2009
(includes January 2002 additional bond issue)
640
638
700
698
10.000% senior notes due 2011 (includes
    January 2002 additional bond issue)
710
708
875
873
11.750% senior discount notes due 2011
939
717
1,018
693
January 2002
12.125% senior discount notes due 2012
330
231
450
280
CCH II:
10.250% senior notes due 2010
1,601
1,601
—
—
CCO Holdings:
8 3/4% senior notes due 2013
500
500
—
—
Renaissance:
10.00% senior discount notes due 2008
114
116
114
113
CC V Holdings:
11.875% senior discount notes due 2008
113
113
180
163
Other long-term debt
—
—
1
1
Credit Facilities
Charter Operating
4,459
4,459
4,542
4,542
CC VI
868
868
926
926
Falcon Cable
856
856
1,155
1,155
CC VIII Operating
1,044
1,044
1,166
1,166
$
19,208
$
18,647
$
19,692
$
18,671
The accreted values presented above represent the
face value of the notes less the original issue discount at the
time of sale plus the accretion to the balance sheet date.
In September 2003, Charter, Charter Holdings and
their indirect subsidiary, CCH II, LLC
("CCH II") purchased, in a non-monetary
transaction, a total of approximately $609 million
principal amount of Charter's outstanding convertible
senior notes and approximately $1.3 billion principal
amount of the senior notes and senior discount notes issued by
Charter Holdings from institutional investors in a small number
of privately negotiated transactions. As consideration for these
securities, CCH II issued approximately $1.6 billion
principal amount of 10.25% notes due 2010, achieving
approximately $294 million of debt discount. CCH II
also issued an additional $30 million principal amount of
10.25% notes for an equivalent amount of cash and used the
proceeds for transaction costs and for general corporate
purposes. See discussion of the CCH II notes below for more
details.
5.75% Charter Convertible
Notes.
In October and November 2000,
Charter issued 5.75% convertible senior notes with a total
principal amount at maturity of $750 million. As of
December 31, 2003, there was $618 million in total
principal amount of these notes outstanding. The 5.75% Charter
convertible notes are convertible at the option of the holder
into shares of Class A common stock at a conversion rate of
46.3822 shares per $1,000 principal amount of notes, which
is equivalent to a price of $21.56 per share,
F-20
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
subject to certain adjustments. Specifically, the
adjustments include anti-dilutive provisions, which cause
adjustments to occur automatically based on the occurrence of
specified events to provide protection rights to holders of the
notes. Additionally, Charter may adjust the conversion ratio
under certain circumstances when deemed appropriate. These notes
are redeemable at Charter's option at amounts decreasing
from 102.3% to 100% of the principal amount plus accrued and
unpaid interest beginning on October 15, 2003, to the date
of redemption. Interest is payable semiannually on April 15
and October 15, beginning April 15, 2001, until
maturity on October 15, 2005.
The 5.75% Charter convertible notes rank equally
with any of Charter's future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of Charter's
subsidiaries. Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
4.75% Charter Convertible
Notes.
In May 2001, Charter issued
4.75% convertible senior notes with a total principal
amount at maturity of $633 million. As of December 31,
2003, there was $156 million in total principal amount of
these notes outstanding. The 4.75% Charter convertible notes are
convertible at the option of the holder into shares of
Class A common stock at a conversion rate of
38.0952 shares per $1,000 principal amount of notes, which
is equivalent to a price of $26.25 per share, subject to
certain adjustments. Specifically, the adjustments include
anti-dilutive provisions, which automatically occur based on the
occurrence of specified events to provide protection rights to
holders of the notes. Additionally, Charter may adjust the
conversion ratio under certain circumstances when deemed
appropriate. These notes are redeemable at Charter's option
at amounts decreasing from 101.9% to 100% of the principal
amount, plus accrued and unpaid interest beginning on
June 4, 2004, to the date of redemption. Interest is
payable semiannually on December 1 and June 1,
beginning December 1, 2001, until maturity on June 1,
2006.
The 4.75% Charter convertible notes rank equally
with any of Charter's future unsubordinated and unsecured
indebtedness, but are structurally subordinated to all existing
and future indebtedness and other liabilities of Charter's
subsidiaries. Upon a change of control, subject to certain
conditions and restrictions, Charter may be required to
repurchase the notes, in whole or in part, at 100% of their
principal amount plus accrued interest at the repurchase date.
March 1999 Charter Holdings
Notes.
The March 1999 Charter Holdings
notes were issued under three separate indentures, each dated as
of March 17, 1999, among Charter Holdings and Charter
Communications Capital Corporation ("Charter
Capital"), as the issuers, and BNY Midwest Trust Company,
as trustee. Charter Holdings and Charter Capital exchanged these
notes for new March 1999 Charter Holdings notes with
substantially similar terms, except that the new March 1999
Charter Holdings notes are registered under the Securities Act
and, therefore, do not bear legends restricting their transfer
and are not subject to further registration or special interest
obligations.
The March 1999 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
The March 1999 8.250% Charter Holdings notes mature on
April 1, 2007, and as of December 31, 2003, there was
$451 million in total principal amount outstanding. The
March 1999 8.625% Charter Holdings notes mature on April 1,
2009 and as of December 31, 2003, there was
$1.2 billion in total principal amount outstanding. The
March 1999 9.920% Charter Holdings notes mature on April 1,
2011 and as of December 31, 2003, the total principal
amount outstanding and accreted value was $1.1 billion.
Cash interest on the March 1999 9.920% Charter Holdings notes
will not accrue prior to April 1, 2004.
F-21
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The March 1999 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the January
2000, January 2001, May 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings' subsidiaries, including the CCH II
notes, the CCO Holdings, LLC
("CCO Holdings") notes, and the credit facilities.
Charter Holdings and Charter Capital will not
have the right to redeem the March 1999 8.250% Charter Holdings
notes prior to their maturity date on April 1, 2007. On or
after April 1, 2004, Charter Holdings and Charter Capital
may redeem some or all of the March 1999 8.625% Charter Holdings
notes and the March 1999 9.920% Charter Holdings notes at any
time, in each case, at a premium. The optional redemption price
declines to 100% of the principal amount of March 1999 Charter
Holdings notes redeemed, plus accrued and unpaid interest, if
any, for redemption on or after April 1, 2007.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding March 1999 Charter Holdings
notes at 101% of their principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
The indentures governing the March 1999 Charter
Holdings senior notes contain restrictive covenants that limit
certain transactions or activities by Charter Holdings and its
restricted subsidiaries. All but two of Charter Holdings'
direct and indirect subsidiaries are currently restricted
subsidiaries.
January 2000 Charter Holdings
Notes.
The January 2000 Charter
Holdings notes were issued under three separate indentures, each
dated as of January 12, 2000, among Charter Holdings and
Charter Capital, as the issuers, and BNY Midwest Trust Company,
as trustee. In June 2000, Charter Holdings and Charter Capital
exchanged these notes for new January 2000 Charter Holdings
notes, with substantially similar terms, except that the new
January 2000 Charter Holdings notes are registered under the
Securities Act and, therefore, do not bear legends restricting
their transfer and are not subject to further registration or
special interest obligations.
The January 2000 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2000 10.00% Charter Holdings notes mature
on April 1, 2009, and as of December 31, 2003, there
was $640 million in total principal amount of these notes
outstanding. The January 2000 10.25% Charter Holdings notes
mature on January 15, 2010 and as of December 31,
2003, there was $318 million in total principal amount of
these notes outstanding. The January 2000 11.75% Charter
Holdings notes mature on January 15, 2010 and as of
December 31, 2003, the total principal amount outstanding
was $450 million and the total accreted value of these
notes was approximately $400 million. Cash interest on the
January 2000 11.75% Charter Holdings notes will not accrue prior
to January 15, 2005.
The January 2000 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2001, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings' subsidiaries, including
the CCH II notes, the CCO Holdings notes, and the
credit facilities.
Charter Holdings and Charter Capital will not
have the right to redeem the January 2000 10.00% Charter
Holdings notes prior to their maturity date on April 1,
2009. On or after January 15, 2005, Charter Holdings and
Charter Capital may redeem some or all of the January 2000
10.25% Charter Holdings notes and the January 2000 11.75%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2000
F-22
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Charter Holdings notes redeemed, plus accrued and
unpaid interest, if any, for redemption on or after
January 15, 2008.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2000 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2000 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 Charter
Holdings notes.
January 2001 Charter Holdings
Notes.
The January 2001 Charter
Holdings notes were issued under three separate indentures, each
dated as of January 10, 2001, each among Charter Holdings
and Charter Capital, as the issuers, and BNY Midwest Trust
Company, as trustee. In March 2001, Charter Holdings and Charter
Capital exchanged these notes for new January 2001 Charter
Holdings notes, with substantially similar terms, except that
the new January 2001 Charter Holdings notes are registered under
the Securities Act and, therefore, do not bear legends
restricting their transfer, and are not subject to further
registration or special interest obligations.
The January 2001 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2001 10.750% Charter Holdings notes mature
on October 1, 2009, and as of December 31, 2003, there
was $874 million in total principal amount of these notes
outstanding. The January 2001 11.125% Charter Holdings notes
mature on January 15, 2011 and as of December 31,
2003, there was $500 million in total principal amount
outstanding. The January 2001 13.500% Charter Holdings notes
mature on January 15, 2011 with a total principal amount at
maturity of $675 million. As of December 31, 2003, the
total accreted value of these 13.500% notes was
approximately $517 million. Cash interest on the January
2001 13.500% Charter Holdings notes will not accrue prior to
January 15, 2006.
The January 2001 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with all other current and future unsubordinated
obligations of Charter Holdings and Charter Capital, including
the March 1999, January 2000, May 2001 and January 2002 Charter
Holdings notes. They are structurally subordinated to the
obligations of Charter Holdings' subsidiaries, including
the CCH II notes, the CCO Holdings notes, and the
credit facilities.
Charter Holdings and Charter Capital will not
have the right to redeem the January 2001 10.750% Charter
Holdings notes prior to their maturity date on October 1,
2009. On or after January 15, 2006, Charter Holdings and
Charter Capital may redeem some or all of the January 2001
11.125% Charter Holdings notes and the January 2001 13.500%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the January 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
January 15, 2009.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2001 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999 and January
2000 Charter Holdings notes.
May 2001 Charter Holdings
Notes.
The May 2001 Charter Holdings
notes were issued under three separate indentures, each among
Charter Holdings and Charter Capital, as the issuers, and BNY
Midwest
F-23
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Trust Company, as trustee. In September 2001,
Charter Holdings and Charter Capital exchanged substantially all
of these notes for new May 2001 Charter Holdings notes, with
substantially similar terms, except that the new May 2001
Charter Holdings notes are registered under the Securities Act
and, therefore, do not bear legends restricting their transfer,
and are not subject to further registration or special interest
obligations.
The May 2001 Charter Holdings notes are general
unsecured obligations of Charter Holdings and Charter Capital.
The May 2001 9.625% Charter Holdings notes mature on
November 15, 2009, and as of December 31, 2003,
combined with the January 2002 additional bond issue discussed
below, there was $640 million in total principal amount
outstanding. The May 2001 10.000% Charter Holdings notes mature
on May 15, 2011 and as of December 31, 2003, combined
with the January 2002 additional bond issue discussed below,
there was $710 million in total principal amount
outstanding. The May 2001 11.750% Charter Holdings notes issued
in the total principal amount at maturity of $1.0 billion
mature on May 15, 2011 and as of December 31, 2003,
the total principal amount outstanding was $939 million and
the total accreted value of the 11.750% notes was
approximately $717 million. Cash interest on the May 2001
11.750% Charter Holdings notes will not accrue prior to
May 15, 2006.
The May 2001 Charter Holdings notes are senior
debts of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsubordinated obligations of
Charter Holdings and Charter Capital, including the March 1999,
January 2000, January 2001 and January 2002 Charter Holdings
notes. They are structurally subordinated to the obligations of
Charter Holdings' subsidiaries, including the CCH II
notes, the CCO Holdings notes, and the credit facilities.
Charter Holdings and Charter Capital will not
have the right to redeem the May 2001 9.625% Charter Holdings
notes prior to their maturity date on November 15, 2009.
Before May 15, 2004, Charter Holdings and Charter Capital
may redeem up to 35% of the May 2001 10.000% Charter Holdings
notes and the May 2001 11.750% Charter Holdings notes, in each
case, at a premium with proceeds of certain offerings of equity
securities. In addition, on or after May 15, 2006, Charter
Holdings and Charter Capital may redeem some or all of the May
2001 10.000% Charter Holdings notes and the May 2001 11.750%
Charter Holdings notes at any time, in each case, at a premium.
The optional redemption price declines to 100% of the principal
amount of the May 2001 Charter Holdings notes redeemed, plus
accrued and unpaid interest, if any, for redemption on or after
May 15, 2009.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding May 2001 Charter Holdings notes
at 101% of their total principal amount or accreted value, as
applicable, plus accrued and unpaid interest, if any.
The indentures governing the May 2001 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000 and January 2001 Charter Holdings notes.
January 2002 Charter Holdings Notes.
The January 2002 Charter Holdings
notes were issued under three separate indentures, each among
Charter Holdings and Charter Capital, as the issuers, and BNY
Midwest Trust Company, as trustee, two of which were supplements
to the indentures for the May 2001 Charter Holdings notes. In
July 2002, Charter Holdings and Charter Capital exchanged
substantially all of these notes for new January 2002 Charter
Holdings notes, with substantially similar terms, except that
the new January 2002 notes are registered under the Securities
Act and, therefore, do not bear legends restricting their
transfer and are not subject to further registration or special
interest obligations.
The January 2002 Charter Holdings notes are
general unsecured obligations of Charter Holdings and Charter
Capital. The January 2002 Charter Holdings notes consisted of
$350 million in total principal
F-24
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
amount of 9.625% senior notes due 2009,
$300 million in total principal amount of
10.000% senior notes due 2011 (both combined with their
respective May 2001 issue in the tabular presentation above) and
$330 million in total principal amount at maturity of
12.125% senior discount notes due 2012.
The January 2002 12.125% senior discount
notes mature on January 15, 2012, and as of
December 31, 2003, the total principal amount outstanding
was $330 million and the total accreted value of these
notes was approximately $231 million. Cash interest on the
January 2002 12.125% Charter Holdings notes will not accrue
prior to January 15, 2007.
The January 2002 Charter Holdings notes are
senior debts of Charter Holdings and Charter Capital. They rank
equally with the current and future unsecured and unsubordinated
debt of Charter Holdings, including the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes. They are
structurally subordinated to the obligations of Charter
Holdings' subsidiaries, including the CCH II notes,
the CCO Holdings notes, and the credit facilities.
The Charter Holdings 12.125% senior discount
notes are redeemable at the option of the issuers at amounts
decreasing from 106.063% to 100% of accreted value beginning
January 15, 2007. At any time prior to January 15,
2005, the issuers may redeem up to 35% of the total principal
amount of the 12.125% senior discount notes at a redemption
price of 112.125% of the accreted value under certain conditions.
In the event that a specified change of control
event occurs, Charter Holdings and Charter Capital must offer to
repurchase any then outstanding January 2002 Charter Holdings
notes at 101% of their total principal amount or accreted value,
as applicable, plus accrued and unpaid interest, if any.
The indentures governing the January 2002 Charter
Holdings notes contain substantially identical events of
default, affirmative covenants and negative covenants as those
contained in the indentures governing the March 1999, January
2000, January 2001 and May 2001 Charter Holdings notes.
CCH II Notes.
In September 2003, CCH II and CCH II Capital Corp.
jointly issued $1.6 billion total principal amount of
10.25% senior notes due 2010. The CCH II notes are
general unsecured obligations of CCH II and CCH II
Capital Corp. They rank equally with all other current or future
unsubordinated obligations of CCH II and CCH II Capital
Corp. The CCH II notes are structurally subordinated to all
obligations of subsidiaries of CCH II, including the CCO
Holdings notes and the credit facilities.
Interest on the CCH II notes accrues at
10.25% per annum, from September 23, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each March 15 and September 15, commencing on
March 15, 2004.
At any time prior to September 15, 2006, the
issuers of the CCH II notes may redeem up to 35% of the
total principal amount of the CCH II notes on a pro rata
basis at a redemption price equal to 110.25% of the principal
amount of CCH II notes redeemed, plus any accrued and
unpaid interest.
On or after September 15, 2008, the issuers
of the CCH II notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 105.125% to a redemption price on or after
September 15, 2009 of 100.0% of the principal amount of the
CCH II notes redeemed, plus, in each case, any accrued and
unpaid interest.
In the event of specified change of control
events, CCH II must offer to purchase the outstanding
CCH II notes from the holders at a purchase price equal to
101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
F-25
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
CCO Holdings Notes.
In November 2003, CCO Holdings and CCO Holdings Capital Corp.
jointly issued $500 million total principal amount of
8 3/4% senior notes due 2013. The CCO Holdings notes
are general unsecured obligations of CCO Holdings and CCO
Holdings Capital Corp. They rank equally with all other current
or future unsubordinated obligations of CCO Holdings and CCO
Holdings Capital Corp. The CCO Holdings notes are structurally
subordinated to all obligations of its subsidiaries, including
the credit facilities.
Interest on the CCO Holdings senior notes accrues
at 8 3/4% per year, from November 10, 2003 or, if
interest already has been paid, from the date it was most
recently paid. Interest is payable semi-annually in arrears on
each May 15 and November 15, commencing on
May 15, 2004.
At any time prior to November 15, 2006, the
issuers of the CCO Holdings senior notes may redeem up to 35% of
the total principal amount of the CCO Holdings senior notes to
the extent of public equity proceeds they have received on a pro
rata basis at a redemption price equal to 108.75% of the
principal amount of CCO Holdings senior notes redeemed, plus any
accrued and unpaid interest.
On or after November 15, 2008, the issuers
of the CCO Holdings senior notes may redeem all or a part of the
notes at a redemption price that declines ratably from the
initial redemption price of 104.375% to a redemption price on or
after November 15, 2011 of 100.0% of the principal amount
of the CCO Holdings senior notes redeemed, plus, in each case,
any accrued and unpaid interest.
In the event of specified change of control
events, CCO Holdings must offer to purchase the outstanding CCO
Holdings senior notes from the holders at a purchase price equal
to 101% of the total principal amount of the notes, plus any
accrued and unpaid interest.
Renaissance Notes.
In connection with the acquisition of Renaissance in April 1999,
the Company assumed $163 million principal amount at
maturity of 10.000% senior discount notes due 2008 of which
$49 million was repurchased in May 1999. The Renaissance
notes did not require the payment of interest until
April 15, 2003. From and after April 15, 2003, the
Renaissance notes bear interest, payable semi-annually in cash,
on April 15 and October 15, commencing on
October 15, 2003. The Renaissance notes are due on
April 15, 2008.
CC V Holdings Notes.
Charter Holdco acquired CC V Holdings in November 1999 and
assumed CC V Holdings' outstanding 11.875% senior
discount notes due 2008 with an accreted value of
$113 million as of December 31, 2003. Commencing
December 1, 2003, cash interest on the CC V Holdings
11.875% notes will be payable semi-annually on June 1
and December 1 of each year.
High-Yield Restrictive Covenants; Limitation
on Indebtedness.
The indentures
governing the notes of the Company's subsidiaries contain
certain covenants that restrict the ability of Charter Holdings,
Charter Capital, CCH II, CCH II Capital Corp., CCO
Holdings, CCO Holdings Capital Corp., the CC V Holdings
notes issuers, Renaissance Media Group, and all of their
restricted subsidiaries to:
•
incur additional debt;
•
pay dividends on equity or repurchase equity;
•
grant liens;
•
make investments;
•
sell all or substantially all of their assets or
    merge with or into other companies;
•
sell assets;
F-26
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
•
enter into sale-leasebacks;
•
in the case of restricted subsidiaries, create or
    permit to exist dividend or payment restrictions with respect to
    the bond issuers, guarantee their parent companies debt, or
    issue specified equity interests; and
•
engage in certain transactions with affiliates.
Charter Operating Credit
Facilities.
The Charter Communications
Operating, LLC ("Charter Operating") credit facilities
were amended and restated as of June 19, 2003 to allow for
the insertion of intermediate holding companies between Charter
Holdings and Charter Operating. In exchange for the
lenders' consent to the organizational restructuring,
Charter Operating's pricing increased by 50 basis
points across all levels in the pricing grid then in effect
under the Charter Operating credit facilities.
Obligations under the Charter Operating credit
facilities are guaranteed by Charter Holdings, CCO Holdings and
by Charter Operating's subsidiaries, other than the
non-recourse subsidiaries, subsidiaries precluded from so
guaranteeing by reason of the provisions of other indebtedness
to which they are subject, and immaterial subsidiaries. The
non-recourse subsidiaries include CCO NR Holdings, LLC, and
subsidiaries contributed to CCO NR Holdings, LLC by Charter
Holdings in the recent organizational restructuring that
occurred in June and July of 2003, including the CC V/CC VIII
Companies, the CC VI Companies and the CC VII
Companies and their respective subsidiaries. The obligations
under the Charter Operating credit facilities are secured by
pledges of all equity interests in Charter Operating's
direct subsidiaries, all equity interests owned by its guarantor
subsidiaries in their respective subsidiaries, and intercompany
obligations owing to Charter Operating and/or its guarantor
subsidiaries by their affiliates. The obligations are also
secured by a pledge of CCO Holdings' equity interests in
all of its direct subsidiaries (including Charter Operating) as
collateral under these credit facilities.
The Charter Operating credit facilities provide
for borrowings of up to $5.1 billion and provide for four
term facilities: two Term A facilities with a total principal
amount of $1.1 billion that matures in September 2007, each
with different amortization schedules, one that began in June
2002 and one beginning in September 2005; and two Term B
facilities with a total principal amount of $2.7 billion,
of which $1.8 billion matures in March 2008 and
$884 million matures in September 2008. The amortization of
the principal amount of the Term B term loan facilities is
substantially "back-ended," with more than 90% of the
principal balance due in the year of maturity. The Charter
Operating credit facilities also provide for two revolving
credit facilities, in a total amount of $1.3 billion, one
which will reduce annually beginning in March 2004 and one which
will reduce quarterly beginning in September 2005, with a
maturity date in September 2007. Supplemental credit facilities
in the amount of $100 million may be available from lenders
within or outside the lending group that agree to provide it.
Amounts under the Charter Operating credit facilities bear
interest at the Eurodollar rate or the base rate, each as
defined, plus a margin of up to 3.0% for Eurodollar loans (3.15%
to 3.92% as of December 31, 2003 and 3.13% to 4.58% as of
December 31, 2002) and 2.0% for base rate loans. A
quarterly commitment fee of between 0.25% and 0.375% per
annum is payable on the unborrowed balance of the revolving
credit facilities.
As of December 31, 2003, outstanding
borrowings under the Charter Operating credit facilities were
approximately $4.5 billion and the unused total potential
availability was $681 million, although financial covenants
limited the availability under these facilities to
$213 million as of December 31, 2003.
CC VI Operating Credit
Facilities.
The obligations under the
CC VI Operating credit facilities are guaranteed by
CC VI Operating's parent, CC VI Holdings, LLC,
and by the subsidiaries of CC VI Operating other than immaterial
subsidiaries. The obligations under the CC VI Operating
credit facilities are secured by pledges of all equity interests
owned by CC VI Operating and its guarantor subsidiaries in
F-27
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
other persons, and by intercompany obligations
owing CC VI Operating and/or its guarantor subsidiaries by their
affiliates, but are not secured by other assets of CC VI
Operating or its subsidiaries. The obligations under the
CC VI Operating credit facilities are also secured by
pledges by CC VI Holdings of all equity interests it holds
in other persons, and intercompany obligations owing to it by
its affiliates, but are not secured by the other assets of
CC VI Holdings.
The CC VI Operating credit facilities
provide for two term facilities, one with a principal amount of
$380 million that matures May 2008 (Term A), and the other
with a principal amount of $372 million that matures
November 2008 (Term B). The CC VI Operating credit
facilities also provide for a $350 million reducing
revolving credit facility with a maturity date in May 2008.
Supplemental credit facilities in the amount of approximately
$300 million may be available until December 31, 2004
from lenders within or outside the lending group that agree to
provide it. Amounts under the CC VI Operating credit
facilities bear interest at the Eurodollar rate or the base
rate, each as defined, plus a margin of up to 2.5% for
Eurodollar loans (2.40% to 3.66% as of December 31, 2003
and 2.62% to 4.31% as of December 31, 2002) and 1.5% for
base rate loans. A quarterly commitment fee of 0.25% per
year is payable on the unborrowed balance of the Term A
facility and the revolving facility.
As of December 31, 2003, outstanding
borrowings under the CC VI Operating credit facilities were
$868 million and unused total potential availability was
$234 million, although financial covenants limited the
availability under these facilities to $119 million as of
December 31, 2003.
Falcon Cable Credit
Facilities.
The obligations under the
Falcon credit facilities are guaranteed by the direct parent of
Falcon Cable Communications, Charter Communications VII, LLC,
and by the subsidiaries of Falcon Cable Communications (except
for certain excluded subsidiaries). The obligations under the
Falcon credit facilities are secured by pledges of all of the
equity interests in the guarantor subsidiaries of Falcon Cable
Communications, but are not secured by other assets of Falcon
Cable Communications or its subsidiaries. The obligations under
the Falcon credit facilities are also secured by a pledge of the
equity interests of Charter Communications VII in Falcon
Cable Communications and intercompany obligations owing to
Charter Communications VII by Falcon Cable Communications
and its guarantor subsidiaries, but are not secured by the other
assets of Charter Communications VII.
