1


     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 2001


                                                      REGISTRATION NO. 333-65094

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

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------


                                AMENDMENT NO. 1


                                       TO


                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                      CHARTER COMMUNICATIONS HOLDINGS, LLC
                                      AND

                        CHARTER COMMUNICATIONS HOLDINGS
                              CAPITAL CORPORATION
           (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)

<Table>
                                                                
            DELAWARE                             4841
43-1843179
            DELAWARE                             4841
43-1843177
  (STATE OR OTHER JURISDICTION       (PRIMARY STANDARD INDUSTRIAL
(FEDERAL EMPLOYER
OF INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)
IDENTIFICATION NUMBER)
</Table>


                                 CHARTER PLAZA


                            12405 POWERSCOURT DRIVE

                           ST. LOUIS, MISSOURI 63131
                                 (314) 965-0555
                  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
                  NUMBER, INCLUDING AREA CODE, OF REGISTRANTS'
                          PRINCIPAL EXECUTIVE OFFICES)

                              CURTIS S. SHAW, ESQ.
              SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY

                                 CHARTER PLAZA


                            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:

<Table>
                                                 
            DANIEL G. BERGSTEIN, ESQ.                              ALVIN G.
SEGEL, ESQ.
               LEIGH P. RYAN, ESQ.                                 IRELL &
MANELLA LLP
            PATRICIA M. CARROLL, ESQ.                      1800 AVENUE OF THE
STARS, SUITE 900
      PAUL, HASTINGS, JANOFSKY & WALKER LLP                 LOS ANGELES,
CALIFORNIA 90067-4276
                 399 PARK AVENUE                                      (310)
277-1010
             NEW YORK, NEW YORK 10022
                  (212) 318-6000
</Table>

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

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable after this Registration Statement becomes effective.

    If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.  [ ]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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.  [ ]

    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.  [ ]
                            ------------------------

    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   2

                                 $1,943,000,000

                               Offer to Exchange
        9.625% Senior Notes due 2009, 10.000% Senior Notes due 2011 and
                     11.750% Senior Discount Notes due 2011
                          for any and all outstanding
        9.625% Senior Notes due 2009, 10.000% Senior Notes due 2011 and
                    11.750% Senior Discount Notes due 2011,
                                respectively, of

                      CHARTER COMMUNICATIONS HOLDINGS, LLC
                                      and
                        CHARTER COMMUNICATIONS HOLDINGS
                              CAPITAL CORPORATION
                           -------------------------


     - This exchange offer expires at 5:00 p.m., New York City time, on
       September 5, 2001, unless extended.


     - No public market exists for the original notes or the new notes. We do
       not intend to list the new notes on any securities exchange or to seek
       approval for quotation through any automated quotation system.
                           -------------------------


     SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR ORIGINAL NOTES IN THE
EXCHANGE OFFER AND BY PURCHASERS OF THE NOTES FROM PERSONS ELIGIBLE TO USE THIS
PROSPECTUS FOR RESALES.


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

     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 in which the offer or sale would be unlawful.

                       NOTICE TO NEW HAMPSHIRE RESIDENTS

     NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-b OF THE NEW HAMPSHIRE UNIFORM
SECURITIES ACT WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
RSA 421-b IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.


                 The date of this prospectus is August 1, 2001.

   3

                               TABLE OF CONTENTS


<Table>
<Caption>
                                                              PAGE
                                                              ----
                                                           
Additional Information......................................     ii
Summary.....................................................      1
Risk Factors................................................     14
Forward-Looking Statements..................................     27
Ratio of Earnings to Fixed Charges..........................     27
Capitalization..............................................     28
Unaudited Pro Forma Financial Statements....................     30
Selected Historical Financial Data..........................     44
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     45
The Exchange Offer..........................................     66
Business....................................................     75
Regulation and Legislation..................................     93
Management..................................................    101
Principal Shareholders......................................    113
Certain Relationships and Related Transactions..............    115
Description of Certain Indebtedness.........................    126
Description of Notes........................................    141
Material United States Federal Income Tax Considerations....    180
Plan of Distribution........................................    188
Legal Matters...............................................    188
Experts.....................................................    188
Index to Financial Statements...............................    F-1
</Table>


                                        i
   4

                             ADDITIONAL INFORMATION


     We have filed with the SEC a registration statement on Form S-4 (File No.
333-65094). This prospectus, which forms part of this registration statement,
does not contain all the information included in the registration statement. For
further information about us and the securities offered in this prospectus, you
should refer to the registration statement and its exhibits.


     We file annual, quarterly and special reports 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 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the SEC's regional offices at 3475 Lenox Road, N.E., Suite
1006, in Atlanta, Georgia 30326-1232. 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 Web site at www.sec.gov.


     Our principal executive offices are located at Charter Plaza, 12405
Powerscourt Drive, St. Louis, Missouri 63131. Our telephone number is (314)
965-0555 and our Web site is located at www.charter.com. The information on our
Web site is not part of this prospectus.


     The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
information superseded by this prospectus. The prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. These documents, listed below, contain important information about the
issuers of the notes:

          (1) Annual Report on Form 10-K for the year ended December 31, 2000;

          (2) Quarterly Reports on Form 10-Q for the quarter ended March 31,
     2001;


          (3) Current Reports on Form 8-K filed January 8, 2001, March 5, 2001,
     March 12, 2001, March 16, 2001, May 9, 2001, May 10, 2001, May 24, 2001,
     June 1, 2001, July 6, 2001 and August 1, 2001.


     We are also incorporating by reference additional documents that we may
file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the expiration of this exchange offer. If you are a noteholder, we may
have sent you some of the documents incorporated by reference, but you can
obtain any of them through us or the SEC. Documents incorporated by reference
are available from us without charge, unless we have specifically incorporated
by reference an exhibit into a document that this prospectus incorporates. You
may obtain documents incorporated by reference into this prospectus by
requesting them in writing or by telephone from: Charter Communications
Holdings, LLC, Attention: Investor Relations at the address indicated above.

                                        ii
   5

                                    SUMMARY

     The following summary contains a general discussion of our business, the
exchange offer and summary financial information. It likely does not contain all
the information that is important to you in making a decision to tender your
original notes in exchange for new notes. For a more complete understanding of
the exchange offer, you should read this entire prospectus and the other
documents to which we refer. Unless stated otherwise, the discussion of our
business in this prospectus includes Charter Communications Holdings, LLC and
its direct and indirect subsidiaries.

                                  OUR BUSINESS

     We are the fourth largest operator of cable systems in the United States,
serving approximately 7 million customers.

     We offer a full range of traditional analog cable television services in
all of our systems. In an increasing number of our systems, we are offering
digital cable television services, along with an array of advanced products and
services, such as interactive video programming, which allows information to
flow in both directions, high-speed Internet access and video-on-demand. We
continue to explore opportunities to offer telephony through our broadband
network. The introduction and roll-out of these new products and services
represents an important step toward the realization of our Wired World(TM)
vision, where cable's ability to transmit voice, video and data at high speeds
enables it to serve as the primary platform for the delivery of new services to
the home and workplace.

     We have grown rapidly over the past several years. In the 16 acquisitions
completed in 1999 and 2000, we added approximately 3.9 million customers. In
addition, we have expanded our customer base through significant internal
growth. For the year ended December 31, 2000, our internal customer growth,
without giving effect to the cable systems we acquired in 2000, was 2.5%, almost
twice the industry average of 1.3%. In June 2001, we added 554,000 customers as
a result of transactions with AT&T.


     Our principal executive offices are located at Charter Plaza, 12405
Powerscourt Drive, St. Louis, Missouri 63131. Our telephone number is (314)
965-0555 and our web site is located at www.charter.com. The information on our
web site is not part of this prospectus or the documents incorporated herein by
reference.


                               BUSINESS STRATEGY

     Our objective is to increase our operating cash flow by increasing our
customer base and the amount of cash flow per customer. To achieve this
objective, we are pursuing the following strategies:

     - upgrade the bandwidth capacity of our systems to 550 megahertz or greater
       to enable greater channel capacity and add two-way capability to
       facilitate interactive communication;

     - expand the array of services we offer to our customers through the
       implementation of our Wired World vision;

     - maximize customer satisfaction by providing reliable, high-quality
       service offerings, superior customer service and attractive programming
       choices at reasonable rates; and

     - employ innovative marketing programs tailored to local customer
       preferences to generate additional revenues.
                                        1
   6

                        CHARTER ORGANIZATIONAL STRUCTURE

     The new notes to be issued in the exchange offer will be issued by Charter
Communications Holdings, LLC and Charter Communications Capital Corporation, the
co-issuers of the original notes.


     The chart below sets forth our organizational structure as of June 30, 2001
and that of our direct and indirect parent companies. Ownership percentages are
as of June 30, 2001.


                      [CHARTER COMMUNICATIONS FLOW CHART]


       * Includes 25,673,870 shares of Charter Communications, Inc. Class A
         common stock issued in connection with certain acquisitions. These
         shares are unregistered and are subject to certain restrictions on
         transfer.


      ** These membership units are exchangeable at any time for shares of
         Charter Communications, Inc. Class B common stock which are in turn
         convertible into shares of Charter Communications, Inc. Class A common
         stock.

     *** Certain former owners of Bresnan own a minority equity interest in
         Charter Communications Holding Company and other former owners of
         Bresnan own 100% of the preferred equity interests in CC VIII, LLC, a
         subsidiary of the Avalon notes issuers. These equity interests are
         exchangeable at any time for shares of Charter Communications, Inc.
         Class A common stock on a one-for-one basis. See "Business -- Charter
         Organizational Structure -- Former Owners of Bresnan."

     For a more detailed description of each entity and how it relates to us,
see "Business -- Charter Organizational Structure."
                                        2
   7

                                 RECENT EVENTS


SUMMARY OF SECOND QUARTER RESULTS



     For the second quarter of 2001, Charter Holdings actual revenues were
$928.5 million, an increase of 16.8% over revenues for the second quarter of
2000. Loss from operations for the second quarter of 2001 was $295.0 million, an
increase of 22.7% compared to the loss from operations for the second quarter of
2000. Net loss was $627.3 million, an increase of 27.1% compared to the net loss
of $493.7 million for the second quarter of 2000.



     For the second quarter of 2001, Charter Holdings pro forma revenues were
$1,010.8 million, an increase of 15.3% over the pro forma revenues for the
second quarter of 2000. Pro forma loss from operations for the second quarter of
2001 was $304.3 million, an increase of 18.0% compared to the pro forma loss
from operations for the second quarter of 2000. Pro forma net loss was $644.0
million, an increase of 17.7% compared to the pro forma net loss of $547.0
million for the second quarter of 2000. The pro forma results reflect all
acquisitions and dispositions of cable systems closed during 2000, the AT&T
transactions closed on June 30, 2001, borrowings under the Charter Holdings 2000
senior bridge loan facility, issuance of the October 2000 senior convertible
notes, issuance of the January 2000, January 2001 and May 2001 Charter Holdings
notes, issuance by Charter Communications, Inc. of 60,247,350 shares of common
stock, issuance of the May 2001 senior convertible notes and application of the
proceeds from all such borrowings to repay portions of other notes and credit
facilities.


AT&T TRANSACTIONS

     In June 2001, we completed several strategic cable system transactions with
AT&T resulting in a net addition of approximately 554,000 customers in Missouri,
Alabama, Nevada and California for a total of $1.77 billion, consisting of $1.75
billion in cash and a cable system valued at $24 million. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- AT&T
Transactions."

CHARTER COMMUNICATIONS, INC. SALE OF MAY 2001 CONVERTIBLE SENIOR NOTES

     In May 2001, Charter Communications, Inc. issued 4.75% convertible senior
notes due 2006 in the aggregate principal amount of $632.5 million. Charter
Communications, Inc. used the net proceeds from the sale of these notes to
purchase from Charter Communications Holding Company, LLC a mirror convertible
senior note with terms substantially similar to the terms of the convertible
senior notes issued by Charter Communications, Inc. Charter Communications
Holding Company used the net proceeds from the sale of the mirror convertible
note to purchase common equity in Charter Holdings, which in turn used the
proceeds it received for working capital purposes and capital expenditures.

CHARTER COMMUNICATIONS, INC. SALE OF CLASS A COMMON STOCK

     In May 2001, Charter Communications, Inc. sold shares of its Class A common
stock for total proceeds of approximately $1.21 billion. Charter Communications,
Inc. used the net proceeds from the sale to purchase additional membership units
in Charter Communications
                                        3
   8

Holding Company which used $710.9 of such proceeds to purchase common equity in
Charter Holdings. We used such proceeds for working capital purposes and capital
expenditures.

CHARTER HOLDINGS JANUARY 2001 SENIOR NOTES

     In January 2001, Charter Communications Holdings, LLC and Charter Capital
issued 10.750% senior notes due 2009 in the aggregate principal amount of $900
million, 11.125% senior notes due 2011 in the aggregate principal amount of $500
million and 13.500% senior discount notes due 2011 in the aggregate principal
amount at maturity of $675 million in Rule 144A and Regulation S private
placements. The net proceeds were used to repay all remaining amounts
outstanding under the Charter Holdings 2000 senior bridge loan facility and the
CC VI (Fanch) revolving credit facility and a portion of amounts outstanding
under the Charter Operating and CC VII (Falcon) revolving credit facilities. In
March 2001, we exchanged the notes for new notes with substantially similar
terms, except that the new notes are registered under the Securities Act of
1933. See "Description of Certain Indebtedness -- Existing Public Debt."

BRESNAN/AVALON COMBINATION

     On December 22, 2000, Charter Holdings contributed all of its equity
interests in CC VIII, LLC to CC V Holdings, combining the cable systems acquired
in the Avalon and Bresnan acquisitions below CC V Holdings. In connection with
this combination, in January 2001, all amounts due under the Avalon credit
facilities were repaid and such credit facilities were terminated. At the same
time, the Bresnan credit facilities were amended and restated to, among other
things, increase borrowing availability by $550.0 million. See "Description of
Certain Indebtedness -- Existing Credit Facilities."
                                        4
   9

                               THE EXCHANGE OFFER

Resales Without Further
  Registration.............  We believe that the new notes issued pursuant to
                             the exchange offer may be offered for resale,
                             resold or otherwise transferred by you without
                             compliance with the registration and prospectus
                             delivery provisions of the Securities Act, as
                             amended, provided that:

                               - you are acquiring the new notes issued in the
                                 exchange offer in the ordinary course of your
                                 business;

                               - you have not engaged in, do not intend to
                                 engage in, and have no arrangement or
                                 understanding with any person to participate
                                 in, the distribution of the new notes issued to
                                 you in the exchange offer, and;

                               - you are not our "affiliate," as defined under
                                 Rule 405 of the Securities Act.

                             Each of the participating broker-dealers that
                             receives new notes for its own account in exchange
                             for original notes that were acquired by such
                             broker or dealer as a result of market-making or
                             other activities must acknowledge that it will
                             deliver a prospectus in connection with the resale
                             of the new notes.


Expiration Date............  5:00 p.m., New York City time, on September 5, 2001
                             unless we extend the exchange offer.


Exchange and Registration
  Rights Agreements........  You have the right to exchange the original notes
                             that you hold for new notes with substantially
                             identical terms. This exchange offer is intended to
                             satisfy these rights. Once the exchange offer is
                             complete, you will no longer be entitled to any
                             exchange or registration rights with respect to
                             your original notes.

Accrued Interest on the New
  Notes and Original
  Notes....................  The new notes will bear interest from May 30, 2001.
                             Holders of original notes which are accepted for
                             exchange will be deemed to have waived the right to
                             receive any payment in respect of interest on such
                             original notes accrued to the date of issuance of
                             the new notes.

Conditions to the Exchange
  Offer....................  The exchange offer is conditioned upon certain
                             customary conditions which we may waive and upon
                             compliance with securities laws.

Procedures for Tendering
  Original Notes...........  Each holder of original notes wishing to accept the
                             exchange offer must:

                               - complete, sign and date the letter of
                                 transmittal, or a facsimile of the letter of
                                 transmittal; or
                                        5
   10

                               - arrange for The Depository Trust Company to
                                 transmit certain required information to the
                                 exchange agent in connection with a book-entry
                                 transfer.

                             You must mail or otherwise deliver such
                             documentation together with the original notes to
                             the exchange agent.

Special Procedures for
  Beneficial Holders.......  If you beneficially own original notes registered
                             in the name of a broker, dealer, commercial bank,
                             trust company or other nominee and you wish to
                             tender your original notes in the exchange offer,
                             you should contact such registered holder promptly
                             and instruct them to tender on your behalf. If you
                             wish to tender on your own behalf, you must, before
                             completing and executing the letter of transmittal
                             for the exchange offer and delivering your original
                             notes, either arrange to have your original notes
                             registered in your name or obtain a properly
                             completed bond power from the registered holder.
                             The transfer of registered ownership may take
                             considerable time.

Guaranteed Delivery
  Procedures...............  You must comply with the applicable procedures for
                             tendering if you wish to tender your original notes
                             and:

                               - time will not permit your required documents to
                                 reach the exchange agent by the expiration date
                                 of the exchange offer; or

                               - you cannot complete the procedure for
                                 book-entry transfer on time; or

                               - your original notes are not immediately
                                 available.

Withdrawal Rights..........  You may withdraw your tender of original notes at
                             any time prior to 5:00 p.m., New York City time, on
                             the date the exchange offer expires.

Failure to Exchange Will
  Affect You Adversely.....  If you are eligible to participate in the exchange
                             offer and you do not tender your original notes,
                             you will not have further exchange or registration
                             rights and your original notes will continue to be
                             subject to some restrictions on transfer.
                             Accordingly, the liquidity of the original notes
                             will be adversely affected.

Material United States
  Federal Income Tax
  Consideration............  The disclosure in this prospectus represents our
                             legal counsel's opinion as to the material United
                             States Federal income tax consequences of
                             participating in the exchange offer and in
                             connection with the ownership and disposition of
                             the new notes. The exchange of original notes for
                             new notes pursuant to the exchange offer will not
                             result in a taxable event. Accordingly, it is our
                             legal counsel's opinion that:

                               - no gain or loss will be realized by a U.S.
                                 holder upon receipt of a new note;
                                        6
   11

                               - a holder's holding period for new notes will
                                 include the holding period for original notes;
                                 and

                               - the adjusted tax basis of the new notes will be
                                 the same as the adjusted tax basis of the
                                 original notes exchanged at the time of such
                                 exchange.

                             Paul, Hastings, Janofsky & Walker LLP has rendered
                             the above-referenced opinion in connection with the
                             exchange offer. See "Material United States Federal
                             Income Tax Considerations."

Exchange Agent.............  The Bank of New York is serving as exchange agent.

Use of Proceeds............  We will not receive any proceeds from the exchange
                             offer.
                                        7
   12

                           SUMMARY TERMS OF NEW NOTES

Issuers.......................   Charter Communications Holdings, LLC and
                                 Charter Communications Holdings Capital
                                 Corporation.

Notes Offered.................   $350.0 million in principal amount of 9.625%
                                 senior notes due 2009.

                                 $575.0 million in principal amount of 10.000%
                                 senior notes due 2011.

                                 $1.018 billion in principal amount at maturity
                                 of 11.750% senior discount notes due 2011.

                                 The form and terms of the new notes will be the
                                 same as the form and terms of the outstanding
                                 notes except that:

                                 - the new notes will bear a different CUSIP
                                   number from the original notes;

                                 - the new notes have been registered under the
                                   Securities Act and, therefore, will not bear
                                   legends restricting their transfer; and

                                 - you will not be entitled to any exchange or
                                   registration rights with respect to the new
                                   notes.

                                 The new notes will evidence the same debt as
                                 the original notes. They will be entitled to
                                 the benefits of the indentures governing the
                                 original notes and will be treated under the
                                 indentures as a single class with the original
                                 notes.

<Table>
<Caption>
                            MATURITY
                              DATE               ISSUE PRICE
INTEREST
                        -----------------  ------------------------
- ---------------------------------
                                                            
9.625% Notes..........  November 15, 2009  100.00% plus accrued      9.625% per
annum, payable every
                                           interest, if any, from    six months
on May 15 and November
                                           May 30, 2001              15,
beginning November 15, 2001
10.000% Notes.........  May 15, 2011       100.00%, plus accrued     10.000% per
annum, payable every
                                           interest, if any, from    six months
on May 15 and November
                                           May 30, 2001              15,
beginning November 15, 2001
11.750% Notes.........  May 15, 2011       $565.02 per $1,000.00     Cash
interest will not accrue on
                                           principal amount at       the senior
discount notes until
                                           maturity                  May 15,
2006. The principal
                                                                     amount
represented by each senior
                                                                     discount
note will accrete from
                                                                     $565.02 to
$1,000 during the
                                                                     period from
the issue date to May
                                                                     15, 2006.
Thereafter, cash
                                                                     interest on
the senior discount
                                                                     notes will
accrue at a rate of
                                                                     11.750% per
year and will be
                                                                     payable
semi-annually in arrears
                                                                     on May 15
and November 15,
                                                                     commencing
on November 15, 2006.
</Table>


Ranking....................  The new notes will be senior debt. They will rank
                             equally with all existing and future unsecured and
                             unsubordinated debt of the Charter Holdings
                             including the existing Charter Holdings senior

                                        8
   13

                             notes and senior discount notes and trade payables,
                             which are accounts payable to vendors, suppliers
                             and service providers. Charter Holdings is a
                             holding company and conducts all of its operations
                             through its direct and indirect subsidiaries. If it
                             defaults, your right to payment under the new notes
                             will rank below all existing and future
                             liabilities, including trade payables, of the
                             subsidiaries of Charter Holdings. As of March 31,
                             2001, pro forma for (1) the issuance and sale of
                             the original notes and the application of the net
                             proceeds therefrom; (2) the receipt of net proceeds
                             from Charter Communications Holding Company from
                             the sale by Charter Communications, Inc. of its May
                             2001 senior convertible notes and from the May 2001
                             sale by Charter Communications, Inc. of additional
                             shares of its Class A common stock; (3) the use of
                             such proceeds to repay all amounts outstanding
                             under the Charter Operating, CC VI (Fanch), CC VII
                             (Falcon) and CC VIII (Bresnan) revolving credit
                             facilities; and (4) the closing of the AT&T
                             transactions and the borrowings under the Charter
                             Operating credit facility to pay a portion of the
                             AT&T purchase price, as if such transactions had
                             occurred on that date, our debt would have totaled
                             approximately $13.8 billion, $6.0 billion of which
                             would have ranked senior to the new notes.

Optional Redemption........  We may redeem some or all of the ten-year senior
                             notes and the senior discount notes beginning on
                             May 15, 2006. The initial redemption price is
                             105.000% of the principal amount plus accrued and
                             unpaid interest for the ten-year senior notes and
                             106.875% of the principal amount at maturity plus
                             accrued and unpaid interest for the senior discount
                             notes. The redemption price will decline each year
                             after 2006 and beginning on May 15, 2009 will be
                             100% of the principal amount plus accrued and
                             unpaid interest for the ten-year senior notes and
                             100% of the principal amount at maturity plus
                             accrued and unpaid interest for the senior discount
                             notes. In addition, before May 15, 2004, we may
                             redeem up to 35% of the ten-year senior notes and
                             the senior discount notes using proceeds of certain
                             offerings of equity securities at a redemption
                             price equal to 110.000% of the principal amount
                             plus accrued and unpaid interest for the ten-year
                             senior notes and 111.750% of the accreted value for
                             the senior discount notes. We do not have the
                             option to redeem any portion of the eight-year
                             senior notes prior to their maturity date.