The Falcon credit facilities provide for two term
facilities, one with a principal amount of $190 million
that matures June 2007 (Term B), and the other with the
principal amount of $285 million that matures December 2007
(Term C). The Falcon credit facilities also provide for a
reducing revolving facility of up to approximately
$60 million (maturing in December 2006), a reducing
supplemental facility of up to approximately $105 million
(maturing in December 2007) and a second reducing revolving
facility of up to $670 million (maturing in June 2007).
Supplemental credit facilities in the amount of up to
$486 million may also be available from lenders within or
outside the lending group that agree to provide it. Amounts
under the Falcon Cable credit facilities bear interest at the
Eurodollar rate or the base rate, each as defined, plus a margin
of up to 2.25% for Eurodollar loans (2.40% to 3.42% as of
December 31, 2003 and 2.69% to 4.07% as of
December 31, 2002) and up to 1.25% for base rate loans. A
quarterly commitment fee of between 0.25% and 0.375% per
year is payable on the unborrowed balance of the revolving
facilities.
As of December 31, 2003, outstanding
borrowings were $856 million and unused total potential
availability was $454 million, although financial covenants
limited the availability under these facilities to
$366 million as of December 31, 2003.
CC VIII Operating Credit
Facilities.
The obligations under the
CC VIII Operating credit facilities are guaranteed by the
parent company of CC VIII Operating, CC VIII Holdings,
LLC, and by the
F-28
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
subsidiaries of CC VIII Operating other than
immaterial subsidiaries. The obligations under the CC VIII
Operating credit facilities are secured by pledges of all equity
interests owned by CC VIII Operating and its guarantor
subsidiaries in other persons, and by intercompany obligations
owing to CC VIII Operating and/or its guarantor
subsidiaries by their affiliates, but are not secured by other
assets of CC VIII Operating or its subsidiaries. The
obligations under the CC VIII Operating credit facilities
are also secured by pledges of equity interests owned by
CC VIII Holdings in other persons, and by intercompany
obligations owing to CC VIII Holdings by its affiliates,
but are not secured by the other assets of CC VIII Holdings.
The CC VIII Operating credit facilities provide
for borrowings of up $1.4 billion as of December 31,
2003. The CC VIII Operating credit facilities provide for
two term facilities, a Term A facility with a reduced
current total principal amount of $375 million, that
continues reducing quarterly until it reaches maturity in June
2007, and a Term B facility with a principal amount of
$490 million, that continues reducing quarterly until it
reaches maturity in February 2008. The amortization of the
principal amount of the Term B term loan facilities is
substantially "back-ended," with more than 90% of the
principal balance due in the year of maturity. The CC VIII
Operating credit facilities also provide for two reducing
revolving credit facilities, in the total amount of
$542 million, which reduce quarterly beginning in June 2002
and September 2005, respectively, with maturity dates in June
2007. Supplemental facilities in the amount of approximately
$300 million may be available from lenders within or
outside the lending group that agree to provide it. Amounts
under the CC VIII Operating credit facilities bear interest
at the Eurodollar rate or the base rate, each as defined, plus a
margin of up to 2.50% for Eurodollar loans (2.15% to 3.66% as of
December 31, 2003 and 2.89% to 4.54% as of
December 31, 2002) and up to 1.50% for base rate loans. A
quarterly commitment fee of 0.25% is payable on the unborrowed
balance of the revolving credit facilities.
As of December 31, 2003, outstanding
borrowings were $1.0 billion, and unused total potential
availability was $363 million although financial covenants
limited the availability under these facilities to
$130 million.
Credit Facility Restrictive
Covenants.
Each of the credit
facilities of the Company's subsidiaries contain
representations and warranties, affirmative and negative
covenants similar to those described above with respect to the
indentures governing the Company's notes and the notes of
the Company's subsidiaries, information requirements,
events of default and financial covenants. The financial
covenants, as defined, measure performance against standards set
for leverage, debt service coverage, and operating cash flow
coverage of cash interest expense on a quarterly basis or as
applicable. Additionally, the credit facilities contain
provisions requiring mandatory loan prepayments under specific
circumstances, including when significant amounts of assets are
sold and the proceeds are not promptly reinvested in assets
useful in the business of the borrower within a specified
period. The Charter Operating credit facility also provides that
in the event that any indebtedness of CCO Holdings remains
outstanding on the date, which is six months prior to the
scheduled final maturity, the term loans under the Charter
Operating credit facility will mature and the revolving credit
facilities will terminate on such date.
In the event of a default under the
Company's subsidiaries' credit facilities or notes,
the subsidiaries' creditors could elect to declare all
amounts borrowed, together with accrued and unpaid interest and
other fees, to be due and payable. In such event, the
subsidiaries' credit facilities and indentures that were so
accelerated or were otherwise in default will not permit the
Company's subsidiaries to distribute funds to Charter
Holdco or the Company to pay interest or principal on the notes.
A default under the covenants governing any of the
Company's debt instruments could result in the acceleration
of its payment obligations under that debt and, under certain
circumstances, in cross-defaults under the Company's other
F-29
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
debt obligations, which would have a material
adverse effect on the Company's consolidated financial
condition or results of operations. In addition, the lenders
under the Company's credit facilities could foreclose on
their collateral, which includes equity interests in the
Company's subsidiaries, and exercise other rights of
secured creditors. In any such case, the Company might not be
able to repay or make any payments on its notes. Additionally,
such a default would cause a cross-default in the indentures
governing the Charter Holdings notes and the convertible senior
notes and would trigger the cross-default provision of the
Charter Operating Credit Agreement. Any default under any of the
subsidiaries' credit facilities or notes might adversely
affect the holders of the Company's notes and the
Company's growth, financial condition and results of
operations and could force the Company to examine all options,
including seeking the protection of the bankruptcy laws.
Based upon outstanding indebtedness as of
December 31, 2003, the amortization of term loans,
scheduled reductions in available borrowings of the revolving
credit facilities, and the maturity dates for all senior and
subordinated notes and debentures, total future principal
payments on the total borrowings under all debt agreements as of
December 31, 2003, are as follows:
Year
Amount
2004
$
188
2005
1,044
2006
1,155
2007
2,531
2008
3,762
Thereafter
10,528
$
19,208
For the amounts of debt scheduled to mature
during 2004, it is management's intent to fund the
repayments from borrowings on the Company's revolving
credit facility. The accompanying consolidated balance sheet
reflects this intent by presenting all debt balances as
long-term while the table above reflects actual debt maturities
as of the stated date.
10.
Minority Interest and Equity Interest of
    Charter Holdco
The Company is a holding company whose primary
asset is a controlling equity interest in Charter Holdco, the
indirect owner of the Company's cable systems and mirror
notes that are payable by Charter Holdco to the Company which
have the same principal amount and terms as those of
Charter's convertible senior notes. Minority interest on
the Company's consolidated balance sheets represents the
ownership percentages of Charter Holdco not owned by the
Company, or 54% of total members' equity of Charter Holdco,
plus $694 million, $668 million and $655 million
of preferred membership interests in CC VIII, LLC
(CC VIII), an indirect subsidiary of Charter Holdco, as of
December 31, 2003, 2002 and 2001, respectively. As more
fully described in Note 22, this preferred interest arises
from the approximately $630 million of preferred membership
units issued by CC VIII in connection with the Bresnan
acquisition in February, 2000. As of December 31, 2003 and
December 31, 2002, minority interest also includes
$25 million of preferred interest in Charter Helicon, LLC
issued in connection with the Helicon acquisition.
Members' equity of Charter Holdco was
($57) million, $662 million and $7.0 billion as
of December 31, 2003, 2002 and 2001, respectively. Gains
and losses arising from the issuance by Charter Holdco of its
membership units are recorded as capital transactions, thereby
increasing or decreasing
F-30
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
shareholders' equity and decreasing or
increasing minority interest on the accompanying consolidated
balance sheets. Minority interest was 53.5% as of
December 31, 2003, 2002 and 2001. Minority interest
includes the proportionate share of changes in fair value of
interest rate risk management derivative agreements. Such
amounts are temporary as they are contractually scheduled to
reverse over the life of the underlying instrument.
Additionally, reported losses allocated to minority interest on
the statement of operations will be limited to the extent of any
remaining minority interest on the balance sheet related to
Charter Holdco. Accordingly, commencing in 2004, the Company
expects to absorb all, or substantially all, future losses
before income taxes, since the minority interest in Charter
Holdco was substantially eliminated at December 31, 2003,
subject to any changes in Charter Holdco's capital
structure. Changes to minority interest consist of the following
for the periods presented:
Minority
Interest
Balance, December 31, 2000
$
4,571
Equity reclassified from redeemable securities
    (26,539,746 shares of Class A common stock)
1,096
Minority interest in loss of a subsidiary
(1,461
)
Minority interest in change in accounting
    principle
(14
)
Minority interest in income tax benefit
16
Changes in fair value of interest rate agreements
(22
)
Gain on issuance of equity by Charter Holdco
253
Other
(5
)
Balance, December 31, 2001
4,434
Minority interest in loss of a subsidiary
(3,176
)
Minority interest in change in accounting
    principle
(306
)
Minority interest in income tax benefit
132
Changes in fair value of interest rate agreements
(35
)
Other
1
Balance, December 31, 2002
1,050
Minority interest in loss of a subsidiary
(377
)
Minority interest in income tax benefit
(8
)
Changes in fair value of interest rate agreements
25
Other
(1
)
Balance, December 31, 2003
$
689
11.
Preferred Stock —
    Redeemable
On August 31, 2001, in connection with its
acquisition of Cable USA, Inc. and certain cable system assets
from affiliates of Cable USA, Inc., the Company issued
505,664 shares of Series A Convertible Redeemable
Preferred Stock (the Preferred Stock) valued at and with a
liquidation preference of $51 million. Holders of the
Preferred Stock have no voting rights but are entitled to
receive cumulative cash dividends at an annual rate of 5.75%,
payable quarterly. If for any reason Charter fails to pay the
dividends on the Preferred Stock on a timely basis, the dividend
rate on each share increases to an annual rate of 7.75% until
the payment is made. The Preferred Stock is redeemable by
Charter at its option on or
F-31
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
after August 31, 2004 and must be redeemed
by Charter at any time upon a change of control, or if not
previously redeemed or converted, on August 31, 2008. The
Preferred Stock is convertible, in whole or in part, at the
option of the holders from April 1, 2002 through
August 31, 2008, into shares of common stock at an initial
conversion rate equal to a conversion price of $24.71 per
share of common stock, subject to certain customary adjustments.
The redemption price per share of Preferred Stock is the
Liquidation Preference of $100, subject to certain customary
adjustments. In the first quarter of 2003, the Company issued
39,595 additional shares of preferred stock valued at and with a
liquidation preference of $4 million.
12.
Common Stock
The Company's Class A common stock and
Class B common stock are identical except with respect to
certain voting, transfer and conversion rights. Holders of
Class A common stock are entitled to one vote per share and
holders of Class B common stock are entitled to ten votes
per share. The Class B common stock is subject to
significant transfer restrictions and is convertible on a share
for share basis into Class A common stock at the option of
the holder.
13.
Comprehensive Loss
Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive loss on the accompanying consolidated balance
sheets. The Company reports changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations, that meet the effectiveness criteria of
SFAS No. 133,
Accounting for Derivative Instruments
and Hedging Activities
, in accumulated other comprehensive
loss, after giving effect to the minority interest share of such
gains and losses. Comprehensive loss for the years ended
December 31, 2003, 2002 and 2001 was $219 million,
$2.5 billion and $1.2 billion, respectively.
14.
Accounting for Derivative Instruments and
    Hedging Activities
The Company uses interest rate risk management
derivative instruments, such as interest rate swap agreements
and interest rate collar agreements (collectively referred to
herein as interest rate agreements) as required under the terms
of its credit facilities. The Company's policy is to manage
interest costs using a mix of fixed and variable rate debt.
Using interest rate swap agreements, the Company agrees to
exchange, at specified intervals through 2007, the difference
between fixed and variable interest amounts calculated by
reference to an agreed-upon notional principal amount. Interest
rate collar agreements are used to limit the Company's
exposure to and benefits from interest rate fluctuations on
variable rate debt to within a certain range of rates.
Effective January 1, 2001, the Company
adopted SFAS No. 133. Interest rate agreements are
recorded in the consolidated balance sheet at December 31,
2003 and 2002 as either an asset or liability measured at fair
value. In connection with the adoption of
SFAS No. 133, the Company recorded a loss of
$10 million (approximately $24 million before minority
interest effects) as the cumulative effect of change in
accounting principle. The effect of adoption was to increase net
loss and loss per share by $10 million and $0.04 per
share, respectively, for the year ended December 31, 2001.
The Company does not hold or issue derivative
instruments for trading purposes. The Company does however have
certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
are those that effectively convert variable interest payments on
certain debt instruments into fixed payments. For qualifying
hedges, SFAS No. 133 allows derivative gains and
losses to offset related results on hedged items in the
consolidated statement of operations. The Company has
F-32
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
formally documented, designated and assessed the
effectiveness of transactions that receive hedge accounting. For
the years ended December 31, 2003, 2002 and 2001, net gain
(loss) on derivative instruments and hedging activities includes
gains of $8 million and losses of $14 million and
$2 million, respectively, which represent cash flow hedge
ineffectiveness on interest rate hedge agreements arising from
differences between the critical terms of the agreements and the
related hedged obligations. Changes in the fair value of
interest rate agreements designated as hedging instruments of
the variability of cash flows associated with floating-rate debt
obligations are reported in accumulated other comprehensive
loss. For the years ended December 31, 2003, 2002 and 2001,
a gain of $48 million and losses of $65 million and
$39 million, respectively, related to derivative
instruments designated as cash flow hedges was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS No. 133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value with the impact recorded as gain (loss) on
derivative instruments and hedging activities in the
Company's statement of operations. For the years ended
December 31, 2003, 2002 and 2001, net gain (loss) on
derivative instruments and hedging activities includes gains of
$57 million and losses of $101 million and
$48 million, respectively, for interest rate derivative
instruments not designated as hedges.
As of December 31, 2003, 2002 and 2001, the
Company had outstanding $3.0 billion, $3.4 billion and
$3.3 billion and $520 million, $520 million and
$520 million, respectively, in notional amounts of interest
rate swaps and collars, respectively. The notional amounts of
interest rate instruments do not represent amounts exchanged by
the parties and, thus, are not a measure of exposure to credit
loss. The amounts exchanged are determined by reference to the
notional amount and the other terms of the contracts.
15.
Fair Value of Financial Instruments
The Company has estimated the fair value of its
financial instruments as of December 31, 2003 and 2002
using available market information or other appropriate
valuation methodologies. Considerable judgment, however, is
required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented in the
accompanying consolidated financial statements are not
necessarily indicative of the amounts the Company would realize
in a current market exchange.
The carrying amounts of cash, receivables,
payables and other current assets and liabilities approximate
fair value because of the short maturity of those instruments.
The Company is exposed to market price risk volatility with
respect to investments in publicly traded and privately held
entities.
The fair value of interest rate agreements
represents the estimated amount the Company would receive or pay
upon termination of the agreements. Management believes that the
sellers of the interest rate agreements will be able to meet
their obligations under the agreements. In addition, some of the
interest rate agreements are with certain of the participating
banks under the Company's credit facilities, thereby
reducing the exposure to credit loss. The Company has policies
regarding the financial stability and credit standing of major
counterparties. Nonperformance by the counterparties is not
anticipated nor would it have a material adverse effect on the
Company's consolidated financial condition or results of
operations.
F-33
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The estimated fair value of the Company's
notes, credit facilities and interest rate agreements at
December 31, 2003 and 2002 are based on quoted market
prices or a discounted cash flow analysis using the
Company's incremental borrowing rate for similar types of
borrowing arrangements and dealer quotations.
A summary of the carrying value and fair value of
the Company's debt and related interest rate agreements at
December 31, 2003 and 2002 is as follows:
2003
2002
Carrying
Fair
Carrying
Fair
Value
Value
Value
Value
Debt
Charter convertible notes
$
774
$
732
$
1,383
$
295
Charter Holdings debt
8,316
7,431
9,222
3,867
CCH II debt
1,601
1,680
—
—
CCO Holdings debt
500
510
—
—
Credit facilities
7,227
6,949
7,789
6,367
Other
229
238
277
212
Interest Rate Agreements
Assets (Liabilities)
Swaps
(171
)
(171
)
(258
)
(258
)
Collars
(8
)
(8
)
(34
)
(34
)
The weighted average interest pay rate for the
Company's interest rate swap agreements was 7.25% and 7.40%
at December 31, 2003 and 2002, respectively. The
Company's interest rate collar agreements are structured so
that if LIBOR falls below 5.3%, the Company pays 6.7%. If the
LIBOR rate is between 5.3% and 8.0%, the Company pays LIBOR. The
LIBOR rate is capped at 8.0%, if LIBOR is between 8.0% and 9.9%.
If the LIBOR rate rises above 9.9%, the cap is removed.
16.
Revenues
Revenues consist of the following for the years
presented:
Year Ended December 31,
2003
2002
2001
Video
$
3,461
$
3,420
$
2,971
High-speed data
556
337
148
Advertising sales
263
302
197
Commercial
204
161
123
Other
335
346
368
$
4,819
$
4,566
$
3,807
F-34
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
17.
Operating Expenses
Operating expenses consist of the following for
the years presented:
Year Ended December 31,
2003
2002
2001
Programming
$
1,249
$
1,166
$
963
Advertising sales
88
87
64
Service
615
554
459
$
1,952
$
1,807
$
1,486
18.
Selling, General and Administrative
    Expenses
Selling, general and administrative expenses
consist of the following for the years presented:
Year Ended December 31,
2003
2002
2001
General and administrative
$
833
$
810
$
689
Marketing
107
153
137
$
940
$
963
$
826
19.
Stock Compensation Plans
The Company grants stock options, restricted
stock and other incentive compensation pursuant to the 2001
Stock Incentive Plan of Charter (the "2001 Plan").
Prior to 2001, options were granted under the 1999 Option Plan
of Charter Holdco (the "1999 Plan").
The 1999 Plan provided for the grant of options
to purchase membership units in Charter Holdco to current and
prospective employees and consultants of Charter Holdco and its
affiliates and current and prospective non-employee directors of
Charter. Options granted generally vest over five years from the
grant date, with 25% vesting 15 months after the
anniversary of the grant date and ratably thereafter. Options
not exercised accumulate and are exercisable, in whole or in
part, in any subsequent period, but not later than 10 years
from the date of grant. Membership units received upon exercise
of the options are automatically exchanged into Class A
common stock of Charter on a one-for-one basis.
The 2001 Plan provides for the grant of
non-qualified stock options, stock appreciation rights, dividend
equivalent rights, performance units and performance shares,
share awards, phantom stock and/or shares of restricted stock
(not to exceed 3,000,000), as each term is defined in the 2001
Plan. Employees, officers, consultants and directors of the
Company and its subsidiaries and affiliates are eligible to
receive grants under the 2001 Plan. Options granted generally
vest over four years from the grant date, with 25% vesting on
the anniversary of the grant date and ratably thereafter.
Generally, options expire 10 years from the grant date.
The 2001 Plan allows for the issuance of up to a
total of 90,000,000 shares of Charter Class A common
stock (or units convertible into Charter Class A common
stock). The total shares available reflect a July 2003 amendment
to the 2001 Plan approved by the board of directors and the
shareholders of Charter to increase available shares by
30,000,000 shares. In 2001, any shares covered by options
that terminated under the 1999 Plan were transferred to the 2001
Plan, and no new options can be granted under the 1999 Plan.
F-35
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
During July and October 2003, in connection with
new employment agreements and related option agreements entered
into by the Company, certain executives and directors were
awarded a total of 80,603 shares of restricted Class A
common stock. The shares vest monthly over a twelve-month period
beginning on the date of grant. During September and October
2001, in connection with new employment agreements and related
option agreements entered into by the Company, certain
executives of the Company were awarded a total of
256,000 shares of restricted Class A common stock, of
which 140,063 shares had been cancelled as of
December 31, 2003. The shares vested 25% upon grant, with
the remaining shares vesting monthly over a three-year period
beginning after the first anniversary of the date of grant. As
of December 31, 2003, deferred compensation remaining to be
recognized in future periods totaled $0.2 million.
A summary of the activity for the Company's
stock options, excluding granted shares of restricted
Class A common stock, for the years ended December 31,
2003, 2002 and 2001, is as follows (amounts in thousands, except
per share data):
2003
2002
2001
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
Options outstanding, beginning of period
53,632
$
14.22
46,558
$
17.10
28,482
$
19.24
Granted
7,983
3.53
13,122
4.88
29,395
16.01
Exercised
(165
)
3.96
—
—
(278
)
19.23
Cancelled
(13,568
)
14.10
(6,048
)
16.32
(11,041
)
19.59
Options outstanding, end of period
47,882
$
12.48
53,632
$
14.22
46,558
$
17.10
Weighted average remaining contractual life
8 years
8 years
9 years
Options exercisable, end of period
22,861
$
16.36
17,844
$
17.93
9,994
$
18.51
Weighted average fair value of options granted
$
2.71
$
2.89
$
9.15
The following table summarizes information about
stock options outstanding and exercisable as of
December 31, 2003:
Options Outstanding
Options Exercisable
Weighted-
Weighted-
Average
Weighted-
Average
Weighted-
Remaining
Average
Remaining
Average
Range of
Number
Contractual
Exercise
Number
Contractual
Exercise
Exercise Prices
Outstanding
Life
Price
Exercisable
Life
Price
(In thousands)
(in thousands)
$ 1.11 — $ 2.85
9,809
9 years
$
2.31
1,718
9 years
$
2.49
$ 3.91 — $ 9.13
6,309
9 years
5.52
319
8 years
9.13
$11.99 — $19.47
20,243
7 years
14.65
12,191
7 years
15.34
$20.00 — $23.09
11,521
6 years
21.19
8,633
6 years
20.83
On January 1, 2003, the Company adopted the
fair value measurement provisions of SFAS No. 123,
under which the Company recognizes compensation expense of a
stock-based award to an employee over
F-36
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
the vesting period based on the fair value of the
award on the grant date. Adoption of these provisions resulted
in utilizing a preferable accounting method as the consolidated
financial statements present the estimated fair value of
stock-based compensation in expense consistently with other
forms of compensation and other expense associated with goods
and services received for equity instruments. In accordance with
SFAS No. 123, the fair value method will be applied
only to awards granted or modified after January 1, 2003,
whereas awards granted prior to such date will continue to be
accounted for under APB No. 25, unless they are modified or
settled in cash. The ongoing effect on consolidated results of
operations or financial condition will be dependent upon future
stock based compensation awards granted. The Company recorded
$4 million of option compensation expense for the year
ended December 31, 2003.
Prior to the adoption of SFAS No. 123,
the Company used the intrinsic value method prescribed by APB
No. 25,
Accounting for Stock Issued to Employees
, to
account for the option plans. Option compensation expense of
$5 million and net option compensation benefit of
$5 million for the years ended December 31, 2002 and
2001, respectively, was recorded in the consolidated statements
of operations since the exercise prices of certain options were
less than the estimated fair values of the underlying membership
interests on the date of grant. A reversal of previously
recognized option compensation expense of $22 million for
the year ended December 31, 2001 was recorded in the
consolidated statements of operations primarily in connection
with the waiver of the right to approximately seven million
options by the Company's former President and Chief
Executive Officer as part of his September 2001 separation
agreement. This was partially offset by expense recorded because
exercise prices on certain options were less than the estimated
fair values of the Company's stock at the time of grant.
Estimated fair values were determined by the Company using the
valuation inherent in the companies acquired by Paul G. Allen in
1998 and valuations of public companies in the cable television
industry adjusted for factors specific to the Company.
Compensation expense is being recorded with the method described
in FASB Interpretation No. 28 over the vesting period of
the individual options that varies between four and five years.
As of December 31, 2003, no deferred compensation remained
to be recognized in future periods. No stock option compensation
expense was recorded for the options granted after
November 8, 1999, since the exercise price was equal to the
estimated fair value of the underlying membership interests or
shares of Class A common stock on the date of grant. Since
the membership units are exchangeable into Class A common
stock of Charter on a one-for-one basis, the estimated fair
value was equal to the quoted market values of Class A
common stock.
In January 2004, the Company commenced an option
exchange program in which employees of the Company and its
subsidiaries were offered the right to exchange all stock
options (vested and unvested) issued under the 1999 Charter
Communications Option Plan and 2001 Stock Incentive Plan that
had an exercise price over $10 per share for shares of
restricted Charter Class A common stock or, in some
instances, cash. Based on a sliding exchange ratio, which varied
depending on the exercise price of an employees outstanding
options, if an employee would have received more than
400 shares of restricted stock in exchange for tendered
options, Charter issued that employee shares of restricted stock
in the exchange. If, based on the exchange ratios, an employee
would have received 400 or fewer shares of restricted stock in
exchange for tendered options, Charter instead paid the employee
cash in an amount equal to the number of shares the employee
would have received multiplied by $5.00. The offer applied to
options (vested and unvested) to purchase a total of
22,929,573 shares of Class A common stock, or
approximately 48% of the Company's 47,882,365 total options
issued and outstanding as of December 31, 2003.