Mandatory Offer to
Repurchase.................  If Charter Holdings, Charter Communications Holding
                             Company or Charter Communications, Inc. experiences
                             certain changes of control, we must offer to
                             repurchase the eight-year senior notes and ten-year
                             senior notes at 101% of their principal amount plus
                             accrued and unpaid interest and the senior discount
                             notes at 101% of their accreted value plus, for any
                             change of control occurring after the full
                             accretion date, accrued and unpaid interest, if
                             any, to the date of purchase.
                                        9
   14

Basic Covenants of
Indentures.................  The indentures governing the notes will, among
                             other things, restrict our ability and the ability
                             of certain of our subsidiaries to:
                               - pay dividends on stock or repurchase stock;
                               - make investments;
                               - borrow money;
                               - create certain liens;
                               - sell all or substantially all of our assets or
                                 merge with or into other companies;
                               - sell assets;
                               - in the case of our restricted subsidiaries,
                                 create or permit to exist dividend or payment
                                 restrictions with respect to us; and
                               - engage in certain transactions with affiliates.

                             These covenants are subject to important
                             exceptions. See "Description of Notes -- Certain
                             Covenants."

                                  RISK FACTORS

     You should carefully consider all of the information in this prospectus. In
particular, you should evaluate the specific risk factors under "Risk Factors"
for a discussion of risks associated with an investment in the new notes.
                                        10
   15

                        UNAUDITED SUMMARY PRO FORMA DATA

     You should read the following unaudited summary pro forma financial data of
Charter Holdings in conjunction with the historical financial statements and
other financial information appearing elsewhere in this prospectus, including
"Capitalization," "Unaudited Pro Forma Financial Statements" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."


<Table>
<Caption>

UNAUDITED PRO FORMA DATA
                                                                    AS OF AND
FOR THE THREE MONTHS ENDED MARCH 31, 2001

- -----------------------------------------------------------------------
                                                            CHARTER         AT&T
                       OFFERING
                                                           HOLDINGS
TRANSACTIONS    SUBTOTAL       ADJUSTMENT        TOTAL
                                                           --------
- ------------    --------       ----------        -----
                                                                      (DOLLARS
IN THOUSANDS, EXCEPT SUBSCRIBER DATA)
                                                                  
                               
STATEMENT OF OPERATIONS:
Revenues................................................. $   873,797    $
79,284    $   953,081      $     --      $   953,081
                                                          -----------
- ----------    -----------      --------      -----------
Operating expenses:
  Operating, general and administrative..................     472,147
50,847        522,994            --          522,994
  Depreciation and amortization..........................     693,812
36,115        729,927            --          729,927
  Option compensation expense............................       6,038
- --          6,038            --            6,038
  Corporate expense charges..............................      13,721
5,005         18,726            --           18,726
                                                          -----------
- ----------    -----------      --------      -----------
    Total operating expenses.............................   1,185,718
91,967      1,277,685            --        1,277,685
                                                          -----------
- ----------    -----------      --------      -----------
Loss from operations.....................................    (311,921)
(12,683)      (324,604)           --         (324,604)
Interest expense.........................................    (287,088)
(19,251)      (306,339)      (21,858)        (328,197)
Interest income..........................................          89
- --             89            --               89
Other expense............................................     (58,978)
(122)       (59,100)           --          (59,100)
                                                          -----------
- ----------    -----------      --------      -----------
Loss before minority interest expense....................    (657,898)
(32,056)      (689,954)      (21,858)        (711,812)
Minority interest expense(a).............................      (3,159)
- --         (3,159)           --           (3,159)
                                                          -----------
- ----------    -----------      --------      -----------
Net loss................................................. $  (661,057)   $
(32,056)   $  (693,113)     $(21,858)     $  (714,971)
                                                          ===========
==========    ===========      ========      ===========
OTHER FINANCIAL DATA:
EBITDA(b)................................................ $   322,913    $
23,310    $   346,223                    $   346,223
EBITDA margin(c).........................................        37.0%
29.4%          36.3%                          36.3%
Adjusted EBITDA(d)....................................... $   401,650
28,437    $   430,087                    $   430,087
Cash flows from (used in) operating activities...........    (154,956)
23,600       (131,356)                      (131,356)
Cash flows from (used in) investing activities...........    (527,446)
7,651       (519,795)                      (519,795)
Cash flows from (used in) financing activities...........     562,683
(30,814)       531,869                        531,869
Capital expenditures.....................................     521,442
(2,270)       519,172                        519,172
Cash interest expense....................................
                                         269,589
Deficiency of earnings to cover fixed charges(e).........
                                     $   714,971
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................................. $23,413,130
$1,059,728    $24,472,858      $452,409       24,925,267
Total debt...............................................  12,326,347
1,048,187     13,374,534       452,409       13,826,943
Minority interest(f).....................................     643,685
- --        643,685                        643,685
Members' equity..........................................   9,022,455
- --      9,022,455                      9,022,455
OPERATING DATA (AT END OF PERIOD, EXCEPT FOR AVERAGE):
Homes passed(g)..........................................  10,258,300
1,078,614     11,336,914                     11,336,914
Basic customers(h).......................................   6,349,823
562,933      6,912,756                      6,912,756
Basic penetration(i).....................................        61.9%
52.2%          61.0%                          61.0%
Premium units(j).........................................   5,199,721
746,548      5,946,269                      5,946,269
Premium penetration(k)...................................        81.9%
132.6%          86.0%                          86.0%
Average monthly revenue per basic customer(l)............
                                     $     45.96
</Table>


                                        11
   16

<Table>
<Caption>

UNAUDITED PRO FORMA DATA
                                                                 AS OF AND FOR
THE YEAR ENDED DECEMBER 31, 2000

- --------------------------------------------------------------------
                                                        CHARTER        RECENT
                 OFFERING
                                                       HOLDINGS     ACQUISITIONS
   SUBTOTAL     ADJUSTMENT       TOTAL
                                                       --------     ------------
   --------     ----------       -----
                                                                 (DOLLARS IN
THOUSANDS, EXCEPT SUBSCRIBER DATA)
                                                              
                        
STATEMENT OF OPERATIONS:
Revenues............................................  $ 3,249,222    $ 360,299
  $ 3,609,521    $      --    $ 3,609,521
                                                      -----------    ---------
  -----------    ---------    -----------
Operating expenses:
  Operating, general and administrative.............    1,650,918      236,269
    1,887,187           --      1,887,187
  Depreciation and amortization.....................    2,462,544      191,857
    2,654,401           --      2,654,401
  Option compensation expense.......................       40,978           --
       40,978           --         40,978
  Corporate expense charges.........................       55,243       12,922
       68,165           --         68,165
                                                      -----------    ---------
  -----------    ---------    -----------
    Total operating expenses........................    4,209,683      441,048
    4,650,731           --      4,650,731
                                                      -----------    ---------
  -----------    ---------    -----------
Loss from operations................................     (960,461)     (80,749)
   (1,041,210)          --     (1,041,210)
Interest expense....................................   (1,042,417)     (82,103)
   (1,124,520)    (106,725)    (1,231,245)
Interest income.....................................        6,679          (49)
        6,630           --          6,630
Other expense.......................................      (17,503)        (723)
      (18,226)          --        (18,226)
                                                      -----------    ---------
  -----------    ---------    -----------
Loss before minority interest expense...............   (2,013,702)    (163,624)
   (2,177,326)    (106,725)    (2,284,051)
Minority interest expense(a)........................      (11,038)      (1,551)
      (12,589)          --        (12,589)
                                                      -----------    ---------
  -----------    ---------    -----------
Net loss............................................  $(2,024,740)   $(165,175)
  $(2,189,915)   $(106,725)   $(2,296,640)
                                                      ===========    =========
  ===========    =========    ===========
OTHER FINANCIAL DATA:
EBITDA (b)..........................................  $ 1,484,580    $ 110,385
  $ 1,594,965                 $ 1,594,965
EBITDA margin (c)...................................         45.7%        30.6%
         44.2%                       44.2%
Adjusted EBITDA (d).................................  $ 1,598,304    $ 124,030
  $ 1,722,334                 $ 1,722,334
Cash flows from operating activities................    1,126,286      123,553
    1,249,839                   1,249,839
Cash flows used in investing activities.............   (2,907,955)    (185,329)
   (3,093,284)                 (3,093,284)
Cash flows from financing activities................    1,798,192       28,399
    1,826,591                   1,826,591
Capital expenditures................................    2,783,440      243,023
    3,026,463                   3,026,463
Cash interest expense...............................
                                  924,913
Deficiency of earnings to cover fixed charges (e)...
                              $ 2,296,640
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................................  $24,074,964    $ 693,356
  $24,768,320    $ 817,491    $25,585,811
Total debt..........................................   12,083,796      683,116
   12,766,912      817,491     13,584,403
Minority interest(f)................................      640,526           --
      640,526           --        640,526
Member's equity.....................................    9,709,882           --
    9,709,882           --      9,709,882
OPERATING DATA (AT END OF PERIOD, EXCEPT FOR
  AVERAGE):
Homes passed (g)....................................   10,219,300    1,081,931
   11,301,231                  11,301,231
Basic customers (h).................................    6,346,200      564,722
    6,910,922                   6,910,922
Basic penetration (i)...............................         62.1%        52.2%
         61.2%                       61.2%
Premium units (j)...................................    4,936,800      769,227
    5,706,027                   5,706,027
Premium penetration (k).............................         77.8%       136.2%
         82.6%                       82.6%
Average monthly revenue per basic customer (l)......
                              $     43.52
</Table>

- ---------------
(a)  Represents the 2% accretion of the preferred membership units of a
     subsidiary of Charter Holdings issued to certain Bresnan sellers. These
     membership units are exchangeable at any time on a one-for-one basis for
     shares of Class A common stock of Charter Communications, Inc.

(b)  EBITDA represents earnings (loss) before interest, depreciation and
     amortization, and minority interest. EBITDA is presented because it is a
     widely accepted financial indicator of a cable company's ability to service
     indebtedness. However, EBITDA should not be considered as an alternative to
     income from operations or to cash flows from operating, investing or
     financing activities, as determined in accordance with generally accepted
     accounting principles. EBITDA should also not be construed as an indication
     of a company's operating performance or as a measure of liquidity.
     Management's discretionary use of funds depicted by EBITDA may be limited
     by working capital, debt service and capital expenditure requirements and
     by restrictions related to legal requirements, commitments and
     uncertainties.

(c)  EBITDA margin represents EBITDA as a percentage of revenues.
                                        12
   17

(d)  Adjusted EBITDA means EBITDA before option compensation expense, corporate
     expense charges, and other expenses. Adjusted EBITDA is presented because
     it is a widely accepted financial indicator of a cable company's ability to
     service its indebtedness. However, adjusted EBITDA should not be considered
     as an alternative to income from operations or to cash flows from
     operating, investing or financing activities, as determined in accordance
     with generally accepted accounting principles. Adjusted EBITDA should also
     not be construed as an indication of a company's operating performance or
     as a measure of liquidity. In addition, because adjusted EBITDA is not
     calculated identically by all companies, the presentation here may not be
     comparable to other similarly titled measures of other companies.
     Management's discretionary use of funds depicted by adjusted EBITDA may be
     limited by working capital, debt service and capital expenditure
     requirements and by restrictions related to legal requirements, commitments
     and uncertainties.

(e)  Earnings include net income (loss) plus fixed charges. Fixed charges
     consist of interest expense and an estimated interest component of rent
     expense.

(f)  Represents preferred membership units in an indirect subsidiary of Charter
     Holdings issued to certain Bresnan sellers, which are exchangeable on a
     one-for-one basis for shares of Class A common stock of Charter
     Communications, Inc.

(g)  Homes passed are the number of living units, such as single residence
     homes, apartments and condominium units, passed by the cable television
     distribution network in a given cable system service area.

(h)  Basic customers are customers who receive basic cable service.

(i)  Basic penetration represents basic customers as a percentage of homes
     passed.

(j)  Premium units represent the total number of subscriptions to premium
     channels.

(k)  Premium penetration represents premium units as a percentage of basic
     customers.

(l)  Average monthly revenue per basic customer represents revenues divided by
     the number of months in the period divided by the number of basic customers
     at the end of the period.
                                        13
   18

                                  RISK FACTORS

     The new notes, like the original notes, entail the following risks. You
should carefully consider these risk factors, as well as the other information
contained in this prospectus, before exchanging the original notes for the new
notes.

OUR BUSINESS

WE AND OUR SUBSIDIARIES HAVE SUBSTANTIAL EXISTING DEBT AND WILL INCUR
SUBSTANTIAL ADDITIONAL DEBT, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH
AND OUR ABILITY TO OBTAIN FINANCING IN THE FUTURE AND REACT TO CHANGES IN OUR
BUSINESS.

     We and our subsidiaries have a significant amount of debt. As of March 31,
2001, pro forma for (1) the issuance and sale of the original notes and the
application of the net proceeds therefrom; (2) the issuance of additional equity
to Charter Communications Holding Company in exchange for the net proceeds
received from Charter Communications Holding Company from the sale by Charter
Communications, Inc. of its May 2001 senior convertible notes and from the May
2001 sale by Charter Communications, Inc. of additional shares of its Class A
common stock; (3) the use of such proceeds to repay all amounts outstanding
under the Charter Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII
(Bresnan) revolving credit facilities; and (4) the closing of the AT&T
transactions and the borrowings under the Charter Operating credit facility to
pay a portion of the AT&T purchase price, our total debt would have been
approximately $13.8 billion, our member's equity would have been approximately
$9.0 billion and the deficiency of our earnings available to cover fixed charges
would have been approximately $715.0 million. Since March 31, 2001, we have
incurred significant additional debt to fund our capital expenditures. Our
significant amount of debt could have important consequences to you. For
example, it could:

     - make it more difficult for us to satisfy our obligations to you under the
       notes, to the lenders under our subsidiaries' credit facilities and to
       our other public noteholders;

     - increase our vulnerability to general adverse economic and cable industry
       conditions, including interest rate increases, because a significant
       portion of our borrowings are and will continue to be at variable rates
       of interest;

     - require us to dedicate a substantial portion of our cash flow from
       operations 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 and the cable industry;

     - place us at a disadvantage compared to our competitors that have
       proportionately less debt; and

     - limit our ability to borrow additional funds in the future, if we need
       them, due to applicable financial and restrictive covenants in our debt.

     The indentures governing the notes will not prohibit us from incurring
additional debt. Further, the agreements and instruments governing our and our
subsidiaries' debt allow for the incurrence of substantial additional debt by
our subsidiaries, all of which would be structurally senior to the notes. We
anticipate that we may incur significant additional debt in the future to fund
the expansion, maintenance and upgrade of our cable systems. If current debt
levels increase, the related risks that we and you now face will intensify.

                                        14
   19

THE AGREEMENTS AND INSTRUMENTS GOVERNING OUR DEBT AND THE DEBT OF OUR
SUBSIDIARIES CONTAIN RESTRICTIONS AND LIMITATIONS THAT COULD SIGNIFICANTLY
IMPACT OUR ABILITY TO OPERATE OUR BUSINESS AND ADVERSELY AFFECT THE HOLDERS OF
THE NOTES.

     The credit facilities of our subsidiaries, the indentures governing the
notes and our and our subsidiaries' other public debt contain a number of
significant covenants that could adversely impact the holders of the notes and
our business. In particular, the credit facilities of our subsidiaries and
indentures of our and our subsidiaries' public notes restrict our ability and
the ability of our subsidiaries to:

     - pay dividends or make other distributions;

     - make certain investments or acquisitions;

     - dispose of assets or merge;

     - incur additional debt;

     - issue equity;

     - repurchase or redeem equity interests and debt;

     - create liens; and

     - pledge assets.

     Furthermore, in accordance with our subsidiaries' credit facilities, a
number of our subsidiaries are required to maintain specified financial ratios
and meet financial tests. The ability to comply with these provisions may be
affected by events beyond our control. The breach of any of these covenants will
result in a default under the applicable debt agreement or instrument, which
could prohibit distributions to us to pay amounts on the notes.

IF OUR SUBSIDIARIES DEFAULT UNDER THEIR CREDIT FACILITIES OR PUBLIC NOTES, WE
MAY NOT HAVE THE ABILITY TO MAKE PAYMENTS ON THE NOTES.

     In the event of a default under our subsidiaries' credit facilities or
public notes, our 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, our subsidiaries' credit facilities and indentures
will not permit our subsidiaries to distribute funds to Charter Holdings to pay
interest or principal on the notes. If the amounts outstanding under such credit
facilities or public notes are accelerated, all of our subsidiaries' debt and
liabilities would be payable from our subsidiaries' assets, prior to any
distribution of our subsidiaries' assets to pay the interest and principal
amounts on the notes and we may not be able to repay or make payments on the
notes. Any default under any of our credit facilities or public notes may
adversely affect the holders of the notes and our growth, financial condition
and results of operations.

CHARTER HOLDINGS IS A HOLDING COMPANY WHICH HAS NO OPERATIONS AND WILL DEPEND ON
ITS OPERATING SUBSIDIARIES FOR CASH TO MAKE PAYMENTS ON THE NOTES. CHARTER
HOLDINGS' SUBSIDIARIES ARE LIMITED IN THEIR ABILITY TO MAKE FUNDS AVAILABLE FOR
THE PAYMENT OF THE NOTES AND OTHER OBLIGATIONS.

     As a holding company, we will depend entirely on cash from our operating
subsidiaries to satisfy our obligations to you as a holder of the notes. Our
operating subsidiaries may not be able to make funds available to us.

     We will not hold any significant assets other than our direct and indirect
interests in our subsidiaries which conduct all of our operations. Our cash flow
will depend upon the cash flow of our operating subsidiaries and the payment of
funds by our operating subsidiaries to us. This could adversely affect our
ability to meet our obligations to you as a holder of the notes.

                                        15
   20

     Our operating subsidiaries are separate and distinct legal entities and are
not obligated to make funds available for payment of the notes and other
obligations in the form of loans, distributions or otherwise. In addition, our
operating subsidiaries' ability to make any such loans, distributions or other
payments to us will depend on their earnings, business and tax considerations
and legal restrictions. Furthermore, covenants in the indentures and credit
agreements governing the debt of our subsidiaries restrict their ability to make
loans, distributions or other payments to us. This could adversely impact our
ability to pay interest and principal due on the notes. See "Description of
Certain Indebtedness."

BECAUSE OF OUR HOLDING COMPANY STRUCTURE, THE NOTES WILL BE STRUCTURALLY
SUBORDINATED TO ALL LIABILITIES OF OUR SUBSIDIARIES.

     The borrowers and guarantors under the Charter Operating credit facilities,
the CC VI (Fanch) credit facilities, the CC VII (Falcon) credit facilities and
the CC VIII (Bresnan) credit facilities are our direct or indirect subsidiaries.
A number of our subsidiaries are also obligors under other debt instruments. As
of March 31, 2001, pro forma for (1) the issuance and sale of the original notes
and the application of the net proceeds therefrom; (2) the receipt of net
proceeds from Charter Communications Holding Company from the sale by Charter
Communications, Inc. of its May 2001 senior convertible notes and from the May
2001 sale by Charter Communications, Inc. of additional shares of its Class A
common stock; (3) the use of such proceeds to repay all amounts outstanding
under the Charter Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII
(Bresnan) revolving credit facilities; and (4) the closing of the AT&T
transactions and the borrowings under the Charter Operating credit facility to
pay a portion of the AT&T purchase price, our total debt would have been
approximately $13.8 billion, $6.0 million of which would have been structurally
senior to the notes. The lenders under all of these credit facilities and the
holders of the other debt instruments will have the right to be paid before us
from any of our subsidiaries' assets. In the event of bankruptcy, liquidation or
dissolution of a subsidiary, following payment by such subsidiary of its
liabilities, such subsidiary may not have sufficient assets remaining to make
payments to us as a shareholder or otherwise. This will adversely affect our
ability to make payments to you as a holder of the notes. In addition, the notes
are unsecured and therefore will be effectively subordinated in right of payment
to all existing and future secured debt we may incur to the extent of the value
of the assets securing such debt.

OUR ABILITY TO GENERATE THE SIGNIFICANT AMOUNT OF CASH NEEDED TO PAY INTEREST
AND PRINCIPAL AMOUNTS ON THE NOTES, SERVICE OUR OTHER DEBT AND THE DEBT OF OUR
SUBSIDIARIES AND GROW OUR BUSINESS DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.

     Our ability to make payments on the notes and to fund our planned capital
expenditures for upgrading our cable systems and our ongoing operations will
depend on our ability to generate cash and to secure financing in the future.
This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond our control. If
our business does not generate sufficient cash flow from operations, and
sufficient future distributions are not available to us from borrowings under
our credit facilities or from other sources of financing, we may not be able to
make interest payments on the notes or repay the notes, to grow our business or
to fund our other liquidity needs.

WE HAVE GROWN RAPIDLY AND HAVE A LIMITED HISTORY OF OPERATING OUR CURRENT
SYSTEMS. THIS MAKES IT DIFFICULT FOR YOU TO COMPLETELY EVALUATE OUR PERFORMANCE.

     We commenced active operations in 1994 and have grown rapidly since then
through acquisitions of cable systems. As of December 31, 2000, our systems
served approximately 400% of the number of customers served as of December 31,
1998. As a result, historical financial information about us may

                                        16
   21

not be indicative of the future or of results that we can achieve with the cable
systems which will be under our control. Our recent growth in revenues over our
short operating history is not necessarily indicative of future performance.

WE MAY NOT HAVE THE ABILITY TO INTEGRATE THE NEW CABLE SYSTEMS THAT WE ACQUIRE
AND THE CUSTOMERS THEY SERVE WITH OUR EXISTING CABLE SYSTEMS. THIS COULD
ADVERSELY AFFECT OUR OPERATING RESULTS AND GROWTH STRATEGY.

     We have grown through acquisitions of cable systems and now own and operate
cable systems serving approximately 7 million customers. We may acquire more
cable systems in the future, through direct acquisition, system swaps or
otherwise. The integration of the cable systems we have acquired poses a number
of significant risks, including:

     - our acquisitions may not have a positive impact on our cash flows from
       operations;

     - the integration of these new systems and customers will place significant
       demands on our management and our operations, information services, and
       financial, legal and marketing resources. Our current operating and
       financial systems and controls and information services may not be
       adequate, and any steps taken to improve these systems and controls may
       not be sufficient;

     - acquired businesses sometimes result in unexpected liabilities and
       contingencies which could be significant; and

     - our continued growth will also increase our need for qualified personnel.
       We may not be able to hire such additional qualified personnel.

     We cannot assure you that we will successfully integrate any acquired
systems into our operations.

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. We expect our net losses to increase as a
result of our closed acquisitions and our planned upgrades and other capital
expenditures. We reported net losses before minority interest expense and
extraordinary items of $22 million for 1998, $641 million for 1999 and $2.0
billion for 2000. Pro forma for (1) the issuance and sale of the January 2001
Charter Holdings notes and the application of the net proceeds therefrom; (2)
the issuance and sale of the original notes and the application of the net
proceeds therefrom; (3) the receipt of net proceeds from Charter Communications
Holding Company from the sale by Charter Communications, Inc. of its May 2001
senior convertible notes and from the May 2001 sale by Charter Communications,
Inc. of additional shares of its Class A common stock; (4) the use of such
proceeds to repay all amounts outstanding under the Charter Operating, CC VI
(Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit facilities; and
(5) the closing of the AT&T transactions and the borrowings under the Charter
Operating credit facility to pay a portion of the AT&T purchase price, we had
net losses of $715.0 million for the three months ended March 31, 2001 and $2.3
billion for the year ended December 31, 2000. We cannot predict what impact, if
any, continued losses will have on our ability to finance our operations in the
future.


IF WE ARE UNSUCCESSFUL IN IMPLEMENTING OUR GROWTH STRATEGY, OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.

     If we are unable to grow our cash flow sufficiently, we may be unable to
make interest payments on the notes or repay the notes or our other debt, to
grow our business or to fund our other liquidity

                                        17
   22

needs. We expect that a substantial portion of our future growth will be
achieved through revenues from new products and services. We may not be able to
offer these new products and services successfully to our customers and these
new products and services may not generate adequate revenues.

OUR PROGRAMMING COSTS ARE INCREASING. WE MAY NOT HAVE THE ABILITY TO PASS THESE
INCREASES 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 single
expense item. In recent years, the cable industry has experienced a rapid
escalation in the cost of programming, particularly sports programming. This
escalation may continue, and we may not be able to pass programming cost
increases on to our customers. The inability to pass these programming cost
increases on to our customers would have an adverse impact on our cash flow and
operating margins. In addition, as we upgrade the channel capacity of our
systems and add programming to our basic, expanded basic and premium programming
tiers, we may face additional market constraints on our ability to pass
programming costs on to our customers. Basic programming includes a variety of
entertainment and local programming. Expanded basic programming offers more
services than basic programming. Premium service includes unedited,
commercial-free movies, sports and other special event entertainment
programming.

OUR PLANNED UPGRADES AND CAPITAL EXPENDITURES MAY NOT BE SUFFICIENT TO FUND OUR
PLANNED SYSTEM UPGRADES, MAINTENANCE AND EXPANSION, OR TO ROLL OUT ADVANCED
SERVICES. THIS COULD ADVERSELY AFFECT OUR ABILITY TO OFFER NEW PRODUCTS AND
SERVICES, WHICH COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.


     Without giving effect to the recent AT&T transactions, in 2001, 2002 and
2003, we expect to spend approximately $2.9 billion, $1.8 billion and $1.1
billion respectively, to upgrade and rebuild our systems in order to offer
advanced services to our customers. In addition, we anticipate rebuild costs
associated with the systems acquired in the AT&T transactions to total
approximately $350 million, $150 million of which we expect to spend in 2001.
The amount that we spend on these types of capital expenditures will depend on
the level of growth in digital cable customers and in the delivery of other
advanced services.


     We cannot assure you that our anticipated levels of capital expenditures
will be sufficient to accomplish our planned system upgrades, maintenance and
expansion, or to roll out advanced services. We currently anticipate that we
will have sufficient capital to fund our capital expenditures through 2003. If
there is accelerated growth in digital cable customers or in the delivery of
other advanced services however, we may need additional capital. If we cannot
obtain such capital from increases in our operating cash flow, additional
borrowings or other sources, we may not be able to fund any accelerated growth
or offer advanced services on a timely basis. Consequently, our growth,
financial condition and results of operations could suffer materially. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Expenditures."

WE MAY NOT BE ABLE TO FUND THE CAPITAL EXPENDITURES NECESSARY TO KEEP PACE WITH
TECHNOLOGICAL DEVELOPMENTS OR OUR CUSTOMERS' DEMAND FOR NEW PRODUCTS AND
SERVICES. THIS COULD LIMIT OUR ABILITY TO COMPETE EFFECTIVELY. CONSEQUENTLY, OUR
GROWTH, RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD SUFFER MATERIALLY.

     The cable 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 technological
developments, or that we will successfully anticipate the demand of our
customers for products and services requiring new technology. This type of rapid
technological change could adversely affect our plans to upgrade or expand our
systems and respond

                                        18
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to competitive pressures. Our inability to upgrade, maintain and expand our
systems and provide advanced services in a timely manner, or to anticipate the
demands of the market place, could adversely affect our ability to compete.
Consequently, our growth, financial condition and results of operations could
suffer materially.

WE MAY BE UNABLE TO NEGOTIATE CONSTRUCTION CONTRACTS ON FAVORABLE TERMS AND OUR
CONSTRUCTION COSTS MAY INCREASE SIGNIFICANTLY. THIS COULD ADVERSELY AFFECT OUR
GROWTH, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     The expansion and upgrade of our systems will require us to hire
contractors and enter into a number of construction agreements. We may have
difficulty hiring civil contractors, and the contractors we hire may encounter
cost overruns or delays in construction. Our construction costs may increase
significantly over the next few years as existing contracts expire and as demand
for telecommunications construction services continues to grow. We cannot assure
you that we will be able to construct new systems or expand or upgrade existing
or acquired systems in a timely manner or at a reasonable cost. This may
adversely affect our growth, financial condition and results of operations.

WE DEPEND ON THIRD-PARTY EQUIPMENT AND SOFTWARE SUPPLIERS. IF WE ARE UNABLE TO
PROCURE THE NECESSARY EQUIPMENT, OUR ABILITY TO OFFER OUR SERVICES COULD BE
IMPAIRED. THIS COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

     We depend on vendors to supply the set-top terminals for analog and digital
cable services. This equipment is available from a limited number of suppliers.
We typically purchase set-top terminals under purchase orders placed from time
to time and do not carry significant inventories of set-top terminals. If demand
for set-top terminals exceeds our inventories and we are unable to obtain
required set-top terminals on a timely basis and at an acceptable cost, our
ability to recognize additional revenue from digital services could be delayed
or impaired. In addition, if there are no suppliers who are able to provide
set-top terminal devices that comply with evolving Internet and
telecommunications standards or that are compatible with other products or
components we use, our business would be impaired.

THERE IS NO EXPECTATION THAT MR. ALLEN WILL FUND OUR OPERATIONS OR OBLIGATIONS
IN THE FUTURE.

     In the past, Mr. Allen and his affiliates have contributed funds to Charter
Communications, Inc., Charter Communications Holding Company and us. There is no
expectation that Mr. Allen or his affiliates will contribute funds to Charter
Communications, Inc., Charter Communications Holding Company, us or to our
subsidiaries in the future.

A SALE BY MR. ALLEN OF HIS DIRECT OR INDIRECT EQUITY INTERESTS COULD ADVERSELY
AFFECT OUR ABILITY TO MANAGE OUR BUSINESS.

     Mr. Allen is not prohibited by any agreement from selling the shares of
Class A or Class B common stock he holds in Charter Communications, Inc. or
causing Charter Investment, Inc. or Vulcan Cable III Inc. to sell their
membership units in Charter Communications Holding Company. We cannot assure you
that Mr. Allen or any of his affiliates will maintain all or any portion of his
direct or indirect ownership interests in Charter Communications, Inc. and
Charter Communications Holding Company. In the event he sells all or any portion
of his direct or indirect ownership interest in Charter Communications, Inc. or
Charter Communications Holding Company, we cannot assure you that he would
continue as Chairman of Charter Communications, Inc.'s board of directors or
otherwise participate in our management. The disposition by Mr. Allen or any of
his affiliates of these equity interests or the loss of his services by Charter
Communications, Inc. and/or Charter Communications Holding Company could
adversely affect our growth, financial condition and results of operations or
adversely impact the market price of the notes.

                                        19
   24

WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT WHICH CAN ADVERSELY AFFECT
OUR BUSINESS AND OPERATIONS.

     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 brand name recognition and
long-standing relationships with regulatory authorities. Mergers, joint ventures
and alliances among any of the following businesses could result in providers
capable of offering cable television, Internet and other telecommunications
services in direct competition with us:

     - cable television operators;

     - local and regional telephone companies;

     - long distance telephone service providers;

     - direct broadcast satellite (DBS) companies;

     - electric utilities;

     - providers of cellular and other wireless communications services; and

     - Internet service providers.

     We face competition within the subscription television industry, which
includes providers of paid television service employing technologies other than
cable, such as direct broadcast satellite or DBS. We also face competition from
broadcast companies distributing television broadcast signals without assessing
a subscription fee and from other communications and entertainment media,
including conventional radio broadcasting services, newspapers, movie theaters,
the Internet, live sports events and home video products.

     We cannot assure you that upgrading our cable systems will allow us to
compete effectively. Additionally, as we expand and introduce new and enhanced
services, including Internet and telecommunications services, we will be subject
to competition from telecommunications providers and Internet service providers.
We cannot predict the extent to which competition may affect our business and
operations in the future. See "Business -- Competition."

THE LOSS OF MR. ALLEN OR MR. KENT COULD ADVERSELY AFFECT OUR ABILITY TO MANAGE
OUR BUSINESS.

     Our success is substantially dependent upon the retention and the continued
performance of Mr. Allen, Chairman of Charter Communications, Inc.'s board of
directors, and Jerald L. Kent, Charter Communications, Inc.'s President and
Chief Executive Officer. The loss of the services of Mr. Allen or Mr. Kent could
adversely affect our growth, financial condition and results of operations.

CHARTER'S STRUCTURE

MR. ALLEN MAY HAVE INTERESTS THAT CONFLICT WITH YOUR INTERESTS.


     Mr. Allen controls approximately 92.0% of the voting power of Charter
Communications, Inc.'s capital stock. Accordingly, Mr. Allen controls Charter
Communications, Inc. Charter Communications, Inc., in turn, controls Charter
Communications Holding Company and Charter Holdings. 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 Charter
Communications, Inc.'s directors, approval of merger transactions involving us
and the sale of all or substantially all of our assets.


     Mr. Allen's control over our management and affairs could create conflicts
of interest if he is faced with decisions that could have implications both for
him and for us and the holders of the notes. Further, Mr. Allen could cause us
to enter into contracts with another entity in which he owns

                                        20
   25

an interest or cause us to decline a transaction that he (or another entity in
which he owns an interest) ultimately enters into.

     Mr. Allen may engage in other businesses involving the operation of cable
television systems, video programming, high-speed Internet access, telephony or
electronic commerce, which is 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. In
addition, Mr. Allen currently engages and may engage in the future in businesses
that are complementary to our cable business.

     Accordingly, conflicts could arise with respect to the allocation of
corporate opportunities between us and Mr. Allen. Current or future agreements
between us and 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. Further, many past and future transactions with Mr. Allen or his
affiliates are informal in nature. As a result, there will be some discretion
left to the parties, who are subject to the potentially conflicting interests
described above. We cannot assure you that the interests of either Mr. Allen or
his affiliates will not conflict with the interests of the holders of the notes.
We have not instituted any formal plans to address conflicts of interest that
may arise.

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. THIS COULD ADVERSELY AFFECT OUR ABILITY TO
OFFER NEW PRODUCTS AND SERVICES OUTSIDE OF THE CABLE TRANSMISSION BUSINESS AND
ENTER INTO NEW BUSINESSES, WHICH COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

     Charter Communications, Inc.'s certificate of incorporation and Charter
Communications Holding Company's limited liability company agreement provide
that Charter Communications, Inc. and Charter Communications Holding Company and
their subsidiaries, including Charter Holdings and its subsidiaries, cannot
engage in any business activity outside the cable transmission business except
for specified businesses. This will be the case unless the opportunity to pursue
the particular business activity is first offered 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. 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. See
"Certain Relationships and Related Transactions -- Allocation of Business
Opportunities with Mr. Allen."

OUR MANAGEMENT MAY BE RESPONSIBLE FOR MANAGING OTHER CABLE OPERATIONS AND MAY
NOT DEVOTE THEIR FULL TIME TO OUR OPERATIONS. THIS COULD GIVE RISE TO CONFLICTS
OF INTEREST AND IMPAIR OUR OPERATING RESULTS.

     Mr. Allen and certain other of our affiliates may from time to time in the
future acquire cable systems in addition to those owned by us. Charter
Communications, Inc., as well as some of the officers of Charter Communications,
Inc. who currently manage our cable systems, may have a substantial role in
managing outside cable systems that may be acquired in the future. As a result,
the time they devote to managing our systems may be correspondingly reduced.
This could adversely affect our growth, financial condition and results of
operations. Moreover, allocating managers' time and other resources of Charter
Communications, Inc. and Charter Communications Holding Company between our
systems and outside systems that may be held by our affiliates could give rise

                                        21
   26

to conflicts of interest. Charter Communications, Inc. and Charter
Communications Holding Company do not have or plan to create formal procedures
for determining whether and to what extent cable systems acquired in the future
will receive priority with respect to personnel requirements.

REGULATORY AND LEGISLATIVE MATTERS

OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL LEGISLATION AND REGULATION.
THE APPLICABLE LEGISLATION AND REGULATIONS, AND CHANGES TO THEM, COULD ADVERSELY
AFFECT OUR BUSINESS BY INCREASING OUR EXPENSES.

     Regulation of the cable industry has increased the administrative and
operational expenses and limited the revenues of cable systems. Cable operators
are subject to, among other things:

     - 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 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. We cannot predict whether in response to
these efforts any of the states or localities in which we now operate will
expand regulation of our cable systems in the future or how they will do so.

WE MAY BE REQUIRED TO PROVIDE ACCESS TO OUR NETWORKS TO OTHER INTERNET SERVICE
PROVIDERS. THIS COULD SIGNIFICANTLY INCREASE OUR COMPETITION AND ADVERSELY
AFFECT THE UPGRADE OF OUR SYSTEMS OR OUR ABILITY TO PROVIDE NEW PRODUCTS AND
SERVICES.


     A number of companies, including telephone companies and Internet service
providers (ISPs), have requested local authorities and the Federal
Communications Commission to require cable operators to provide 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 circuit court in
California, a federal circuit court in Virginia, and a federal district court in
Florida recently struck down as unlawful "open-access" requirements imposed by a
variety of franchising authorities. Each of these decisions struck down the
"open-access" requirements on different legal grounds. In response to the first
federal circuit decision in California, the Federal Communications Commission
initiated an inquiry to determine the appropriate classification and regulatory
treatment of the provision of Internet service by cable operators. The Federal
Trade Commission recently imposed certain "open-access" requirements on Time
Warner and AOL in connection with their merger, but those requirements are not
applicable to other cable operators.


     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;

     - would strengthen our Internet service provider competitors; and

                                        22
   27

     - may cause us to decide not to upgrade our systems which would prevent us
       from introducing our planned new products and services.

     In addition, we cannot assure you that if we were required to provide
access in this manner, it would not have a significant adverse impact on our
profitability. This 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.

OUR CABLE SYSTEMS ARE OPERATED UNDER FRANCHISES WHICH ARE SUBJECT TO NON-RENEWAL
OR TERMINATION. THE FAILURE TO RENEW A FRANCHISE COULD ADVERSELY AFFECT OUR
BUSINESS IN A KEY MARKET.

     Our cable systems generally operate pursuant to franchises, permits or
licenses granted by a municipality or other state or local government
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 material 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, which have been and may continue to be costly to us. In some instances,
franchises have not been renewed at expiration, and we have operated under
either temporary operating agreements or without a license while negotiating
renewal terms with the local franchising authorities.

     We cannot assure you that we will be able to comply with all material
provisions of our franchise agreements or that we will be able to renew our
franchises in the future. A termination of and/or a sustained failure to renew a
franchise could adversely affect our business in the affected geographic area.

WE OPERATE OUR CABLE SYSTEMS UNDER FRANCHISES WHICH ARE NON-EXCLUSIVE. LOCAL
FRANCHISING AUTHORITIES CAN GRANT ADDITIONAL FRANCHISES AND CREATE COMPETITION
IN MARKET AREAS WHERE NONE EXISTED PREVIOUSLY.

     Our cable systems are operated under franchises granted by local
franchising authorities. These franchises are non-exclusive. Consequently, local
franchising authorities can grant additional franchises to competitors in the
same geographic area. 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 increasing
competition or creating competition where none existed previously. As of
December 31, 2000, we are aware of overbuild situations impacting approximately
139,000 of our basic customers, or 2% of our total basic customers, and
potential overbuild situations in areas servicing approximately 253,000
additional basic customers, or 4% of our total basic customers, together
representing a total of approximately 392,000 customers. Additional overbuild
situations may occur in other systems.

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   28

LOCAL FRANCHISE AUTHORITIES HAVE THE ABILITY TO IMPOSE ADDITIONAL REGULATORY
CONSTRAINTS ON OUR BUSINESS. THIS COULD FURTHER INCREASE OUR EXPENSES.

     In addition to the franchise document, cable authorities in some
jurisdictions have adopted cable regulatory ordinances that further regulate the
operation of cable systems. This additional regulation increases our expenses in
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 of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. Basic service tier
rates are the prices charged for basic programming services. As of December 31,
2000, we have refunded a total of approximately $1.2 million since our
inception. We may be required to refund additional amounts in the future.

DESPITE DEREGULATION OF EXPANDED BASIC CABLE PROGRAMMING PACKAGES, WE ARE
CONCERNED THAT CABLE RATE INCREASES COULD GIVE RISE TO FURTHER REGULATION. THIS
COULD CAUSE US TO DELAY OR CANCEL SERVICE OR PROGRAMMING ENHANCEMENTS OR IMPAIR
OUR ABILITY TO RAISE RATES TO COVER OUR INCREASING COSTS.

     On March 31, 1999, the pricing of expanded basic cable programming packages
was deregulated, permitting cable operators to set their own rates. This
deregulation was not applicable to basic services. However, the Federal
Communications Commission and the United States Congress continue to be
concerned that cable rate increases are exceeding inflation. It is possible that
either the Federal Communications Commission or the United States 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 financial
condition and results of operations could be materially adversely affected.

IF WE OFFER TELECOMMUNICATIONS SERVICES, WE MAY BE SUBJECT TO ADDITIONAL
REGULATORY BURDENS CAUSING US TO INCUR ADDITIONAL COSTS.

     If we enter the business of offering telecommunications services, we may be
required to obtain federal, state and local licenses or other authorizations to
offer these services. 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, including Internet protocol telephony companies, generally are
subject to significant regulation as well as higher fees for pole attachments.
Internet protocol telephony companies are companies that have the ability to
offer telephone services over the Internet. Pole attachments are cable wires
that are attached to poles.

     In particular, cable operators who provide telecommunications services and
cannot reach agreement with local utilities over pole attachment rates in states
that do not regulate pole attachment rates will be subject to a methodology
prescribed by the Federal Communications Commission for determining the rates.
These rates may be higher than those paid by cable operators that do not provide
telecommunications services. The rate increases are to be phased in over a five-
year period beginning on February 8, 2001. If we become subject to
telecommunications regulation or higher pole attachment rates, we may incur
additional costs which may be material to our business. A recent court decision,
currently under appeal to the United States Supreme Court, suggests that the
provision of Internet service may subject cable systems to higher pole
attachment rates. Certain utilities have already proposed vastly higher pole
attachment rates, based in part on the existing court decision.

                                        24
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THE OFFERING

THERE CURRENTLY EXISTS NO PUBLIC MARKET FOR THE NOTES. WE CANNOT ASSURE YOU THAT
AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES.

     The notes will be new securities for which there is currently no public
market. We do not intend to list the notes on any securities exchange or
quotation system. We cannot assure you that an active trading market will
develop for the notes. If a trading market does not develop, you may experience
difficulty in reselling notes, or you may be unable to sell them at all. In
addition, if a trading market does develop for the notes, the liquidity of the
trading market, and the market price quoted for the notes, may be adversely
affected by changes in the overall market for high yield securities generally or
the interest of securities dealers in making a market in the notes and by
changes in our financial performance or prospects or in the prospects for
companies in our industry generally.

WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FULFILL OUR
OBLIGATIONS UNDER THE NOTES FOLLOWING A CHANGE OF CONTROL. THIS WOULD PLACE US
IN DEFAULT UNDER THE INDENTURES GOVERNING THE NOTES.

     Under the indentures governing the notes, upon the occurrence of specified
change of control events, we will be required to offer to repurchase all
outstanding notes. However, we may not have sufficient funds at the time of the
change of control event to make the required repurchase of the notes. In
addition, a change of control would require the repayment of borrowings under
credit facilities and publicly held debt of our subsidiaries and the existing
Charter Holdings notes. Because our credit facilities and other publicly held
debt, other than the notes and existing Charter Holdings notes, are obligations
of our subsidiaries, the credit facilities and such debt would have to be repaid
by our subsidiaries before their assets could be available to Charter Holdings
to repurchase the notes. Our failure to make or complete an offer to repurchase
the notes would place us in default under the indentures governing the notes.
You should also be aware that a number of important corporate events, such as
leveraged recapitalizations that would increase the level of our indebtedness,
would not constitute a change of control under the indentures governing the
notes.

IF WE DO NOT FULFILL OUR OBLIGATIONS TO YOU UNDER THE NOTES, YOU WILL NOT HAVE
ANY RECOURSE AGAINST CHARTER COMMUNICATIONS, INC., CHARTER COMMUNICATIONS
HOLDING COMPANY, MR. ALLEN OR THEIR AFFILIATES.

     The notes will be issued solely by Charter Holdings and Charter
Communications Holdings Capital Corporation. None of our equity holders,
directors, officers, employees or affiliates, including Charter Communications,
Inc. and Mr. Allen, will be an obligor or guarantor under the notes.
Furthermore, the indentures governing the notes expressly provide that these
parties will not have any liability for our obligations under the notes or the
indentures governing the notes. By accepting the notes, you waive and release
all such liability as consideration for issuance of the notes. Consequently, if
the issuers do not fulfill their obligations to you under the notes, you will
have no recourse against any of these parties.

     Additionally, our equity holders, including Charter Communications, Inc.
and Mr. Allen, will be free to manage other entities, including other cable
companies. If we do not fulfill our obligations to you under the notes, you will
have no recourse against those other entities or their assets.

THE SENIOR DISCOUNT NOTES WILL BE ISSUED WITH ORIGINAL ISSUE DISCOUNT.
CONSEQUENTLY, HOLDERS OF THE SENIOR DISCOUNT NOTES WILL GENERALLY BE REQUIRED TO
INCLUDE AMOUNTS IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES IN ADVANCE OF
RECEIVING CASH.

     The senior discount notes will be issued at a substantial discount from
their stated principal amount. As a result, purchasers of the senior discount
notes generally will be required to include the

                                        25
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accrued portion of this discount in gross income, as interest, for United States
federal income tax purposes in advance of the receipt of cash payments of this
interest.

IF A BANKRUPTCY PETITION WERE FILED BY OR AGAINST US, YOU MAY RECEIVE A LESSER
AMOUNT FOR YOUR CLAIM THAN YOU WOULD BE ENTITLED TO RECEIVE UNDER THE INDENTURE
GOVERNING THE SENIOR DISCOUNT NOTES, AND YOU MAY REALIZE TAXABLE GAIN OR LOSS
UPON PAYMENT OF YOUR CLAIM.

     If a bankruptcy petition were filed by or against us under the U.S.
Bankruptcy Code after the issuance of the senior discount notes, the claim by a
holder of the senior discount notes for the principal amount of the senior
discount notes may be limited to an amount equal to the sum of:

          (1) the initial offering price for the senior discount notes; and

          (2) that portion of the original issue discount that does not
     constitute "unmatured interest" for purposes of the U.S. Bankruptcy Code.

     Any original issue discount that was not amortized as of the date of the
bankruptcy filing would constitute unmatured interest. Accordingly, holders of
senior discount notes under these circumstances may receive a lesser amount than
they would be entitled to receive under the terms of the Indenture governing the
senior discount notes, even if sufficient funds are available. In addition, to
the extent that the U.S. Bankruptcy Code differs from the Internal Revenue Code
in determining the method of amortization of original issue discount, a holder
of senior discount notes may realize taxable gain or loss upon payment of that
holder's claim in bankruptcy.

                                        26
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                           FORWARD-LOOKING STATEMENTS

     This prospectus includes forward-looking statements 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," "estimated" and "potential," among
others. Important factors that could cause actual results to differ materially
from the forward-looking statements we make in this prospectus are set forth in
this prospectus and in other reports or documents that we file from time to time
with the SEC and include, but are not limited to:

     - Our plans to achieve growth by offering new products and services and
       through acquisitions and swaps;

     - Our anticipated capital expenditures for our planned upgrades and the
       ability to fund these expenditures;

     - Our beliefs regarding the effects of governmental regulation on our
       business; and

     - Our ability to effectively compete in a highly competitive environment.