Participation by employees was voluntary. Those members of the
Company's board of directors who were not also employees of
the Company or any of its subsidiaries were not eligible to
participate in the exchange offer.
F-37
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
In the closing of the exchange offer on
February 20, 2004, the Company accepted for cancellation
eligible options to purchase approximately
18,137,664 shares of its Class A common stock. In
exchange, the Company granted 1,966,686 shares of
restricted stock, including 460,777 performance shares to
eligible employees of the rank of senior vice president and
above, and paid a total cash amount of approximately
$4 million (which amount includes applicable withholding
taxes) to those employees who received cash rather than shares
of restricted stock. The grants of restricted stock were
effective as of February 25, 2004. Employees tendered
approximately 79% of the options eligible to be exchanged under
the program.
Based on the results above, the cost to the
Company of the Stock Option Exchange Program was approximately
$12 million, with a 2004 cash compensation expense of
approximately $4 million and a non-cash compensation
expense of approximately $8 million to be expensed ratably
over the three-year vesting period of the restricted stock in
the exchange.
In January 2004, the Compensation Committee of
the board of directors of Charter approved Charter's
Long-Term Incentive Program ("LTIP"), which is a
program administered under the 2001 Stock Incentive Plan.
Employees of Charter and its subsidiaries whose pay
classifications exceed a certain level are eligible to receive
stock options, and more senior level employees are eligible to
receive stock options and performance shares. Under the LTIP,
the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance shares are
earned on the third anniversary of the grant date, conditional
upon Charter's performance against financial performance
measures and customer growth targets established by
Charter's management and approved by its board of directors
as of the time of the award. No awards were made under the LTIP
in 2003.
20.
Special Charges
In the fourth quarter of 2002, the Company
recorded a special charge of $35 million, of which
$31 million was associated with its workforce reduction
program and the consolidation of its operations from three
divisions and ten regions into five operating divisions,
elimination of redundant practices and streamlining its
management structure. The remaining $4 million related to
legal and other costs associated with the Company's ongoing
grand jury investigation, shareholder lawsuits and SEC
investigation. The $31 million charge related to
realignment activities, included severance costs of
$28 million related to approximately 1,400 employees
identified for termination as of December 31, 2002 and
lease termination costs of $3 million. During the year
ended December 31, 2003, an additional 1,400 employees
were identified for termination and additional severance costs
of $20 million and additional lease costs of
$6 million were recorded in special charges. In total,
approximately 2,600 employees were terminated during the year
ended December 31, 2003. Severance payments are generally
made over a period of up to twelve months with approximately
$39 million paid during the year ended December 31,
2003. The Company paid $4 million in lease termination
costs during the year ended December 31, 2003. As of
December 31, 2003 and December 31, 2002, a liability
of approximately $14 million and $31 million,
respectively, is recorded on the accompanying consolidated
balance sheets related to the realignment activities. For the
year ended December 31, 2003, the additional severance
costs were offset by a $5 million settlement from the
Internet service provider Excite@Home related to the conversion
of high-speed data customers to Charter Pipeline service in 2001.
During the year ended December 31, 2001, the
Company recorded $18 million in special charges that
represent $15 million of costs associated with the
transition of approximately 145,000 (unaudited) data
customers from the Excite@Home Internet service to the Charter
Pipeline Internet service.
In December 2001, the Company implemented a
restructuring plan to reduce its workforce in certain markets
and reorganize its operating divisions from two to three and
operating regions from twelve to ten.
F-38
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The restructuring plan was completed during the
first quarter of 2002, resulting in the termination of
approximately 320 employees and severance costs of
$4 million of which $1 million was recorded in the
first quarter of 2002 and $3 million was recorded in the
fourth quarter of 2001.
21.
Income Taxes
All operations are held through Charter Holdco
and its direct and indirect subsidiaries. Charter Holdco and the
majority of its subsidiaries are not subject to income tax.
However, certain of these subsidiaries are corporations and are
subject to income tax. All of the taxable income, gains, losses,
deductions and credits of Charter Holdco are passed through to
its members: Charter, Charter Investment, Inc. and Vulcan
Cable III Inc. Charter is responsible for its share of
taxable income or loss of Charter Holdco allocated to it in
accordance with the Charter Holdco limited liability company
agreement ("LLC Agreement") and partnership tax rules
and regulations.
The LLC Agreement provides for certain special
allocations of net tax profits and net tax losses (such net tax
profits and net tax losses being determined under the applicable
federal income tax rules for determining capital accounts).
Pursuant to the LLC Agreement, through the end of 2003, net tax
losses of Charter Holdco that would otherwise have been
allocated to Charter based generally on its percentage ownership
of outstanding common units were allocated instead to membership
units held by Vulcan Cable III Inc. and Charter Investment,
Inc. (the "Special Loss Allocations") to the extent of
their respective capital account balances. After 2003, pursuant
to the LLC Agreement, net tax losses of Charter Holdco are to be
allocated to Charter, Vulcan Cable III Inc. and Charter
Investment, Inc. based generally on their respective percentage
ownership of outstanding common units to the extent of their
respective capital account balances. The LLC Agreement further
provides that, beginning at the time Charter Holdco generates
net tax profits, the net tax profits that would otherwise have
been allocated to Charter based generally on its percentage
ownership of outstanding common membership units will instead
generally be allocated to Vulcan Cable III Inc. and Charter
Investment, Inc. (the "Special Profit Allocations").
The Special Profit Allocations to Vulcan Cable III Inc. and
Charter Investment, Inc. will generally continue until the
cumulative amount of the Special Profit Allocations offsets the
cumulative amount of the Special Loss Allocations. The amount
and timing of the Special Profit Allocations are subject to the
potential application of, and interaction with, the Curative
Allocation Provisions described in the following paragraph. The
LLC Agreement generally provides that any additional net tax
profits are to be allocated among the members of Charter Holdco
based generally on their respective percentage ownership of
Charter Holdco common membership units.
Because the respective capital account balance of
each of Vulcan Cable III Inc. and Charter Investment, Inc.
was reduced to zero by December 31, 2002, certain net tax
losses of Charter Holdco that were to be allocated for 2002,
2003 (subject to resolution of the issue described in
Note 22) and possibly later years to Vulcan Cable III
Inc. and Charter Investment, Inc. will instead be allocated to
Charter (the "Regulatory Allocations"). The LLC
Agreement further provides that, to the extent possible, the
effect of the Regulatory Allocations is to be offset over time
pursuant to certain curative allocation provisions (the
"Curative Allocation Provisions") so that, after
certain offsetting adjustments are made, each member's
capital account balance is equal to the capital account balance
such member would have had if the Regulatory Allocations had not
been part of the LLC Agreement. The cumulative amount of the
actual tax losses allocated to Charter as a result of the
Regulatory Allocations through the year ended December 31,
2003 is approximately $2.0 billion to $2.6 billion
pending the resolution of the issue described in Note 22.
F-39
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
As a result of the Special Loss Allocations and
the Regulatory Allocations referred to above, the cumulative
amount of losses of Charter Holdco allocated to Vulcan
Cable III Inc. and Charter Investment, Inc. is in excess of
the amount that would have been allocated to such entities if
the losses of Charter Holdco had been allocated among its
members in proportion to their respective percentage ownership
of Charter Holdco common membership units. The cumulative amount
of such excess losses was approximately $3.1 billion
through December 31, 2002 and $2.0 billion to
$2.5 billion through December 31, 2003, depending upon
the resolution of the issue described in Note 22.
In certain situations, the Special Loss
Allocations, Special Profit Allocations, Regulatory Allocations
and Curative Allocation Provisions described above could result
in Charter paying taxes in an amount that is more or less than
if Charter Holdco had allocated net tax profits and net tax
losses among its members based generally on the number of common
membership units owned by such members. This could occur due to
differences in (i) the character of the allocated income
(e.g., ordinary versus capital), (ii) the allocated
amount and timing of tax depreciation and tax amortization
expense due to the application of section 704(c) under the
Internal Revenue Code, (iii) the potential interaction
between the Special Profit Allocations and the Curative
Allocation Provisions, (iv) the amount and timing of
alternative minimum taxes paid by Charter, if any, (v) the
apportionment of the allocated income or loss among the states
in which Charter Holdco does business, and (vi) future
federal and state tax laws. Further, in the event of new capital
contributions to Charter Holdco, it is possible that the tax
effects of the Special Profit Allocations, Special Loss
Allocations, Regulatory Allocations and Curative Allocation
Provisions will change significantly pursuant to the provisions
of the income tax regulations. Such change could defer the
actual tax benefits to be derived by Charter with respect to the
net tax losses allocated to it or accelerate the actual taxable
income to Charter with respect to the net tax profits allocated
to it. As a result, it is possible under certain circumstances,
that Charter could receive future allocations of taxable income
in excess of its currently allocated tax deductions and
available tax loss carryforwards.
In addition, under their exchange agreement with
Charter, Vulcan Cable III Inc. and Charter Investment, Inc.
may exchange some or all of their membership units in Charter
Holdco for Charter's Class B common stock, be merged
with Charter, or be acquired by Charter in a non-taxable
reorganization. If such an exchange were to take place prior to
the date that the Special Profit Allocation provisions had fully
offset the Special Loss Allocations, Vulcan Cable III Inc.
and Charter Investment, Inc. could elect to cause Charter Holdco
to make the remaining Special Profit Allocations to Vulcan
Cable III Inc. and Charter Investment, Inc. immediately
prior to the consummation of the exchange. In the event Vulcan
Cable III Inc. and Charter Investment, Inc. choose not to
make such election or to the extent such allocations are not
possible, Charter would then be allocated tax profits
attributable to the membership units received in such exchange
pursuant to the Special Profit Allocation provisions.
Mr. Allen has generally agreed to reimburse Charter for any
incremental income taxes that Charter would owe as a result of
such an exchange and any resulting future Special Profit
Allocations to Charter.
For the years ended December 31, 2003, 2002
and 2001, the Company recorded deferred income tax benefits as
shown below. The income tax benefits were realized through
reductions in the deferred tax liabilities related to
Charter's investment in Charter Holdco, as well as the
deferred tax liabilities of certain of Charter's indirect
corporate subsidiaries. In 2003, Charter received tax loss
allocations from Charter Holdco. Previously, the tax losses had
been allocated to Vulcan Cable III Inc. and Charter
Investment, Inc. in accordance with the Special Loss Allocations
provided under the Charter Holdco amended and restated limited
liability company agreement. The Company does not expect to
recognize a similar benefit related to its investment in Charter
Holdco after 2003 due to limitations on its ability to offset
future tax benefits against the remaining deferred tax
liabilities. However, the actual tax provision calculation in
future periods will be the result of current and future
temporary differences, as well as future operating results.
F-40
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Current and deferred income tax expense (benefit)
is as follows:
December 31,
2003
2002
2001
Current expense:
Federal income taxes
$
1
$
—
$
—
State income taxes
1
2
—
Current income tax expense
2
2
—
Deferred benefit:
Federal income taxes
(98
)
(456
)
(11
)
State income taxes
(14
)
(66
)
(1
)
Deferred income tax benefit:
(112
)
(522
)
(12
)
Total income benefit
$
(110
)
$
(520
)
$
(12
)
The Company recorded the portion of the income
tax benefit associated with the adoption of SFAS No. 142 as
a $60 million reduction of the cumulative effect of
accounting change on the accompanying statement of operations
for the year ended December 31, 2002.
The Company's effective tax rate differs
from that derived by applying the applicable federal income tax
rate of 35%, and average state income tax rate of 5% for the
years ended December 31, 2003, 2002 and 2001 as follows:
December 31,
2003
2002
2001
Statutory federal income taxes
$
(122
)
$
(969
)
$
(409
)
State income taxes, net of federal benefit
(17
)
(138
)
(58
)
Valuation allowance provided
29
587
455
Provision for income taxes
$
(110
)
$
(520
)
$
(12
)
F-41
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The tax effects of these temporary differences
that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at December 31, 2003
and 2002 which are included in long-term liabilities are
presented below.
December 31,
2003
2002
Deferred tax assets:
Net operating loss carryforward
$
1,723
$
1,489
Other
6
9
Total gross deferred tax assets
1,729
1,498
Less: valuation allowance
(1,291
)
(1,444
)
Net deferred tax assets
$
438
$
54
Deferred tax liabilities:
Investment in Charter Holdco
$
(553
)
$
(266
)
Property, plant & equipment
(42
)
(67
)
Franchises
(260
)
(240
)
Gross deferred tax liabilities
(855
)
(573
)
Net deferred tax liabilities
$
(417
)
$
(519
)
As of December 31, 2003, the Company has
deferred tax assets of $1.7 billion, which primarily relate
to financial and tax losses allocated to Charter from Charter
Holdco. The deferred tax assets also include $912 million
of tax net operating loss carryforwards (generally expiring in
years 2004 through 2023) of Charter and its indirect corporate
subsidiaries, which are subject to certain limitations.
Valuation allowances of $480 million exist with respect to
these carryforwards.
The total valuation allowance for deferred tax
assets as of December 31, 2003 and 2002 was
$1.3 billion and $1.4 billion, respectively. In
assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion
or all of the deferred tax assets will be realized. Because of
the uncertainties in projecting future taxable income of Charter
Holdco, valuation allowances have been established except for
deferred benefits available to offset certain deferred tax
liabilities.
The Company is currently under examination by the
Internal Revenue Service for the tax years ending
December 31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
the Company's consolidated financial condition or results
of operation.
22.
Related Party Transactions
The following sets forth certain transactions in
which the Company and the directors, executive officers and
affiliates of the Company are involved. Unless otherwise
disclosed, management believes that each of the transactions
described below was on terms no less favorable to the Company
than could have been obtained from independent third parties.
Charter has entered into management arrangements
with Charter Holdco and certain of its subsidiaries. Under these
agreements, Charter provides management services for the cable
systems owned or operated by its subsidiaries. The management
services include such services as centralized customer
F-42
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
billing services, data processing and related
support, benefits administration and coordination of insurance
coverage and self-insurance programs for medical, dental and
workers' compensation claims. Costs associated with
providing these services are billed and charged directly to the
Company's operating subsidiaries and are included within
operating costs in the accompanying consolidated statements of
operations. Such costs totaled $210 million,
$176 million and $119 million for the years ended
December 31, 2003, 2002 and 2001, respectively. All other
costs incurred on the behalf of the Company's operating
subsidiaries are considered a part of the management fee and are
recorded as a component of selling, general and administrative
expense, in the accompanying consolidated financial statements.
For the years ended December 31, 2003, 2002 and 2001, the
management fee charged to the Company's operating
subsidiaries approximated the expenses incurred by Charter
Holdco and Charter on behalf of the Company's operating
subsidiaries. The credit facilities of the Company's
operating subsidiaries prohibit payments of management fees in
excess of 3.5% of revenues until repayment of the outstanding
indebtedness. In the event any portion of the management fee due
and payable is not paid, it is deferred by Charter and accrued
as a liability of such subsidiaries. Any deferred amount of the
management fee will bear interest at the rate of 10% per
annum, compounded annually, from the date it was due and payable
until the date it is paid.
Mr. Allen, the controlling shareholder of
Charter, and a number of his affiliates have interests in
various entities that provide services or programming to
Charter's subsidiaries. Given the diverse nature of
Mr. Allen's investment activities and interests, and
to avoid the possibility of future disputes as to potential
business, Charter may not, and may not allow its subsidiaries
to, engage in any business transaction outside the cable
transmission business except for certain existing approved
investments. Should Charter or its subsidiaries wish to pursue a
business transaction outside of this scope, it must first offer
Mr. Allen the opportunity to pursue the particular business
transaction. If he decides not to pursue the business
transaction and consents to Charter or its subsidiaries to
engage in the business transaction, they will be able to do so.
The cable transmission business means the business of
transmitting video, audio, including telephony, and data over
cable systems owned, operated or managed by Charter or its
subsidiaries from time to time.
Mr. Allen or his affiliates own equity
interests or warrants to purchase equity interests in various
entities with which the Company does business or which provides
it with products, services or programming. Among these entities
are TechTV L.L.C. ("TechTV"), Oxygen Media Corporation
("Oxygen Media"), Digeo, Inc., Click2learn, Inc.,
Trail Blazer Inc., Action Sports Cable Network ("Action
Sports") and Microsoft Corporation. In addition,
Mr. Allen and Mr. Savoy were directors of USA
Networks, Inc. ("USA Networks"), who operates the USA
Network, The Sci-Fi Channel, Trio, World News International and
Home Shopping Network, owning approximately 5% and less than 1%,
respectively, of the common stock of USA Networks. In 2002,
Mr. Allen and Mr. Savoy sold their common stock and
are no longer directors of the USA Network. Mr. Allen owns
100% of the equity of Vulcan Ventures Incorporated ("Vulcan
Ventures") and Vulcan Inc. and is the president of Vulcan
Ventures. Mr. Savoy was a vice president and a director of
Vulcan Ventures until his resignation in September 2003.
Mr. Savoy will remain as a member of the board of directors
of Charter. The various cable, media, Internet and telephony
companies in which Mr. Allen has invested may mutually
benefit one another. The agreements governing the Company's
relationship with Digeo, Inc. ("Digeo") are an example
of a cooperative business relationship among
Mr. Allen's affiliated companies. The Company can give
no assurance that any of these business relationships will be
successful, that the Company will realize any benefits from
these relationships or that the Company will enter into any
business relationships in the future with Mr. Allen's
affiliated companies.
F-43
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Mr. Allen and his affiliates have made, and
in the future likely will make, numerous investments outside of
the Company and its business. The Company cannot assure that, in
the event that the Company or any of its subsidiaries enter into
transactions in the future with any affiliate of Mr. Allen,
such transactions will be on terms as favorable to the Company
as terms it might have obtained from an unrelated third party.
Also, conflicts could arise with respect to the allocation of
corporate opportunities between the Company and Mr. Allen
and his affiliates. The Company has not instituted any formal
plan or arrangement to address potential conflicts of interest.
High Speed Access
Corp.
("High Speed Access")
was a provider of high-speed Internet access services over cable
modems. During the period from 1997 to 2000, certain Charter
entities entered into Internet-access related service
agreements, and both Vulcan Ventures and certain of
Charter's subsidiaries made equity investments in High
Speed Access.
On February 28, 2002, Charter's
subsidiary, CC Systems, purchased from High Speed Access
the contracts and associated assets, and assumed related
liabilities, that served the Company's customers, including
a customer contact center, network operations center and
provisioning software. Immediately prior to the asset purchase,
Vulcan Ventures beneficially owned approximately 37%, and the
Company beneficially owned approximately 13%, of the common
stock of High Speed Access (including the shares of common stock
which could be acquired upon conversion of the Series D
preferred stock, and upon exercise of the warrants owned by
Charter Holdco). Following the consummation of the asset
purchase, neither the Company nor Vulcan Ventures beneficially
owned any securities of, or were otherwise affiliated with, High
Speed Access.
The Company receives or will receive programming
for broadcast via its cable systems from TechTV, USA Networks,
Oxygen Media and Action Sports. The Company pays a fee for the
programming service generally based on the number of customers
receiving the service. Such fees for the years ended
December 31, 2003, 2002 and 2001 were each less than 1% of
total operating expenses with the exception of USA Networks
which was 2%, 2% and 3% of total operating expenses for the
years ended December 31, 2003, 2002 and 2001, respectively.
In addition, the Company receives commissions from USA Networks
for home shopping sales generated by its customers. Such
revenues for the years ended December 31, 2003, 2002 and
2001 were less than 1% of total revenues. On November 5,
2002, Action Sports announced that it was discontinuing its
business. The Company believes that the failure of Action Sports
will not materially affect the Company's business or
results of operations.
The Company entered into an equity issuance
agreement pursuant to which Oxygen Media granted a subsidiary of
Charter Holdco a warrant to purchase 2.4 million
shares of common stock of Oxygen Media for an exercise price of
$22.00 per share. Charter Holdco will also receive
unregistered shares of Oxygen Media common stock with a
guaranteed fair market value on the date of issuance of
$34 million, on or prior to February 2, 2005 with the
exact date to be determined by Oxygen Media. The Company
currently recognizes the guaranteed value of the investment over
the life of the programming agreement as a reduction of
programming expense. For the year ended December 31, 2003,
the Company recorded approximately $9 million as a
reduction of programming expense. The carrying value of the
Company's investment in Oxygen was approximately
$19 million as of December 31, 2003.
The Company receives from TechTV programming for
distribution via its cable system pursuant to an affiliation
agreement. The affiliation agreement provides, among other
things, that TechTV must offer the Company certain terms and
conditions that are no less favorable in the affiliation
agreement than are given to any other distributor that serves
the same number of or fewer TechTV viewing customers. The
Company believes that TechTV has breached the TechTV affiliation
agreement, and is involved in discussions with TechTV
representatives in an effort to reach a settlement regarding the
damages owed to
F-44
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
the Company for such breach. To date, no
settlement has been reached and no formal legal proceedings have
been commenced. In the event the parties are not able to reach a
settlement, the Company intends to pursue its contractual and
legal rights for relief.
As discussed in Note 4, in April 2002,
Interlink Communications Partners, LLC, Rifkin Acquisition
Partners, LLC and Charter Communications Entertainment I,
LLC, each an indirect, wholly-owned subsidiary of the Company,
completed the cash purchase of certain assets of Enstar Income
Program II-2, L.P., Enstar Income Program IV-3, L.P.,
Enstar Income/ Growth Program Six-A, L.P., Enstar Cable of
Macoupin County and Enstar Income IV/PBD Systems Venture,
serving approximately 21,600 (unaudited) customers, for a total
cash sale price of approximately $48 million. In September
2002, Charter Communications Entertainment I, LLC purchased
all of Enstar Income Program II-1, L.P.'s Illinois
cable systems, serving approximately 6,400 (unaudited)
customers, for a cash sale price of $15 million. Enstar
Communications Corporation, a direct subsidiary of Charter
Holdco, is a general partner of the Enstar limited partnerships
but does not exercise control over them. All of the executive
officers of Charter and Charter Holdco act as officers of Enstar
Communications Corporation.
The Company entered into various broadband
carriage agreements with Digeo Interactive, LLC ("Digeo
Interactive"), a wholly-owned subsidiary of Digeo. These
agreements provide for the development by Digeo Interactive of
future features to be included in the Basic i-TV service
provided by Digeo and for Digeo's development of an
interactive "toolkit" to enable the Company to develop
interactive local content. Furthermore, the Company may request
that Digeo Interactive manage local content for a fee. The
agreement provides for the Company to pay for development of the
Basic i-TV service as well as license fees for customers
who receive the service, and for the Company and Digeo to split
certain revenues earned from the service. In 2003, the Company
paid Digeo Interactive approximately $4 million for
customized development of the i-channels and the local content
tool kit. The Company received no revenues under the broadband
carriage agreement in 2003.
On June 30, 2003, Charter Holdco entered
into an agreement with Motorola for the purchase of 100,000
broadband media centers, subject to the Company's testing
and approval of product performance and functionality. It is
contemplated that the software for these broadband media centers
would be supplied to Motorola by Digeo. License fees for Digeo
to license such software to the Company and support fees for the
broadband media centers and relevant content and support
services are currently under negotiation.
In March 2001, Charter Communications Ventures,
LLC ("Charter Ventures"), the Company's indirect
subsidiary, and Vulcan Ventures formed DBroadband Holdings, LLC
("DBroadband") for the sole purpose of purchasing
equity interests in Digeo. In connection with the execution of
the broadband carriage agreement, DBroadband purchased an equity
interest in Digeo funded by contributions from Vulcan Ventures.
The equity interest is subject to a priority return of capital
to Vulcan Ventures up to the amount contributed by Vulcan
Ventures on Charter Ventures' behalf. Charter Ventures has
a 100% profit interest in DBroadband. Vulcan Ventures also
agreed to make, through January 24, 2004, certain
additional contributions through DBroadband to acquire
additional equity in Digeo as necessary to maintain Charter
Ventures' pro rata interest in Digeo in the event of
certain future Digeo equity financings by the founders of Digeo.
These additional equity interests are also subject to a priority
return of capital to Vulcan Ventures up to amounts contributed
by Vulcan Ventures on Charter Ventures' behalf. DBroadband
is therefore not included in the Company's consolidated
financial statements.
The Company believes that Vulcan Ventures, an
entity controlled by Mr. Allen, owns an approximate 60%
equity interest in Digeo, Inc. Messrs. Allen and Vogel are
directors of Digeo. Mr. Savoy was a
F-45
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
director and served on the compensation committee
of Digeo until September 2003. Mr. Vogel owns options to
purchase 10,000 shares of Digeo common stock.
On January 10, 2003, Charter signed an
agreement to carry two around-the-clock, high definition
networks, HDNet and HDNet Movies. The Company believes that
entities controlled by Mr. Mark Cuban, co-founder and
president of HDNet, owns 85% of HDNet and HDNet Movies as of
December 31, 2003. As of December 31, 2003
Mr. Cuban, owns an approximate 6.4% equity interest in
Charter.
Certain related parties, including members of the
board of directors and management, hold interests in the
Company's senior convertible debt and senior notes and
discount notes of the Company's subsidiary of approximately
$61.5 million of face value at December 31, 2003.