     All forward-looking statements attributable to us or a person acting on our
behalf are expressly qualified in their entirety by those cautionary statements.

                       RATIO OF EARNINGS TO FIXED CHARGES

     Earnings for the years ended December 31, 1996 and 1997; for the periods
from January 1, 1998 through December 23, 1998 and from December 24, 1998
through December 31, 1998; for the years ended December 31, 1999 and 2000; and
for the three months ended March 31, 2001 were insufficient to cover fixed
charges by $2.7 million, $4.6 million, $17.2 million, $5.3 million, $639.9
million, $2.0 billion and $672.6 million, respectively. As a result of such
deficiencies, the ratios of earnings to fixed charges are not presented.

                                        27
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                                 CAPITALIZATION

     The following table sets forth as of March 31, 2001, on a consolidated
basis:

     - the actual capitalization of Charter Holdings; and

     - the pro forma capitalization of Charter Holdings to reflect the effect of
       the following as if they had occurred prior to the issuance and sale of
       the original notes:

          (1) the repayment of all amounts outstanding under the Charter
              Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII (Bresnan)
              revolving credit facilities with an equity contribution by Charter
              Communications Holding Company of $1.3 billion of the net proceeds
              from the issuance and sale by Charter Communications, Inc. of its
              May 2001 convertible senior notes and the May 2001 issuance and
              sale by Charter Communications, Inc. of 52,389,000 shares of its
              Class A common stock; and

          (2) the closing of the AT&T transactions and the borrowing of
              approximately $1,047.4 million under the Charter Operating
              revolving credit facility to pay a portion of the AT&T purchase
              price.

     - the pro forma as adjusted capitalization of Charter Holdings to reflect:

          (1) the events described in (1) and (2) above;

          (2) the issuance and sale of the original notes as described in this
              prospectus; and

          (3) the repayment of all amounts outstanding under the Charter
              Operating revolving credit facility.

     This table should be read in conjunction with the "Unaudited Pro Forma
Financial Statements" included elsewhere in this prospectus.

<Table>
<Caption>
                                                                 AS OF MARCH 31,
2001

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

     PRO FORMA
                                                        ACTUAL        PRO FORMA
    AS ADJUSTED
                                                      -----------    -----------
    -----------
                                                                (DOLLARS IN
THOUSANDS)
                                                               
    
LONG-TERM DEBT:
  Credit facilities:
     Charter Operating..............................  $ 3,815,000    $ 4,497,781
    $ 3,450,000
     CC VI -- Fanch.................................      901,000        850,000
        850,000
     CC VII -- Falcon...............................      698,750        488,750
        488,750
     CC VIII -- Bresnan.............................    1,005,000      1,000,000
      1,000,000
  Charter Holdings notes(a).........................    6,304,266      6,304,266
      6,304,266
  9.625% senior notes due 2009......................           --             --
        350,000
  10.000% senior notes due 2011.....................           --             --
        575,000
  11.750% senior discount notes due 2011............           --             --
        575,190
  Other notes(b)....................................      233,331        233,737
        233,737
                                                      -----------    -----------
    -----------
     Total long-term debt...........................   12,957,347     13,374,534
     13,826,943
                                                      -----------    -----------
    -----------
MINORITY INTEREST(c)................................      643,685        643,685
        643,685
                                                      -----------    -----------
    -----------
MEMBERS' EQUITY.....................................    7,696,436      9,022,455
      9,022,455
                                                      -----------    -----------
    -----------
     Total capitalization...........................  $21,297,468    $23,040,674
    $23,493,083
                                                      ===========    ===========
    ===========
</Table>

                                        28
   33

- ---------------
(a) Represents the following Charter Holdings notes:

<Table>
                                                               
    8.250% senior notes due 2007................................  $  598,807
    8.625% senior notes due 2009................................   1,496,359
    9.920% senior discount notes due 2011.......................   1,103,285
    10.00% senior notes due 2009................................     675,000
    10.25% senior notes due 2010................................     325,000
    11.75% senior discount notes due 2010.......................     345,307
    10.750% senior notes due 2009...............................     899,240
    11.125% senior notes due 2011...............................     500,000
    13.500% senior discount notes due 2011......................     361,268
                                                                  ----------
                                                                  $6,304,266
                                                                  ==========
</Table>

(b) Primarily represents outstanding public notes of our Renaissance and Avalon
    subsidiaries. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations -- Financing Activities" and
    "Description of Certain Indebtedness -- Existing Public Debt." The pro forma
    increase relates to debt assumed in the AT&T transactions.

(c) Minority interest consists of preferred membership units in a subsidiary of
    Charter Holdings issued to certain Bresnan sellers, which are exchangeable
    on a one-for-one basis for shares of Class A common stock of Charter
    Communications, Inc.

                                        29
   34

                    UNAUDITED PRO FORMA FINANCIAL STATEMENTS

     The following Unaudited Pro Forma Financial Statements of Charter Holdings
are based on the historical financial statements of Charter Holdings.

     The balance sheet is adjusted on a pro forma basis to reflect the following
transactions as if they had occurred on March 31, 2001:

     (1) the repayment of all amounts outstanding under the Charter Operating,
         CC VI (Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit
         facilities with an equity contribution by Charter Communications
         Holding Company of $1.3 billion of the net proceeds from the issuance
         and sale by Charter Communications, Inc. of its May 2001 convertible
         senior notes and the May 2001 issuance and sale by Charter
         Communications, Inc. of 52,389,000 shares of its Class A common stock;

     (2) the closing of the AT&T transactions and the borrowing of approximately
         $1,047.4 million under the Charter Operating revolving credit facility
         to pay a portion of the AT&T purchase price; and

     (3) the issuance and sale of the original notes described in this
         prospectus and the application of the net proceeds.

     The statements of operations are adjusted on a pro forma basis to
illustrate the estimated effects of the following transactions as if they had
occurred on January 1, 2000:

     (1) acquisitions and dispositions completed during 2000;

     (2) the closing of the AT&T transactions and the borrowing of approximately
         $1,047.4 million under the Charter Operating revolving credit facility
         to pay a portion of the AT&T purchase price;

     (3) borrowings under the Charter Holdings 2000 senior bridge loan facility
         and the application of a portion of such borrowings to repay a portion
         of the amounts outstanding under the Charter Operating and CC VII
         (Falcon) revolving credit facilities;

     (4) the issuance and sale of the January 2001 Charter Holdings notes and
         the application of the net proceeds to repay all remaining amounts
         outstanding under the Charter Holdings 2000 senior bridge loan facility
         and the CC VI (Fanch) revolving credit facility, and a portion of the
         amounts outstanding under the Charter Operating and CC VII (Falcon)
         revolving credit facilities;

     (5) the repayment of a portion of the Charter Holdings 2000 senior bridge
         loan facility with an equity contribution by Charter Communications
         Holding Company of the net proceeds from the sale by Charter
         Communications, Inc. of its October 2000 convertible senior notes;

     (6) the repayment of all amounts outstanding under the Charter Operating,
         CC VI (Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit
         facilities with an equity contribution by Charter Communications
         Holding Company of $1.3 billion of the net proceeds from the issuance
         and sale by Charter Communications, Inc. of its May 2001 convertible
         senior notes and the May 2001 issuance and sale by Charter
         Communications, Inc. of 52,389,000 shares of its Class A common stock;
         and

     (7) the issuance and sale of the original notes described in this
         prospectus and the application of the net proceeds to repay all amounts
         outstanding under the Charter Operating revolving credit facility.

     The Unaudited Pro Forma Financial Statements reflect the application of the
principles of purchase accounting to the transactions listed in items (1) and
(2) above. The allocation of certain

                                        30
   35

purchase prices is based, in part, on preliminary information, which is subject
to adjustment upon obtaining complete valuation information of intangible assets
and is subject to post-closing purchase price adjustments. We believe that
finalization of the purchase prices and the allocation will not have a material
impact on the results of operations or financial position of Charter Holdings.

     The Unaudited Pro Forma Financial Statements of Charter Holdings do not
purport to be indicative of what our financial position or results of operations
would actually have been had the transactions described above been completed on
the dates indicated or to project our results of operations for any future date.


<Table>
<Caption>
                                                                     UNAUDITED
PRO FORMA DATA
                                                       AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 2001

- ----------------------------------------------------------------------------
                                                 CHARTER              AT&T
               OFFERING
                                                 HOLDINGS         TRANSACTIONS
              ADJUSTMENT
                                                 (NOTE A)           (NOTE B)
 SUBTOTAL      (NOTE C)       TOTAL
                                                 --------         ------------
 --------     ----------      -----
                                                          (DOLLARS IN THOUSANDS,
EXCEPT SUBSCRIBER DATA)
                                                            
                     
STATEMENT OF OPERATIONS:
Revenues..................................     $   873,797         $   79,284
$   953,081    $     --    $   953,081
                                               -----------         ----------
- -----------    --------    -----------
Operating expenses:
  Operating, general and administrative...         472,147             50,847
    522,994          --        522,994
  Depreciation and amortization...........         693,812             36,115
    729,927          --        729,927
  Option compensation expense.............           6,038                 --
      6,038          --          6,038
  Corporate expense charges...............          13,721              5,005
     18,726          --         18,726
                                               -----------         ----------
- -----------    --------    -----------
    Total operating expenses..............       1,185,718             91,967
  1,277,685          --      1,277,685
                                               -----------         ----------
- -----------    --------    -----------
Loss from operations......................        (311,921)           (12,683)
   (324,604)         --       (324,604)]
Interest expense..........................        (287,088)           (19,251)
   (306,339)    (21,858)      (328,197)
Interest income...........................              89                 --
         89          --             89
Other expense.............................         (58,978)              (122)
    (59,100)         --        (59,100)
                                               -----------         ----------
- -----------    --------    -----------
Loss before minority interest expense.....        (657,898)           (32,056)
   (689,954)    (21,858)      (711,812)
Minority interest expense (Note D)........          (3,159)                --
     (3,159)         --         (3,159)
                                               -----------         ----------
- -----------    --------    -----------
Net loss..................................     $  (661,057)        $  (32,056)
$  (693,113)   $(21,858)   $  (714,971)
                                               ===========         ==========
===========    ========    ===========
OTHER FINANCIAL DATA:
EBITDA (Note E)...........................     $   322,913         $   23,310
$   346,223                $   346,223
EBITDA margin (Note F)....................            37.0%              29.4%
       36.3%                      36.3%
Adjusted EBITDA (Note G)..................     $   401,650         $   28,437
$   430,087                $   430,087
Cash flows from (used in) operating
  activities..............................        (154,956)            23,600
   (131,356)                  (131,356)
Cash flows from (used in) investing
  activities..............................        (527,446)             7,651
   (519,795)                  (519,795)
Cash flows from (used in) financing
  activities..............................         562,683            (30,814)
    531,869                    531,869
Capital expenditures......................         521,442             (2,270)
    519,172                    519,172
Cash interest expense.....................
                               269,589
Deficiency of earnings to cover fixed
  charges (Note H)........................
                           $   714,971
OPERATING DATA (AT END OF PERIOD, EXCEPT
  FOR AVERAGE):
Homes passed (Note I).....................      10,258,300          1,078,614
 11,336,914                 11,336,914
Basic customers (Note J)..................       6,349,823            562,933
  6,912,756                  6,912,756
Basic penetration (Note K)................            61.9%              52.2%
       61.0%                      61.0%
Premium units (Note L)....................       5,199,721            746,548
  5,946,269                  5,946,269
Premium penetration (Note M)..............            81.9%             132.6%
       86.0%                      86.0%
Average monthly revenue per basic customer
  (Note N)................................
                           $     45.96
</Table>


                                        31
   36

              NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

     NOTE A:  Pro forma operating results for Charter Holdings consist of the
following (dollars in thousands):

<Table>
<Caption>
                                                              HISTORICAL
                                                              ----------
                                                              3/31/2001
                                                               CHARTER       PRO
FORMA
                                                               HOLDINGS
ADJUSTMENTS      TOTAL
                                                              ----------
- -----------    ----------
                                                                      
          
Revenues....................................................  $  873,797      $
  --      $  873,797
                                                              ----------
- -------      ----------
Operating expenses:
  Operating, general and administrative.....................     472,147
  --         472,147
  Depreciation and amortization.............................     693,812
  --         693,812
  Option compensation expense...............................       6,038
  --           6,038
  Corporate expense charges.................................      13,721
  --          13,721
                                                              ----------
- -------      ----------
    Total operating expenses................................   1,185,718
  --       1,185,718
                                                              ----------
- -------      ----------
Loss from operations........................................    (311,921)
  --        (311,921)
Interest expense............................................    (298,648)
11,560(a)     (287,088)
Interest income.............................................          89
  --              89
Other expense...............................................     (58,978)
  --         (58,978)
                                                              ----------
- -------      ----------
Loss before minority interest expense.......................    (669,458)
11,560        (657,898)
Minority interest expense...................................      (3,159)
  --          (3,159)
                                                              ----------
- -------      ----------
Net loss....................................................  $ (672,617)
$11,560      $ (661,057)
                                                              ==========
=======      ==========
</Table>

- ---------------
(a) Represents a decrease in interest expense related to the repayment of
    amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
    (Falcon) and CC VIII (Bresnan) revolving credit facilities with the net
    proceeds from an equity contribution by Charter Communications Holding
    Company of $1.3 billion of the net proceeds from the issuance and sale by
    Charter Communications, Inc. of its May 2001 convertible senior notes and
    the issuance and sale by Charter Communications, Inc. of 52,389,000 shares
    of its Class A common stock.

<Table>
                                                               
    $365.0 million of Charter Operating revolving credit
      facilities at a composite rate of 7.34%...................  $ 6.7
    $51.0 million of CC VI (Fanch) revolving credit facilities
      at a composite rate of 7.18%..............................    0.9
    $210.0 million of CC VII (Falcon) revolving credit
      facilities at a composite rate of 7.34%...................    3.9
    $5.0 million of CC VIII (Bresnan) revolving credit
      facilities at a composite rate of 6.90%...................    0.1
                                                                  -----
             Adjustment.........................................  $11.6
                                                                  =====
</Table>

     NOTE B:  Pro forma operating results for the AT&T transactions consist of
the following (dollars in thousands):

<Table>
<Caption>
                                                      AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31,
                                                                           2001

- ---------------------------------------------------------------
                                                                    PENDING
ACQUISITION

- ---------------------------------------------------------------
                                                                         PRO
FORMA

- ---------------------------------------------------------------
                                                   AT&T
                                              TRANSACTIONS(a)    DISPOSITIONS(b)
   ADJUSTMENTS       TOTAL
                                              ---------------    ---------------
   -----------      --------
                                                           
                 
Revenues....................................      $80,307            $(1,023)
    $     --        $ 79,284
                                                  -------            -------
    --------        --------
Operating expenses:
  Operating, general and administrative.....       51,289               (442)
          --          50,847
  Depreciation and amortization.............       24,419               (352)
      12,048(c)       36,115
  Corporate expense charges.................        5,005                 --
          --           5,005
                                                  -------            -------
    --------        --------
         Total operating expenses...........       80,713               (794)
      12,048          91,967
                                                  -------            -------
    --------        --------
Income (loss) from operations...............         (406)              (229)
     (12,048)        (12,683)
Interest expense............................          (12)                --
     (19,239)(d)     (19,251)
Other income (expense)......................         (122)                --
          --            (122)
                                                  -------            -------
    --------        --------
Loss before income taxes and minority
  interest expense..........................         (540)              (229)
     (31,287)        (32,056)
                                                  -------            -------
    --------        --------
Net loss....................................      $  (540)           $  (229)
    $(31,287)       $(32,056)
                                                  =======            =======
    ========        ========
</Table>

                                        32
   37

(a)  Represents the results of operations of the systems acquired in the AT&T
     transactions for the three months ended March 31, 2001.

(b)  Represents the results of operations of the Charter system transferred to
     AT&T in the AT&T transactions. No material gain or loss occurred on the
     disposition as the system was recently acquired and recorded at fair value
     at that time.

(c)  Represents additional depreciation and amortization as a result of the AT&T
     transactions. A large portion of the purchase price was allocated to
     franchises ($1.3 billion) that are amortized over 15 years. The adjustment
     to depreciation and amortization expense consists of the following (dollars
     in millions):

<Table>
<Caption>
                                                            WEIGHTED AVERAGE
DEPRECIATION/
                                              FAIR VALUE      USEFUL LIFE
AMORTIZATION
                                              ----------    ----------------
- -------------
                                                      

Franchises..................................   $1,308.1            15
 $ 21.8
Cable distribution systems..................      369.3             7
   13.2
Buildings and equipment.....................       38.5             7
    1.4

 ------
     Total depreciation and amortization....................................
   36.4
     Less -- historical depreciation and amortization.......................
  (24.4)

 ------
          Adjustment........................................................
 $ 12.0

 ======
</Table>

(d)  Reflects approximately $19.2 million in additional interest expense related
     to $1.0 billion of borrowings under the Charter Operating revolving credit
     facility at a composite current rate of 7.34%.

     An increase in the interest rate of 0.125% on all variable rate debt would
     result in an increase in interest expense of $1.8 million.

     NOTE C:   The offering adjustment of approximately $21.9 million in
additional interest expense consists of the following (dollars in millions):

<Table>
                                                           
$350.0 million of 9.625% senior notes due 2009..............  $  8.4
$575.0 million of 10.000% senior notes due 2011.............    14.4
$1,018.0 million of 11.750% senior discount notes due
  2011......................................................    17.4
Amortization of debt issuance costs.........................     0.9
                                                              ------
     Total pro forma interest expense.......................    41.1
     Less: Interest expense on repayment of $1.0 billion of
           Charter Operating revolving credit facility at a
           composite rate of 7.34%..........................   (19.2)
                                                              ------
          Adjustment........................................  $ 21.9
                                                              ======
</Table>

     NOTE D:   Represents 2% accretion of the preferred membership units in a
subsidiary of Charter Holdings issued to certain Bresnan sellers.

     NOTE E:   EBITDA represents earnings (loss) before interest, depreciation
and amortization, and minority interest. EBITDA is presented because it is a
widely accepted financial indicator of a cable company's ability to service
indebtedness. However, EBITDA should not be considered as an alternative to
income from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. EBITDA should also not be construed as an indication of a company's
operating performance or as a measure of liquidity. In addition, because EBITDA
is not calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted by EBITDA may be limited by working capital,
debt service and capital expenditure requirements and by restrictions related to
legal requirements, commitments and uncertainties.

     NOTE F:  EBITDA margin represents EBITDA as a percentage of revenues.

                                        33
   38

     NOTE G:  Adjusted EBITDA means EBITDA before option compensation expense,
corporate expense charges and other expense. Adjusted EBITDA is presented
because it is a widely accepted indicator of a cable company's ability to
service indebtedness. However, adjusted EBITDA should not be considered as an
alternative to income from operations or to cash flows from operating, investing
or financing activities, as determined in accordance with generally accepted
accounting principles. Adjusted EBITDA should also not be construed as an
indication of a company's operating performance or as a measure of liquidity. In
addition, because adjusted EBITDA is not calculated identically by all
companies, the presentation here may not be comparable to other similarly titled
measures of other companies. Management's discretionary use of funds depicted by
adjusted EBITDA may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.

     NOTE H:  Earnings include net income (loss) plus fixed charges. Fixed
charges consist of interest expense and an estimated interest component of rent
expense.

     NOTE I:   Homes passed are the number of living units, such as single
residence homes, apartments and condominium units, passed by the cable
distribution network in a given cable system service area.

     NOTE J:   Basic customers are customers who receive basic cable service.

     NOTE K:  Basic penetration represents basic customers as a percentage of
homes passed.

     NOTE L:  Premium units represent the total number of subscriptions to
premium channels.

     NOTE M: Premium penetration represents premium units as a percentage of
basic customers.

     NOTE N: Average monthly revenue per basic customer represents revenues
divided by three divided by the number of basic customers at March 31, 2001.

                                        34
   39


<Table>
<Caption>

UNAUDITED PRO FORMA DATA
                                                                      AS OF AND
FOR THE YEAR ENDED DECEMBER 31, 2000

- -----------------------------------------------------------------------
                                                             CHARTER
RECENT                     OFFERING
                                                             HOLDINGS
ACQUISITIONS                 ADJUSTMENTS
                                                             (NOTE A)
(NOTE B)      SUBTOTAL      (NOTE C)        TOTAL
                                                             --------
- ------------    --------     -----------      -----
                                                                      (DOLLARS
IN THOUSANDS, EXCEPT SUBSCRIBER DATA)
                                                                     
                               
STATEMENT OF OPERATIONS:
Revenues................................................   $ 3,249,222      $
360,299     $ 3,609,521    $      --    $ 3,609,521
                                                           -----------
- ---------     -----------    ---------    -----------
Operating expenses:
  Operating, general and administrative.................     1,650,918
236,269       1,887,187           --      1,887,187
  Depreciation and amortization.........................     2,462,544
191,857       2,654,401           --      2,654,401
  Option compensation expense...........................        40,978
  --          40,978           --         40,978
  Corporate expense charges.............................        55,243
12,922          68,165           --         68,165
                                                           -----------
- ---------     -----------    ---------    -----------
    Total operating expenses............................     4,209,683
441,048       4,650,731           --      4,650,731
                                                           -----------
- ---------     -----------    ---------    -----------
Loss from operations....................................      (960,461)
(80,749)     (1,041,210)          --     (1,041,210)
Interest expense........................................    (1,042,417)
(82,103)     (1,124,520)    (106,725)    (1,231,245)
Interest income.........................................         6,679
 (49)          6,630           --          6,630
Other expense...........................................       (17,503)
(723)        (18,226)          --        (18,226)
                                                           -----------
- ---------     -----------    ---------    -----------
Loss before minority interest expense...................    (2,013,702)
(163,624)     (2,177,326)    (106,725)    (2,284,051)
Minority interest expense (Note D)......................       (11,038)
(1,551)        (12,589)          --        (12,589)
                                                           -----------
- ---------     -----------    ---------    -----------
Net loss................................................   $(2,024,740)
$(165,175)    $(2,189,915)   $(106,725)   $(2,296,640)
                                                           ===========
=========     ===========    =========    ===========
OTHER FINANCIAL DATA:
EBITDA (Note E).........................................   $ 1,484,580      $
110,385     $ 1,594,965                 $ 1,594,965
EBITDA margin (Note F)..................................          45.7%
30.6%           44.2%                       44.2%
Adjusted EBITDA (Note G)................................   $ 1,598,304      $
124,030     $ 1,722,334                 $ 1,722,334
Cash flows from operating activities....................     1,126,286
123,553       1,249,839                   1,249,839
Cash flows used in investing activities.................    (2,907,955)
(185,329)     (3,093,284)                 (3,093,284)
Cash flows from financing activities....................     1,798,192
28,399       1,826,591                   1,826,591
Capital expenditures....................................     2,783,440
243,023       3,026,463                   3,026,463
Cash interest expense...................................
                                         924,913
Deficiency of earnings to cover fixed charges (Note
  H)....................................................
                                     $ 2,296,640
OPERATING DATA (AT END OF PERIOD, EXCEPT FOR AVERAGE):
Homes passed (Note I)...................................    10,219,300
1,081,931      11,301,231                  11,301,231
Basic customers (Note J)................................     6,346,200
564,722       6,910,922                   6,910,922
Basic penetration (Note K)..............................          62.1%
52.2%           61.2%                       61.2%
Premium units (Note L)..................................     4,936,800
769,227       5,706,027                   5,706,027
Premium penetration (Note M)............................          77.8%
136.2%           82.6%                       82.6%
Average monthly revenue per basic customer (Note N).....
                                     $     43.52
</Table>