As part of the acquisition of the cable systems
owned by Bresnan Communications Company Limited Partnership in
February 2000, CC VIII, LLC, Charter's indirect limited
liability company subsidiary, issued, after adjustments,
24,279,943 Class A preferred membership units
(collectively, the "CC VIII interest") with a value
and an initial capital account of approximately
$630 million to certain sellers affiliated with AT&T
Broadband, subsequently owned by Comcast Corporation (the
"Comcast sellers"). While held by the Comcast sellers,
the CC VIII interest was entitled to a 2% priority return on its
initial capital account and such priority return was entitled to
preferential distributions from available cash and upon
liquidation of CC VIII, LLC. While held by the Comcast sellers,
the CC VIII interest generally did not share in the profits and
losses of CC VIII, LLC. Mr. Allen granted the Comcast
sellers the right to sell to him the CC VIII interest for
approximately $630 million plus 4.5% interest annually from
February 2000 (the "Comcast put right"). In April
2002, the Comcast sellers exercised the Comcast put right in
full, and this transaction was consummated on June 6, 2003.
Accordingly, Mr. Allen has become the holder of the CC VIII
interest, indirectly through an affiliate. Consequently, subject
to the matters referenced in the next paragraph, Mr. Allen
generally thereafter will be allocated his pro rata share (based
on number of membership interests outstanding) of profits or
losses of CC VIII, LLC. In the event of a liquidation of CC
VIII, LLC, Mr. Allen would be entitled to a priority
distribution with respect to the 2% priority return (which will
continue to accrete). Any remaining distributions in liquidation
would be distributed to CC V Holdings, LLC and Mr. Allen in
proportion to CC V Holdings, LLC's capital account and
Mr. Allen's capital account (which will equal the
initial capital account of the Comcast sellers of approximately
$630 million, increased or decreased by
Mr. Allen's pro rata share of CC VIII, LLC's
profits or losses (as computed for capital account purposes)
after June 6, 2003). The limited liability company
agreement of CC VIII, LLC does not provide for a mandatory
redemption of the CC VIII interest.
An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the CC VIII
interest following consummation of the Comcast put right.
Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead would receive the preferred equity
interests in CC VIII, LLC represented by the CC VIII interest.
As part of the last-minute changes to the Bresnan transaction
documents, a draft amended version of the Charter Holdco limited
liability company agreement was prepared, and contract
provisions were drafted for that agreement that would have
required an automatic exchange of the CC VIII interest for
24,273,943 Charter Holdco membership units if the Comcast
sellers exercised the Comcast put right and sold the CC VIII
interest to Mr. Allen or his affiliates. However, the
provisions that would have required this automatic exchange did
not appear in the final version of the Charter Holdco limited
liability company
F-46
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
agreement that was delivered and executed at the
closing of the Bresnan transaction. The law firm that prepared
the documents for the Bresnan transaction brought this matter to
the attention of Charter and representatives of Mr. Allen
in 2002.
Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs. Tory, Wangberg and Merritt) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a "scrivener's
error" had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr. Allen should be required to
contribute the CC VIII interest to Charter Holdco in exchange
for 24,273,943 Charter Holdco membership units. The Special
Committee also recommended to the board of directors of Charter
that, to the extent the contract reformation is achieved, the
board of directors should consider whether the CC VIII interest
should ultimately be held by Charter Holdco or Charter Holdings
or another entity owned directly or indirectly by them.
Mr. Allen disagrees with the Special
Committee's determinations described above and has so
notified the Special Committee. Mr. Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days' prior notice to the other.
In addition, the Special Committee and Mr. Allen have
determined to utilize the Delaware Court of Chancery's
program for mediation of complex business disputes in an effort
to resolve the CC VIII interest dispute. If the Special
Committee and Mr. Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr. Allen and his
affiliates seeking contract reformation, declaratory relief as
to the respective rights of the parties regarding this dispute
and alternative forms of legal and equitable relief. The
ultimate resolution and financial impact of the dispute are not
determinable at this time.
F-47
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
23.
Commitments and Contingencies
Commitments
The following table summarizes the Company's
payment obligations as of December 31, 2003 for its
contractual obligations.
Total
2004
2005
2006
2007
2008
Thereafter
Contractual Obligations
Operating Lease Obligations(1)
$
70
$
17
$
14
$
11
$
7
$
5
$
16
Programming Minimum Commitments(2)
1,949
320
329
355
386
317
242
Other(3)
282
63
47
39
24
25
84
Total
$
2,301
$
400
$
390
$
405
$
417
$
347
$
342
(1)
The Company leases certain facilities and
    equipment under noncancellable operating leases. Leases and
    rental costs charged to expense for the years ended
    December 31, 2003, 2002 and 2001, were $30 million,
    $31 million and $25 million, respectively.
(2)
The Company pays programming fees under
    multi-year contracts ranging from three to six years typically
    based on a flat fee per customer, which may be fixed for the
    term or may in some cases, escalate over the term. Programming
    costs included in the accompanying statement of operations were
    $1.2 billion, $1.2 billion and $963 million for
    the years ended December 31, 2003, 2002 and 2001,
    respectively. Certain of the Company's programming
    agreements are based on a flat fee per month or have guaranteed
    minimum payments. The table sets forth the aggregate guaranteed
    minimum commitments under the Company's programming
    contracts.
(3)
"Other" represents other guaranteed
    minimum commitments, which consist primarily of commitments to
    the Company's billing services vendors.
The following items are not included in the
contractual obligation table due to various factors discussed
below. However, the Company incurs these costs as part of its
operations:
•
The Company also rents utility poles used in its
    operations. Generally, pole rentals are cancelable on short
    notice, but the Company anticipates that such rentals will
    recur. Rent expense incurred for pole rental attachments for the
    years ended December 31, 2003, 2002 and 2001, was
    $40 million, $41 million and $33 million,
    respectively.
•
The Company pays franchise fees under multi-year
    franchise agreements based on a percentage of revenues earned
    from video service per year. The Company also pays other
    franchise related costs, such as public education grants under
    multi-year agreements. Franchise fees and other
    franchise-related costs included in the accompanying statement
    of operations were $162 million, $160 million and
    $144 million for the years ended December 31, 2003,
    2002 and 2001, respectively.
•
The Company also has $153 million in letters
    of credit, primarily to its various worker's compensation,
    property casualty and general liability carriers as collateral
    for reimbursement of claims. These letters of credit reduce the
    amount the Company may borrow under its credit facilities.
Litigation
Fourteen putative federal class action lawsuits
(the "Federal Class Actions") have been filed
against Charter and certain of its former and present officers
and directors in various jurisdictions allegedly on
F-48
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
behalf of all purchasers of Charter's
securities during the period from either November 8 or
November 9, 1999 through July 17 or July 18,
2002. Unspecified damages are sought by the plaintiffs. In
general, the lawsuits allege that Charter utilized misleading
accounting practices and failed to disclose these accounting
practices and/or issued false and misleading financial
statements and press releases concerning Charter's
operations and prospects. The Federal Class Actions were
specifically and individually identified in public filings made
by Charter prior to the date of this annual report.
In October 2002, Charter filed a motion with the
Judicial Panel on Multidistrict Litigation (the
"Panel") to transfer the Federal Class Actions to
the Eastern District of Missouri. On March 12, 2003, the
Panel transferred the six Federal Class Actions not filed
in the Eastern District of Missouri to that district for
coordinated or consolidated pretrial proceedings with the eight
Federal Class Actions already pending there. The
Panel's transfer order assigned the Federal
Class Actions to Judge Charles A. Shaw. By virtue of a
prior court order, StoneRidge Investment Partners LLC became
lead plaintiff upon entry of the Panel's transfer order.
StoneRidge subsequently filed a Consolidated Amended Complaint.
The Court subsequently consolidated the Federal
Class Actions for pretrial purposes. On June 19, 2003,
following a pretrial conference with the parties, the Court
issued a Case Management Order setting forth a schedule for the
pretrial phase of the consolidated class action. Motions to
dismiss the Consolidated Amended Complaint have been filed. On
February 10, 2004, in response to a joint motion made by
StoneRidge and defendants, Charter, Vogel and Allen, the court
entered an order providing, among other things, that:
(1) the parties who filed such motion engage in a mediation
within ninety (90) days; and (2) all proceedings in
the Consolidated Federal Class Actions are stayed for
ninety (90) days.
On September 12, 2002, a shareholders
derivative suit (the "State Derivative Action") was
filed in Missouri state court against Charter and its then
current directors, as well as its former auditors. A
substantively identical derivative action was later filed and
consolidated into the State Derivative Action. The plaintiffs
allege that the individual defendants breached their fiduciary
duties by failing to establish and maintain adequate internal
controls and procedures. Unspecified damages, allegedly on
Charter's behalf, are sought by the plaintiffs.
Separately, on February 12, 2003, a
shareholders derivative suit (the "Federal Derivative
Action"), was filed against Charter and its then current
directors in the United States District Court for the Eastern
District of Missouri. The plaintiff alleges that the individual
defendants breached their fiduciary duties and grossly
mismanaged Charter by failing to establish and maintain adequate
internal controls and procedures. Unspecified damages, allegedly
on Charter's behalf, are sought by the plaintiffs.
In addition to the Federal Class Actions,
the State Derivative Action and the Federal Derivative Action,
six putative class action lawsuits have been filed against
Charter and certain of its then current directors and officers
in the Court of Chancery of the State of Delaware (the
"Delaware Class Actions"). The lawsuits were
filed after the filing of a 13D amendment by Mr. Allen
indicating that he was exploring a number of possible
alternatives with respect to restructuring or expanding his
ownership interest in Charter. Charter believes the plaintiffs
speculated that Mr. Allen might have been contemplating an
unfair bid for shares of Charter or some other sort of going
private transaction on unfair terms and generally alleged that
the defendants breached their fiduciary duties by participating
in or acquiescing to such a transaction. The lawsuits were
brought on behalf of Charter's securities holders as of
July 29, 2002, and seek unspecified damages and possible
injunctive relief. The Delaware Class Actions are
substantively identical. No such transaction by Mr. Allen
has been presented. Plaintiffs' counsel has granted the
defendants an indefinite extension of time to respond to the
only complaint that has been served in the Delaware
Class Actions.
F-49
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
The lawsuits discussed above are each in
preliminary stages. No reserves have been established for
potential losses or related insurance recoveries on these
matters because the Company is unable to predict the outcome.
Charter intends to vigorously defend the lawsuits.
In August of 2002, Charter became aware of a
grand jury investigation being conducted by the United States
Attorney's Office for the Eastern District of Missouri into
certain of its accounting and reporting practices, focusing on
how Charter reported customer numbers and its reporting of
amounts received from digital set-top terminal suppliers for
advertising. The U.S. Attorney's Office has publicly
stated that Charter is not currently a target of the
investigation. Charter has also been advised by the
U.S. Attorney's Office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July 24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July 25, 2003, one of the former officers who was indicted
entered a guilty plea. Charter is fully cooperating with the
investigation.
On November 4, 2002, Charter received an
informal, non-public inquiry from the staff of the Securities
and Exchange Commission ("SEC"). The SEC subsequently
issued a formal order of investigation dated January 23,
2003, and subsequent related document and testimony subpoenas.
The investigation and subpoenas generally concern Charter's
prior reports with respect to its determination of the number of
customers, and various of its other accounting policies and
practices including its capitalization of certain expenses and
dealings with certain vendors, including programmers and digital
set-top terminal suppliers. Charter is fully cooperating with
the SEC Staff.
Charter is generally required to indemnify each
of the named individual defendants in connection with these
matters pursuant to the terms of its Bylaws and (where
applicable) such individual defendants' employment
agreements. Pursuant to the terms of certain employment
agreements and in accordance with the Bylaws of Charter, in
connection with the pending grand jury investigation, SEC
investigation and the above described lawsuits, Charter's
current directors and its current and former officers have been
advanced certain costs and expenses incurred in connection with
their defense.
Charter has liability insurance coverage that it
believes is available for these matters, where applicable, and
subject to the terms, conditions and limitations of the
respective policies. There is no assurance that current coverage
will be sufficient for all claims described above or any future
claims that may arise.
In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter in South Carolina Court of Common Pleas ("South
Carolina Class Action"), purportedly on behalf of a
class of Charter customers, alleging that Charter improperly
charged them a wire maintenance fee without request or
permission. They also claimed that Charter improperly required
them to rent analog and/or digital set-top terminals even though
their television sets were "cable ready." Charter
removed this case to the United States District Court for the
District of South Carolina in November 2001, and moved to
dismiss the suit in December 2001. The federal judge remanded
the case to the South Carolina Court of Common Pleas in August
2002 without ruling on the motion to dismiss. The plaintiffs
subsequently moved for a default judgment, arguing that upon
return to state court, Charter should have but did not file a
new motion to dismiss. The state court judge granted the
plaintiff's motion over Charter's objection in
September 2002. Charter immediately appealed that decision to
the South Carolina Court of Appeals and the South Carolina
Supreme Court, but those courts have ruled that until a final
judgment is entered against Charter, they lack jurisdiction to
hear the appeal.
F-50
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
In January 2003, the Court of Common Pleas
granted the plaintiffs' motion for class certification. In
October and November 2003, Charter filed motions (a) asking
that court to set aside the default judgment, and
(b) seeking dismissal of plaintiffs' suit for failure
to state a claim. In January 2004, the Court of Common Pleas
granted in part and denied in part Charter's motion to
dismiss for failure to state a claim. It also took under
advisement Charter's motion to set aside the default
judgment.
Charter is unable to predict the outcome of the
lawsuits and the government investigations described above. An
unfavorable outcome in the lawsuits or the government
investigations described above could have a material adverse
effect on the Company's consolidated financial condition,
results of operations or its liquidity, including its ability to
comply with the Company's debt covenants.
In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims will not have a
material adverse effect on the Company's consolidated
financial condition or results of operations.
Regulation in the Cable
    Industry
The operation of a cable system is extensively
regulated by the Federal Communications Commission
("FCC"), some state governments and most local
governments. The FCC has the authority to enforce its
regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of
other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities used
in connection with cable operations. The 1996 Telecom Act
altered the regulatory structure governing the nation's
communications providers. It removed barriers to competition in
both the cable television market and the local telephone market.
Among other things, it reduced the scope of cable rate
regulation and encouraged additional competition in the video
programming industry by allowing local telephone companies to
provide video programming in their own telephone service areas.
The 1996 Telecom Act required the FCC to
undertake a number of implementing rulemakings. Moreover,
Congress and the FCC have frequently revisited the subject of
cable regulation. Future legislative and regulatory changes
could adversely affect the Company's operations.
24.
Employee Benefit Plan
The Company's employees may participate in
the Charter Communications, Inc. 401(k) Plan. Employees that
qualify for participation can contribute up to 50% of their
salary, on a pre-tax basis, subject to a maximum contribution
limit as determined by the Internal Revenue Service. The Company
matches 50% of the first 5% of participant contributions. The
Company made contributions to the 401(k) plan totaling
$7 million, $8 million and $9 million for the
years ended December 31, 2003, 2002 and 2001, respectively.
25.
Recently Issued Accounting Standards
In December 2003, the FASB issued FASB
Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities
("FIN 46R"), which addresses how a business
enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting
rights and accordingly should consolidate the entity.
FIN 46R replaces FASB Interpretation No. 46,
Consolidation of Variable Interest Entities
, which was
issued in January 2003. The Company will be required to apply
FIN 46R to variable interests in variable interest entities
created after December 31, 2003. For variable interests in
variable interest entities created before December 31,
2003, the FIN 46R
F-51
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
will be applied beginning on March 31, 2004.
For any variable interest entities that must be consolidated
under FIN 46R that were created before December 31,
2003, the assets, liabilities and noncontrolling interests of
the variable interest entity initially would be measured at
their carrying amounts with any difference between the net
amount added to the balance sheet and any previously recognized
interest being recognized as the cumulative effect of an
accounting change. If determining the carrying amounts is not
practicable, fair value at the date FIN 46R first applies
may be used to measure the assets, liabilities and
noncontrolling interest of the variable interest entity. The
Company has identified DBroadband Holdings, LLC as a variable
interest entity in accordance with FIN 46R. As the Company
is not the primary beneficiary of the variable interest entity
(as defined by FIN 46R), DBroadband Holdings, LLC has not
been included in the Company's consolidated financial
statements. In future periods, the Company will continue to
reassess its relationship with DBroadband Holdings, LLC to
ensure proper recognition of the relationship in accordance with
FIN 46R. See Note 22 for additional information.
In December 2003, the SEC issued Staff Accounting
Bulletin ("SAB") No. 104,
Revenue
Recognition
. SAB No. 104 revises or rescinds portions
of interpretative guidance on revenue recognition. SAB
No. 104 became effective immediately upon release and
requires registrants to either restate prior financial
statements or report a change in accounting principle. The
adoption of SAB No. 104 did not have a material impact on
the Company's consolidated financial statements.
26.
Parent Company Only Financial
    Statements
As the result of limitations on, and prohibitions
of, distributions, substantially all of the net assets of the
consolidated subsidiaries are restricted for distribution to
Charter, the parent company. The following condensed parent-only
financial statements of Charter account for the investment in
Charter Holdco under the equity method of accounting. The
financial statements should be read in conjunction with the
consolidated financial statements of the Company and notes
thereto.
Charter Communications, Inc. (Parent Company
Only)
Condensed Balance Sheet
December 31,
2003
2002
ASSETS
Cash and cash equivalents
$
1
$
10
Receivable from related party
9
3
Investment in Charter Holdco
—
308
Notes receivable from Charter Holdco
803
1,433
$
813
$
1,754
LIABILITIES AND SHAREHOLDERS' EQUITY
    (DEFICIT)
Current liabilities
$
10
$
13
Convertible notes
774
1,383
Deferred income taxes
149
266
Preferred stock — redeemable
55
51
Shareholders' equity (deficit)
(175
)
41
Total liabilities and shareholders' equity
    (deficit)
$
813
$
1,754
F-52
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
Condensed Statement of Operations
Year Ended December 31,
2003
2002
2001
REVENUES
Interest income
$
69
$
76
$
61
Management fees
11
9
6
Total revenues
80
85
67
EXPENSES
Equity in losses of Charter Holdco
(359
)
(2,922
)
(1,168
)
General and administrative expenses
(11
)
(9
)
(6
)
Interest expense
(65
)
(73
)
(60
)
Total expenses
(435
)
(3,004
)
(1,234
)
Net loss before income taxes
(355
)
(2,919
)
(1,167
)
Income taxes
117
405
—
Net loss
(238
)
(2,514
)
(1,167
)
Dividend on preferred equity
(4
)
(3
)
(1
)
Net loss after preferred dividends
$
(242
)
$
(2,517
)
$
(1,168
)
Condensed Statements of Cash Flows
2003
2002
2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss after preferred dividends
$
(242
)
$
(2,517
)
$
(1,168
)
Equity in losses of Charter Holdco
359
2,922
1,168
Changes in operating assets and liabilities
(9
)
10
—
Deferred income taxes
(117
)
(405
)
—
Net cash flows from operating activities
(9
)
10
—
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in and receivables from Charter Holdco
—
—
(633
)
Investment in Charter Holdco
—
—
(1,224
)
Net cash flows from investing activities
—
—
(1,857
)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of convertible notes
—
—
633
Net proceeds from issuance of common stock
—
—
1,218
Other
—
—
6
Net cash flows from financing activities
—
—
1,857
NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS
(9
)
10
—
CASH AND CASH EQUIVALENTS, beginning of year
10
—
—
CASH AND CASH EQUIVALENTS, end of year
$
1
$
10
$
—
F-53
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2003, 2002 AND
2001
(Dollars in millions, except where
indicated)
27.
Unaudited Quarterly Financial Data
The following table presents quarterly data for
the periods presented on the consolidated statement of
operations:
Year Ended December 31, 2003
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Revenues
$
1,178
$
1,217
$
1,207
$
1,217
Income from operations
86
112
117
210
Income (loss) before minority interest and income
    taxes
(301
)
(286
)
23
(161
)
Net income (loss) applicable to common stock
(182
)
(38
)
36
(58
)
Basic income (loss) per common share
(0.62
)
(0.13
)
0.12
(0.20
)
Diluted Income (loss) per common share
(0.62
)
(0.13
)
0.07
(0.20
)
Weighted-average shares outstanding, basic
294,466,137
294,474,596
294,566,878
294,875,504
Weighted-average shares outstanding, diluted
294,466,137
294,474,596
637,822,843
294,875,504
Year Ended December 31, 2002
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Revenues
$
1,074
$
1,137
$
1,166
$
1,189
Income (loss) from operations
97
85
91
(4,595
)
Loss before minority interest, income taxes and
    cumulative effect of accounting change
(234
)
(354
)
(367
)
(4,989
)
Net loss applicable to common stock
(317
)
(161
)
(167
)
(1,872
)
Basic and diluted loss per common share before
    cumulative effect of accounting change
(0.38
)
(0.55
)
(0.57
)
(6.36
)
Basic and diluted loss per common share
(1.08
)
(0.55
)
(0.57
)
(6.36
)
Weighted-average shares outstanding
294,394,939
294,453,454
294,454,659
294,457,134
F-54
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in millions, except share
data)
September 30,
December 31,
2004
2003
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
129
$
127
Accounts receivable, less allowance for doubtful
    accounts of $16 and $17, respectively
186
189
Prepaid expenses and other current assets
30
34
Total current assets
345
350
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
    depreciation of $4,933 and $3,950, respectively
6,415
7,014
Franchises, net of accumulated amortization of
    $3,300 and $3,445, respectively
9,885
13,680
Total investment in cable properties, net
16,300
20,694
OTHER NONCURRENT ASSETS
439
320
Total assets
$
17,084
$
21,364
LIABILITIES AND SHAREHOLDERS'
    DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses
$
1,301
$
1,286
Total current liabilities
1,301
1,286
LONG-TERM DEBT
18,484
18,647
DEFERRED MANAGEMENT FEES — RELATED PARTY
14
14
OTHER LONG-TERM LIABILITIES
675
848
MINORITY INTEREST
637
689
PREFERRED STOCK — REDEEMABLE;
    $.001 par value; 1 million shares authorized;
    545,259 shares issued and outstanding
55
55
SHAREHOLDERS' DEFICIT:
Class A Common stock; $.001 par value;
    1.75 billion shares authorized; 304,803,455 and
    295,038,606 shares issued and outstanding, respectively
—
—
Class B Common stock; $.001 par value;
    750 million shares authorized; 50,000 shares issued
    and outstanding
—
—
Preferred stock; $.001 par value;
    250 million shares authorized; no non-redeemable shares
    issued and outstanding
—
—
Additional paid-in capital
4,783
4,700
Accumulated deficit
(8,856
)
(4,851
)
Accumulated other comprehensive loss
(9
)
(24
)
Total shareholders' deficit
(4,082
)
(175
)
Total liabilities and shareholders' deficit
$
17,084
$
21,364
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-55
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in millions, except share and per
share data)
Unaudited
Three Months Ended
Nine Months Ended
September 30,
September 30,
2004
2003
2004
2003
REVENUES
$
1,248
$
1,207
$
3,701
$
3,602
COSTS AND EXPENSES:
Operating (excluding depreciation and
    amortization)
525
484
1,552
1,457
Selling, general and administrative
252
235
735
702
Depreciation and amortization
371
352
1,105
1,095
Impairment of franchises
2,433
—
2,433
—
(Gain) loss on sale of assets, net
—
10
(104
)
23
Option compensation expense, net
8
1
34
1
Special charges, net
3
8
100
18
3,592
1,090
5,855
3,296
Income (loss) from operations
(2,344
)
117
(2,154
)
306
OTHER INCOME AND EXPENSE:
Interest expense, net
(424
)
(387
)
(1,227
)
(1,163
)
Gain (loss) on derivative instruments and hedging
    activities, net
(8
)
31
48
35
Loss on debt to equity conversions
—
—
(23
)
—
Loss on extinguishment of debt
—
—
(21
)
—
Gain on debt exchange, net
—
267
—
267
Other, net
—
(5
)
—
(9
)
(432
)
(94
)
(1,223
)
(870
)
Income (loss) before minority interest, income
    taxes and cumulative effect of accounting change
(2,776
)
23
(3,377
)
(564
)
MINORITY INTEREST
34
(14
)
24
297
Income (loss) before income taxes and cumulative
    effect of accounting change
(2,742
)
9
(3,353
)
(267
)
INCOME TAX BENEFIT
213
28
116
86
Income (loss) before cumulative effect of
    accounting change
(2,529
)
37
(3,237
)
(181
)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX
(765
)
—
(765
)
—
Net income (loss)
(3,294
)
37
(4,002
)
(181
)
Dividends on preferred stock —
    redeemable
(1
)
(1
)
(3
)
(3
)
Net income (loss) applicable to common stock
$
(3,295
)
$
36
$
(4,005
)
$
(184
)
EARNINGS (LOSS) PER COMMON SHARE
Basic
$
(10.89
)
$
0.12
$
(13.38
)
$
(0.62
)
Diluted
$
(10.89
)
$
0.07
$
(13.38
)
$
(0.62
)
Weighted average common shares outstanding, basic
302,604,978
294,566,878
299,411,053
294,503,840
Weighted average common shares outstanding,
    diluted
302,604,978
637,822,843
299,411,053
294,503,840
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-56
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Dollars in millions)
Unaudited
Nine Months Ended
September 30,
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(4,002
)
$
(181
)
Adjustments to reconcile net loss to net cash
    flows from operating activities:
Minority interest
(24
)
(297
)
Depreciation and amortization
1,105
1,095
Impairment of franchises
2,433
—
Option compensation expense, net
30
1
Special charges, net
85
—
Noncash interest expense
237
319
(Gain) on derivative instruments and hedging
    activities, net
(48
)
(35
)
(Gain) loss on sale of assets, net
(104
)
23
Loss on debt to equity conversions
23
—
Loss on extinguishment of debt
18
—
Gain on debt exchange, net
—
(267
)
Deferred income taxes
(116
)
(86
)
Cumulative effect of accounting change, net
765
—
Other, net
(1
)
4
Changes in operating assets and liabilities, net
    of effects from dispositions:
Accounts receivable
1
70
Prepaid expenses and other assets
2
7
Accounts payable, accrued expenses and other
(21
)
(24
)
Receivables from and payables to related party,
    including deferred management fees
—
9
Net cash flows from operating activities
383
638
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(639
)
(503
)
Change in accrued expenses related to capital
    expenditures
(23
)
(109
)
Proceeds from sale of assets
729
—
Purchases of investments
(15
)
(8
)
Other, net
(2
)
(8
)
Net cash flows from investing activities
50
(628
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
2,873
452
Repayments of long-term debt
(4,707
)
(646
)
Proceeds from issuance of debt
1,500
30
Payments for debt issuance costs
(97
)
(32
)
Net cash flows from financing activities
(431
)
(196
)
NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS
2
(186
)
CASH AND CASH EQUIVALENTS, beginning of period
127
321
CASH AND CASH EQUIVALENTS, end of period
$
129
$
135
CASH PAID FOR INTEREST
$
824
$
756
NONCASH TRANSACTIONS:
Debt exchanged for Charter Class A common
    stock
$
30
$
—
Issuance of debt by CCH II, LLC
$
—
$
1,572
Retirement of debt
$
—
$
1,866
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-57
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
1.
Organization and Basis of
    Presentation
Charter Communications, Inc.
("Charter") is a holding company whose principal
assets at September 30, 2004 are the 47.2% controlling
common equity interest in Charter Communications Holding
Company, LLC ("Charter Holdco") and "mirror"
notes which are payable by Charter Holdco to Charter and have
the same principal amount and terms as those of Charter's
convertible senior notes. Charter Holdco is the sole owner of
Charter Communications Holdings, LLC ("Charter
Holdings"). The condensed consolidated financial statements
include the accounts of Charter, Charter Holdco, Charter
Holdings and all of their wholly owned subsidiaries where the
underlying operations reside, collectively referred to herein as
the "Company." Charter consolidates Charter Holdco on
the basis of voting control. Charter Holdco's limited
liability company agreement provides that so long as
Charter's Class B common stock retains its special
voting rights, Charter will maintain a 100% voting interest in
Charter Holdco. Voting control gives Charter full authority and
control over the operations of Charter Holdco. All significant
intercompany accounts and transactions among consolidated
entities have been eliminated. The Company is a broadband
communications company operating in the United States. The
Company offers its customers traditional cable video programming
(analog and digital video) as well as high-speed data services
and, in some areas, advanced broadband services such as high
definition television, video on demand, telephony and
interactive television. The Company sells its cable video
programming, high-speed data and advanced broadband services on
a subscription basis.
The accompanying condensed consolidated financial
statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States
for interim financial information and the rules and regulations
of the Securities and Exchange Commission ("SEC").
Accordingly, certain information and footnote disclosures
typically included in Charter's Annual Report on
Form 10-K have been condensed or omitted for this quarterly
report. The accompanying condensed consolidated financial
statements are unaudited and are subject to review by regulatory
authorities. However, in the opinion of management, such
financial statements include all adjustments, which consist of
only normal recurring adjustments, necessary for a fair
presentation of the results for the periods presented. Interim
results are not necessarily indicative of results for a full
year.
The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Areas
involving significant judgments and estimates include
capitalization of labor and overhead costs; depreciation and
amortization costs; impairments of property, plant and
equipment, franchises and goodwill; income taxes; and
contingencies. Actual results could differ from those estimates.
Reclassifications
Certain 2003 amounts have been reclassified to
conform with the 2004 presentation.
2.
Liquidity and Capital Resources
The Company incurred net loss applicable to
common stock of $3.3 billion and $4.0 billion for the
three and nine months ended September 30, 2004,
respectively, and $184 million for the nine months ended
September 30, 2003. The Company achieved net income
applicable to common stock of $36 million for the three
months ended September 30, 2003. The Company's net
cash flows from operating activities were $383 million and
$638 million for the nine months ended September 30,
2004 and 2003, respectively.
F-58
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
The Company has historically required significant
cash to fund capital expenditures and debt service costs.
Historically, the Company has funded these requirements through
cash flows from operating activities, borrowings under its
credit facilities, issuances of debt and equity securities and
from cash on hand. The mix of funding sources changes from
period to period, but for the nine months ended
September 30, 2004, approximately 49% of the Company's
funding requirements were met from cash flows from operating
activities and 51% from proceeds from the sale of systems. This
gives effect to the use of proceeds from the sale of systems,
described below, to repay long-term debt. For the nine months
ended September 30, 2004, the Company had net cash flows
used in financing activities of $431 million, reflecting a
net repayment of $334 million of debt. Additionally, the
Company increased cash on hand by $2 million to
$129 million.
The Company has a significant level of debt. The
Company's long-term financing as of September 30, 2004
consists of $5.4 billion of credit facility debt,
$12.3 billion principal amount of high-yield notes and
$744 million principal amount of convertible senior notes.
In the fourth quarter of 2004, $7.5 million
of the Company's debt will mature. An additional
$618 million and $186 million of the Company's
debt will mature in 2005 and 2006, respectively. In addition,
the Charter Communications Operating, LLC ("Charter
Operating") credit facilities require the CC V Holdings,
LLC notes to be redeemed within 45 days after the Charter
Holdings leverage ratio, discussed below, is determined to be
below 8.75 to 1.0. In 2007 and beyond, significant additional
amounts will become due under the Company's remaining
long-term debt obligations.
The Company's ability to operate depends
upon, among other things, its continued access to capital,
including credit under the Charter Operating credit facilities.
These credit facilities are subject to certain restrictive
covenants, some of which require the Company to achieve
specified operating results. The Company expects to maintain
compliance with these covenants in 2004. If the Company's
operating performance results in non-compliance with these
covenants, or if any of certain other events of non-compliance
under these credit facilities or indentures governing the
Company's debt occurs, funding under the credit facilities
may not be available and defaults on some or potentially all of
the Company's debt obligations could occur. The
Company's borrowing availability under the credit
facilities totaled $957 million as of September 30,
2004, none of which was restricted due to covenants.
The Company expects that cash on hand, cash flows
from operating activities and the amounts available under its
credit facilities will be adequate to meet its cash needs in
2004. However, as the principal amounts owing under the
Company's various debt obligations become due, meeting the
Company's liquidity needs in subsequent years will depend
on its ability to access additional sources of capital.
Currently, the Company does not expect that cash flows from
operating activities and amounts available under its credit
facilities will be sufficient to fund its operations and permit
the Company to satisfy its principal repayment obligations that
come due in 2005 and thereafter. In the event that the Company
is not able to demonstrate that it has adequate access to
liquidity in an amount sufficient to fund its business and to
make principal repayment obligations that come due in 2005 and
thereafter, Charter and its subsidiaries' ability to
receive an unqualified opinion from an independent registered
public accounting firm may be adversely affected. The failure of
Charter Operating to receive an unqualified opinion would
constitute a default under Charter Operating's credit
facilities. An event of default under the covenants governing
any of the Company's debt instruments could result in the
acceleration of its payment obligations under that debt and,
under certain circumstances, in cross-defaults under its other
debt obligations, which would have a material adverse effect on
the Company's consolidated financial condition or results
of operations.
F-59
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
Charter's ability to make interest payments
on its convertible senior notes, and, in 2005 and 2006, to repay
the outstanding principal of its convertible senior notes will
depend on its ability to raise additional capital and/or on
receipt of payments or distributions from Charter Holdco or its
subsidiaries, including CCH II, LLC
("CCH II"), CCO Holdings, LLC ("CCO
Holdings") and Charter Operating. The indentures governing
the CCH II notes, CCO Holdings notes, and Charter Operating
notes, however, restrict these entities and their subsidiaries
from making distributions to their parent companies (including
Charter and Charter Holdco) for payment of principal on
Charter's convertible senior notes, in each case unless
there is no default under the applicable indenture and a
specified leverage ratio test is met. In addition, each of
CCH II, CCO Holdings and Charter Operating must
independently assess whether such payments or distributions are
advisable. CCH II, CCO Holdings and Charter Operating
currently meet the applicable leverage ratio test under each of
their respective indentures, and therefore are not currently
prohibited from making any such distributions to their
respective direct parent.
The indentures governing the Charter Holdings
notes permit Charter Holdings to make distributions to Charter
Holdco for payment of interest or principal on the
Company's convertible senior notes, only if, after giving
effect to the distribution, Charter Holdings can incur
additional debt under the leverage ratio test of 8.75 to 1.0,
there is no default under Charter Holdings' indentures and
the other specified tests are met. For the quarter ended
September 30, 2004, there were no defaults under the
Charter Holdings indentures and the other specified tests were
met. However, Charter Holdings continued not to meet the
leverage ratio test of 8.75 to 1.0 at September 30, 2004.
As a result, distributions from Charter Holdings to Charter or
Charter Holdco have been restricted and will continue to be
restricted until that test is met.
During this restriction period, the indentures
governing the Charter Holdings notes permit Charter Holdings and
its subsidiaries to make specified investments in Charter Holdco
or Charter, up to an amount determined by a formula, as long as
there is no default under the indentures. As of
September 30, 2004, Charter Holdco had $31 million in
cash on hand and was owed $39 million in intercompany loans
from its subsidiaries, which were available to Charter Holdco to
pay interest on Charter's convertible senior notes, which
is expected to be approximately $21 million for the
remainder of 2004.
As a result of the foregoing, it is likely that
Charter or Charter Holdco will require additional funding to
repay debt maturing in 2005 and 2006. The Company is working
with its financial advisors to address such funding
requirements. However, there can be no assurance that such
funding will be available to the Company. Although
Mr. Allen and his affiliates have purchased equity from the
Company in the past, Mr. Allen and his affiliates are not
obligated to purchase equity from, contribute to or loan funds
to the Company in the future.
On March 1, 2004, the Company closed the
sale of certain cable systems in Florida, Pennsylvania,
Maryland, Delaware and West Virginia to Atlantic Broadband
Finance, LLC. The Company closed on the sale of an additional
cable system in New York to Atlantic Broadband Finance, LLC in
April 2004. These transactions resulted in a $105 million
pretax gain recorded as a gain on sale of assets in the
Company's condensed consolidated statements of operations.
Subject to post-closing contractual adjustments, the Company
expects the total net proceeds from the sale of all of these
systems to be approximately $733 million, of which
$10 million is currently held in an indemnity escrow
account (with the unused portion thereof to be released by
March 1, 2005). The proceeds received to date have been
used to repay a portion of amounts outstanding under the
Company's credit facilities.
3.
Franchises and Goodwill
On January 1, 2002, the Company adopted
Statement of Financial Accounting Standards ("SFAS")
No. 142, which eliminates the amortization of
indefinite-lived intangible assets. Accordingly, beginning
F-60
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
January 1, 2002, all franchises that qualify
for indefinite-life treatment under SFAS No. 142 are
no longer amortized against earnings but instead are tested for
impairment annually, or more frequently as warranted by events
or changes in circumstances. Based on the guidance prescribed in
Emerging Issues Task Force ("EITF") Issue
No. 02-7,
Unit of Accounting for Testing of Impairment
of Indefinite-Lived Intangible Assets
, franchises are
aggregated into essentially inseparable asset groups to conduct
the valuations. The asset groups generally represent geographic
clustering of the Company's cable systems into groups by
which such systems are managed. Management believes such
grouping represents the highest and best use of those assets.
Fair value is determined based on estimated discounted future
cash flows using assumptions that are consistent with internal
forecasts. The Company has historically followed a residual
method of valuing its franchise assets, which had the effect of
including goodwill with the franchise assets.
In September 2004, the SEC staff issued Topic
D-108,
Use of the Residual Method to Value Acquired Assets
Other than Goodwill
, which requires the direct method of
separately valuing all intangible assets and does not permit
goodwill to be included in franchise assets. On
September 30, 2004, the Company adopted Topic D-108
which resulted in the Company recording a cumulative effect of
accounting change of $765 million (approximately
$875 million before tax effects of $91 million and
minority interest effects of $19 million) for the three and
nine months ended September 30, 2004. The effect of the
adoption was to increase net loss and loss per share by
$765 million and $2.53 for the three months ended
September 30, 2004, respectively, and $765 million and
$2.56 for the nine months ended September 30, 2004,
respectively.
The Company performed an impairment assessment
during the third quarter 2004 using an independent third-party
appraiser and following the guidance of EITF Issue 02-17,
Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination
, and Topic D-108.
The use of lower projected growth rates and the resulting
revised estimates of future cash flows in the Company's
valuation, primarily as a result of increased competition, led
to the recognition of a $2.4 billion impairment charge for
the three and nine months ended September 30, 2004.
The independent third-party appraisers'
valuation as of September 30, 2004 yielded a total
enterprise value of approximately $19.3 billion, which
included approximately $2.0 billion assigned to customer
relationships and approximately $0.9 billion assigned to
goodwill. At October 1, 2003, the independent third-party
appraisers' valuation yielded an enterprise value of
approximately $24.7 billion, which included approximately
$3.2 billion assigned to customer relationships and
approximately $1.1 billion assigned to goodwill. The
valuation completed at October 1, 2003 resulted in no
impairment. SFAS No. 142 does not permit the
recognition of intangible assets not previously recognized.
F-61
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
As of September 30, 2004 and
December 31, 2003, indefinite-lived and finite-lived
intangible assets are presented in the following table:
September 30, 2004
December 31, 2003
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
Amount
Amortization
Amount
Indefinite-lived intangible assets:
Franchises with indefinite lives
$
13,129
$
3,287
$
9,842
$
17,018
$
3,412
$
13,606
Goodwill
52
—
52
52
—
52
$
13,181
$
3,287
$
9,894
$
17,070
$
3,412
$
13,658
Finite-lived intangible assets:
Franchises with finite lives
$
56
$
13
$
43
$
107
$
33
$
74
For the nine months ended September 30,
2004, the net carrying amount of indefinite-lived intangible
assets was reduced by $484 million as a result of the sale
of cable systems to Atlantic Broadband Finance, LLC discussed in
Note 2. Additionally, in the first quarter of 2004,
approximately $29 million of franchises that were
previously classified as finite-lived were reclassified to
indefinite-lived, based on the Company's renewal of these
franchise assets in 2003. Franchise amortization expense for the
three and nine months ended September 30, 2004 was
$1 million and $3 million, respectively, and franchise
amortization expense for the three and nine months ended
September 30, 2003 was $2 million and $6 million,
respectively, which represents the amortization relating to
franchises that did not qualify for indefinite-life treatment
under SFAS No. 142, including costs associated with
franchise renewals. The Company expects that amortization
expense on franchise assets will be approximately
$4 million annually for each of the next five years. Actual
amortization expense in future periods could differ from these
estimates as a result of new intangible asset acquisitions or
divestitures, changes in useful lives and other relevant factors.
4.
Accounts Payable and Accrued
    Expenses
Accounts payable and accrued expenses consist of
the following as of September 30, 2004 and
December 31, 2003:
September 30,
December 31,
2004
2003
Accounts payable — trade
$
78
$
163
Accrued capital expenditures
85
108
Accrued expenses:
Interest
443
277
Programming costs
303
319
Franchise-related fees
55
70
State sales tax
45
61
Other
292
288
$
1,301
$
1,286
F-62
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
5.
Long-Term Debt
Long-term debt consists of the following as of
September 30, 2004 and December 31, 2003:
September 30, 2004
December 31, 2003
Face
Accreted
Face
Accreted
Value
Value
Value
Value
Long-Term Debt
Charter Communications, Inc.:
October and November 2000
5.75% convertible senior notes due 2005
$
588
$
588
$
618
$
618
May 2001
4.75% convertible senior notes due 2006
156
156
156
156
Charter Holdings:
March 1999
8.250% senior notes due 2007
451
451
451
450
8.625% senior notes due 2009
1,244
1,242
1,244
1,242
9.920% senior discount notes due 2011
1,108
1,108
1,108
1,082
January 2000
10.000% senior notes due 2009
640
640
640
640
10.250% senior notes due 2010
318
318
318
318
11.750% senior discount notes due 2010
450
435
450
400
January 2001
10.750% senior notes due 2009
874
874
874
873
11.125% senior notes due 2011
500
500
500
500
13.500% senior discount notes due 2011
675
571
675
517
May 2001
9.625% senior notes due 2009 (includes
    January 2002 additional notes issue)
640
638
640
638
10.000% senior notes due 2011 (includes
    January 2002 additional notes issue)
710
708
710
708
11.750% senior discount notes due 2011
939
780
939
717
January 2002
12.125% senior discount notes due 2012
330
252
330
231
CCH II:
10.250% senior notes due 2010
1,601
1,601
1,601
1,601
CCO Holdings:
8 3/4% senior notes due 2013
500
500
500
500
Charter Operating:
8.000% senior second lien notes
1,100
1,100
—
—
8.375% senior second lien notes
400
400
—
—
Renaissance:
10.00% senior discount notes due 2008
114
116
114
116
F-63
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
September 30, 2004
December 31, 2003
Face
Accreted
Face
Accreted
Value
Value
Value
Value
CC V Holdings:
11.875% senior discount notes due 2008
113
113
113
113
Credit Facilities
Charter Operating
5,393
5,393
4,459
4,459
CC VI Operating
—
—
868
868
Falcon Cable
—
—
856
856
CC VIII Operating
—
—
1,044
1,044
$
18,844
$
18,484
$
19,208
$
18,647
In April 2004, Charter's indirect
subsidiaries, Charter Operating and Charter Communications
Operating Capital Corp., sold $1.5 billion of senior second
lien notes in a private transaction. Additionally, Charter
Operating amended and restated its $5.1 billion credit
facilities, among other things, to defer maturities and increase
availability under those facilities to approximately
$6.5 billion, consisting of a $1.5 billion six-year
revolving credit facility, a $2.0 billion six-year term
loan facility and a $3.0 billion seven-year term loan
facility. Charter Operating used the additional borrowings under
the amended and restated credit facilities, together with
proceeds from the sale of the Charter Operating senior second
lien notes to refinance the credit facilities of its
subsidiaries, CC VI Operating Company, LLC ("CC VI
Operating"), Falcon Cable Communications, LLC ("Falcon
Cable"), and CC VIII Operating, LLC
("CC VIII Operating"), all in concurrent
transactions. In addition, Charter Operating was substituted as
the lender in place of the banks under those subsidiaries'
credit facilities.
Loss on debt to equity
conversions.
The Company recognized a
loss of approximately $23 million for the nine months ended
September 30, 2004 from privately negotiated exchanges of a
total of $30 million principal amount of Charter's
5.75% convertible senior notes for shares of Charter
Class A common stock. The exchanges resulted in the
issuance of more shares in the exchange transaction than would
have been issuable under the original terms of the convertible
senior notes.
6.
Minority Interest and Equity Interest of
    Charter Holdco
Charter is a holding company whose primary asset
is a controlling equity interest in Charter Holdco, the indirect
owner of the Company's cable systems, and $744 million
of mirror notes which are payable by Charter Holdco to Charter
and have the same principal amount and terms as those of
Charter's convertible senior notes. Minority interest on
the Company's consolidated balance sheets represents the
percentage of Charter Holdco not owned by Charter, or 52.8% of
total members' equity of Charter Holdco, plus
$705 million and $694 million of preferred membership
interests in CC VIII, LLC ("CC VIII"), an
indirect subsidiary of Charter Holdco, as of September 30,
2004 and December 31, 2003, respectively. As more fully
described in Note 17, this preferred interest arises from
the approximately $630 million of preferred membership
units issued by CC VIII in connection with an acquisition
in February 2000. As of December 31, 2003, minority
interest also includes $25 million of preferred interest in
Charter Helicon, LLC, another indirect subsidiary of Charter
Holdco, issued in connection with the 1999 Helicon acquisition.
As of September 30, 2004, the preferred interest in Charter
Helicon, LLC was reclassified to other long-term liabilities.
Members' deficit of Charter Holdco was
$673 million and $57 million as of September 30,
2004 and December 31, 2003, respectively. Gains and losses
arising from the issuance by Charter Holdco of its
F-64
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
membership units are recorded as capital
transactions, thereby increasing or decreasing
shareholders' equity and decreasing or increasing minority
interest on the accompanying consolidated balance sheets.
Minority interest was 52.8% and 53.5% as of September 30,
2004 and December 31, 2003, respectively. Minority interest
includes the proportionate share of changes in fair value of
interest rate derivative agreements. Such amounts are temporary
as they are contractually scheduled to reverse over the life of
the underlying instrument. Additionally, reported losses
allocated to minority interest on the consolidated statement of
operations are limited to the extent of any remaining minority
interest on the balance sheet related to Charter Holdco. Because
minority interest in Charter Holdco was substantially eliminated
at December 31, 2003, beginning in the first quarter of
2004, the Company began to absorb substantially all losses
before income taxes that otherwise would have been allocated to
minority interest. This resulted in an additional
$1.7 billion and $2.0 billion of net loss for the
three and nine months ended September 30, 2004,
respectively. Subject to any changes in Charter Holdco's
capital structure, future losses will be substantially absorbed
by Charter. Changes to minority interest consist of the
following:
Minority
Interest
Balance, December 31, 2003
$
689
Minority interest in loss of a subsidiary
(24
)
Minority interest in cumulative effect of
    accounting change
(19
)
Reclassification of Helicon, LLC interest
(25
)
Changes in fair value of interest rate agreements
16
Balance, September 30, 2004
$
637
7.
Comprehensive Loss
Certain marketable equity securities are
classified as available-for-sale and reported at market value
with unrealized gains and losses recorded as accumulated other
comprehensive loss on the accompanying consolidated balance
sheets. Additionally, the Company reports changes in the fair
value of interest rate agreements designated as hedging the
variability of cash flows associated with floating-rate debt
obligations, that meet the effectiveness criteria of
SFAS No. 133,
Accounting for Derivative Instruments
and Hedging Activities
, in accumulated other comprehensive
loss, after giving effect to the minority interest share of such
gains and losses. Comprehensive loss for the three and nine
months ended September 30, 2004 was $3.3 billion and
$4.0 billion, respectively. Comprehensive income for the
three months ended September 30, 2003 was $48 million,
and comprehensive loss for the nine months ended
September 30, 2003 was $168 million.
8.
Accounting for Derivative Instruments and
    Hedging Activities
The Company uses interest rate derivative
instruments, such as interest rate swap agreements and interest
rate collar agreements (collectively referred to herein as
interest rate agreements) to manage its interest costs. The
Company's policy is to manage interest costs using a mix of
fixed and variable rate debt. Using interest rate swap
agreements, the Company has agreed to exchange, at specified
intervals through 2007, the difference between fixed and
variable interest amounts calculated by reference to an
agreed-upon notional principal amount. Interest rate collar
agreements are used to limit the Company's exposure to and
benefits from interest rate fluctuations on variable rate debt
to within a certain range of rates.
F-65
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
The Company does not hold or issue derivative
instruments for trading purposes. The Company does, however,
have certain interest rate derivative instruments that have been
designated as cash flow hedging instruments. Such instruments
are those that effectively convert variable interest payments on
certain debt instruments into fixed payments. For qualifying
hedges, SFAS No. 133 allows derivative gains and
losses to offset related results on hedged items in the
consolidated statement of operations. The Company has formally
documented, designated and assessed the effectiveness of
transactions that receive hedge accounting. For the three months
ended September 30, 2004 and 2003, net gain (loss) on
derivative instruments and hedging activities includes gains of
$1 million and $0, respectively, and for the nine months
ended September 30, 2004 and 2003, net gain (loss) on
derivative instruments and hedging activities includes gains of
$3 million and $8 million, respectively, which
represent cash flow hedge ineffectiveness on interest rate hedge
agreements arising from differences between the critical terms
of the agreements and the related hedged obligations. Changes in
the fair value of interest rate agreements designated as hedging
instruments of the variability of cash flows associated with
floating-rate debt obligations that meet the effectiveness
criteria of SFAS No. 133 are reported in accumulated
other comprehensive loss. For the three and nine months ended
September 30, 2004, a gain of $2 million and
$31 million, respectively, and for the three and nine
months ended September 30, 2003, a gain of $21 million
and $30 million, respectively, related to derivative
instruments designated as cash flow hedges, was recorded in
accumulated other comprehensive loss and minority interest. The
amounts are subsequently reclassified into interest expense as a
yield adjustment in the same period in which the related
interest on the floating-rate debt obligations affects earnings
(losses).
Certain interest rate derivative instruments are
not designated as hedges as they do not meet the effectiveness
criteria specified by SFAS No. 133. However,
management believes such instruments are closely correlated with
the respective debt, thus managing associated risk. Interest
rate derivative instruments not designated as hedges are marked
to fair value, with the impact recorded as gain (loss) on
derivative instruments and hedging activities in the
Company's condensed consolidated statements of operations.