                                        35
   40

              NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

     NOTE A:  Pro forma operating results for Charter Holdings consist of the
following (dollars in thousands):


<Table>
<Caption>
                                                              HISTORICAL
                                                              -----------
                                                              12/31/2000
                                                                CHARTER
PRO FORMA
                                                               HOLDINGS
ADJUSTMENTS       TOTAL
                                                              -----------
- -----------    -----------
                                                                       
           
Revenues....................................................  $ 3,249,222      $
   --      $ 3,249,222
                                                              -----------
- -------      -----------
Operating expenses:
  Operating, general and administrative.....................    1,650,918
   --        1,650,918
  Depreciation and amortization.............................    2,462,544
   --        2,462,544
  Option compensation expense...............................       40,978
   --           40,978
  Corporate expense charges.................................       55,243
   --           55,243
                                                              -----------
- -------      -----------
    Total operating expenses................................    4,209,683
   --        4,209,683
                                                              -----------
- -------      -----------
Loss from operations........................................     (960,461)
   --         (960,461)
Interest expense............................................   (1,065,236)
22,819(a)    (1,042,417)
Interest income.............................................        6,679
   --            6,679
Other expense...............................................      (17,503)
   --          (17,503)
                                                              -----------
- -------      -----------
Loss before minority interest expense.......................   (2,036,521)
22,819       (2,013,702)
Minority interest expense...................................      (11,038)
               (11,038)
                                                              -----------
- -------      -----------
Net loss....................................................  $(2,047,559)
$22,819      $(2,024,740)
                                                              ===========
=======      ===========
</Table>


- ---------------
(a) Represents a decrease in interest expense related to (1) an increase in
    interest expense of $17.8 million related to borrowings under the Charter
    Holdings 2000 senior bridge loan facility and the application of
    substantially all of such borrowings to repay a portion of the amounts
    outstanding under the Charter Operating and CC VII (Falcon) revolving credit
    facilities, (2) an increase in interest expense of $48.8 million related to
    the January 2001 Charter Holdings notes, (3) a decrease in interest expense
    of $66.8 million related to the repayment of a portion of amounts
    outstanding under the Charter Holdings 2000 senior bridge loan facility with
    net proceeds from the sale of Charter Communications, Inc.'s October 2000
    convertible senior notes, substantially all of which net proceeds were
    contributed as equity to Charter Holdings, and (4) a decrease in interest
    expense of $22.6 million related to the equity contribution by Charter
    Communications Holding Company of $1.3 billion of the net proceeds from the
    issuance and sale by Charter Communications, Inc. of its May 2001
    convertible senior notes and the May 2001 issuance and sale by Charter
    Communications, Inc. of 52,389,000 shares of its Class A common stock and
    the application of these proceeds to pay the remaining portion of the
    amounts outstanding under the revolving credit facilities of our
    subsidiaries (dollars in millions):

<Table>
<Caption>
                                                                  INTEREST
                            DESCRIPTION                            EXPENSE
                            -----------                           ---------
                                                               

    $1.0 billion of Charter Holdings 2000 senior bridge loan at
      a weighted average rate of 10.85%.........................   $  67.8
    Amortization of debt issuance costs.........................       1.6
                                                                   -------
        Total pro forma interest expense........................      69.4
        Less: Historical interest expense on $957.0 million
              Charter Operating and CC VII (Falcon) revolving
              credit facilities at a composite rate of 8.6%.....     (51.6)
                                                                   -------
          Adjustment............................................
17.8
    $900.0 million of 10.750% senior notes due 2009.............      96.7
    $500.0 million of 11.125% senior notes due 2011.............      55.6
    $675.0 million of 13.500% senior discount notes due 2011....      49.6
    Amortization of debt issuance costs.........................       3.6
                                                                   -------
        Total pro forma interest expense........................     205.5
        Less -- interest expense on debt repaid.................    (156.7)
                                                                   -------
          Adjustment............................................
48.8
    Less -- interest expense on debt repaid by equity
      contribution:
        $727.5 million of Charter Holdings 2000 senior bridge
         loan at a weighted average rate of 10.85%..............     (65.8)
        Amortization of debt issuance costs.....................      (1.0)
                                                                   -------
          Adjustment............................................
(66.8)
</Table>

                                        36
   41

<Table>
<Caption>
                                                                  INTEREST
                            DESCRIPTION                            EXPENSE
                            -----------                           ---------
                                                               

        $105.0 million of Charter Operating revolving credit
         facility at a composite rate of 8.45%..................      (8.9)
        $75.0 million of CC VII (Falcon) revolving credit
         facility at a composite rate of 8.23%..................      (6.2)
        $92.0 million of CC VIII (Bresnan) revolving credit
         facility at a composite rate of 8.25%..................      (7.5)
                                                                   -------
          Adjustment............................................
(22.6)

- ------
             Total interest expense adjustment..................
$(22.8)

======
</Table>

     NOTE B:  Pro forma operating results for our acquisitions since January 1,
2000 consist of the following (dollars in thousands):


<Table>
<Caption>
                                                                YEAR ENDED
DECEMBER 31, 2000

- ------------------------------------------------------------
                                                             RECENT ACQUISITIONS
- -- HISTORICAL

- ------------------------------------------------------------
                                                BRESNAN(a)   KALAMAZOO(b)
AT&T(c)     OTHER(d)     Total
                                                ----------   ------------
- --------    --------    --------
                                                                   
                
Revenues......................................   $37,102       $14,151
$314,492    $ 3,187     $368,932
                                                 -------       -------
- --------    -------     --------
Operating expenses:
  Operating, general and administrative.......    24,925         8,437
208,682      2,759      244,803
  Depreciation and amortization...............     8,095         1,640
129,253        777      139,765
  Corporate expense charges...................     1,389           318
12,088        112       13,907
                                                 -------       -------
- --------    -------     --------
    Total operating expenses..................    34,409        10,395
350,023      3,648      398,475
                                                 -------       -------
- --------    -------     --------
Income (loss) from operations.................     2,693         3,756
(35,531)      (461)     (29,543)
Interest expense..............................    (9,566)           --
(63)    (1,565)     (11,194)
Interest income...............................        44         3,365
 --          2        3,411
Other expense.................................      (106)         (131)
(646)        (1)        (884)
                                                 -------       -------
- --------    -------     --------
Income (loss) before income taxes.............    (6,935)        6,990
(36,240)    (2,025)     (38,210)
Income tax benefit............................        --            --
 78         --           78
                                                 -------       -------
- --------    -------     --------
Net loss......................................   $(6,935)      $ 6,990
$(36,162)   $(2,025)    $(38,132)
                                                 =======       =======
========    =======     ========
</Table>



<Table>
<Caption>
                                                                 YEAR ENDED
DECEMBER 31, 2000

- --------------------------------------------------------------------------
                                                                     RECENT
ACQUISITIONS

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

PRO FORMA

- -------------------------------------------------------------
                                          HISTORICAL   ACQUISITIONS(e)
DISPOSITIONS(f)   ADJUSTMENTS       TOTAL
                                          ----------   ---------------
- ---------------   -----------      --------
                                                                
                        
Revenues................................   $368,932         $556
$(9,189)       $     --        $360,299
                                           --------         ----
- -------        --------        --------
Operating expenses:
  Operating, general and
    administrative......................    244,803          415
(4,333)         (4,616)(g)     236,269
  Depreciation and amortization.........    139,765          107
(1,254)         53,239(h)      191,857
  Corporate expense charges.............     13,907           47
 --          (1,032)(g)      12,922
                                           --------         ----
- -------        --------        --------
         Total operating expenses.......    398,475          569
(5,587)         47,591         441,048
                                           --------         ----
- -------        --------        --------
Income (loss) from operations...........    (29,543)         (13)
(3,602)        (47,591)        (80,749)
Interest expense........................    (11,194)          (8)
 --         (70,901)(i)     (82,103)
Interest income.........................      3,411           --
 --          (3,460)(j)         (49)
Other income (expense)..................       (884)          10
 55              96(k)         (723)
                                           --------         ----
- -------        --------        --------
Loss before income taxes and, minority
  interest in loss of subsidiary........    (38,210)         (11)
(3,547)       (121,856)       (163,624)
Income tax benefit......................         78            5
 --             (83)(l)          --
Minority interest in loss of
  subsidiary............................         --           --
 --          (1,551)(m)      (1,551)
                                           --------         ----
- -------        --------        --------
Net loss................................   $(38,132)        $ (6)
$(3,547)       $(123,490)      $(165,175)
                                           ========         ====
=======        ========        ========
</Table>


                                        37
   42

- ---------------
(a)  Represents the results of operations of Bresnan for the period from January
     1, 2000 to February 14, 2000, the date of acquisition.

(b)  Represents the results of operations of Kalamazoo for the period from
     January 1, 2000 to September 7, 2000, the date of acquisition.

(c)  Represents the results of operations of the systems acquired in the AT&T
     transactions for the year ended December 31, 2000.

(d)  Represents the historical results of operations of Capital Cable and
     Farmington for the period from January 1, 2000 through April 1, 2000, the
     date of these acquisitions, and of Interlake for the period from January 1,
     2000 through January 31, 2000, the date of that acquisition.

(e)  Represents the historical results of operations for the period from January
     1, 2000 through the date of purchase for an acquisition completed by
     Bresnan. This acquisition was accounted for using the purchase method of
     accounting. The purchase price was $36.2 million and the transaction closed
     in January 2000.

(f)  Represents the results of operations of a North Dakota cable system sold in
     December 2000, the results of operations of an Indiana cable system
     transferred in March 2000, and the results of operations of the Charter
     system transferred in the AT&T transactions. No material gain or loss
     occurred on the dispositions as these systems were recently acquired and
     recorded at fair value at that time.

(g)  Reflects a reclassification of expenses representing corporate expenses
     that would have occurred at Charter Investment, Inc. totaling $0.2 million.
     The remaining adjustment primarily relates to the elimination of severance
     and divestiture costs of $3.8 million and an adjustment for loss contracts
     of $0.6 million that were included in operating, general and administrative
     expense. Also represents the elimination of termination benefits of $1.2
     million paid in connection with the Bresnan acquisition included in
     corporate expense charges.

(h)  Represents additional depreciation and amortization as a result of our
     acquisitions completed in 2000 and the AT&T transactions. A large portion
     of the purchase price was allocated to franchises ($4.3 billion) that are
     amortized over 15 years. The adjustment to depreciation and amortization
     expense consists of the following (dollars in millions):

<Table>
<Caption>
                                                            WEIGHTED AVERAGE
DEPRECIATION/
                                              FAIR VALUE      USEFUL LIFE
AMORTIZATION
                                              ----------    ----------------
- -------------
                                                      

Franchises..................................   $4,272.9            15
 $ 122.9
Cable distribution systems..................      695.0             7
    63.1
Land, buildings and improvements............       10.2            10
     0.4
Vehicles and equipment......................       55.3             6
     6.7

 -------
     Total depreciation and amortization....................................
   193.1
     Less -- historical depreciation and amortization.......................
  (139.9)

 -------
          Adjustment........................................................
 $  53.2

 =======
</Table>

                                        38
   43

(i)  Reflects additional interest expense on borrowings, which were used to
     finance our acquisitions completed in 2000 and the AT&T transactions as
     follows (dollars in millions):

<Table>
<Caption>
                        DESCRIPTION                           INTEREST EXPENSE
                        -----------                           ----------------
                                                           
$631.2 million of credit facilities at a composite current
  rate of 8.4% -- CC VIII (Bresnan).........................       $  6.6
$361.0 million of January 2000 Charter Holdings notes used
  to refinance Bresnan 8.0% senior notes and 9.25% senior
  discount notes at composite rate of 10.55%................          4.7
Interest expense on additional borrowings used to finance
  other acquisitions at a composite current rate of 8.8%....         13.0
$682.7 million of credit facilities at a composite rate of
  8.45% -- Charter Operating................................         57.7
                                                                   ------
     Total pro forma interest expense.......................         82.0
     Less -- historical interest expense from acquired
      companies.............................................        (11.1)
                                                                   ------
       Adjustment...........................................       $ 70.9
                                                                   ======
</Table>

      An increase in the interest rate of 0.125% on all variable rate debt would
      result in an increase in interest expense of $7.0 million.

(j)  Represents interest income on a historical related party receivable that
     was retained by the seller.

(k)  Represents the elimination of gain (loss) on sale of cable systems whose
     results of operations have been eliminated in (f) above.

(l)  Reflects the elimination of income tax benefit as a result of being
     acquired by a limited liability company.

(m) Represents the 2% accretion of the preferred membership units in an indirect
    subsidiary of Charter Holdings issued to certain Bresnan sellers.

     NOTE C:   The offering adjustment of approximately $106.7 million in
additional interest expense consists of the following (dollars in millions):

<Table>
                                                           
$350.0 million of 9.625% senior notes due 2009..............   $ 33.7
$575.0 million of 10.000% senior notes due 2011.............     57.5
$1,018.0 million of 11.750% senior discount notes due
  2011......................................................     69.6
Amortization of debt issuance costs.........................      3.6
                                                               ------
     Total pro forma interest expense.......................    164.4
     Less: Interest expense on repayment of $682.7 million
      of Charter Operating revolving credit facility at a
      composite rate of 8.45%...............................    (57.7)
                                                               ------
       Adjustment...........................................   $106.7
                                                               ======
</Table>

     NOTE D:   Represents the 2% accretion of the preferred membership units in
an indirect subsidiary of Charter Holdings issued to certain Bresnan sellers.
These membership units are exchangeable on a one-for-one basis for shares of
Class A common stock of Charter Communications, Inc.

     NOTE E:   EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization, and minority interest. EBITDA is presented
because it is a widely accepted financial indicator of a cable company's ability
to service indebtedness. However, EBITDA should not be considered as an
alternative to income from operations or to cash flows from operating, investing
or financing activities, as determined in accordance with generally accepted
accounting principles. EBITDA should also not be construed as an indication of a
company's operating performance or as a measure of liquidity. In addition,
because EBITDA is not calculated identically by all companies, the presentation
here may not be comparable to other similarly titled measures of other
companies. Management's discretionary use of funds depicted by EBITDA may be
limited by working capital, debt service and capital expenditure requirements
and by restrictions related to legal requirements, commitments and
uncertainties.

                                        39
   44

     NOTE F:  EBITDA margin represents EBITDA as a percentage of revenues.

     NOTE G:  Adjusted EBITDA means EBITDA before option compensation expense,
corporate expense charges and other expense. Adjusted EBITDA is presented
because it is a widely accepted indicator of a cable company's ability to
service indebtedness. However, adjusted EBITDA should not be considered as an
alternative to income from operations or to cash flows from operating, investing
or financing activities, as determined in accordance with generally accepted
accounting principles. Adjusted EBITDA should also not be construed as an
indication of a company's operating performance or as a measure of liquidity. In
addition, because adjusted EBITDA is not calculated identically by all
companies, the presentation here may not be comparable to other similarly titled
measures of other companies. Management's discretionary use of funds depicted by
adjusted EBITDA may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.

     NOTE H:  Earnings include net income (loss) plus fixed charges. Fixed
charges consist of interest expense and an estimated interest component of rent
expense.

     NOTE I:  Homes passed are the number of living units, such as single
residence homes, apartments and condominium units, passed by the cable
distribution network in a given cable system service area.

     NOTE J:   Basic customers are customers who receive basic cable service.

     NOTE K:   Basic penetration represents basic customers as a percentage of
homes passed.

     NOTE L:  Premium units represent the total number of subscriptions to
premium channels.

     NOTE M:  Premium penetration represents premium units as a percentage of
basic customers.

     NOTE N: Average monthly revenue per basic customer represents revenues
divided by twelve divided by the number of basic customers at December 31, 2000.

                                        40
   45

<Table>
<Caption>
                                                          UNAUDITED PRO FORMA
BALANCE SHEET AS OF MARCH 31, 2001

- -------------------------------------------------------------------
                                                      CHARTER         AT&T
               OFFERING
                                                     HOLDINGS     TRANSACTIONS
              ADJUSTMENT
                                                     (NOTE A)       (NOTE B)
 SUBTOTAL      (NOTE C)       TOTAL
                                                    -----------   ------------
- -----------   ----------   -----------
                                                            
                     
ASSETS
Cash and cash equivalents.........................  $   705,919    $ (695,019)
$    10,900    $417,409    $   428,309
Accounts receivable, net..........................      208,937         9,973
    218,910          --        218,910
Receivable from related party.....................          179            --
        179          --            179
Prepaid expenses and other........................       82,690           (36)
     82,654          --         82,654
                                                    -----------    ----------
- -----------    --------    -----------
    Total current assets..........................      997,725      (685,082)
    312,643     417,409        730,052
Property, plant and equipment.....................    5,398,397       398,320
  5,796,717          --      5,796,717
Franchises........................................   16,753,694     1,294,420
 18,048,114          --     18,048,114
Other assets......................................      263,314        52,070
    315,384      35,000        350,384
                                                    -----------    ----------
- -----------    --------    -----------
    Total assets..................................  $23,413,130    $1,059,728
$24,472,858    $452,409    $24,925,267
                                                    ===========    ==========
===========    ========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses.............  $ 1,088,034    $   11,569
$ 1,099,603    $     --    $ 1,099,603
                                                    -----------    ----------
- -----------    --------    -----------
    Total current liabilities.....................    1,088,034        11,569
  1,099,603          --      1,099,603
Long-term debt....................................   12,326,347     1,048,187
 13,374,534     452,409     13,826,943
Deferred management fees -- related party.........       13,751            --
     13,751          --         13,751
Other long-term liabilities.......................      318,858           (28)
    318,830          --        318,830
Minority interest.................................      643,685            --
    643,685          --        643,685
Members' equity...................................    9,022,455            --
  9,022,455          --      9,022,455
                                                    -----------    ----------
- -----------    --------    -----------
    Total liabilities and members' equity.........  $23,413,130    $1,059,728
$24,472,858    $452,409    $24,925,267
                                                    ===========    ==========
===========    ========    ===========
</Table>

                 NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET

NOTE A:The pro forma balance sheet for Charter Holdings consists of the
       following (dollars in thousands):

<Table>
<Caption>
                                                                         AS OF
MARCH 31, 2001

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

CHARTER HOLDINGS

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

PRO FORMA
                                                              HISTORICAL
ADJUSTMENTS         TOTAL
                                                              -----------
- -----------      -----------
                                                                       
             
ASSETS
Cash and cash equivalents...................................  $    10,900    $
695,019(a)    $   705,919
Accounts receivable, net....................................      208,937
    --           208,937
Receivable from related party...............................          179
    --               179
Prepaid expenses and other..................................       82,690
    --            82,690
                                                              -----------
- ----------       -----------
    Total current assets....................................      302,706
695,019           997,725
Property, plant and equipment...............................    5,398,397
    --         5,398,397
Franchises..................................................   16,753,694
    --        16,753,694
Other assets................................................      263,314
    --           263,314
                                                              -----------
- ----------       -----------
    Total assets............................................  $22,718,111    $
695,019       $23,413,130
                                                              ===========
==========       ===========
LIABILITIES AND MEMBERS' EQUITY
Accounts payable and accrued expenses.......................  $ 1,088,034    $
    --       $ 1,088,034
                                                              -----------
- ----------       -----------
    Total current liabilities...............................    1,088,034
    --         1,088,034
Long-term debt..............................................   12,957,347
(631,000)(a)    12,326,347
Deferred management fees -- related party...................       13,751
    --            13,751
Other long-term liabilities.................................      318,858
    --           318,858
Minority interest...........................................      643,685
    --           643,685
Members' equity.............................................    7,696,436
1,326,019(a)      9,022,455
                                                              -----------
- ----------       -----------
    Total liabilities and members' equity...................  $22,718,111    $
695,019       $23,413,130
                                                              ===========
==========       ===========
</Table>

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

(a) Represents the receipt of cash of $1.3 billion from Charter Communications
    Holding Company and the application of a portion of such cash to repay
    amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
    (Falcon) and CC VIII (Bresnan) credit facilities. The remaining $695.0
    million was applied to cash and cash equivalents for use to fund the AT&T
    transactions.

                                        41
   46

NOTE B: The pro forma balance sheet for the AT&T transactions consists of the
        following (dollars in thousands):

<Table>
<Caption>
                                                                AS OF MARCH 31,
2001

- -----------------------------------------------------------------------
                                               AT&T
                                         TRANSACTIONS(a)       DISPOSITIONS(b)
 ADJUSTMENTS         TOTAL
                                       --------------------    ---------------
 -----------      -----------
                                                         
               
ASSETS
Cash and cash equivalents............       $    7,613            $   (413)
 $  (702,219)(c)  $  (695,019)
Accounts receivable, net.............           10,080                (107)
          --            9,973
Receivable from related party........               --                  --
          --               --
Prepaid expenses and other...........               --                 (36)
          --              (36)
                                            ----------            --------
 -----------      -----------
    Total current assets.............           17,693                (556)
    (702,219)        (685,082)
Property, plant and equipment........          410,617             (12,297)
          --          398,320
Franchises...........................        1,294,742             (13,713)
      13,391(d)     1,294,420
Other assets.........................           52,208                (138)
          --           52,070
                                            ----------            --------
 -----------      -----------
    Total assets.....................       $1,775,260            $(26,704)
 $  (688,828)     $ 1,059,728
                                            ==========            ========
 ===========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued
  expenses...........................       $   14,245            $ (2,676)
 $        --      $    11,569
Payables to manager of cable
  systems -- related party...........          121,296                  --
    (121,296)(e)           --
                                            ----------            --------
 -----------      -----------
    Total current liabilities........          135,541              (2,676)
    (121,296)          11,569
Long-term debt.......................              406                  --
   1,047,781(f)     1,048,187
Other long-term liabilities..........               --                 (28)
          --              (28)
Minority interest....................               --                  --
          --               --
Shareholders' equity.................        1,639,313             (24,000)
  (1,615,313)(g)           --
                                            ----------            --------
 -----------      -----------
    Total liabilities and
      shareholders' equity...........       $1,775,260            $(26,704)
 $  (688,828)     $ 1,059,728
                                            ==========            ========
 ===========      ===========
</Table>

- ---------------
(a) Represents the assets and liabilities of the systems acquired in the AT&T
    transactions.

(b) Represents the assets and liabilities of the Charter system transferred to
    AT&T in the AT&T transactions.

(c) Represents cash used to fund a portion of the purchase price of the AT&T
    transactions.

(d) Substantial amounts of the purchase price have been allocated to franchises
    based on estimated fair values. This results in an allocation of purchase
    price as follows (dollars in thousands):

<Table>
<Caption>
                                                                 AT&T
                                                              ----------
                                                           
Working capital.............................................  $    3,448
Property, plant, and equipment..............................     410,617
Franchises..................................................   1,308,133
Other.......................................................      51,802
                                                              ----------
                                                              $1,774,000
                                                              ==========
</Table>

(e) Represents liabilities retained by the seller.

(f) Represents additional borrowings from the Charter Operating revolving credit
    facility to pay the remaining cash portion of the purchase price of the AT&T
    transactions.

(g) Represents the following adjustment related to the AT&T transactions:

<Table>
                                                           
Fair value of assets transferred............................  $    24,000
  Less: Historical equity...................................   (1,639,313)
                                                              -----------
          Adjustment........................................  $(1,615,313)
                                                              ===========
</Table>

                                        42
   47

NOTE C:  Offering adjustments represent additional long-term debt that consists
         of the following (dollars in millions):

<Table>
                                                           
9.625% senior notes due 2009................................  $   350.0
10.000% senior notes due 2011...............................      575.0
11.750% senior discount notes due 2011......................      575.2
Less -- Charter operating revolving credit facility.........   (1,047.8)
                                                              ---------
          Total pro forma adjustment........................  $   452.4
                                                              =========
In connection with the sale of the original notes, the remaining net
proceeds of $417.4 million were applied to cash and cash equivalents
for general corporate purposes.
</Table>

                                        43
   48

                       SELECTED HISTORICAL FINANCIAL DATA

     The selected historical financial data below for the years ended December
31, 1996 and 1997, for the periods from January 1, 1998 through December 23,
1998 and from December 24, 1998 through December 31, 1998 and the years ended
December 31, 1999 and 2000 are derived from the consolidated financial
statements of Charter Holdings. The consolidated financial statements of Charter
Holdings for the years ended December 31, 1996 and 1997, for the periods from
January 1, 1998 through December 23, 1998 and from December 24, 1998 through
December 31, 1998, and years ended December 31, 1999 and 2000 have been audited
by Arthur Andersen LLP, independent public accountants. The consolidated
financial statements for Charter Holdings for the periods from January 1, 1998
through December 23, 1998 and December 24, 1998 through December 31, 1998, and
for the years ended December 31, 1999 and 2000 are included elsewhere in this
prospectus. The information presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements and related notes included
elsewhere in this prospectus.

                       SELECTED HISTORICAL FINANCIAL DATA
<Table>
<Caption>
                                                                 CHARTER
                                                                HOLDINGS

- -----------------------------------------------------------------------
                                    YEAR ENDED
                                   DECEMBER 31,       1/1/98     12/24/98
YEAR ENDED     YEAR ENDED
                                 -----------------   THROUGH     THROUGH
DECEMBER 31,   DECEMBER 31,
                                  1996      1997     12/23/98    12/31/98
1999           2000
                                 -------   -------   --------   ----------
- ------------   ------------
                                                         (DOLLARS IN THOUSANDS)
                                                              
           
STATEMENT OF OPERATIONS:
Revenues.......................  $14,881   $18,867   $ 49,731   $   13,713   $
1,428,090    $ 3,249,222
                                 -------   -------   --------   ----------
- -----------    -----------
Operating expenses:
  Operating, general and
    administrative.............    8,123    11,767     25,952        7,134
737,957      1,650,918
  Depreciation and
    amortization...............    4,593     6,103     16,864        8,318
745,315      2,462,544
  Option compensation
    expense....................       --        --         --          845
 79,979         40,978
  Management fees/corporate
    expense charges............      446       566      6,176          473
 51,428         55,243
                                 -------   -------   --------   ----------
- -----------    -----------
    Total operating expenses...   13,162    18,436     48,992       16,770
1,614,679      4,209,683
                                 -------   -------   --------   ----------
- -----------    -----------
Income (loss) from
  operations...................    1,719       431        739       (3,057)
(186,589)      (960,461)
Interest expense...............   (4,415)   (5,120)   (17,277)      (2,353)
(471,871)    (1,065,236)
Interest income................       20        41         44          133
 18,821          6,679
Other income (expense).........      (47)       25       (728)          --
   (245)       (17,503)
                                 -------   -------   --------   ----------
- -----------    -----------
Loss before income taxes,
  minority interest expense and
  extraordinary item...........   (2,723)   (4,623)   (17,222)      (5,277)
(639,884)    (2,036,521)
Income tax expense.............       --        --         --           --
 (1,030)            --
Minority interest expense......       --        --         --           --
     --        (11,038)
Extraordinary item-loss from
  early extinguishment of
  debt.........................       --        --         --           --
 (7,794)            --
                                 -------   -------   --------   ----------
- -----------    -----------
Net loss.......................  $(2,723)  $(4,623)  $(17,222)  $   (5,277)  $
(648,708)   $(2,047,559)
                                 =======   =======   ========   ==========
===========    ===========
BALANCE SHEET DATA (AT END OF
  PERIOD):
Total assets...................  $67,994   $55,811   $281,969   $4,335,527
$18,939,477    $22,982,177
Total debt.....................   59,222    41,500    274,698    1,991,756
10,015,618     12,310,455
Member's equity (deficit)......    2,648    (1,975)    (8,397)   2,147,379
8,047,953      8,383,863

<Caption>
                                             CHARTER
                                            HOLDINGS
                                 -------------------------------
                                     THREE            THREE
                                  MONTHS ENDED     MONTHS ENDED
                                   MARCH 31,        MARCH 31,
                                      2000             2001
                                 --------------   --------------
                                     (DOLLARS IN THOUSANDS)
                                            
STATEMENT OF OPERATIONS:
Revenues.......................   $   721,604      $   873,797
                                  -----------      -----------
Operating expenses:
  Operating, general and
    administrative.............       371,769          472,147
  Depreciation and
    amortization...............       546,100          693,812
  Option compensation
    expense....................        15,500            6,038
  Management fees/corporate
    expense charges............        12,508           13,721
                                  -----------      -----------
    Total operating expenses...       945,877        1,185,718
                                  -----------      -----------
Income (loss) from
  operations...................      (224,273)        (311,921)
Interest expense...............      (247,034)        (298,648)
Interest income................         5,123               89
Other income (expense).........           132          (58,978)
                                  -----------      -----------
Loss before income taxes,
  minority interest expense and
  extraordinary item...........      (466,052)        (669,458)
Income tax expense.............            --               --
Minority interest expense......        (1,552)          (3,159)
Extraordinary item-loss from
  early extinguishment of
  debt.........................            --               --
                                  -----------      -----------
Net loss.......................   $  (467,604)     $  (672,617)
                                  ===========      ===========
BALANCE SHEET DATA (AT END OF
  PERIOD):
Total assets...................   $21,791,982      $22,718,111
Total debt.....................    11,154,423       12,957,347
Member's equity (deficit)......     9,037,300        7,696,436
</Table>

                                        44
   49

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

     Reference is made to the "Certain Trends and Uncertainties" section below
in this Management's Discussion and Analysis for a discussion of 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 Holdings, LLC and subsidiaries as of and
for the years ended December 31, 2000 and 1999 and for the period from December
24, 1998 through December 31, 1998 and for the period from January 1, 1998 to
December 23, 1998.

INTRODUCTION

     We do not believe that our historical financial condition and results of
operations are accurate indicators of future results because of certain
significant past events. Those events include numerous mergers, acquisitions and
debt financing transactions over the last few years.

ORGANIZATIONAL HISTORY

     Prior to the acquisition of the Charter companies by Mr. Allen on December
23, 1998 and the merger of Marcus Holdings with and into Charter Holdings
effective April 7, 1999, the cable systems of the Charter and Marcus companies
were operated under four groups of companies. Three of these groups were
comprised of companies that were managed by Charter Investment and in which
Charter Investment had an ownership interest. The fourth group was comprised of
companies that were subsidiaries of Marcus Holdings which Charter Investment
began managing in October 1998.

THE CHARTER COMPANIES

     Prior to the acquisition by Mr. Allen, the Charter companies were as
follows:

     (1) CCPH

             CCPH was a wholly owned subsidiary of Charter Investment. The
        primary subsidiary of CCPH, which owned the cable systems, was Charter
        Communications Properties, LLC. On May 20, 1998, CCPH acquired certain
        cable systems from Sonic Communications, Inc. for a total purchase
        price, net of cash acquired, of $228.4 million, including $60.9 million
        of assumed debt. In connection with Mr. Allen's acquisition on December
        23, 1998, CCPH was merged out of existence, and Charter Communications
        Properties became a direct, wholly owned subsidiary of Charter
        Investment.

     (2) CCA Group

             The controlling interests in CCA Group were held by affiliates of
        Kelso & Co., and Charter Investment had only a minority interest.
        Effective December 23, 1998, prior to Mr. Allen's acquisition, Charter
        Investment acquired from the Kelso affiliates the interests the Kelso
        affiliates held in CCA Group. Later, the operating companies comprising
        CCA Group became wholly owned subsidiaries of Charter Investment.

     (3) CharterComm Holdings, LLC

             The controlling interests in CharterComm Holdings were held by
        affiliates of Charterhouse Group International Inc., and Charter
        Investment had only a minority interest. Effective December 23, 1998,
        prior to Mr. Allen's acquisition, Charter Investment acquired from the
        Charterhouse Group affiliates the interests the Charterhouse Group
        affiliates held

                                        45
   50

        in CharterComm Holdings. Consequently, CharterComm Holdings became a
        wholly owned subsidiary of Charter Investment.

     The cable systems were owned by the various subsidiaries of CharterComm
Holdings. In connection with Mr. Allen's acquisition of us on December 23, 1998,
some of the non-operating subsidiaries, including CharterComm Holdings, were
merged out of existence.

     The acquisition by Mr. Allen became effective on December 23, 1998, through
a series of transactions in which Mr. Allen acquired approximately 94% of the
equity interests of Charter Investment for an aggregate purchase price of $2.2
billion, excluding $2.0 billion in assumed debt. CCPH and the operating
companies that formerly comprised CCA Group and CharterComm Holdings were
contributed to Charter Operating subsequent to Mr. Allen's acquisition. CCPH is
deemed to be our predecessor. Consequently, the contribution of CCPH was
accounted for as a reorganization under common control. Accordingly, our results
of operations for periods prior to and including December 23, 1998 include the
accounts of CCPH. The contributions of the operating companies that formerly
comprised CCA Group and CharterComm Holdings were accounted for in accordance
with purchase accounting. Accordingly, our results of operations for periods
after December 23, 1998 include the accounts of CCPH, CCA Group and CharterComm
Holdings.

     In February 1999, Charter Holdings was formed as a wholly owned subsidiary
of Charter Investment, and Charter Operating was formed as a wholly owned
subsidiary of Charter Holdings. All of Charter Investment's direct interests in
the entities described above were transferred to Charter Operating. All of the
prior management agreements were terminated, and a single new management
agreement was entered into between Charter Investment and Charter Operating to
cover all of the subsidiaries.

     In May 1999, Charter Communications Holding Company was formed as a wholly
owned subsidiary of Charter Investment. All of Charter Investment's interests in
Charter Holdings were transferred to Charter Communications Holding Company.

     In July 1999, Charter Communications, Inc. was formed as a wholly owned
subsidiary of Charter Investment.

     In November 1999, Charter Communications, Inc. conducted its initial public
offering. In the initial public offering, substantially all of the equity
interests in Charter Communications, Inc. were sold to the public, and less than
1% of its equity interests were sold to Mr. Allen. Charter Communications, Inc.
contributed substantially all of the proceeds of its initial public offering to
Charter Communications Holding Company, which issued membership units to Charter
Communications, Inc. In November 1999, the management agreement between Charter
Investment and Charter Operating was amended and assigned from Charter
Investment to Charter Communications, Inc. Also in November 1999, Charter
Communications Holding Company sold membership units to Vulcan Cable III.

THE MARCUS COMPANIES

     In April 1998, Mr. Allen acquired approximately 99% of the non-voting
economic interests in Marcus Cable, and agreed to acquire the remaining
interests. The owner of the remaining partnership interests retained voting
control of Marcus Cable. In October 1998, Marcus Cable entered into a management
consulting agreement with Charter Investment, pursuant to which Charter
Investment provided management and consulting services to Marcus Cable and its
subsidiaries which own cable systems. This agreement placed the Marcus cable
systems under common management with the cable systems of the Charter companies
acquired by Mr. Allen in December 1998.

     In March 1999, all of Mr. Allen's interests in Marcus Cable were
transferred to Marcus Holdings, a then newly formed company. Later in March
1999, Mr. Allen acquired the remaining

                                        46
   51

interests in Marcus Cable, including voting control, which interests were
transferred to Marcus Holdings. In April 1999, Mr. Allen merged Marcus Holdings
into Charter Holdings, and the operating subsidiaries of Marcus Holdings and all
of the cable systems they owned came under the ownership of Charter Holdings
and, in turn, Charter Operating. For financial reporting purposes, the merger of
Marcus Holdings with and into Charter Holdings was accounted for as an
acquisition of Marcus Holdings effective March 31, 1999, and accordingly, the
results of operations of Marcus Holdings have been included in our consolidated
financial statements since that date.

ACQUISITIONS

     During 1999 and 2000, we completed 16 acquisitions for an aggregate
purchase price of $14.3 billion including aggregate cash payments of $9.1
billion, $3.3 billion of assumed debt and $1.9 billion of equity interests
issued. These acquisitions were funded through the issuance of long-term debt,
bank borrowings, capital contributions from our parent companies, the assumption
of outstanding debt amounts, equity issuances to certain sellers and internally
generated funds. In 2000, Charter Communications Holding Company transferred the
cable systems it acquired in three of those acquisitions (Fanch, Falcon and
Avalon) to Charter Holdings. 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.

     The following table sets forth information on our acquisitions in 1999 and
2000.

<Table>
<Caption>
                                                     PURCHASE PRICE (IN
MILLIONS)                          REVENUES SINCE

- ----------------------------------------                   ACQUISITION DATE
                                 ACQUISITION    CASH    ASSUMED   SECURITIES
TOTAL      ACQUIRED    ---------------------
                                    DATE        PAID     DEBT       ISSUED
PRICE     CUSTOMERS      1999        2000
                                 -----------   ------   -------   ----------
- -------    ----------   --------   ----------

                          (IN THOUSANDS)
                                                      
                          
Renaissance....................      4/99      $  348   $  111          --
$   459       134,000   $ 42,032   $   70,312
American Cable.................      5/99         240       --          --
   240        69,000     24,904       42,151
Greater Media Systems..........      6/99         500       --          --
   500       176,000     32,313       95,988
Helicon........................      7/99         410      115          25(a)
   550       171,000     35,658       89,872
Vista..........................      7/99         126       --          --
   126        26,000      5,751       14,253
Cable Satellite................      8/99          22       --          --
    22         9,000      1,917        4,750
Rifkin.........................      9/99       1,200      128         133(b)
 1,461       463,000     67,514      236,370
InterMedia.....................     10/99         873       --          --
   873(c)    278,000     54,850      229,489
                                               ------   ------      ------
- -------    ----------   --------   ----------
    Total -- 1999
      Acquisitions.............                $3,719   $  354      $  158
$ 4,231     1,326,000   $264,939   $  783,185
Fanch..........................      1/00       2,400       --          --
 2,400       535,600     32,281      266,031
Falcon.........................      1/00       1,250    1,700         550(d)
 3,500       977,200     56,051      456,999
Avalon.........................      1/00         558      274          --
   832       270,800     13,929      124,068
Interlake......................      1/00          13       --          --
    13         6,000         --        1,713
Bresnan........................      2/00       1,100      963       1,015(e)
 3,078       695,800         --      297,080(g)
Capital Cable..................      4/00          60       --          --
    60        23,200         --        7,513
Farmington.....................      4/00          15       --          --
    15         5,700         --        1,571
Kalamazoo......................      9/00          --       --         171(f)
   171        50,700         --        7,360
                                               ------   ------      ------
- -------    ----------   --------   ----------
    Total -- 2000
      Acquisitions.............                $5,396   $2,937      $1,736
$10,069     2,565,000   $102,261   $1,162,335
                                               ======   ======      ======
=======    ==========   ========   ==========
    Total -- 1999 & 2000
      Acquisitions.............                $9,115   $3,291      $1,894
$14,300     3,891,000   $367,200   $1,945,520
                                               ======   ======      ======
=======    ==========   ========   ==========
</Table>

- -------------------------
(a) Purchase price component represents a preferred limited liability company
    interest in Charter-Helicon, LLC, an indirect wholly owned subsidiary.

(b) Purchase price component relates to equity in Charter Communications Holding
    Company.

(c) As part of this transaction, we agreed to "swap" some of our non-strategic
    cable systems serving customers in Indiana, Montana, Utah & Northern
    Kentucky. At the closing we retained a cable system located in Indiana for
    which we were unable to timely obtain necessary regulatory approvals of the
    system transfer. Such approval was subsequently obtained and the Indiana

                                        47
   52

    system assets were transferred in March 2000. This transaction, including
    the transfer of the retained Indiana system, resulted in a net increase of
    273,300 customers.

(d) Purchase price component relates to common membership units in Charter
    Communications Holding Company issued to certain of the Falcon sellers.

(e) Purchase price component is comprised of $385 million in equity in Charter
    Communications Holding Company and $630 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's Class A common stock.

(g) Includes revenues of approximately $0.6 million related to the cable systems
    acquired by Bresnan since December 31, 1999.

AT&T TRANSACTIONS

     In February 2001, affiliates of Charter Holdings entered into several
agreements with AT&T Broadband, LLC involving several strategic cable system
transactions that would result in a net addition of customers for the Charter
cable systems. These affiliates assigned the agreements to us and the AT&T
transactions closed in June 2001. In the AT&T transactions, we acquired cable
systems from AT&T Broadband serving approximately 554,000 customers in Missouri,
Alabama, Nevada and California for a total of $1.77 billion consisting of $1.75
billion in cash and a Charter cable system valued at $24 million.

OVERVIEW OF OPERATIONS

     Approximately 87% of our revenues for the year ended December 31, 2000 are
attributable to monthly subscription fees charged to customers for our basic,
expanded basic, premium and digital cable television programming services,
Internet access through television-based service, dial-up telephone modems and
high-speed cable modem service, equipment rental and ancillary services provided
by our cable systems. The remaining 13% of revenue is derived from installation
and reconnection fees charged to customers to commence or reinstate service,
pay-per-view programming, where users are charged a fee for individual programs
requested, advertising revenues and commissions related to the sale of
merchandise by home shopping services and franchise revenues. We have generated
increased revenues in each of the past three years, primarily through customer
growth from acquisitions, internal customer growth, basic and expanded tier rate
increases and revenues from new services and products.

     Our expenses primarily consist of operating costs, general and
administrative expenses, depreciation and amortization expense, interest expense
and management fees/corporate expense charges. Operating costs primarily include
programming costs, cable service related expenses, marketing and advertising
costs, franchise fees and expenses related to customer billings.

     We have had a history of net losses and expect to continue to report net
losses for the foreseeable future. The principal reasons for our prior and
anticipated net losses include depreciation and amortization expenses associated
with our acquisitions and capital expenditures related to construction and
upgrading of our systems, and interest costs on borrowed money. We cannot
predict what impact, if any, continued losses will have on our ability to
finance our operations in the future.

                                        48
   53

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

     The following table sets forth the percentages of revenues that items in
the statements of operations constitute for the indicated periods (dollars in
millions):

<Table>
<Caption>
                                                   THREE MONTHS         THREE
MONTHS
                                                       ENDED               ENDED
                                                  MARCH 31, 2001       MARCH 31,
2000
                                                 -----------------
- ----------------
                                                  AMOUNT       %      AMOUNT
  %
                                                 --------    -----    -------
- -----
                                                             

STATEMENTS OF OPERATIONS:
Revenues.......................................  $  873.8    100.0%   $ 721.6
100.0%
                                                 --------    -----    -------
- -----
Operating expenses:
  Operating, general and administrative........     472.1     54.0%     371.8
 51.5%
  Depreciation and amortization................     693.8     79.4%     546.1
 75.7%
  Option compensation expense..................       6.0      0.7%      15.5
  2.2%
  Corporate expenses...........................      13.7      1.6%      12.5
  1.7%
                                                 --------    -----    -------
- -----
Total operating expenses.......................   1,185.6    135.7%     945.9
131.1%
                                                 --------    -----    -------
- -----
Loss from operations...........................    (311.8)   (35.7)%   (224.3)
(31.1)%
Interest expense...............................    (298.6)   (34.2)%   (247.0)
(34.2)%
Interest income................................        --       --        5.1
  0.7%
Other income (expense).........................     (59.0)    (6.8)%      0.1
   --
                                                 --------    -----    -------
- -----
Loss before minority interest..................    (669.4)   (76.7)%   (466.1)
(64.6)%
                                                 --------    -----    -------
- -----
Minority interest in loss of subsidiary........      (3.2)    (0.4)%     (1.5)
 (0.2)%
                                                 --------    -----    -------
- -----
Net loss.......................................  $ (672.6)   (77.1)%  $(467.6)
(64.8)%
                                                 ========    =====    =======
=====
</Table>

     REVENUES.  Revenues increased by $152.2 million, or 21%, from $721.6
million for the three months ended March 31, 2000 to $873.8 million for the
three months ended March 31, 2001. System operations acquired after January 1,
2000 accounted for $39.1 million, or 26%, of the increase, while systems
acquired before January 1, 2000 accounted for $113.1 million, or 74% of the
increase. Revenues by service offering are as follows (dollars in millions):

<Table>
<Caption>
                                    THREE MONTHS ENDED MARCH 31,
                              ----------------------------------------
                                     2001                  2000
                              ------------------    ------------------
                                          % OF                  % OF
     %
                              AMOUNT    REVENUES    AMOUNT    REVENUES    CHANGE
   CHANGE
                              ------    --------    ------    --------    ------
   ------
                                                           
   
Analog video................  $649.4       75%      $587.5       82%      $ 61.9
     11%
Digital video...............    55.0        6%         9.2        1%        45.8
    498%
Cable modem.................    25.2        3%         9.7        1%        15.5
    160%
Advertising sales...........    55.6        6%        33.3        5%        22.3
     67%
Other.......................    88.6       10%        81.9       11%         6.7
      8%
                              ------      ---       ------      ---       ------
    ---
                              $873.8      100%      $721.6      100%      $152.2
     21%
                              ======      ===       ======      ===       ======
    ===
</Table>

     Analog video customers increased by 197,800 to 6,349,800 at March 31, 2001
as compared to 6,152,000 at March 31, 2000. Of this increase, approximately
72,700 customer additions were the result of acquisitions. The remaining
increase of 125,100 customers relates to internal growth.

     Digital video customers increased by 1,119,000 to 1,343,700 at March 31,
2001 from 224,700 at March 31, 2000. The increase was primarily due to internal
growth which continues to increase as we upgrade our systems to provide advanced
services to a larger customer base. Increased marketing efforts and strong
demand for this service have also contributed to the increase.

                                        49
   54

     Cable modem customers increased by 220,400, to 343,300 at March 31, 2001
from 122,900 at March 31, 2000. The increase was primarily due to internal
growth. Our system upgrades continue to increase our ability to offer high-speed
interactive service to a larger customer base. Growth in cable modem services
was also the result of strong marketing efforts coupled with increased demand
for such services.

     Advertising sales increased $22.3 million, from $33.3 million for the three
months ended March 31, 2000 to $55.6 million for the three months ended March
31, 2001. The increase was primarily due to internal growth. As a result of our
rebuild efforts, we experienced increased capacity due to expanded channel
line-ups.

     OPERATING, GENERAL AND ADMINISTRATIVE COSTS.  Operating, general and
administrative costs increased by $100.3 million, from $371.8 million for the
three months ended March 31, 2000 to $472.1 million for the three months ended
March 31, 2001. System operations acquired after January 1, 2000 accounted for
$22.6 million, or 23%, of the increase in 2001 while systems acquired before
January 1, 2000 accounted for $77.7 million, or 77%. Key components of expense
as a percentage of revenues are as follows (dollars in millions):

<Table>
<Caption>
                                    THREE MONTHS ENDED MARCH 31,
                              ----------------------------------------
                                     2001                  2000
                              ------------------    ------------------
                                          % OF                  % OF
     %
                              AMOUNT    REVENUES    AMOUNT    REVENUES    CHANGE
   CHANGE
                              ------    --------    ------    --------    ------
   ------
                                                           
   
General, administrative and
  service...................  $189.5       22%      $168.0       23%      $ 21.5
     13%
Analog video programming....   210.4       24%       164.8       23%        45.6
     28%
Digital video...............    20.6        2%         4.2        1%        16.4
    390%
Cable modem.................    17.6        2%         8.8        1%         8.8
    100%
Advertising sales...........    15.3        2%        12.3        2%         3.0
     24%
Marketing...................    16.6        2%        11.7        2%         4.9
     42%
Other.......................     2.1       --          2.0       --          0.1
      5%
                              ------                ------                ------
                              $472.1                $371.8                $100.3
                              ======                ======                ======
</Table>

     The increase in general, administrative and service costs of $21.5 million
reflects an increase of $7.2 million, or 33%, related to operations acquired
after January 1, 2000. The remaining increase of $14.3 million was due to
increased spending on customer care coupled with overall continued growth. Of
the $45.6 million increase in analog video programming, approximately $9.4
million, or 21%, related to operations acquired after January 1, 2000. The
remaining increase of $36.2 million was due to continued inflationary or
negotiated increases, particularly in sports programming, coupled with increased
channel capacity. The increase in digital video costs of $16.4 million reflects
an increase of $1.8 million related to operations acquired after January 1,
2000. The remaining increase of $14.6 million was due to internal growth of
these advanced services. The increase in cable modem costs of $8.8 million
reflects an increase of $0.5 million related to operations acquired after
January 1, 2000. The remaining increase was due to internal growth. Advertising
sales costs increased $3.0 million, of which the majority related to operations
acquired after January 1, 2000. Marketing expenses increased $4.9 million to
$16.6 million in 2001 related to promotions of advanced product offerings,
including digital cable and high-speed Internet service.