For the three months ended September 30, 2004 and 2003, net
gain (loss) on derivative instruments and hedging activities
includes losses of $9 million and gains of
$31 million, respectively, and for the nine months ended
September 30, 2004 and 2003 net gain (loss) on
derivative instruments and hedging activities includes gains of
$45 million and $27 million, respectively, for
interest rate derivative instruments not designated as hedges.
As of September 30, 2004 and
December 31, 2003, the Company had outstanding
$2.7 billion and $3.0 billion and $20 million and
$520 million, respectively, in notional amounts of interest
rate swaps and collars, respectively. The notional amounts of
interest rate instruments do not represent amounts exchanged by
the parties and, thus, are not a measure of exposure to credit
loss. The amounts exchanged are determined by reference to the
notional amount and the other terms of the contracts.
F-66
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
9.
Revenues
Revenues consist of the following for the three
and nine months ended September 30, 2004 and 2003:
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2004
2003
2004
2003
Video
$
839
$
866
$
2,534
$
2,607
High-speed data
189
145
538
403
Advertising sales
73
64
205
188
Commercial
61
52
175
149
Other
86
80
249
255
$
1,248
$
1,207
$
3,701
$
3,602
10.
Operating Expenses
Operating expenses consist of the following for
the three and nine months ended September 30, 2004 and 2003:
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2004
2003
2004
2003
Programming
$
328
$
307
$
991
$
934
Advertising sales
24
21
72
65
Service
173
156
489
458
$
525
$
484
$
1,552
$
1,457
11.
Selling, General and Administrative
    Expenses
Selling, general and administrative expenses
consist of the following for the three and nine months ended
September 30, 2004 and 2003:
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2004
2003
2004
2003
General and administrative
$
220
$
204
$
636
$
622
Marketing
32
31
99
80
$
252
$
235
$
735
$
702
Components of selling expense are included in
general and administrative and marketing expense.
12.
Special Charges
In the fourth quarter of 2002, the Company
recorded a special charge of $31 million associated with
the Company's workforce reduction and the consolidation of
its operations from three divisions and ten regions into five
operating divisions, elimination of redundant practices and
streamlining its management structure. During the year ended
December 31, 2003, additional severance-related costs of
$26 million were incurred and recorded as a special charge.
During the three and nine months ended September 30, 2004,
an additional 300 and 450 employees, respectively, were
identified for termination, and severance
F-67
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
costs of $6 million and $9 million,
respectively, were recorded in special charges. Severance
payments are made over a period of up to two years with
approximately $3 million and $14 million paid during
the three and nine months ended September 30, 2004,
respectively, and $43 million paid during the year ended
December 31, 2003. As of September 30, 2004 and
December 31, 2003, a liability of approximately
$9 million and $14 million, respectively, is recorded
on the accompanying condensed consolidated balance sheets
related to the reorganization activities discussed above. For
the nine months ended September 30, 2004, special charges
also includes approximately $85 million, representing the
aggregate value of the Charter Class A common stock and
warrants to purchase Charter Class A common stock
contemplated to be issued as part of a settlement of
consolidated federal and state class actions and federal
derivative action lawsuits and approximately $9 million of
litigation costs related to the tentative settlement of a
national class action suit, all of which are subject to final
documentation and court approval (see note 14). For the
three and nine months ended September 30, 2004, the
severance costs were offset by $3 million received from a
third party in settlement of a dispute.
During the three and nine months ended
September 30, 2003, the Company recorded severance costs of
$8 million and $23 million, respectively, in special
charges. For the nine months ended September 30, 2003, the
severance costs were offset by a $5 million settlement from
the Internet service provider Excite@Home related to the
conversion of approximately 145,000 high-speed data customers to
our Charter High Speed service in 2001.
13.
Income Taxes
All operations are held through Charter Holdco
and its direct and indirect subsidiaries. Charter Holdco and the
majority of its subsidiaries are not subject to income tax.
However, certain of these subsidiaries are corporations and are
subject to income tax. All of the taxable income, gains, losses,
deductions and credits of Charter Holdco are passed through to
its members: Charter, Charter Investment, Inc. ("Charter
Investment") and Vulcan Cable III Inc. ("Vulcan
Cable"). Charter is responsible for its share of the
taxable income or loss of Charter Holdco allocated to Charter in
accordance with the Charter Holdco limited liability company
agreement (the "LLC Agreement") and partnership tax
rules and regulations.
As of September 30, 2004 and
December 31, 2003, the Company had net deferred income tax
liabilities of approximately $204 million and
$417 million, respectively. Approximately $204 million
and $267 million of the deferred tax liabilities recorded
in the condensed consolidated financial statements at
September 30, 2004 and December 31, 2003,
respectively, relate to certain indirect subsidiaries of Charter
Holdco, which file separate income tax returns.
During the three and nine months ended
September 30, 2004, the Company recorded $304 million
and $207 million of income tax benefit, respectively. The
Company recorded the portion of the income tax benefit
associated with the adoption of Topic D-108 as a
$91 million reduction of the cumulative effect of
accounting change on the accompanying statement of operations
for the three and nine months ended September 30, 2004.
During the three and nine months ended September 30, 2003,
the Company recorded $28 million and $86 million of
income tax benefit, respectively. The sale of cable systems to
Atlantic Broadband Finance, LLC on March 1 and
April 30, 2004 resulted in $15 million of income tax
expense for the nine months ended September 30, 2004.
Income tax benefit is recognized through
reductions in the deferred tax liabilities related to
Charter's investment in Charter Holdco, as well as the
deferred tax liabilities of certain of Charter's indirect
corporate subsidiaries. The Company recorded an additional
deferred tax asset of approximately $1.4 billion and
$1.7 billion during the three and nine months ended
September 30, 2004, respectively,
F-68
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
relating to net operating loss carryforwards, but
recorded a valuation allowance with respect to these amounts
because of the uncertainty of the ability to realize a benefit
from these carryforwards in the future.
The Company had deferred tax assets of
approximately $3.4 billion and $1.7 billion as of
September 30, 2004 and December 31, 2003,
respectively, a portion of which relates to the excess of
cumulative financial statement losses over cumulative tax losses
allocated from Charter Holdco. The deferred tax assets also
include approximately $1.8 billion and $912 million of
tax net operating loss carryforwards as of September 30,
2004 and December 31, 2003, respectively (generally
expiring in years 2004 through 2024), of Charter and its
indirect corporate subsidiaries, which are subject to certain
return limitations.
The total valuation allowance for deferred tax
assets was $3.0 billion and $1.3 billion as of
September 30, 2004 and December 31, 2003,
respectively. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not
that some or all of the deferred tax assets will be realized.
Because of the uncertainties in projecting future taxable income
of Charter Holdco, valuation allowances have been established
except for deferred benefits available to offset deferred tax
liabilities.
The Company is currently under examination by the
Internal Revenue Service for the tax years ending
December 31, 1999 and 2000. Management does not expect the
results of this examination to have a material adverse effect on
the Company's financial position or results of operations.
14.
Contingencies
As previously reported in the Company's 2003
Annual Report on Form 10-K and 2004 Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004,
fourteen putative federal class action lawsuits (the
"Federal Class Actions") were filed against
Charter and certain of its former and present officers and
directors in various jurisdictions allegedly on behalf of all
purchasers of Charter's securities during the period from
either November 8 or November 9, 1999 through July 17
or July 18, 2002. In general, the lawsuits alleged that
Charter utilized misleading accounting practices and failed to
disclose these accounting practices and/or issued false and
misleading financial statements and press releases concerning
Charter's operations and prospects. The Federal
Class Actions were specifically and individually identified
in public filings made by Charter prior to the date of this
quarterly report.
On September 12, 2002, a shareholders
derivative suit (the "State Derivative Action") was
filed in the Circuit Court of the City of St. Louis, State
of Missouri (the "Missouri State Court") against
Charter and its then current directors, as well as its former
auditors. A substantively identical derivative action was later
filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their
fiduciary duties by failing to establish and maintain adequate
internal controls and procedures. An action substantively
identical to the State Derivative Action was filed in March
2004. The State Derivative Actions were specifically and
individually identified in public filings made by Charter prior
to the date of this quarterly report.
Separately, on February 12, 2003, a
shareholders derivative suit (the "Federal Derivative
Action") was filed against Charter and its then current
directors in the United States District Court for the Eastern
District of Missouri. The plaintiff in that suit alleged that
the individual defendants breached their fiduciary duties and
grossly mismanaged Charter by failing to establish and maintain
adequate internal controls and procedures. The Federal
Derivative Action was identified in public filings made by
Charter prior to the date of this quarterly report.
F-69
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
On August 5, 2004, Charter entered into
Memoranda of Understanding setting forth agreements in principle
regarding settlement of the Federal Class Actions, the
State Derivative Action(s) and the Federal Derivative Action
(the "Actions"). In exchange for a release of all
claims by plaintiffs against Charter and its former and present
officers and directors named in the Actions, Charter will pay to
the plaintiffs a combination of cash and equity collectively
valued at $144 million, which will include the fees and
expenses of plaintiffs' counsel. Of this amount,
$64 million will be paid in cash (by Charter's
insurance carriers) and the balance will be paid in shares of
Charter Class A common stock having an aggregate value of
$40 million and ten-year warrants to purchase shares of
Charter Class A common stock having an aggregate warrant
value of $40 million. The warrants would have an exercise
price equal to 150% of the fair market value (as defined) of
Charter Class A common stock as of the date of the entry of
the order of final judgment approving the settlement. In
addition, Charter expects to issue additional shares of its
Class A common stock to its insurance carrier having an
aggregate value of $5 million. As a result, in the second
quarter of 2004, the Company recorded a $149 million
litigation liability within other long-term liabilities and a
$64 million insurance receivable as part of other
non-current assets on its consolidated balance sheet and an
$85 million special charge on its consolidated statement of
operations. Additionally, as part of the settlements, Charter
will also commit to a variety of corporate governance changes,
internal practices and public disclosures, some of which have
already been undertaken and none of which are inconsistent with
measures Charter is taking in connection with the recent
conclusion of the SEC investigation described below. The
settlement of each of the lawsuits is conditioned upon, among
other things, the parties' approval and execution of
definitive settlement agreements with respect to the matters
described above, judicial approval of the settlements by the
Court following notice to the class, and dismissal of the
consolidated derivative actions now pending in Missouri State
Court, which are related to the Federal Derivative Action.
In August 2002, Charter became aware of a grand
jury investigation being conducted by the
U.S. Attorney's Office for the Eastern District of
Missouri into certain of its accounting and reporting practices,
focusing on how Charter reported customer numbers, and its
reporting of amounts received from digital set-top terminal
suppliers for advertising. The U.S. Attorney's Office
has publicly stated that Charter is not a target of the
investigation. Charter has also been advised by the
U.S. Attorney's office that no member of its board of
directors, including its Chief Executive Officer, is a target of
the investigation. On July 24, 2003, a federal grand jury
charged four former officers of Charter with conspiracy and mail
and wire fraud, alleging improper accounting and reporting
practices focusing on revenue from digital set-top terminal
suppliers and inflated customer account numbers. On
July 25, 2003, one of the former officers who was indicted
entered a guilty plea. Charter is fully cooperating with the
investigation.
On November 4, 2002, Charter received an
informal, non-public inquiry from the staff of the SEC. The SEC
issued a formal order of investigation dated January 23,
2003, and subsequently served document and testimony subpoenas
on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charter's
prior reports with respect to its determination of the number of
customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings
with certain vendors, including programmers and digital set-top
terminal suppliers. On July 27, 2004, the SEC and Charter
reached a final agreement to settle the investigation. In the
Settlement Agreement and Cease and Desist Order, Charter agreed
to entry of an administrative order prohibiting any future
violations of United States securities laws and requiring
certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing,
and the SEC assessed no fine against Charter.
F-70
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
Charter is generally required to indemnify each
of the named individual defendants in connection with the
matters described above pursuant to the terms of its bylaws and
(where applicable) such individual defendants' employment
agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC
investigation and the above described lawsuits, some of
Charter's current and former directors and current and
former officers have been advanced certain costs and expenses
incurred in connection with their defense.
In October 2001, two customers, Nikki Nicholls
and Geraldine M. Barber, filed a class action suit against
Charter Holdco in South Carolina Court of Common Pleas (the
"South Carolina Class Action"), purportedly on
behalf of a class of Charter Holdco's customers, alleging
that Charter Holdco improperly charged them a wire maintenance
fee without request or permission. They also claimed that
Charter Holdco improperly required them to rent analog and/or
digital set-top terminals even though their television sets were
"cable ready." A substantively identical case was
filed in the Superior Court of Athens — Clarke County,
Georgia by Emma S. Tobar on March 26, 2002 (the
"Georgia Class Action"), alleging a nationwide
class for these claims. The South Carolina Class Action and
the Georgia Class Action were identified in public filings
made by Charter prior to the date of this quarterly report.
In April 2004, the parties to both the Georgia
and South Carolina Class Actions participated in a
mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the
mediator's proposal and reached a tentative settlement,
subject to final documentation and court approval. As a result
of the tentative settlement, the Company recorded a special
charge of $9 million in its consolidated statement of
operations in the first quarter of 2004 (see note 12). On
July 8, 2004, the Superior Court of Athens —
Clarke County, Georgia granted a motion to amend the Tobar
complaint to add Nicholls, Barber and April Jones as plaintiffs
in the Georgia Class Action and to add any potential class
members in South Carolina. The court also granted preliminary
approval of the proposed settlement on that date. A hearing to
consider final approval of the settlement is scheduled to occur
on November 10, 2004. On August 2, 2004, the parties
submitted a joint request to the South Carolina Court of Common
Pleas to stay the South Carolina Class Action pending final
approval of the settlement and on August 17, 2004, that
court granted the parties' request.
In addition to the matters set forth above,
Charter is also party to other lawsuits and claims that arose in
the ordinary course of conducting its business. In the opinion
of management, after taking into account recorded liabilities,
the outcome of these other lawsuits and claims are not expected
to have a material adverse effect on the Company's
financial condition, results of operations or its liquidity.
15.
Earnings Per Share
Basic earnings per share is based on the average
number of shares of common stock outstanding during the period.
Diluted earnings per share is based on the average number of
shares used for the basic earnings per share calculation,
adjusted for the dilutive effect of stock options, convertible
debt, convertible redeemable preferred stock and exchangeable
membership units. Basic earnings per share equals diluted
F-71
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
earnings per share for the three months ended
September 30, 2004 and the nine months ended
September 30, 2003 and 2004.
Three Months Ended
September 30, 2003
Earnings Per
Earnings
Shares
Share
Basic earnings per share
$
36
295
$
0.12
Effect of stock options
—
4
—
Effect of Charter Investment Class B Common
    Stock
7
223
(0.04
)
Effect of Vulcan Cable III Inc. Class B
    Common Stock
4
116
(0.01
)
Diluted earnings per share
$
47
638
$
0.07
The effect of stock options represents the shares
resulting from the assumed exercise of outstanding stock
options, calculated using the treasury stock method for all
options whose exercise price was less than the average market
price of the common shares. Charter Investment Class B
common stock and Vulcan Cable III Inc. Class B common
stock represent membership units in Charter Holdco that are
exchangeable at any time on a one-for-one basis for shares of
Charter Class B common stock, which are in turn convertible
on a one-for-one basis into shares of Charter Class A
common stock. Their effect on earnings represents the allocation
of gains to minority interest based on their ownership of
Charter Holdco.
Certain options to purchase common stock, which
were outstanding during the three months ended
September 30, 2003, were not included in the computation of
diluted earnings per share because the options' exercise
price was greater than the average market price of the common
shares. Charter's 5.75% and 4.75% convertible senior
notes, Charter's series A convertible redeemable
preferred stock and all of the outstanding exchangeable
membership units in Charter's indirect subsidiary, CC VIII,
LLC, also were not included in the computation of diluted
earnings per share because the effect of the conversions would
have been antidilutive.
16.
Stock Compensation Plans
The Company has historically accounted for
stock-based compensation in accordance with Accounting
Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees,
and related
interpretations, as permitted by SFAS No. 123,
Accounting for Stock-Based Compensation.
On
January 1, 2003, the Company adopted the fair value
measurement provisions of SFAS No. 123 using the
prospective method, under which the Company recognizes
compensation expense of a stock-based award to an employee over
the vesting period based on the fair value of the award on the
grant date consistent with the method described in Financial
Accounting Standards Board Interpretation No. 28,
Accounting for Stock Appreciation Rights and Other Variable
Stock Option or Award Plans
. Adoption of these provisions
resulted in utilizing a preferable accounting method as the
condensed consolidated financial statements will present the
estimated fair value of stock-based compensation in expense
consistently with other forms of compensation and other expense
associated with goods and services received for equity
instruments. In accordance with SFAS No. 148,
Accounting for Stock-Based Compensation —
Transition and Disclosure
, the fair value method is being
applied only to awards granted or modified after January 1,
2003, whereas awards granted prior to such date will continue to
be accounted for under APB No. 25, unless they are modified
or settled in cash. The ongoing effect on consolidated results
of operations or financial condition will depend on future
stock-based compensation awards granted by the Company.
F-72
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
SFAS No. 123 requires pro forma
disclosure of the impact on earnings as if the compensation
expense for these plans had been determined using the fair value
method. The following table presents the Company's net
income (loss) and income (loss) per share as reported and the
pro forma amounts that would have been reported using the fair
value method under SFAS No. 123 for the periods
presented:
Three Months
Ended
Nine Months
September 30,
Ended September 30,
2004
2003
2004
2003
Net income (loss) applicable to common stock
$
(3,295
)
$
36
$
(4,005
)
$
(184
)
Add back stock-based compensation expense related
    to stock options included in reported net income (loss) (net of
    minority interest)
8
1
34
1
Less employee stock-based compensation expense
    determined under fair value based method for all employee stock
    option awards (net of minority interest)
(6
)
(3
)
(37
)
(11
)
Effects of unvested options in stock option
    exchange
—
—
48
—
Pro forma
$
(3,293
)
$
34
$
(3,960
)
$
(194
)
Income (loss) per common shares, basic:
As reported
$
(10.89
)
$
0.12
$
(13.38
)
$
(0.62
)
Pro forma
$
(10.88
)
$
0.12
$
(13.23
)
$
(0.66
)
Income (loss) per common shares, diluted:
As reported
$
(10.89
)
$
0.07
$
(13.38
)
$
(0.62
)
Pro forma
$
(10.88
)
$
0.07
$
(13.23
)
$
(0.66
)
In January 2004, Charter began an option exchange
program in which the Company offered its employees the right to
exchange all stock options (vested and unvested) under the 1999
Charter Communications Option Plan and 2001 Stock Incentive Plan
that had an exercise price over $10 per share for shares of
restricted Charter Class A common stock or, in some
instances, cash. Based on a sliding exchange ratio, which varied
depending on the exercise price of an employee's
outstanding options, if an employee would have received more
than 400 shares of restricted stock in exchange for
tendered options, Charter issued to that employee shares of
restricted stock in the exchange. If, based on the exchange
ratios, an employee would have received 400 or fewer shares of
restricted stock in exchange for tendered options, Charter
instead paid the employee cash in an amount equal to the number
of shares the employee would have received multiplied by $5.00.
The offer applied to options (vested and unvested) to purchase a
total of 22,929,573 shares of Charter Class A common
stock, or approximately 48% of the Company's 47,882,365
total options (vested and unvested) issued and outstanding as of
December 31, 2003. Participation by employees was
voluntary. Those members of Charter's board of directors
who were not also employees of the Company were not eligible to
participate in the exchange offer.
In the closing of the exchange offer on
February 20, 2004, the Company accepted for cancellation
eligible options to purchase approximately
18,137,664 shares of Charter Class A common stock. In
exchange, the Company granted 1,966,686 shares of
restricted stock, including 460,777 performance shares to
eligible employees of the rank of senior vice president and
above, and paid a total cash amount of approximately
$4 million (which amount includes applicable withholding
taxes) to those employees who
F-73
Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
received cash rather than shares of restricted
stock. The restricted stock was granted on February 25,
2004. Employees tendered approximately 79% of the options
exchangeable under the program.
The cost to the Company of the stock option
exchange program was approximately $12 million, with a 2004
cash compensation expense of approximately $4 million and a
non-cash compensation expense of approximately $8 million
to be expensed ratably over the three-year vesting period of the
restricted stock issued in the exchange.
In January 2004, the Compensation Committee of
the board of directors of Charter approved Charter's
Long-Term Incentive Program ("LTIP"), which is a
program administered under the 2001 Stock Incentive Plan.
Employees of Charter and its subsidiaries whose pay
classifications exceed a certain level are eligible to receive
stock options, and more senior level employees are eligible to
receive stock options and performance shares. Under the LTIP,
the stock options vest 25% on each of the first four
anniversaries of the date of grant. The performance units vest
on the third anniversary of the grant date and shares of Charter
Class A common stock are issued, conditional upon
Charter's performance against financial performance targets
established by Charter's management and approved by its
board of directors as of the time of the award.
17.
Related Parties
CC VIII.
As
part of the acquisition of the cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000,
CC VIII, Charter's indirect limited liability company
subsidiary, issued, after adjustments, 24,273,943 Class A
preferred membership units (collectively, the "CC VIII
interest") with a value and an initial capital account of
approximately $630 million to certain sellers affiliated
with AT&T Broadband, subsequently owned by Comcast
Corporation (the "Comcast sellers"). While held by the
Comcast sellers, the CC VIII interest was entitled to a 2%
priority return on its initial capital account and such priority
return was entitled to preferential distributions from available
cash and upon liquidation of CC VIII. While held by the
Comcast sellers, the CC VIII interest generally did not
share in the profits and losses of CC VIII. Mr. Allen
granted the Comcast sellers the right to sell to him the
CC VIII interest for approximately $630 million plus
4.5% interest annually from February 2000 (the "Comcast put
right"). In April 2002, the Comcast sellers exercised the
Comcast put right in full, and this transaction was consummated
on June 6, 2003. Accordingly, Mr. Allen has become the
holder of the CC VIII interest, indirectly through an
affiliate. Consequently, subject to the matters referenced in
the next paragraph, Mr. Allen generally thereafter will be
allocated his pro rata share (based on number of membership
interests outstanding) of profits or losses of CC VIII. In
the event of a liquidation of CC VIII, Mr. Allen would
be entitled to a priority distribution with respect to the 2%
priority return (which will continue to accrete). Any remaining
distributions in liquidation would be distributed to CC V
Holdings, LLC and Mr. Allen in proportion to CC V
Holdings, LLC's capital account and Mr. Allen's
capital account (which will equal the initial capital account of
the Comcast sellers of approximately $630 million,
increased or decreased by Mr. Allen's pro rata share
of CC VIII's profits or losses (as computed for
capital account purposes) after June 6, 2003). The limited
liability company agreement of CC VIII does not provide for
a mandatory redemption of the CC VIII interest.
An issue has arisen as to whether the
documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the
CC VIII interest following consummation of the Comcast put
right. Specifically, under the terms of the Bresnan transaction
documents that were entered into in June 1999, the Comcast
sellers originally would have received, after adjustments,
24,273,943 Charter Holdco membership units, but due to an FCC
regulatory issue raised by the Comcast sellers shortly before
closing, the Bresnan transaction was modified to provide that
the Comcast sellers instead
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Table of Contents
CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
would receive the preferred equity interests in
CC VIII represented by the CC VIII interest. As part
of the last-minute changes to the Bresnan transaction documents,
a draft amended version of the Charter Holdco limited liability
company agreement was prepared, and contract provisions were
drafted for that agreement that would have required an automatic
exchange of the CC VIII interest for 24,273,943 Charter
Holdco membership units if the Comcast sellers exercised the
Comcast put right and sold the CC VIII interest to
Mr. Allen or his affiliates. However, the provisions that
would have required this automatic exchange did not appear in
the final version of the Charter Holdco limited liability
company agreement that was delivered and executed at the closing
of the Bresnan transaction. The law firm that prepared the
documents for the Bresnan transaction brought this matter to the
attention of Charter and representatives of Mr. Allen in
2002.
Thereafter, the board of directors of Charter
formed a Special Committee (currently comprised of
Messrs. Merritt, Tory and Wangberg) to investigate the
matter and take any other appropriate action on behalf of
Charter with respect to this matter. After conducting an
investigation of the relevant facts and circumstances, the
Special Committee determined that a "scrivener's
error" had occurred in February 2000 in connection with the
preparation of the last-minute revisions to the Bresnan
transaction documents and that, as a result, Charter should seek
the reformation of the Charter Holdco limited liability company
agreement, or alternative relief, in order to restore and ensure
the obligation that the CC VIII interest be automatically
exchanged for Charter Holdco units. The Special Committee
further determined that, as part of such contract reformation or
alternative relief, Mr. Allen should be required to
contribute the CC VIII interest to Charter Holdco in exchange
for 24,273,943 Charter Holdco membership units. The Special
Committee also recommended to the board of directors of Charter
that, to the extent the contract reformation is achieved, the
board of directors should consider whether the CC VIII interest
should ultimately be held by Charter Holdco or Charter Holdings
or another entity owned directly or indirectly by them.
Mr. Allen disagrees with the Special
Committee's determinations described above and has so
notified the Special Committee. Mr. Allen contends that the
transaction is accurately reflected in the transaction
documentation and contemporaneous and subsequent company public
disclosures.
The parties engaged in a process of non-binding
mediation to seek to resolve this matter, without success. The
Special Committee is evaluating what further actions or
processes it may undertake to resolve this dispute. To
accommodate further deliberation, each party has agreed to
refrain from initiating legal proceedings over this matter until
it has given at least ten days' prior notice to the other.
In addition, the Special Committee and Mr. Allen have
determined to utilize the Delaware Court of Chancery's
program for mediation of complex business disputes in an effort
to resolve the CC VIII interest dispute. If the Special
Committee and Mr. Allen are unable to reach a resolution
through that mediation process or to agree on an alternative
dispute resolution process, the Special Committee intends to
seek resolution of this dispute through judicial proceedings in
an action that would be commenced, after appropriate notice, in
the Delaware Court of Chancery against Mr. Allen and his
affiliates seeking contract reformation, declaratory relief as
to the respective rights of the parties regarding this dispute
and alternative forms of legal and equitable relief. The
ultimate resolution and financial impact of the dispute are not
determinable at this time.
TechTV, Inc.
TechTV,
Inc. ("TechTV") operated a cable television network
that offered programming mostly related to technology. Pursuant
to an affiliation agreement that originated in 1998 and that
terminates in 2008, TechTV has provided the Company with
programming for distribution via its cable systems. The
affiliation agreement provides, among other things, that TechTV
must offer Charter certain terms and conditions that are no less
favorable in the affiliation agreement than are given to any
F-75
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
other distributor that serves the same number of
or fewer TechTV viewing customers. Additionally, pursuant to the
affiliation agreement, the Company was entitled to incentive
payments for channel launches through December 31, 2003.
In March 2004, Charter Holdco entered into
agreements with Vulcan Programming and TechTV, which provide for
(i) Charter Holdco and TechTV to amend the affiliation
agreement which, among other things, revises the description of
the TechTV network content, provides for Charter Holdco to waive
certain claims against TechTV relating to alleged breaches of
the affiliation agreement and provides for TechTV to make
payment of outstanding launch receivables due to Charter Holdco
under the affiliation agreement, (ii) Vulcan Programming to
pay approximately $10 million and purchase over a 24-month
period, at fair market rates, $2 million of advertising
time across various cable networks on Charter cable systems in
consideration of the agreements, obligations, releases and
waivers under the agreements and in settlement of the
aforementioned claims and (iii) TechTV to be a provider of
content relating to technology and video gaming for
Charter's interactive television platforms through
December 31, 2006 (exclusive for the first year). The
Company recognized approximately $5 million of the Vulcan
Programming payment as an offset to programming expense during
the nine months ended September 30, 2004 with the remaining
$5 million to be recognized over the term of the agreement.
The Company believes that Vulcan Programming, which is 100%
owned by Mr. Allen, owned an approximate 98% equity
interest in TechTV at the time of the transaction. Until
September 2003, Mr. Savoy, a former Charter director, was
the president and director of Vulcan Programming and was a
director of TechTV. Mr. Wangberg, one of Charter's
directors, was the chairman, chief executive officer and a
director of TechTV. Mr. Wangberg resigned as the chief
executive officer of TechTV in July 2002. He remained a director
of TechTV along with Mr. Allen until Vulcan Programming
sold TechTV to an unrelated third party in May 2004.
Digeo, Inc.
On
June 30, 2003, Charter Holdco entered into an agreement
with Motorola, Inc. for the purchase of 100,000 digital video
recorder ("DVR") units. The software for these DVR
units is being supplied by Digeo Interactive, LLC ("Digeo
Interactive"), a wholly owned subsidiary of Digeo, Inc.
("Digeo"), under a license agreement entered into in
April 2004. Under the license agreement Digeo Interactive
granted to Charter Holdco the right to use Digeo's
proprietary software for the number of DVR units that Charter
deploys from a maximum of 10 headends through year-end 2004.
This maximum number of headends was increased from 10 to 15
pursuant to a letter agreement executed on June 11, 2004
and was increased again from 15 to 20 pursuant to a second
letter agreement dated August 4, 2004. The license granted
for each unit deployed under the agreement is valid for five
years. In addition, Charter will pay certain other fees
including a per-headend license fee and maintenance fees. Total
license and maintenance fees during the term of the agreement
are expected to be approximately $3 million. The agreement
provides that Charter is entitled to receive contract terms,
considered on the whole, and license fees, considered apart from
other contract terms, no less favorable than those accorded to
any other Digeo customer. In April 2004, the Company launched
DVR service utilizing the Digeo proprietary software in its
Rochester, Minnesota market.
In May 2004, Charter Holdco entered into a
binding term sheet with Digeo Interactive for the purchase of
70,000 Digeo PowerKey DVR units. The term sheet provides that
the parties will proceed in good faith to negotiate, prior to
year-end 2004, definitive agreements for the purchase of the DVR
units and that the parties will enter into a license agreement
for Digeo's proprietary software on terms substantially
similar to the terms of the license agreement described above.
Total purchase price and license and maintenance fees during the
term of the definitive agreements are expected to be
approximately $40 million. The term sheet and any
definitive agreements will be terminable at no penalty to
Charter in certain circumstances.
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
Charter and Digeo entered into a letter agreement
effective September 28, 2004 amending the April 2004
license agreement to reduce certain fees payable to Digeo by
Charter and to increase the maximum number of headends in which
Charter has the right to deploy the DVR units from a maximum of
20 by year end 2004, to a maximum of 30 by June 30, 2005.
The Company believes that Vulcan Ventures, an
entity controlled by Mr. Allen, owns an approximate 60%
equity interest in Digeo, Inc. Messrs. Allen and Vogel are
directors of Digeo. Mr. Vogel owns options to
purchase 10,000 shares of Digeo common stock.
Oxygen Media LLC.
Oxygen Media LLC ("Oxygen") provides programming
content aimed at the female audience for distribution over cable
systems and satellite. On July 22, 2002, Charter Holdco
entered into a carriage agreement with Oxygen, whereby the
Company agreed to carry programming content from Oxygen. Under
the carriage agreement, the Company currently makes Oxygen
programming available to approximately 5 million of its
video customers. The term of the carriage agreement was
retroactive to February 1, 2000, the date of launch of
Oxygen programming by the Company, and runs for a period of five
years from that date. For the nine months ended
September 30, 2004 and 2003, the Company paid Oxygen
approximately $10 million and $6 million,
respectively, for programming content. In addition, Oxygen pays
the Company marketing support fees for customers launched after
the first year of the term of the carriage agreement up to a
total of $4 million. The Company recorded approximately
$1 million and $696 million related to these launch
incentives as a reduction of programming expense for each of the
nine months ended September 30, 2004 and 2003, respectively.
Concurrently with the execution of the carriage
agreement, Charter Holdco entered into an equity issuance
agreement pursuant to which Oxygen's parent company, Oxygen
Media Corporation ("Oxygen Media"), granted a
subsidiary of Charter Holdco a warrant to
purchase 2.4 million shares of Oxygen Media common
stock for an exercise price of $22.00 per share. Charter
Holdco was also to receive unregistered shares of Oxygen Media
common stock with a guaranteed fair market value on the date of
issuance of $34 million, on or prior to February 2,
2005, with the exact date to be determined by Oxygen Media.
The Company recognizes the guaranteed value of
the investment over the life of the carriage agreement as a
reduction of programming expense. For the nine months ended
September 30, 2004 and 2003, the Company recorded
approximately $10 million and $6 million,
respectively, as a reduction of programming expense. The
carrying value of the Company's investment in Oxygen was
approximately $29 million and $19 million as of
September 30, 2004 and December 31, 2003, respectively.
In August 2004, Charter Holdco and Oxygen entered
into agreements that amend and renew the carriage agreement. The
amendment to the carriage agreement (a) revises the number
of the Company's customers to which Oxygen programming must
be carried and for which the Company must pay, (b) releases
Charter Holdco from any claims related to the failure to achieve
distribution benchmarks under the carriage agreement,
(c) requires Oxygen to make payment on outstanding
receivables for marketing support fees due to the Company under
the affiliation agreement; and (d) requires that Oxygen
provide its programming content to the Company on economic terms
no less favorable than Oxygen provides to any other cable or
satellite operator having fewer subscribers than the Company.
The renewal of the carriage agreement (a) extends the
period that the Company will carry Oxygen programming to its
customers through January 31, 2008, and (b) requires
license fees to be paid based on customers receiving Oxygen
programming, rather than for specific customer benchmarks.
In August 2004, Charter Holdco and Oxygen also
amended the equity issuance agreement to provide for the
issuance of 1 million shares of Oxygen Preferred Stock with
a liquidation preference of $33.10 per
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CHARTER COMMUNICATIONS, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(UNAUDITED)
(Dollars in millions, except per share amounts
and where indicated)
share plus accrued dividends to Charter Holdco on
February 1, 2005 in place of the $34 million of
unregistered shares of Oxygen Media common stock. The preferred
stock is convertible into common stock after December 31,
2007 at a conversion ratio, the numerator of which is the
liquidation preference and the denominator which is the fair
market value per share of Oxygen Media common stock on the
conversion date.
As of September 30, 2004, through Vulcan
Programming, Mr. Allen owned an approximate 31% interest in
Oxygen assuming no exercises of outstanding warrants or
conversion or exchange of convertible or exchangeable securities.
Marc Nathanson has an indirect beneficial
interest of less than 1% in Oxygen.
F-78
Table of Contents
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13.
Other Expenses of Issuance and
    Distribution
The following table sets forth the various
expenses to be incurred in connection with the sale and
distribution of the securities covered by this prospectus, all
of which will be borne by the registrant. All amounts shown are
estimates except the SEC filing fee.
Regulatory filing fees
$
71,361
Legal fees and expenses
$
1,500,000
Accounting fees and expenses
$
500,000
Printing expenses
$
250,000
Total expenses
$
2,321,361
Item 14.
Indemnification of Directors and
    Officers
Indemnification Under the Certificate of
Incorporation and Bylaws of Charter Communications,
Inc.
Charter Communications, Inc.'s certificate
of incorporation provides that a director of Charter
Communications, Inc. shall not be personally liable to Charter
Communications, Inc. or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for
liability: (i) for any breach of the directors' duty
of loyalty to Charter Communications, Inc. or its shareholders;
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the Delaware General
Corporation law; or (iv) for any transaction from which the
director derived an improper personal benefit. Charter
Communications, Inc.'s bylaws require Charter
Communications, Inc., to the fullest extent authorized by the
Delaware General Corporation Law, to indemnify any person who
was or is made a party or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding by reason
of the fact that he is or was a director or officer of Charter
Communications, Inc. or is or was serving at the request of
Charter Communications, Inc. as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity or enterprise, in each
case, against all expense, liability and loss (including
attorneys' fees, judgments, amounts paid in settlement,
fines, ERISA excise taxes or penalties) reasonably incurred or
suffered by such person in connection therewith.
Indemnification Under the Delaware General
Corporation Law
Section 145 of the Delaware General
Corporation Law, authorizes a corporation to indemnify any
person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding, if
the person acted in good faith and in a manner the person
reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. In addition, the Delaware
General Corporation Law does not permit indemnification in any
threatened, pending or completed action or suit by or in the
right of the corporation in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that
the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses, which such court shall deem proper. To the extent
that a present or former director or officer of a corporation
has been successful on the merits or otherwise in defense of any
action, suit or
II-1
Table of Contents
proceeding referred to above, or in defense of
any claim, issue or matter, such person shall be indemnified
against expenses, including attorneys' fees, actually and
reasonably incurred by such person. Indemnity is mandatory to
the extent a claim, issue or matter has been successfully
defended. The Delaware General Corporation Law also allows a
corporation to provide for the elimination or limit of the
personal liability of a director to the corporation or its
shareholders for monetary damages for breach of fiduciary duty
as a director, provided that such provision shall not eliminate
or limit the liability of a director
(i) for any breach of the director's
    duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in good faith
    or which involve intentional misconduct or a knowing violation
    of law,
(iii) for unlawful payments of dividends or
    unlawful stock purchases or redemptions, or
(iv) for any transaction from which the
    director derived an improper personal benefit. These provisions
    will not limit the liability of directors or officers under the
    federal securities laws of the United States.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
Item 15.
Recent Sales of Unregistered
    Securities.
On March 29, 2004, Charter Communications,
Inc. issued 2,385,705 shares of its Class A common
stock in exchange for $10 million aggregate principal
amount of Charter's 5.75% convertible senior notes due
2005 in a privately negotiated transaction. The shares of
Class A common stock issued in this exchange were exempt
from registration under Section 3(a)(9) of the Securities
Act of 1933.
On May 6, 2004, Charter Communications, Inc.
issued 4,867,113 shares of its Class A common stock in
exchange for $20 million aggregate principal amount of
Charter's 5.75% convertible senior notes due 2005 in a
privately negotiated transaction. The shares of Class A
common stock issued in this exchange were exempt from
registration under Section 3(a)(9) of the Securities Act of
1933.
On November 22, 2004, Charter
Communications, Inc. issued and sold $862.5 million
original principal amount of 5.875% Convertible Senior
Notes due 2009. The notes were sold in a private transaction to
qualified institutional buyers, and the sale was exempt from
registration by virtue of Section 4(2) of the Securities
Act of 1933 and Rule 506 of Regulation D. The notes
were eligible for resale to qualified institutional buyers
pursuant to Rule 144A of the Securities Act of 1933. The
initial conversion rate, subject to adjustment in certain
circumstances, will be 413.2231 shares of Charter's
Class A common stock per $1,000 original principal amount
of notes, which represents a conversion price of approximately
$2.42 per share. Consequently, the notes are convertible
into an aggregate of approximately 356,405,000 shares of
Class A common stock. A portion of the net proceeds from
the sale of the notes were used to purchase a portfolio of
U.S. Treasury securities which are pledged as security for
the notes and which Charter expects to use to fund the first six
scheduled interest payments on the notes. Charter also intends
to use a portion of the net proceeds to redeem outstanding
indebtedness in the aggregate principal amount of
$588 million. Excess proceeds will be used for general
corporate purposes.
In December 2003, subject to certain
conditions and finalizing appropriate documentation, the Company
agreed to issue 18,638 shares of Class A common stock in
exchange for cancellation of an option to purchase 186,385
shares which was issued in 2001 as compensation for services.
The exchange is scheduled to be consummated in 2005. In
addition, we agreed to issue to the same holder a new option to
purchase an additional 289,268 shares of Class A common
stock for an exercise price of $3.905 per share. The issuances
were in exchange for services rendered or to be rendered, and
were exempt from registration pursuant to Section 4(2)
under the Securities Act of 1933 and Rule 506 of
Regulation D.
II-2
Table of Contents
Item 16.
Exhibits
Exhibit
Description
1**
Form of Underwriting Agreement.
2
.1(a)
Purchase and Contribution Agreement, entered into
    as of June 1999, by and among BCI (USA), LLC, William Bresnan,
    Blackstone BC Capital Partners L.P., Blackstone BC Offshore
    Capital Partners L.P., Blackstone Family Investment
    Partnership III L.P., TCID of Michigan, Inc. and TCI
    Bresnan LLC and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit 2.11 to Amendment
    No. 2 to the registration statement on Form S-1 of
    Charter Communications, Inc. filed on September 28, 1999
    (File No. 333-83887)).
2
.1(b)
First Amendment to Purchase and Contribution
    Agreement dated as of February 14, 2000, by and among BCI
    (USA), LLC, William J. Bresnan, Blackstone BC Capital Partners
    L.P., Blackstone BC Offshore Capital Partners, L.P., Blackstone
    Family Media III L.P. (as assignee of Blackstone Family
    Investment III, L.P.), TCID of Michigan, Inc., TCI Bresnan,
    LLC and Charter Communications Holding Company, LLC.
    (Incorporated by reference to Exhibit 2.11(a) to the
    current report on Form 8-K filed by Charter Communications,
    Inc. on February 29, 2000 (File No. 000-27927)).
2
.2
Asset Purchase Agreement, dated as of
    September 28, 2001, between High Speed Access Corp. and
    Charter Communications Holding Company, LLC (including as
    Exhibit A, the Form of Voting Agreement, as Exhibit B,
    the form of Management Agreement, as Exhibit C, the form of
    License Agreement, and as Exhibit D, the Form of Billing
    Letter Agreement) (Incorporated by reference to
    Exhibit 10.1 to Amendment No. 6 to Schedule 13D
    filed by Charter Communications, Inc. and others with respect to
    High Speed Access Corp., filed on October 1, 2001 (File
    No. 005-56431)).
2
.3(a)
Asset Purchase Agreement, dated August 29,
    2001, by and between Charter Communications
    Entertainment I, LLC, Interlink Communications Partners,
    LLC, and Rifkin Acquisitions Partners, LLC and Enstar Income
    Program II-1, L.P., Enstar Income Program II-2,
    L.P., Enstar Income Program IV-3, L.P., Enstar Income/
    Growth Program Six-A, L.P., Enstar IV/ PBD Systems Venture,
    and Enstar Cable of Macoupin County (Incorporated by reference
    to Exhibit 2.1 to the current report of Form 8-K filed
    by Enstar IV-2, L.P. on September 13, 2001 (File
    No. 000-15706)).
2
.3(b)
Letter of Amendment, dated September 10,
    2001, by and between Charter Communications
    Entertainment I, LLC, Interlink Communications Partners,
    LLC, and Rifkin Acquisition Partners, LLC and Enstar Income
    Program II-1, L.P., Enstar Income Program II-2,
    L.P., Enstar Income Program IV-3, L.P., Enstar Income/
    Growth Program Six-A, L.P., Enstar IV/ PBD Systems Venture,
    and Enstar Cable of Macoupin County (Incorporated by reference
    to Exhibit 2.1 to the current report of Form 8-K filed
    by Enstar IV-2, L.P. on September 13, 2001 (File
    No. 000-15706)).
2
.3(c)
Letter of Amendment, dated April 10, 2002,
    by and between Charter Communications Entertainment I, LLC,
    Interlink Communications Partners, LLC, and Rifkin Acquisition
    Partners, LLC and Enstar Income Program II-1, L.P.,
    Enstar Income Program II-2, L.P., Enstar Income
    Program IV-3, L.P., Enstar Income/ Growth Program
    Six-A, L.P., Enstar IV/ PBD Systems Venture, and
    Enstar Cable of Macoupin County (Incorporated by reference to
    Exhibit 2.1 to the current report on Form 8-K filed by
    Enstar Income Program IV-1, L.P. on April 22,
    2002 (File No. 000-15705)).
2
.4
Asset Purchase Agreement, dated April 10,
    2002, by and between Charter Communications
    Entertainment I, LLC, and Enstar Income Program II-1,
    L.P. (Incorporated by reference to Exhibit 2.2 to the
    current report on Form 8-K filed by Enstar Income
    Program II-1, L.P. on April 26, 2002
    (File No. 000-14508)).
II-3
Table of Contents
Exhibit
Description
3
.1(a)
Restated Certificate of Incorporation of Charter
    Communications, Inc. (Originally incorporated July 22,
    1999) (Incorporated by reference to Exhibit 3.1 to
    Amendment No. 3 to the registration statement on
    Form S-1 of Charter Communications, Inc. filed on
    October 18, 1999 (File No. 333-83887)).
3
.1(b)
Certificate of Amendment of Restated Certificate
    of Incorporation of Charter Communications, Inc. filed
    May 10, 2001 (Incorporated by reference to
    Exhibit 3.1(b) to the annual report of Form 10-K of
    Charter Communications, Inc. filed on March 29, 2002 (File
    No. 000-27927).
3
.2(a)
Amended and Restated By-laws of Charter
    Communications, Inc. as of November 5, 1999 (Incorporated
    by reference to Exhibit 3.2 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    November 14, 2001 (File No. 000-27927)).
3
.2(b)
Fourth Amendment to Amended and Restated By-Laws
    of Charter Communications, Inc. adopted as of October 3,
    2003 (Incorporated by reference to Exhibit No. 3.3 to
    the quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on November 3, 2003 (File
    No. 000-27927)).
3
.2(c)
Fifth Amendment to Amended and Restated By-Laws
    of Charter Communications, Inc. adopted as of October 28,
    2003 (Incorporated by reference to Exhibit No. 3.3 to
    the quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on November 3, 2003 (File
    No. 000-27927)).
3
.2(d)
Sixth Amendment to the Amended and Restated
    By-Laws of Charter Communications, Inc. adopted as of
    September 24, 2004 (Incorporated by reference to
    Exhibit 99.1 to the current report on Form 8-K of
    Charter Communications, Inc. filed on September 30, 2004
    (File No. 000-27927)).
3
.2(e)
Seventh Amendment to the Amended and Restated
    By-Laws of Charter Communications, Inc. adopted as of
    October 21, 2004 (Incorporated by reference to
    Exhibit 3.1 to the current report on Form 8-K of
    Charter Communications, Inc. filed on October 22, 2004
    (File No. 000-27927)).
4
.1
Certificate of Designation of Series A
    Convertible Redeemable Preferred Stock of Charter
    Communications, Inc. and related Certificate of Correction of
    Certificate of Designation (Incorporated by reference to
    Exhibit 3.1 to the quarterly report on Form 10-Q filed
    by Charter Communications, Inc. on November 14, 2001 (File
    No. 000-27927)).
4
.3(b)
Supplemental Indenture, dated as of
    March 26, 1999, by and among Avalon Cable of Michigan
    Holdings, Inc., Avalon Cable LLC and Avalon Cable Holdings
    Finance, Inc., as issuers, Avalon Cable of Michigan, Inc., as
    guarantor, and The Bank of New York, as trustee for the Notes
    (Incorporated by reference to Exhibit 4.2 to Amendment
    No. 1 to the registration statement on Form S-4 of
    Avalon Cable LLC, Avalon Cable Holdings Finance, Inc., Avalon
    Cable of Michigan Holdings, Inc. and Avalon Cable of Michigan,
    Inc. filed on May 28, 1999 (File No. 333-75415 and
    333-75453)).
4
.4
Indenture relating to the 8.250% Senior
    Notes due 2007, dated as of March 17, 1999, between Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit 4.1(a) to Amendment
    No. 2 to the registration statement on Form S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June 22, 1999 (File
    No. 333-77499)).
II-4
Table of Contents
Exhibit
Description
4
.5
Indenture relating to the 8.625% Senior
    Notes due 2009, dated as of March 17, 1999, among Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit 4.2(a) to Amendment
    No. 2 to the registration statement on Form S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June 22, 1999 (File
    No. 333-77499)).
4
.6
Indenture relating to the 9.920% Senior
    Discount Notes due 2011, dated as of March 17, 1999, among
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit 4.3(a) to Amendment
    No. 2 to the registration statement on Form S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on June 22, 1999 (File
    No. 333-77499)).
4
.7
Indenture relating to the 10.00% Senior
    Notes due 2009, dated as of January 12, 2000, between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit 4.1(a) to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January 25, 2000 (File
    No. 333-95351)).
4
.8
Indenture relating to the 10.25% Senior
    Notes due 2010, dated as of January 12, 2000, among Charter
    Communications Holdings, LLC, Charter Communications Holdings
    Capital Corporation and Harris Trust and Savings Bank
    (Incorporated by reference to Exhibit 4.2(a) to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January 25, 2000 (File
    No. 333-95351)).
4
.9
Indenture relating to the 11.75% Senior
    Discount Notes due 2010, dated as of January 12, 2000,
    among Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and Harris Trust and
    Savings Bank (Incorporated by reference to Exhibit 4.3(a)
    to the registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January 25, 2000 (File
    No. 333-95351)).
4
.10
Indenture relating to 5.75% Convertible
    Senior Notes due 2005, dated as of October 30, 2000, among
    Charter Communications, Inc. and BNY Midwest Trust Company as
    trustee (Incorporated by reference to Exhibit 10.35 to the
    quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on November 14, 2000 (File
    No. 000-27927)).
4
.11
Indenture dated as of January 10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 10.750% senior notes due
    2009 (Incorporated by reference to Exhibit 4.2(a) to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February 2, 2001 (File
    No. 333-54902)).
4
.12
Indenture dated as of January 10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 11.125% senior notes due
    2011 (Incorporated by reference to Exhibit 4.2(b) to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February 2, 2001 (File
    No. 333-54902)).
II-5
Table of Contents
Exhibit
Description
4
.13
Indenture dated as of January 10, 2001
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 13.500% senior discount
    notes due 2011 (Incorporated by reference to Exhibit 4.2(c)
    to the registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on February 2, 2001 (File
    No. 333-54902)).
4
.14(a)
Indenture dated as of May 15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 9.625% Senior Notes due 2009
    (Incorporated by reference to Exhibit 10.2(a) to the
    current report on Form 8-K filed by Charter Communications,
    Inc. on June 1, 2001 (File No. 000-27927)).
4
.14(b)
First Supplemental Indenture dated as of
    January 14, 2002 between Charter Communications Holdings,
    LLC, Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 9.625% Senior
    Notes due 2009 (Incorporated by reference to
    Exhibit 10.2(a) to the current report on Form 8-K
    filed by Charter Communications, Inc. on January 15, 2002
    (File No. 000-27927)).
4
.14(c)
Second Supplemental Indenture dated as of
    June 25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 9.625% Senior
    Notes due 2009 (Incorporated by reference to Exhibit 4.1 to
    the quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on August 6, 2002 (File
    No. 000-27927)).