     GROSS MARGIN.  Gross margin decreased by 2%, from 48% for the three months
ended March 31, 2000 to 46% for the three months ended March 31, 2001. Gross
margin on analog video decreased by 4.3% from 71.9% for the three months ended
March 31, 2000 to 67.6% in 2001 due to continued inflation and negotiated
increases in programming. Digital video gross margin increased 8.2% from 54.3%
for the three months ended March 31, 2000 to 62.5% in 2001 primarily due to an
increased customer base. Cable modem gross margin also increased 20.9% from 9.3%
for the three

                                        50
   55

months ended March 31, 2000 to 30.2% in 2001 due to the significant growth in
customer base compared to the prior year. Advertising sales gross margin
increased 9.5% due to our significant system upgrades, which resulted in
expanded channel capacity.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense
increased by $147.7 million, from $546.1 million for the three months ended
March 31, 2000 to $693.8 million for the three months ended March 31, 2001. This
increase was due to a full quarter of expense on the fixed assets and franchises
related to our 2000 acquisitions and an increase in capital expenditures of
$261.5 million to rebuild and upgrade our cable systems compared to first
quarter 2000.

     OPTION COMPENSATION EXPENSE.  Option compensation expense decreased by $9.5
million, from $15.5 million for the three months ended March 31, 2000 to $6.0
million for the three months ended March 31, 2001. The expense related to option
grants at the time of our initial public offering at exercise prices less than
the estimated fair value of our stock at the time of grant, resulting in
compensation expense being accrued over the vesting period of the options.
Expense will continue to be recorded at a decreasing rate until the last vesting
period lapses in April 2004.

     CORPORATE EXPENSES.  Corporate expenses increased by $1.2 million, from
$12.5 million for the three months ended March 31, 2000 to $13.7 million for the
three months ended March 31, 2001. The increase was the result of growth from
acquisitions and internal growth.

     INTEREST EXPENSE.  Interest expense increased by $51.6 million, from $247.0
million for the three months ended March 31, 2000 to $298.6 million for the
three months ended March 31, 2001. The increase in interest expense was a result
of increased average debt outstanding during the first quarter in 2001 of $12.8
billion compared to $9.9 billion in the first quarter of 2000, coupled with an
increase in our average borrowing rate of 0.27% from 8.63% in the first quarter
of 2000 to 8.90% in the first quarter of 2001. Our average borrowing rate
increased primarily as a result of our issuance of the January 2001 Charter
Holdings notes. The increased debt primarily relates to capital expenditures.

     INTEREST INCOME.  Interest income decreased by $5.0 million, from $5.1
million for the three months ended March 31, 2000 to $0.1 million for the three
months ended March 31, 2001. The decrease in interest income was due to lower
cash on hand at March 31, 2001 over March 31, 2000 as a result of our continued
capital expenditures to upgrade, rebuild, and expand our cable systems, to
develop new products and services and to deploy digital converters.

     OTHER INCOME (EXPENSE).  Other expense fluctuated by $59.1 million, from
$0.1 million of income for the three months ended March 31, 2000 to $59.0
million of expense for the three months ended March 31, 2001. This decrease was
due to a cumulative effect of a change in accounting principle of $23.9 million
related to our adoption of SFAS No. 133 on January 1, 2001, a current period
loss of $21.8 million on interest rate agreements also as a result of adoption
of SFAS No. 133 and losses of $12.8 million primarily on investments carried on
the equity method.

     MINORITY INTEREST.  Minority interest expense represents the 2% accretion
of the preferred membership units in our indirect subsidiary, CC VIII, LLC,
issued to certain Bresnan sellers. These membership units are exchangeable on a
one-for-one basis for shares of Class A common stock of Charter Communications,
Inc.

     NET LOSS.  Net loss increased by $205.0 million, from $467.6 million for
the three months ended March 31, 2000 to $672.6 million for the three months
ended March 31, 2001 as a result of the factors described above.

                                        51
   56

     The following table sets forth the percentages of revenues that items in
the statements of operations constitute for the indicated periods (dollars in
thousands):

<Table>
<Caption>
                                                           CHARTER HOLDINGS

- --------------------------------------------------------------------------------
- ---
                                                      PERIOD
                               PERIOD              DECEMBER 24,
                           JANUARY 1, 1998             1998              YEAR
ENDED           YEAR ENDED
                           TO DECEMBER 23,       TO DECEMBER 31,        DECEMBER
31,         DECEMBER 31,
                                1998                   1998                 1999
                2000
                          -----------------      ----------------
- ------------------   -------------------
                                                      
                 
STATEMENTS OF
  OPERATIONS:
Revenues................  $ 49,731    100.0%     $13,713    100.0%   $1,428,090
 100.0%  $ 3,249,222   100.0%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Operating expenses:
  Operating, general and
    administrative......    25,952     52.2%       7,134     52.0%      737,957
  51.7%    1,650,918    50.8%
  Depreciation and
    amortization........    16,864     33.9%       8,318     60.7%      745,315
  52.2%    2,462,544    75.8%
  Option compensation
    expense.............        --       --          845      6.2%       79,979
   5.6%       40,978     1.3%
  Management fees/
    corporate expense
    charges.............     6,176     12.4%         473      3.4%       51,428
   3.6%       55,243     1.7%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Total operating
  expenses..............    48,992     98.5%      16,770    122.3%    1,614,679
 113.1%    4,209,683   129.6%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Income (loss) from
  operations............       739      1.5%      (3,057)   (22.3)%    (186,589)
 (13.1)%    (960,461)  (29.6)%
Interest expense........   (17,277)   (34.7)%     (2,353)   (17.2)%    (471,871)
 (33.0)%  (1,065,236)  (32.8)%
Interest income.........        44      0.1%         133      1.0%       18,821
   1.3%        6,679     0.2%
Other expense...........      (728)    (1.5)%         --       --          (245)
    --       (17,503)   (0.5)%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Loss before income
  taxes, minority
  interest and
  extraordinary item....   (17,222)   (34.6)%     (5,277)   (38.5)%    (639,884)
 (44.8)%  (2,036,521)  (62.7)%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Income tax expense......        --       --           --       --        (1,030)
  (0.1)%          --      --
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Loss before minority
  interest and
  extraordinary item....   (17,222)   (34.6)%     (5,277)   (38.5)%    (640,914)
 (44.9)%  (2,036,521)  (62.7)%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Minority interest
  expense...............        --       --           --       --            --
    --       (11,038)   (0.3)%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Loss before
  extraordinary item....   (17,222)   (34.6)%     (5,277)   (38.5)%    (640,914)
 (44.9)%  (2,047,559)  (63.0)%
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Extraordinary
  item -- loss on early
  extinguishment of
  debt..................        --       --           --       --        (7,794)
  (0.5)%          --      --
                          --------    -----      -------    -----    ----------
 -----   -----------   -----
Net loss................  $(17,222)   (34.6)%    $(5,277)   (38.5)%  $ (648,708)
 (45.4)% $(2,047,559)  (63.0)%
                          ========    =====      =======    =====    ==========
 =====   ===========   =====
</Table>

                                        52
   57

FISCAL 2000 COMPARED TO FISCAL 1999

     REVENUES.  Revenues increased by $1,821.1 million, or 128%, from $1,428.1
million in 1999 to $3,249.2 million in 2000. System operations acquired after
January 1, 1999 accounted for $1,578.3 million, or 87% of the increase in 2000,
while systems acquired before January 1, 1999 accounted for $242.8 million, or
13%. Revenues by service offering are as follows (dollars in thousands):

<Table>
<Caption>
                                2000                    1999              2000
OVER 1999
                        ---------------------   ---------------------
- -------------------
                                       % OF                    % OF
      %
                         BALANCE     REVENUES    BALANCE     REVENUES     CHANGE
    CHANGE
                        ----------   --------   ----------   --------
- ----------   ------
                                                         
    
Basic.................  $2,249,339      69%     $1,002,954      70%
$1,246,385    124%
Premium...............     226,598       7%        124,788       9%
101,810     82%
Pay-per-view..........      28,590       1%         27,537       2%
1,053      4%
Digital...............      91,115       3%          8,299      .5%
82,816    998%
Data services.........      63,330       2%         10,107      .5%
53,223    527%
Advertising sales.....     220,205       7%         71,997       5%
148,208    206%
Other.................     370,045      11%        182,408      13%
187,637    103%
                        ----------     ---      ----------     ---
- ----------
                        $3,249,222     100%     $1,428,090     100%
$1,821,132
                        ==========     ===      ==========     ===
==========
</Table>

     In 2000, we added 898,300 basic customers from 5,452,600 to 6,350,900, of
which approximately 741,100 was a result of acquisitions. The remaining 157,200
relates to internal growth, which is an increase of approximately 2.5% compared
to the prior year on a pro forma basis.

     Premium units increased by 2,094,700, from 2,844,400 to 4,939,100, of which
approximately 300,100 was a result of acquisitions. The remaining increase of
1,794,600 is the result of aggressive marketing and pricing of premium products
related to upgrades.

     We added 943,300 digital customers, from 126,200 to 1,069,500. Of the total
increase, approximately 29,200 was the result of acquisitions and 914,100 was
the result of internal growth or upgrades. The pace of growth increased
throughout the year as we upgraded our systems. We surpassed our expectations
throughout the year, with an average of 17,500 digital installations per week
during 2000 which increased to 40,000 digital installations per week in December
2000. Growth was a result of intense marketing efforts and strong demand for
this service.

     Data customers increased by 180,400, from 72,000 to 252,400, of which
12,400 was the result of acquisitions and 168,000 was the result of internal
growth. Our system upgrades facilitated interactive capability necessary to
offer high-speed interactive service. Growth in data services was also the
result of strong marketing efforts coupled with increased demand for such
services.

     Advertising revenues increased $148.2 million, from $72.0 million to $220.2
million, of which approximately $101.8 million was the result of operations
acquired after January 1, 1999. In addition, as a result of our rebuild efforts,
we experienced increased capacity due to expanded channel line-ups and thus,
increased advertising. The significant level of political campaign advertising
in 2000 also contributed to increased advertising revenues.

     OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES.  Operating, general and
administrative expenses increased by $913.0 million from $738.0 million in 1999
to $1,650.9 million in 2000. System operations acquired after January 1, 1999
accounted for $813.8 million, or 89%, of the increase in

                                        53
   58

2000, while systems acquired before January 1, 1999 accounted for $99.6 million,
or 11% of the increase. Key expense components as a percentage of revenues are
as follows (dollars in thousands):

<Table>
<Caption>
                                      2000                   1999
2000 OVER 1999
                              ---------------------   -------------------
- -----------------
                                             % OF                  % OF
        %
                               BALANCE     REVENUES   BALANCE    REVENUES
CHANGE    CHANGE
                              ----------   --------   --------   --------
- --------   ------
                                                             
      
Programming.................  $  736,043      23%     $330,754      23%
$405,289    123%
General and
  Administrative............     543,430      17%      237,480      17%
305,950    129%
Service.....................     192,603       6%       99,486       7%
93,117     94%
Marketing...................      63,789       2%       23,447       2%
40,342    172%
Advertising sales...........      56,499       2%       31,281       2%
25,218     81%
Other.......................      58,554       2%       15,509       1%
43,045    278%
                              ----------              --------
- --------
                              $1,650,918              $737,957
$912,961
                              ==========              ========
========
</Table>

     Of the $405.3 million increase in programming, approximately $355.7
million, or 88%, relates to operations acquired after January 1, 1999. The
remaining $49.6 million increase is due to continued inflationary or negotiated
increases, particularly in sports programming, coupled with increased channel
capacity. The increase in general and administrative costs of $306.0 million
reflects an increase of $275.0 million, or 90%, related to operations acquired
after January 1, 1999. The remaining increase of $31.0 million is due to
increases in corporate and regional resources to support our growth. Service
expenses increased $93.1 million, of which $87.0 million, or 93%, relates to
operations acquired after January 1, 1999 and $6.1 million, or 7% as a result of
internal growth. Marketing expenses increased $40.3 million to $63.8 million in
2000, of which approximately $20.1 million, or 50%, relates to operations
acquired after January 1, 1999. The remaining increase of $20.2 million, relates
to promotions of advanced product offerings, including Charter Digital Cable and
TV-based high-speed Internet service. Advertising expenses increased $25.2
million, of which the majority relates to operations acquired after January 1,
1999. Other operating expenses increased by $43.0 million, from $15.5 million in
1999 to $58.6 million in 2000, of which the majority relates to operations
acquired after January 1, 1999.

     MANAGEMENT FEES/CORPORATE EXPENSE CHARGES.  Corporate expense charges
increased by $3.8 million, from $51.4 million in 1999 to $55.2 million in 2000.
The increase was primarily a result of continued growth from acquisitions.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense
increased by $1,717.2 million, from $745.3 million in 1999 to $2,462.5 million
in 2000. This increase was due to a full year of expense on the fixed assets and
franchises of our 1999 acquisitions, a partial year of expense on 2000
acquisitions and capital expenditures of $2.8 billion to rebuild and upgrade our
cable systems in 2000. Related to the rebuild and upgrade of our plant, the
useful lives of certain depreciable assets were shortened. As a result, an
additional $508.5 million of depreciation expense was recorded during 2000.
These increases were partially offset by the elimination of depreciation and
amortization expense related to dispositions of cable systems.

     OPTION COMPENSATION EXPENSE.  Option compensation expense decreased by
$39.0 million, from $80.0 million in 1999 to $41.0 million in 2000. The expense
relates to option grants at the time of the initial public offering of Charter
Communications, Inc. at prices less than the estimated fair market value of
Charter Communications Class A common stock resulting in compensation expense to
be accrued over the vesting period of the options.

     INTEREST EXPENSE.  Interest expense increased by $593.4 million, from
$471.9 million in 1999 to $1,065.2 million in 2000. The increase in interest
expense was a result of increased average debt

                                        54
   59

outstanding in 2000 of $12,281.2 million compared to $7,108.5 million in 1999,
coupled with an increase in our average borrowing rate of .66%, from 8.36% in
1999 to 9.02% in 2000. The increased debt was used for acquisitions, capital
expenditures and for other corporate purposes.

     INTEREST INCOME.  Interest income decreased by $12.1 million, from $18.8
million in 1999 to $6.7 million in 2000. The decrease in interest income was a
result of lower cash on hand in 2000 due to required credit facility draw downs
in 1999 which were not required in 2000.

     LOSS ON EQUITY INVESTMENTS.  The loss in 2000 was primarily due to losses
of $7.0 million on investments carried under the equity method of accounting and
other than temporary losses of $4.7 million on investments carried under the
cost method partially offset by realized gains of $.7 million on sales of
marketable securities.

     MINORITY INTEREST EXPENSE.  Minority interest expense represents the 2%
accretion of the preferred membership units in our indirect subsidiary, CC VIII,
LLC, issued to certain Bresnan sellers. These membership units are exchangeable
on a one-for-one basis for shares of Class A common stock of Charter
Communications, Inc.

     NET LOSS.  Net loss increased by $1,398.9 million, from $648.7 million in
1999 to $2,047.6 million in 2000 as a result of the combination of factors
discussed above.

FISCAL 1999 COMPARED TO PERIOD FROM JANUARY 1, 1998 THROUGH DECEMBER 23, 1998

     REVENUES.  Revenues increased by $1,378.4 million, from $49.7 million for
the period from January 1, 1998 through December 23, 1998 to $1,428.1 million in
1999. The increase in revenues primarily resulted from the acquisitions of CCA
Group and CharterComm Holdings, Marcus Holdings and 1999 acquisitions.
Additional revenues from these entities included for the year ended December 31,
1999 were $618.8 million, $386.7 million and $350.1 million, respectively.

     OPERATING, GENERAL AND ADMINISTRATIVE COSTS.  Operating, general and
administrative costs increased by $712 million, from $26.0 million for the
period from January 1, 1998 through December 23, 1998 to $738.0 million in 1999.
This increase was due primarily to the acquisition of the CCA Group and
CharterComm Holdings, Marcus Holdings and 1999 acquisitions. Additional
operating, general and administrative expenses from these entities included for
the year ended December 31, 1999 were $338.5 million, $209.3 million and $158.8
million, respectively.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense
increased by $728.5 million, from $16.9 million, for the period from January 1,
1998 through December 23, 1998 to $745.3 million in 1999. There was a
significant increase in amortization expense resulting from the acquisitions of
the CCA Group and CharterComm Holdings, Marcus Holdings and 1999 acquisitions.
Additional depreciation and amortization expense from these entities included
for the year ended December 31, 1999 were $346.3 million, $203.5 million and
$195.1 million, respectively. The increases were offset by the elimination of
depreciation and amortization expense related to disposition of cable systems.

     OPTION COMPENSATION EXPENSE.  Option compensation expense in 1999 was $80.0
million due to the granting of options to employees in December 1998, February
1999 and April 1999. The exercise prices of the options on the date of grant
were less than the estimated fair values of the underlying membership units,
resulting in compensation expense accrued over the vesting period of each grant
that varies from four to five years.

     MANAGEMENT FEES/CORPORATE EXPENSE CHARGES.  Management fees/corporate
expense charges increased by $45.3 million, from $6.2 million, for the period
from January 1, 1998 through December 23, 1998 to $51.4 million in 1999. The
increase in 1998 compared to 1999 was the result

                                        55
   60

of the acquisitions of CCA Group and CharterComm Holdings, Marcus Holdings and
1999 acquisitions.

     INTEREST INCOME.  Interest income increased by $18.8 million, from $0.04
million for the period from January 1, 1998 through December 23, 1998 to $18.8
million in 1999. The increase was primarily due to investing excess cash that
resulted from required credit facilities drawdowns, the initial public offering
and the sale of the March 1999 Charter Holdings notes.

     INTEREST EXPENSE.  Interest expense increased by $454.6 million, from $17.3
million for the period from January 1, 1998 through December 23, 1998 to $471.9
million in 1999. This increase resulted primarily from interest on the notes and
credit facilities used to finance the acquisitions of CCA Group and CharterComm
Holdings, Marcus Holdings and 1999 acquisitions.

     NET LOSS.  Net loss increased by $631.5 million, from $17.2 million for the
period from January 1, 1998 through December 23, 1998 to $648.7 million in 1999.
The increase in revenues that resulted from the acquisitions of CCA Group,
CharterComm Holdings and Marcus Holdings was not sufficient to offset the
operating expenses associated with the acquired systems.

LIQUIDITY AND CAPITAL RESOURCES

     Our business requires significant cash to fund acquisitions, capital
expenditures, debt service costs and ongoing operations. We have historically
funded and expect to fund future liquidity and capital requirements through cash
flows from operations, borrowings under our credit facilities and debt and
equity transactions. Our cash flows from operating activities were $1.1 billion,
$460.4 million and $7.6 million in 2000, 1999 and 1998, respectively. As of
March 31, 2001, we had availability of $2.2 billion under our bank credit
facilities. In recent years, we have incurred significant debt to fund our
capital expenditures and growth through acquisition. Our significant amount of
debt may adversely affect our ability to obtain financing in the future and
react to changes in our business. We may incur substantial additional debt in
the future. Our credit facilities and other debt instruments contain various
financial and operating covenants that could adversely impact our ability to
operate our business, including restrictions on the ability of our operating
subsidiaries to distribute cash to their parents. See "-- Certain Trends and
Uncertainties -- Restrictive Covenants" for further information.

CAPITAL EXPENDITURES

     We have substantial ongoing capital expenditure requirements. We make
capital expenditures primarily to upgrade, rebuild and expand our cable systems,
as well as for system maintenance, the development of new products and services,
and set-top terminals.

     Upgrading our cable systems will enable us to offer new products and
services, including digital television, additional channels and tiers, expanded
pay-per-view options, high-speed Internet access, video-on-demand, telephony and
interactive services.

     We made capital expenditures, excluding acquisitions of cable systems, of
$2.78 billion and $741.5 million for the years ended December 31, 2000 and 1999,
respectively. The majority of these capital expenditures in 2000 relate to our
accelerated rebuild and upgrade program and purchases of converters and were
funded from cash flows from operations and borrowings under credit facilities.
We made capital expenditures, excluding acquisitions of cable systems of $521.4
million and $259.9 million for the three months ended March 31, 2001 and 2000,
respectively.


     Excluding the systems acquired in the AT&T transactions, for 2001, 2002 and
2003, we expect to spend a total of approximately $2.9 billion, $1.8 billion and
$1.1 billion, respectively, to upgrade and rebuild our systems in order to offer
advanced services to our customers. In addition, we anticipate rebuild costs
associated with the systems acquired in the AT&T transactions to total


                                        56
   61


approximately $350.0 million, $150.0 million of which we expect to spend in
2001. In 2001, our capital expenditures will include extensions of systems,
development of new products and services, purchases of converters, system
improvements and the build-out of six new advanced customer call centers in
2001. The amount that we spend on these types of capital expenditures will
depend on the level of our growth in digital cable customers and in the delivery
of other advanced services. We currently anticipate that we will have sufficient
capital to fund our capital expenditures through 2003. If there is accelerated
growth in digital cable customers or in the delivery of other advanced services
however, we may need additional capital. If we are not able to obtain such
capital it could adversely affect our ability to offer new products and services
and compete effectively, and could adversely affect our growth, financial
condition and results of operations. See "-- Certain Trends and Uncertainties"
for further information.


RECENT INVESTING ACTIVITIES

     HIGH SPEED ACCESS CORP.  In December 2000, Vulcan Ventures, Inc., an entity
controlled by Mr. Allen, and Charter Communications Ventures, LLC, our
subsidiary, invested $38.0 million and $37.0 million, respectively, in exchange
for 38,000 shares and 37,000 shares, respectively, of senior convertible
preferred stock of High Speed Access. The preferred stock has a liquidation
preference of $1,000 per share, in general, shares in dividends on High Speed
Access common stock on an "as converted to common stock" basis and is
convertible into common stock of High Speed Access at a conversion rate of
$5.01875 per share of High Speed Access common stock, subject to certain
adjustments. Vulcan Ventures and Charter Ventures were granted certain
preemptive, first refusal, registration and significant board representation
rights as part of the transaction.


     On July 31, 2001, Charter Communications, Inc. extended an offer to High
Speed Access Corp. to purchase the contracts and associated assets of High Speed
Access that serve our customers. The offer has not been accepted by High Speed
Access Corp. and is subject to a number of conditions, including approval by the
boards of directors of Charter Communications, Inc. and High Speed Access Corp.,
approval by the stockholders of High Speed Access Corp., third party consents,
satisfactory completion of due diligence and negotiation of definitive
agreements. See "Certain Relationships and Related Transactions -- Business
Relationships."