4
.15(a)
Indenture dated as of May 15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 10.000% Senior Notes due 2011
    (Incorporated by reference to Exhibit 10.3(a) to the
    current report on Form 8-K filed by Charter Communications,
    Inc. on June 1, 2001 (File No. 000-27927)).
4
.15(b)
First Supplemental Indenture dated as of
    January 14, 2002 between Charter Communications Holdings,
    LLC, Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 10.000% Senior
    Notes due 2011 (Incorporated by reference to
    Exhibit 10.3(a) to the current report on Form 8-K
    filed by Charter Communications, Inc. on January 15, 2002
    (File No. 000-27927)).
4
.15(c)
Second Supplemental Indenture dated as of
    June 25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 10.000% Senior
    Notes due 2011 (Incorporated by reference to Exhibit 4.2 to
    the quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on August 6, 2002 (File
    No. 000-27927)).
4
.16
Indenture dated as of May 15, 2001 between
    Charter Communications Holdings, LLC, Charter Communications
    Holdings Capital Corporation and BNY Midwest Trust Company as
    Trustee governing 11.750% Senior Discount Notes due 2011
    (Incorporated by reference to Exhibit 10.4(a) to the
    current report on Form 8-K filed by Charter Communications,
    Inc. on June 1, 2001 (File No. 000-27927)).
4
.17
Indenture dated May 30, 2001 between Charter
    Communications, Inc. and BNY Midwest Trust Company as Trustee
    governing 4.75% Convertible Senior Notes due 2006
    (Incorporated by reference to Exhibit 4.1(b) to the current
    report on Form 8-K filed by Charter Communications, Inc. on
    June 1, 2001 (File No. 000-27927)).
II-6
Table of Contents
Exhibit
Description
4
.18(a)
Indenture dated as of January 14, 2002
    between Charter Communications Holdings, LLC, Charter
    Communications Holdings Capital Corporation and BNY Midwest
    Trust Company as Trustee governing 12.125% Senior Discount
    Notes due 2012 (Incorporated by reference to
    Exhibit 10.4(a) to the current report on Form 8-K
    filed by Charter Communications, Inc. on January 15, 2002
    (File No. 000-27927)).
4
.18(b)
First Supplemental Indenture dated as of
    June 25, 2002 between Charter Communications Holdings, LLC,
    Charter Communications Holdings Capital Corporation and BNY
    Midwest Trust Company as Trustee governing 12.125% Senior
    Discount Notes due 2012 (Incorporated by reference to
    Exhibit 4.3 to the quarterly report on Form 10-Q filed
    by Charter Communications, Inc. on August 6, 2002 (File
    No. 000-27927)).
4
.19(a)
5.75% Mirror Note in the principal amount of
    $650 million dated as of October 30, 2000 made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit 4.4(a) to the quarterly report on Form 10-Q
    filed by Charter Communications, Inc. on August 6, 2002
    (File No. 000-27927)).
4
.19(b)
5.75% Mirror Note in the principal amount of
    $100 million dated as of November 3, 2000 made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit 4.4(b) to the quarterly report on Form 10-Q
    filed by Charter Communications, Inc. on August 6, 2002
    (File No. 000-27927)).
4
.20
4.75% Mirror Note in the principal amount of
    $632.5 million dated as of May 30, 2001, made by
    Charter Communications Holding Company, LLC, a Delaware limited
    liability company, in favor of Charter Communications, Inc., a
    Delaware corporation (Incorporated by reference to
    Exhibit 4.5 to the quarterly report on Form 10-Q filed
    by Charter Communications, Inc. on August 6, 2002 (File
    No. 000-27927)).
4
.21
Indenture relating to the 10.25% Senior
    Notes due 2010, dated as of September 23, 2003, among
    CCH II, LLC, CCH II Capital Corporation and Wells
    Fargo Bank, National Association (Incorporated by reference to
    Exhibit 10.1 to the current report on Form 8-K of
    Charter Communications Inc. filed on September 26, 2003
    (File No. 000-27927)).
4
.22
Exchange and Registration Rights Agreement
    relating to 10.25% Senior Notes due 2010, dated as of
    September 23, 2003, among CCH II, LLC, CCH II
    Capital Corp., and the purchasers set forth on the signature
    pages thereto (Incorporated by reference to Exhibit 10.2 to
    the current report on Form 8-K of Charter Communications,
    Inc. filed on September 26, 2003 (File No. 000-27927)).
4
.23
CCI Senior Notes Exchange Agreement, dated
    as of September 18, 2003, by and between Charter
    Communications, Inc., CCH II, LLC and CCH II Capital
    Corp. (Incorporated by reference to Exhibit 10.4 to Charter
    Communications, Inc.'s current report on Form 8-K
    filed on September 26, 2003 (File No. 000-27927)).
4
.24
Holdings Senior Notes Exchange Agreement,
    dated as of September 18, 2003, by CCH II, LLC and
    CCH II Capital Corp. (Incorporated by reference to
    Exhibit 10.5 to Charter Communications, Inc.'s current
    report on Form 8-K filed on September 26, 2003 (File
    No. 000-27927)).
4
.25
Indenture relating to the 8 3/4% Senior
    Notes due 2013, dated as of November 10, 2003, by and among
    CCO Holdings, LLC, CCO Holdings Capital Corp. and Wells Fargo
    Bank, N.A., as trustee (Incorporated by reference to
    Exhibit 4.1 to Charter Communications, Inc.'s current
    report on Form 8-K filed on November 12, 2003 (File
    No. 000-27927)).
II-7
Table of Contents
Exhibit
Description
4
.26
Exchange and Registration Rights Agreement, dated
    as of November 10, 2003, by and between CCO Holdings, LLC
    and CCO Holdings Capital Corp. (Incorporated by reference
    to Exhibit 4.2 to Charter Communications, Inc.'s
    current report on Form 8-K filed on November 12, 2003
    (File No. 000-27927)).
4
.27
Indenture relating to the 8% senior second
    lien notes due 2012 and 8 3/8% senior second lien
    notes due 2014, dated as of April 27, 2004, by and among
    Charter Communications Operating, LLC, Charter Communications
    Operating Capital Corp. and Wells Fargo Bank, N.A. as trustee
    (Incorporated by reference to Exhibit 10.32 to Amendment
    No. 2 to the registration statement on Form S-4 of
    CCH II, LLC filed on May 5, 2004 (File
    No. 333-111423)).
4
.29
Indenture relating to the 5.875% convertible
    senior notes due 2009, dated as of November 2004, by and among
    Charter Communications, Inc. and Wells Fargo Bank, N.A. as
    trustee (Incorporated by reference to Exhibit 10.1 to the
    current report on Form 8-K of Charter Communications, Inc.
    filed on November 30, 2004 (File No. 000-27927)).
4
.30
5.875% convertible senior notes due 2009 Resale
    Registration Rights Agreement, dated November 22, 2004, by
    and among Charter Communications, Inc. and Citigroup Global
    Markets Inc. and Morgan Stanley and Co. Incorporated as
    representatives of the initial purchasers (Incorporated by
    reference to Exhibit 10.2 to the current report on
    Form 8-K of Charter Communications, Inc. filed on
    November 30, 2004 (File No. 000-27927)).
4
.31
Share Loan Registration Rights Agreement, dated
    November 22, 2004, by and between Charter Communications,
    Inc. and Citigroup Global Markets Inc. (Incorporated by
    reference to Exhibit 10.3 to the current report on
    Form 8-K of Charter Communications, Inc. filed on
    November 30, 2004 (File No. 000-27927)).
4
.32
Collateral Pledge and Security Agreement, dated
    as of November 22, 2004, by and between Charter
    Communications, Inc. and Wells Fargo Bank, N.A. as trustee and
    collateral agent (Incorporated by reference to Exhibit 10.4
    to the current report on Form 8-K of Charter
    Communications, Inc. filed on November 30, 2004 (File
    No. 000-27927)).
4
.33
Collateral Pledge and Security Agreement, dated
    as of November 22, 2004 among Charter Communications, Inc.,
    Charter Communications Holding Company, LLC and Wells Fargo
    Bank, N.A. as trustee and collateral agent (Incorporated by
    reference to Exhibit 10.5 to the current report on
    Form 8-K of Charter Communications, Inc. filed on
    November 30, 2004 (File No. 000-27927)).
4
.34
Share Lending Agreement, dated as of
    November 22, 2004 between Charter Communications, Inc.,
    Citigroup Global Markets Limited, through Citigroup Global
    Markets, Inc. (Incorporated by reference to Exhibit 10.6 to
    the current report on Form 8-K of Charter Communications,
    Inc. filed on November 30, 2004 (File No. 000-27927)).
4
.35
Holdco Mirror Notes Agreement, dated as of
    November 22, 2004, by and between Charter Communications,
    Inc. and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit 10.7 to the current
    report on Form 8-K of Charter Communications, Inc. filed on
    November 30, 2004 (File No. 000-27927)).
4
.36
Unit Lending Agreement, dated as of
    November 22, 2004, by and between Charter Communications,
    Inc. and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit 10.8 to the current
    report on Form 8-K of Charter Communications, Inc. filed on
    November 30, 2004 (File No. 000-27927)).
II-8
Table of Contents
Exhibit
Description
4
.37
5.875% Mirror Convertible Senior Note due 2009,
    in the principal amount of $862,500,000 dated as of
    November 22, 2004 made by Charter Communications Holding
    Company, LLC, a Delaware limited liability company, in favor of
    Charter Communications, Inc., a Delaware limited liability
    company, in favor of Charter Communications, Inc., a Delaware
    corporation (Incorporated by reference to Exhibit 10.9 to
    the current report on Form 8-K of Charter Communications,
    Inc. filed on November 30, 2004 (File No. 000-27927)).
5
.1**
Opinion regarding legality.
10
.1
Consulting Agreement, dated as of March 10,
    1999, by and between Vulcan Northwest Inc., Charter
    Communications, Inc. (now called Charter Investment, Inc.) and
    Charter Communications Holdings, LLC (Incorporated by reference
    to Exhibit 10.3 to Amendment No. 4 to the registration
    statement on Form S-4 of Charter Communications Holdings,
    LLC and Charter Communications Holdings Capital Corporation
    filed on July 22, 1999 (File No. 333-77499)).
10
.2
Letter Agreement, dated September 21, 1999,
    by and among Charter Communications, Inc., Charter Investment,
    Inc., Charter Communications Holding Company, Inc. and Vulcan
    Ventures Inc. (Incorporated by reference to Exhibit 10.22
    to Amendment No. 3 to the registration statement on
    Form S-1 of Charter Communications, Inc. filed on
    October 18, 1999 (File No. 333-83887)).
10
.3(a)
First Amended and Restated Mutual Services
    Agreement, dated as of December 21, 2000, by and between
    Charter Communications, Inc., Charter Investment, Inc. and
    Charter Communications Holding Company, LLC (Incorporated by
    reference to Exhibit 10.2(b) to the registration statement
    on Form S-4 of Charter Communications Holdings, LLC and
    Charter Communications Holdings Capital Corporation filed on
    February 2, 2001 (File No. 333-54902)).
10
.3(b)
Letter Agreement, dated June 19, 2003, by
    and among Charter Communications, Inc., Charter Communications
    Holding Company, LLC and Charter Investment, Inc. regarding
    Mutual Services Agreement (Incorporated by reference to Exhibit
    No. 10.5(b) to the quarterly report on Form 10-Q filed
    by Charter Communications, Inc. on August 5, 2003 (File
    No. 000-27927)).
10
.3(c)
Second Amended and Restated Mutual Services
    Agreement, dated as of June 19, 2003 between Charter
    Communications, Inc. and Charter Communications Holding Company,
    LLC (Incorporated by reference to Exhibit 10.5(a) to the
    quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on August 5, 2003 (File
    No. 000-27927)).
10
.4
Form of Management Agreement, dated as of
    November 9, 1999, by and between Charter Communications
    Holding Company, LLC and Charter Communications, Inc.
    (Incorporated by reference to Exhibit 10.2(d) to Amendment
    No. 3 to the registration statement on Form S-1 of
    Charter Communications, Inc. filed on October 18, 1999
    (File No. 333-83887)).
10
.5
Amended and Restated Management Agreement, dated
    as of June 19, 2003, between Charter Communications
    Operating, LLC and Charter Communications, Inc. (Incorporated by
    reference to Exhibit 10.4 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    August 5, 2003 (File No. 333-83887)).
10
.6
Management Agreement, dated as of
    November 12, 1999, by and between CC VI Operating Company,
    LLC and Charter Communications, Inc. (Incorporated by reference
    to Exhibit 10.2(d) to Amendment No. 1 to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on April 18, 2000 (File
    No. 333-77499)).
II-9
Table of Contents
Exhibit
Description
10
.7
Management Agreement, dated as of
    November 12, 1999 by and between Falcon Cable
    Communications, LLC and Charter Communications, Inc.
    (Incorporated by reference to Exhibit 10.2(e) to Amendment
    No. 1 to the registration statement on Form S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on April 18, 2000 (File
    No. 333-77499)).
10
.8
Form of Exchange Agreement, dated as of
    November 12, 1999 by and among Charter Investment, Inc.,
    Charter Communications, Inc., Vulcan Cable III Inc. and
    Paul G. Allen (Incorporated by reference to Exhibit 10.13
    to Amendment No. 3 to the registration statement on
    Form S-1 of Charter Communications, Inc. filed on
    October 18, 1999 (File No. 333-83887)).
10
.9
Exchange Agreement, dated as of February 14,
    2000, by and among Charter Communications, Inc., BCI (USA), LLC,
    William J. Bresnan, Blackstone BC Capital Partners
    L.P., Blackstone BC Offshore Capital Partners L.P.,
    Blackstone Family Media, III L.P. (as assignee of Blackstone
    Family Investment III L.P.), TCID of Michigan, Inc., and
    TCI Bresnan LLC (Incorporated by reference to
    Exhibit 10.40 to the current report on Form 8-K of
    Charter Communications, Inc. filed on February 29, 2000
    (File No. 000-27927)).
10
.10(a)+
Charter Communications Holdings, LLC 1999 Option
    Plan (Incorporated by reference to Exhibit 10.4 to
    Amendment No. 4 to the registration statement on
    Form S-4 of Charter Communications Holdings, LLC and
    Charter Communications Holdings Capital Corporation filed on
    July 22, 1999 (File No. 333-77499)).
10
.10(b)+
Assumption Agreement regarding Option Plan, dated
    as of May 25, 1999, by and between Charter Communications
    Holdings, LLC and Charter Communications Holding Company, LLC
    (Incorporated by reference to Exhibit 10.13 to Amendment
    No. 6 to the registration statement on Form S-4 of
    Charter Communications Holdings, LLC and Charter Communications
    Holdings Capital Corporation filed on August 27, 1999 (File
    No. 333-77499
10
.10(c)+
Form of Amendment No. 1 to the Charter
    Communications Holdings, LLC 1999 Option Plan (Incorporated by
    reference to Exhibit 10.10(c) to Amendment No. 4 to
    the registration statement on Form S-1 of Charter
    Communications, Inc. filed on November 1, 1999 (File
    No. 333-83887)).
10
.10(d)+
Amendment No. 2 to the Charter
    Communications Holdings, LLC 1999 Option Plan (Incorporated by
    reference to Exhibit 10.4(c) to the annual report on
    Form 10-K filed by Charter Communications, Inc. on
    March 30, 2000 (File No. 000-27927)).
10
.10(e)+
Amendment No. 3 to the Charter
    Communications 1999 Option Plan (Incorporated by reference to
    Exhibit 10.14(e) to the annual report of Form 10-K of
    Charter Communications, Inc. filed on March 29, 2002 (File
    No. 000-27927).
10
.10(f)+
Amendment No. 4 to the Charter
    Communications 1999 Option Plan (Incorporated by reference to
    Exhibit 10.10(f) to the annual report on Form 10-K of
    Charter Communications, Inc. filed on April 15, 2003 (File
    No. 000-27927)).
10
.11(a)+
Charter Communications, Inc. 2001 Stock Incentive
    Plan (Incorporated by reference to Exhibit 10.25 to the
    quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on May 15, 2001 (File
    No. 000-27927)).
10
.11(b) +
Amendment No. 1 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit 10.11(b) to the annual report on
    Form 10-K of Charter Communications, Inc. filed on
    April 15, 2003 (File No. 000-27927)).
10
.11(c)+
Amendment No. 2 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit 10.10 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    November 14, 2001 (File No. 000-27927).
II-10
Table of Contents
Exhibit
Description
10
.11(d)+
Amendment No. 3 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan effective
    January 2, 2002 (Incorporated by reference to
    Exhibit 10.15(c) to the annual report of Form 10-K of
    Charter Communications, Inc. filed on March 29, 2002 (File
    No. 000-27927).
10
.11(e)+
Amendment No. 4 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit 10.11(e) to the annual report on
    Form 10-K of Charter Communications, Inc. filed on
    April 15, 2003 (File No. 000-27927)).
10
.11(f)+
Amendment No. 5 to the Charter
    Communications, Inc. 2001 Stock Incentive Plan (Incorporated by
    reference to Exhibit 10.11(f) to the annual report on
    Form 10-K of Charter Communications, Inc. filed on
    April 15, 2003 (File No. 000-27927)).
10
.11(g)+
Description of Long-Term Incentive Program to the
    Charter Communications, Inc. 2001 Stock Incentive Plan
    (Incorporated by reference to Exhibit 10.11 to the annual
    report on Form 10-K filed by Charter Communications, Inc.
    on March 15, 2004 (File No. 000-27927)).
10
.12(a)+
Letter Agreement, dated May 25, 1999,
    between Charter Communications, Inc. and Marc Nathanson
    (Incorporated by reference to Exhibit 10.36 to the
    registration statement on Form S-4 of Charter
    Communications Holdings, LLC and Charter Communications Holdings
    Capital Corporation filed on January 25, 2000 (File
    No. 333-95351)).
10
.12(b)+
Letter Agreement, dated March 27, 2000,
    between CC VII Holdings, LLC and Marc Nathanson,
    amending the Letter Agreement dated May 25, 1999
    (Incorporated by reference to Exhibit 10.13(b) to the
    annual report on Form 10-K of Charter Communications, Inc.
    filed on April 15, 2003 (File No. 000-27927)).
10
.13+
Employment Agreement between Charter
    Communications, Inc. and Margaret A. "Maggie"
    Bellville, entered into as of April 27, 2003 (Incorporated
    by reference to Exhibit 10.1 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    November 3, 2003 (File No. 000-27927)).
10
.14+
Employment Agreement, dated as of October 8,
    2001, by and between Carl E. Vogel and Charter Communications,
    Inc. (Incorporated by reference to Exhibit 10.4 to the
    quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on November 14, 2001 (File
    No. 000-27927)).
10
.15+
Employment Agreement, dated as of October 18
    2001, by and between Stephen E. Silva and Charter
    Communications, Inc. (Incorporated by reference to
    Exhibit 10.5 to the quarterly report on Form 10-Q
    filed by Charter Communications, Inc. on November 14, 2001
    (File No. 000-27927)).
10
.16
Amended and Restated Credit Agreement among
    Charter Communications Operating, LLC, CCO Holdings, LLC and
    certain lenders and agents named therein dated April 27,
    2004 (Incorporated by reference to Exhibit 10.25 to
    Amendment No. 2 to the registration statement on
    Form S-4 of CCH II, LLC filed on May 5, 2004
    (File No. 333-111423)).
10
.17
Amended and Restated Limited Liability Company
    Agreement for Charter Communications Holding Company, LLC made
    as of August 31, 2001 (Incorporated by reference to
    Exhibit 10.9 to the quarterly report on Form 10-Q
    filed by Charter Communications, Inc. on November 14, 2001
    (File No. 000-27927)).
10
.18
Amended and Restated Limited Liability Company
    Agreement for CC VIII, LLC, dated as of March 31,
    2003 (Incorporated by reference to Exhibit 10.27 to the
    annual report on Form 10-K of Charter Communications, Inc.
    filed on April 15, 2003 (File No. 000-27927)).
10
.19
Amended and Restated Limited Liability Company
    Agreement of Charter Communications Operating, LLC, dated as of
    June 19, 2003 (Incorporated by reference to
    Exhibit No. 10.2 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    August 5, 2003 (File No. 000-27927)).
II-11
Table of Contents
Exhibit
Description
10
.20(a)
Commitment letter, dated April 14, 2003,
    from Vulcan Inc. to Charter Communications VII, LLC
    (Incorporated by reference to Exhibit No. 10.28 to the
    annual report on Form 10-K filed by Charter Communications,
    Inc. on April 15, 2003 (File No. 000-27927)).
10
.20(b)
Letter from Vulcan Inc. dated June 30, 2003
    amending the Commitment Letter, dated April 14, 2003
    (Incorporated by reference to Exhibit No. 10.3(b) to
    the quarterly report on Form 10-Q filed by Charter
    Communications, Inc. on August 5, 2003 (File
    No. 000-27927)).
10
.20(c)
Notice of Termination of Commitment, dated
    November 14, 2003 (Incorporated by reference to
    Exhibit 10.8(c) to the registration statement on
    Form S-4 of CCO Holdings, LLC filed on
    February 6, 2004 (File No. 333-112593)).
10
.21+
Employment Offer Letter, dated December 2,
    2003 by and between Charter Communications, Inc. and Derek Chang
    (Incorporated by reference to Exhibit 10.24 to the annual
    report on Form 10-K filed by Charter Communications, Inc.
    on March 15, 2004 (File No. 000-27927)).
10
.22+
Employment Offer Letter, dated December 17,
    2003 by and between Charter Communications, Inc. and Michael
    Huseby (Incorporated by reference to Exhibit 10.25 to the
    annual report on Form 10-K filed by Charter Communications,
    Inc. on March 15, 2004 (File No. 000-27927)).
10
.23+
Separation Agreement and Release for Margaret A.
    Bellville, dated as of September 16, 2004 (Incorporated by
    reference to Exhibit 10.1 to the quarterly report on
    Form 10-Q filed by Charter Communications, Inc. on
    November 4, 2004 (File No. 000-27927)).
10
.24
Letter Agreement between Charter Communications,
    Inc. and Charter Investment Inc. and Vulcan Cable III Inc.
    amending the Amended and Restated Limited Liability Company
    Agreement of Charter Communications Holding Company, LLC, dated
    as of November 22, 2004 (Incorporated by reference to
    Exhibit 10.10 to the current report on Form 8-K of
    Charter Communications, Inc. filed on November 30, 2004
    (File No. 000-27927)).
21
.1*
Subsidiaries of Charter Communications, Inc.
23
.1*
Consent of KPMG LLP
23
.2**
Consent of Irell & Manella LLP
24
.1
Power of Attorney (included on the signature page
    hereto).
*
Filed herewith
**
To be filed by amendment
+
Management compensatory plan or arrangement
Item 17.
Undertakings
The Undersigned Registrant Hereby Undertakes
That:
(1) For purpose of determining any liability
    under the Securities Act of 1933, the information omitted from
    the form of prospectus filed as part of this registration
    statement in reliance upon Rule 430A and contained in a
    form of prospectus filed by the registrant pursuant to
    Rule 424(b)(2) or (4) or 497(h) under the Securities
    Act shall be deemed to be part of this registration statement as
    of the time it was declared effective
(2) For the purpose of determining any
    liability under the Securities Act of 1933, each post-effective
    amendment that contains a form of prospectus shall be deemed to
    be a new registration statement relating to the securities
    offered therein, and the offering of such securities at that
    time shall be deemed to be the initial bona fide offering
    thereof.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or
II-12
Table of Contents
otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-13
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration
statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Denver,
State of Colorado, on December 6,
2004
CHARTER COMMUNICATIONS, INC.,
Registrant
By:
/s/ CARL E. VOGEL
Carl E. Vogel
President and Chief Executive
    Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Curtis S.
Shaw, with full power to act as his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to the registration statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting unto
said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed below
by the following persons in the capacities and on the dates
indicated.
Signature
Title
Date
/s/ PAUL G. ALLEN
Paul G. Allen
Chairman of the Board of Directors
December 6, 2004
/s/ CARL E. VOGEL
Carl E. Vogel
President, Chief Executive Officer, Director
    (Principal Executive Officer)
December 6, 2004
/s/ DEREK CHANG
Derek Chang
Executive Vice President and Interim Co-Chief
    Financial Officer (Principal Financial Officer)
December 6, 2004
/s/ PAUL E. MARTIN
Paul E. Martin
Senior Vice President, Controller and Interim
    Co-Chief Financial Officer (Principal Accounting Officer)
December 6, 2004
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Table of Contents
Signature
Title
Date
/s/ W. LANCE CONN
W. Lance Conn
Director
December 6, 2004
/s/ JONATHAN L. DOLGEN
Jonathan L. Dolgen
Director
December 6, 2004
/s/ CHARLES M. LILLIS
Charles M. Lillis
Director
December 6, 2004
/s/ ROBERT P. MAY
Robert P. May
Director
December 6, 2004
/s/ DAVID C. MERRITT
David C. Merritt
Director
December 6, 2004
/s/ MARC B. NATHANSON
Marc B. Nathanson
Director
December 6, 2004
/s/ JO ALLEN PATTON
Jo Allen Patton
Director
December 6, 2004
/s/ JOHN H. TORY
John H. Tory
Director
December 6, 2004
/s/ LARRY W. WANGBERG
Larry W. Wangberg
Director
December 6, 2004
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