FINANCING ACTIVITIES


     As of March 31, 2001, our total debt was approximately $13.0 billion.
Summarized below (dollars in thousands) is our actual debt outstanding at March
31, 2001 and our total debt, pro forma for (1) the issuance and sale of the
original notes and the application of the net proceeds therefrom; (2) the
receipt of net proceeds from Charter Communications Holding Company from the
sale by Charter Communications, Inc. of its May 2001 senior convertible notes
and from the May 2001 sale by Charter Communications, Inc. of additional shares
of its Class A common stock; (3) the use of such proceeds to repay all amounts
outstanding under the Charter Operating, CC VI (Fanch), CC VII (Falcon) and CC
VIII (Bresnan) revolving credit facilities; and (4) the closing of the AT&T
transactions and the borrowings under the Charter Operating credit facility to
pay a portion of the AT&T purchase price:


<Table>
<Caption>
                                                         ACTUAL        PRO FORMA
                                                       BALANCE AT     BALANCE AT
                                                        MARCH 31,      MARCH 31,
                                                          2001           2001
                                                       -----------
- -----------
                                                                
LONG-TERM DEBT
Charter Holdings:
  8.250% senior notes due 2007.......................  $   600,000    $
600,000
</Table>

                                        57
   62

<Table>
<Caption>
                                                         ACTUAL        PRO FORMA
                                                       BALANCE AT     BALANCE AT
                                                        MARCH 31,      MARCH 31,
                                                          2001           2001
                                                       -----------
- -----------
                                                                
  8.625% senior discount notes due 2009..............    1,500,000
1,500,000
  9.920% senior notes due 2011.......................    1,475,000
1,475,000
  10.00% senior notes due 2009.......................      675,000
675,000
  10.25% senior notes due 2010.......................      325,000
325,000
  11.75% senior discount notes due 2010..............      532,000
532,000
  10.750% senior notes due 2009......................      900,000
900,000
  11.125% senior notes due 2011......................      500,000
500,000
  13.500% senior discount notes due 2011.............      675,000
675,000
  9.625% senior notes due 2009.......................           --
350,000
  10.000% senior notes due 2011......................           --
575,000
  11.750% senior discount notes due 2011.............           --
1,018,000
Renaissance:
  10.00% senior discount notes due 2008..............      114,413
114,413
CC V Holdings -- Avalon:
  11.875% senior discount notes due 2006.............      179,750
179,750
Other long-term debt.................................        1,416
1,416
CREDIT FACILITIES
Charter Operating....................................    3,815,000
3,450,000
CC VI -- Fanch.......................................      901,000
850,000
CC VII -- Falcon.....................................      698,750
488,750
CC VIII -- Bresnan...................................    1,005,000
1,000,000
                                                       -----------
- -----------
                                                        13,897,329
15,209,329
Unamortized discount.................................     (939,982)
(1,382,386)
                                                       -----------
- -----------
                                                       $12,957,347
$13,826,943
                                                       ===========
===========
</Table>

     MARCH 1999 CHARTER HOLDINGS NOTES.  In March 1999, Charter Holdings and
Charter Capital issued $3.6 billion principal amount of senior notes. The March
1999 Charter Holdings notes consisted of $600.0 million in aggregate principal
amount of 8.250% senior notes due 2007, $1.5 billion in aggregate principal
amount of 8.625% senior notes due 2009, and $1.475 billion in aggregate
principal amount at maturity of 9.920% senior discount notes due 2011. The net
proceeds of approximately $2.9 billion, combined with the borrowings under our
credit facilities, were used to consummate tender offers for publicly held debt
of several of our subsidiaries, as described below, to refinance borrowings
under our previous credit facilities, for working capital purposes and to
finance a number of acquisitions.

     As of March 31, 2001, a total of $2.1 billion was outstanding under the
8.250% notes and the 8.625% notes, and the accreted value of the outstanding
9.920% notes was $1.1 billion.

     JANUARY 2000 CHARTER HOLDINGS NOTES.  In January 2000, Charter Holdings and
Charter Capital issued $1.5 billion principal amount of senior notes. The
January 2000 Charter Holdings notes consisted of $675.0 million in aggregate
principal amount of 10.00% senior notes due 2009, $325.0

                                        58
   63

million in aggregate principal amount of 10.25% senior notes due 2010, and
$532.0 million in aggregate principal amount at maturity of 11.75% senior
discount notes due 2010. The net proceeds of approximately $1.25 billion were
used to consummate change of control offers for certain of the Falcon, Avalon
and Bresnan notes and debentures.

     As of March 31, 2001, $1.0 billion of the January 2000 Charter Holdings
10.00% and 10.25% senior notes were outstanding, and the accreted value of the
11.75% senior discount notes was approximately $345.3 million.

     JANUARY 2001 CHARTER HOLDINGS NOTES.  In January 2001, Charter Holdings and
Charter Capital issued $1.75 billion in aggregate principal amount of senior
notes. The January 2001 Charter Holdings notes consisted of $900.0 million in
aggregate principal amount of 10.750% senior notes due 2009, $500.0 million in
aggregate principal amount of 11.125% senior notes due 2011 and $675.0 million
in aggregate principal amount at maturity of 13.500% senior discount notes due
2011. The net proceeds of approximately $1.72 billion were used to repay all
remaining amounts then outstanding under the Charter Holdings 2000 senior bridge
loan facility and the CC VI (Fanch) revolving credit facility and a portion of
the amounts then outstanding under the Charter Operating and CC VII (Falcon)
revolving credit facilities and for general corporate purposes. As of March 31,
2001, $1.4 billion of the January 2001 Charter Holdings 10.750% and 11.125%
senior notes were outstanding, and the accreted value of the 13.500% senior
discount notes was approximately $361.3 million.

     CHARTER OPERATING CREDIT FACILITIES.  The Charter Operating credit
facilities provide for two term facilities, one with a principal amount of $1.0
billion that matures in September 2007 (Term A), and the other with a principal
amount of $2.45 billion that matures in March 2008 (Term B). The Charter
Operating credit facilities also provide for a $1.25 billion revolving credit
facility with a maturity date in September 2007 and, at the option of the
lenders, supplemental credit facilities in the amount of $400.0 million
available until March 18, 2002. Amounts under the Charter Operating credit
facilities bear interest at the Base Rate or the Eurodollar rate, as defined,
plus a margin of up to 2.75% (8.39% to 9.27% as of December 31, 2000). A
quarterly commitment fee of between 0.25% and 0.375% per annum is payable on the
unborrowed balance of Term A and the revolving credit facility.

     As of March 31, 2001, outstanding borrowings were approximately $3.8
billion, and the unused availability was $885.0 million. As of March 31, 2001,
pro forma for (1) the issuance and sale of the original notes and the
application of the net proceeds therefrom; (2) the receipt of net proceeds from
Charter Communications Holding Company from the sale by Charter Communications,
Inc. of its May 2001 senior convertible notes and from the May 2001 sale by
Charter Communications, Inc. of additional shares of its Class A common stock;
(3) the use of such proceeds to repay all amounts outstanding under the Charter
Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit
facilities; and (4) the closing of the AT&T transactions and the borrowings
under the Charter Operating credit facility to pay a portion of the AT&T
purchase price, outstanding borrowings would have been $3.5 billion and the
unused availability would have been $1.25 billion.

     RENAISSANCE NOTES.  In connection with the acquisition of Renaissance in
April 1999, we assumed $163.2 million principal amount at maturity of 10% senior
discount notes due 2008. The Renaissance notes do 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.

     In May 1999, $48.8 million aggregate face amount of the Renaissance notes
was repurchased at 101% of the accreted value plus accrued and unpaid interest.
As of March 31, 2001, $114.4 million of the Renaissance notes were outstanding,
and the accreted value was approximately $96.7 million.

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     FALCON DEBENTURES.  Charter Communications Holding Company acquired Falcon
in November 1999 and assumed Falcon's outstanding $375.0 million in principal
amount of 8.375% senior debentures due 2010 and 9.285% senior discount
debentures due 2010 with an accreted value of approximately $319.1 million as of
the acquisition date. Falcon was transferred to Charter Holdings in January
2000.

     In February 2000, through change of control offers and purchases in the
open market, all of the Falcon 8.375% senior debentures with a principal amount
of $375.0 million were repurchased for $388.0 million, and all of the Falcon
9.285% senior discount debentures with an aggregate principal amount at maturity
of $435.3 million were repurchased for $328.1 million.

     CC VII (FALCON) CREDIT FACILITIES.  In connection with the Falcon
acquisition, the previous Falcon credit facilities were amended to provide for
two term facilities, one with a principal amount of $196.0 million that matures
June 2007 (Term B), and the other with the principal amount of $294.0 million
that matures December 2007 (Term C). The CC VII (Falcon) credit facilities also
provide for a $646.0 million revolving credit facility with a maturity date in
December 2006 and, at the option of the lenders, supplemental credit facilities
in the amount of up to $700.0 million with a maturity date in December 2007.
Amounts under the CC VII (Falcon) credit facilities bear interest at the Base
Rate or the Eurodollar rate, as defined, plus a margin of up to 2.5% (8.14% to
9.50% as of December 31, 2000). A quarterly commitment fee of between 0.25% and
0.375% per annum is payable on the unborrowed balance.


     As of March 31, 2001, outstanding borrowings were $698.8 million and unused
availability was $547.2 million. As of March 31, 2001, pro forma for (1) the
issuance and sale of the original notes and the application of the net proceeds
therefrom; (2) the receipt of net proceeds from Charter Communications Holding
Company from the sale by Charter Communications, Inc. of its May 2001 senior
convertible notes and from the May 2001 sale by Charter Communications, Inc. of
additional shares of its Class A common stock; (3) the use of such proceeds to
repay all amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
(Falcon) and CC VIII (Bresnan) revolving credit facilities; and (4) the closing
of the AT&T transactions and the borrowings under the Charter Operating credit
facility to pay a portion of the AT&T purchase price, outstanding borrowings
would have been $488.8 million and the unused availability would have been
$757.3 million.


     AVALON CREDIT FACILITIES.  In December 2000, two of our subsidiaries,
Bresnan and Avalon, were merged. Upon completion of the Bresnan/Avalon
Combination in January 2001, all amounts outstanding under the Avalon credit
facilities were repaid and the Avalon credit facilities were terminated. The
Bresnan credit facilities were amended and restated to, among other things,
increase borrowing availability by $550.0 million.

     AVALON NOTES.  Charter Communications Holding Company acquired Avalon in
November 1999 and assumed Avalon's outstanding 11.875% senior discount notes due
2008 with an accreted value of $123.3 million and $150.0 million in principal
amount of 9.375% senior subordinated notes due 2008. Avalon was transferred to
us in January 2000. After December 1, 2003, cash interest on the Avalon 11.875%
notes will be payable semi-annually on June 1 and December 1 of each year,
commencing June 1, 2004.

     In January 2000, we completed change of control offers in which we
repurchased $16.3 million aggregate principal amount at maturity of the 11.875%
notes at a purchase price of 101% of accreted value as of January 28, 2000, for
$10.5 million. As of March 31, 2001, Avalon 11.875% notes with an aggregate
principal amount of $179.8 million at maturity remained outstanding with an
accreted value of $135.2 million.

     At the same time, through change of control offers and purchases in the
open market, we repurchased all of the $150.0 million aggregate principal amount
of the Avalon 9.375% notes. The

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aggregate repurchase price was $153.7 million and was funded with the proceeds
from the sale of the January 2000 Charter Holdings notes.

     CC VI (FANCH) CREDIT FACILITIES.  The CC VI (Fanch) credit facilities
provide for two term facilities, one with a principal amount of $450.0 million
that matures May 2008 (Term A), and the other with a principal amount of $400.0
million that matures November 2008 (Term B). The CC VI (Fanch) credit facilities
also provide for a $350.0 million revolving credit facility with a maturity date
in May 2008 and, at the option of the lenders, supplemental credit facilities in
the amount of $300.0 million available until December 31, 2004. Amounts under
the CC VI (Fanch) credit facilities bear interest at the Base Rate or the
Eurodollar rate, as defined, plus a margin of up to 3.0% (8.15% to 9.55% as of
December 31, 2000). A quarterly commitment fee of between 0.250% and 0.375% per
annum is payable on the unborrowed balance. $850.0 million of the credit
facilities were used to fund a portion of the Fanch purchase price.

     As of March 31, 2001, outstanding borrowings were $901.0 million, and
unused availability was $299.0 million. As of March 31, 2001, pro forma for (1)
the issuance and sale of the original notes and the application of the net
proceeds therefrom; (2) the receipt of net proceeds from Charter Communications
Holding Company from the sale by Charter Communications, Inc. of its May 2001
senior convertible notes and from the May 2001 sale by Charter Communications,
Inc. of additional shares of its Class A common stock; (3) the use of such
proceeds to repay all amounts outstanding under the Charter Operating, CC VI
(Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit facilities; and
(4) the closing of the AT&T transactions and the borrowings under the Charter
Operating credit facility to pay a portion of the AT&T purchase price,
outstanding borrowings would have been $850.0 million and the unused
availability would have been $350.0 million. However, debt covenants limit the
amount that can be borrowed to $122.3 million at March 31, 2001.

     BRESNAN NOTES.  We acquired Bresnan in February 2000 and assumed Bresnan's
outstanding $170.0 million in principal amount of 8% senior notes due 2009 and
$275.0 million in principal amount at maturity of 9.25% senior discount notes
due 2009 with an accreted value of $192.2 million. In March 2000, we repurchased
all of the outstanding Bresnan notes at purchase prices of 101% of the
outstanding principal amounts plus accrued and unpaid interest or accreted
value, as applicable, for a total of $369.7 million, using proceeds from the
sale of the January 2000 Charter Holdings notes.

     CC VIII (BRESNAN) CREDIT FACILITIES.  Upon the completion of the
Bresnan/Avalon combination in January 2001, the CC VIII (Bresnan) credit
facilities were amended and restated to, among other things, increase borrowing
availability by $555.0 million. As amended, the CC VIII (Bresnan) credit
facilities provide for borrowings of up to $1.45 billion. The CC VIII (Bresnan)
credit facilities provide for two term facilities, one with a principal amount
of $500.0 million (Term A), and the other with a principal amount of $500.0
million (Term B). The CC VIII (Bresnan) credit facilities also provide for a
$450.0 million revolving credit facility with a maturity date in June 2007 and,
at the option of lenders, supplemental facilities in the amount of $500.0
million. Amounts under the CC VIII (Bresnan) credit facilities bear interest at
the Base Rate or the Eurodollar Rate, as defined, plus a margin of up to 2.75%.
A quarterly commitment fee of between 0.250% and 0.375% is payable on the
unborrowed balance of Term A and the revolving credit facility. At the closing
of the Bresnan acquisition, we borrowed approximately $599.9 million to replace
the borrowings outstanding under the previous credit facilities and an
additional $30.0 million to fund a portion of the Bresnan purchase price. As of
March 31, 2001, outstanding borrowings were $1.0 billion and unused availability
was $445.0 million. As of March 31, 2001, pro forma for (1) the issuance and
sale of the original notes and the application of the net proceeds therefrom;
(2) the receipt of net proceeds from Charter Communications Holding Company from
the sale by Charter Communications, Inc. of its May 2001 senior convertible
notes and from the May 2001 sale by Charter Communications, Inc. of additional

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shares of its Class A common stock; (3) the use of such proceeds to repay all
amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII (Falcon)
and CC VIII (Bresnan) revolving credit facilities; and (4) the closing of the
AT&T transactions and the borrowings under the Charter Operating credit facility
to pay a portion of the AT&T purchase price, outstanding borrowings would have
been $1.0 billion and the unused availability would have been $450.0 million.

     CHARTER HOLDINGS 2000 SENIOR BRIDGE LOAN FACILITY.  On August 4, 2000,
Charter Holdings and Charter Capital entered into a senior bridge loan agreement
providing for senior increasing rate bridge loans in an aggregate principal
amount of up to $1.0 billion.

     On August 14, 2000, Charter Holdings borrowed $1.0 billion under the senior
bridge loan facility and used substantially all of the proceeds to repay a
portion of the amounts outstanding under the Charter Operating and the CC VII
(Falcon) revolving credit facilities. The bridge loan initially bore interest at
an annual rate of 10.21%. For amounts not repaid by November 14, 2000, the
interest rate increased by 1.25% at such date.

     The net proceeds, totaling $727.5 million, from the sales in October and
November 2000 of Charter Communications, Inc.'s convertible senior notes were
contributed as equity to Charter Holdings. We used all of the net proceeds
therefrom to repay $727.5 million of the amount outstanding under the Charter
Holdings 2000 senior bridge loan facility. As of January 5, 2001, the remaining
balance of $272.5 million on the senior bridge loan facility was paid down with
the proceeds from the sale of the Charter Holdings January 2001 notes.

OUTLOOK

     We believe we are uniquely positioned in the forefront of our industry
going into 2001. In 2001, we will continue to aggressively roll out our advanced
services, focusing on digital cable and high speed data. The effect of the AT&T
transactions is not included in this Outlook discussion.

     With "same store" systems running smoothly and major 1999 and 2000
acquisitions successfully integrated, we expect 2001 revenue growth of 14% to
16% and operating cash flow growth after corporate overhead expense of 12% to
14%. Basic customer growth is expected to exceed 2% in 2001, consistent with
2000 growth. Digital revenues are expected to increase dramatically from 1.07
million customers at December 31, 2000 to 2 million customers by the end of
2001. In addition, we expect VOD to be available to approximately 2.2 million
homes passed by the end of the year. Telephony initiatives will continue to be
tested and developed during 2001 with targeted market entry in 2002 or 2003.
Furthermore, we will continue our focus on interactive TV, with trials currently
in process and expected launches in several markets beginning in 2001. Our
advanced technology team is working on DVR capability in advanced digital
set-top terminals and wireless home networking. Set-top terminals with built-in
DVR functionality should be available to our digital customers in 2001.

     Operating expenses are expected to increase 18% to 19% in 2001, driven
primarily by increased digital and data sales, as well as higher programming and
general and administrative costs. Programming costs are expected to increase
approximately 25%. The year over year increase on a per channel basis is
approximately 12% to 13%. Sports programming is the largest portion of the
expected increase. The remainder of the increase is due to digital and basic
customer growth, new channel launches and higher premium rates. The primary
drivers for increased general and administrative costs are higher property taxes
of approximately $22 million, resulting from the network upgrades and
approximately $11 million of expenses associated with new customer call centers.

     We will continue to evaluate strategic acquisitions and "swaps" of cable
systems in order to enlarge the coverage of our current areas of operations.
This approach will allow us to generate higher growth in revenues and operating
cash flow.

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     Customer care will remain a priority at Charter. We plan to build six new
customer contact centers in 2001 with capital expenditures of $66 million in
2001. These new centers will serve our customer base with state-of-the-art
technology to further improve customer satisfaction. Eventually, each of our
twelve regions will have its own customer contact center.

     We will continue our system rebuilds and upgrades so that our customers
have access to the latest advanced service technology. We will aggressively
evaluate funding opportunities, including bank, equity or high-yield financing,
to meet the needs of our future growth plans, including future strategic
acquisitions.

     Achieving the anticipated growth and increases specified in this Outlook
section is subject to many factors, some of which are outside our control. Among
those factors are those specified in "-- Certain Trends and Uncertainties" and
in "Risk Factors." We refer you to these sections, as well as to
"Forward-Looking Statements."

CERTAIN TRENDS AND UNCERTAINTIES

     The following discussion highlights a number of trends and uncertainties,
in addition to those discussed elsewhere in this memorandum, that could
materially impact our business, results of operations and financial condition.

     SUBSTANTIAL LEVERAGE.  As of March 31, 2001, our total debt was
approximately $13.0 billion. We may incur additional debt in the future to fund
any future acquisitions and the expansion, maintenance and upgrade of our cable
systems. As of March 31, 2001, pro forma for (1) the issuance and sale of the
original notes and the application of the net proceeds therefrom; (2) the
issuance of additional equity to Charter Communications Holding Company in
exchange for the net proceeds received from Charter Communications Holding
Company from the sale by Charter Communications, Inc. of its May 2001 senior
convertible notes and from the May 2001 sale by Charter Communications, Inc. of
additional shares of its Class A common stock; (3) the use of such proceeds to
repay all amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
(Falcon) and CC VIII (Bresnan) revolving credit facilities; and (4) the closing
of the AT&T transactions and the borrowings under the Charter Operating credit
facility to pay a portion of the purchase price, our total debt would have been
approximately $13.8 billion.

     Our ability to make payments on our debt and fund our ongoing operations
will depend on our ability to generate cash flow from operations in the future.
This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond our control. We
cannot assure you that our business will generate sufficient cash flow from
operations, or that future borrowings will be available to us under our existing
credit facilities, new facilities or from other sources of financing at
acceptable rates or in an amount sufficient to enable us to repay our debt, to
grow our business or to fund our other liquidity and capital needs.

     VARIABLE INTEREST RATES.  At March 31, 2001, approximately 50.0% of our
debt bears interest at variable rates that are linked to short-term interest
rates. In addition, a significant portion of our existing debt, assumed debt or
debt we might arrange in the future will bear interest at variable rates. If
interest rates rise, our costs relative to those obligations will also rise. At
March 31, 2001, our weighted-average rate on outstanding bank commitments was
approximately 7.43% and approximately 10% on high-yield debt, resulting in a
blended weighted-average rate of 8.75%. See "-- Interest Rate Risk."

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     RESTRICTIVE COVENANTS.  Our credit facilities and the indentures governing
our outstanding debt contain a number of significant covenants that, among other
things, restrict our ability and the ability of our subsidiaries to:

     - pay dividends or make other distributions;

     - make certain investments or acquisitions;

     - dispose of assets or merge;

     - incur additional debt;

     - issue equity;

     - repurchase or redeem equity interests and debt;

     - create liens; and

     - pledge assets.

     Furthermore, in accordance with our credit facilities we are required to
maintain specified financial ratios and meet financial tests. The ability to
comply with these provisions may be affected by events beyond our control. The
breach of any of these covenants will result in a default under the applicable
debt agreement or instrument, which could trigger acceleration of the debt. Any
default under our credit facilities or the indentures governing our outstanding
debt may adversely affect our growth, our financial condition, and our results
of operations and the ability to repay amounts due under our publicly held debt.

     NEW SERVICES AND PRODUCTS GROWTH STRATEGY.  We expect that a substantial
portion of any of our future growth will be achieved through revenues from
additional services. We cannot be assured that we will be able to offer new
advanced services successfully to our customers or that those new advanced
services will generate revenues. The amount of our capital expenditures and
related roll-out of advanced services may be limited by the availability of
certain equipment (in particular, digital set-top terminals and cable modems)
due to production capacity constraints of certain vendors and/or materials
shortages. We continue to work with our primary vendors to address such problems
and have been assured that we will have an adequate supply to meet our demand.
If we are unable to grow our cash flow sufficiently, we may be unable to fulfill
our obligations or obtain alternative financing.

     MANAGEMENT OF GROWTH.  We have experienced rapid growth that has placed and
is expected to continue to place a significant strain on our management,
operations and other resources. Our future success will depend in part on our
ability to successfully integrate the operations acquired and to be acquired and
to attract and retain qualified personnel. No significant severance cost was
incurred in conjunction with acquisitions in 1999 and 2000. The failure to
retain or obtain needed personnel or to implement management, operating or
financial systems necessary to successfully integrate acquired operations or
otherwise manage growth when and as needed could have a material adverse effect
on our business, results of operations and financial condition.

     REGULATION AND LEGISLATION.  Cable systems are extensively regulated at the
federal, state, and local level. Effective March 31, 1999, the scope of rate
regulation was reduced so that it continues to impact only the lowest level of
basic cable service and associated equipment. This change affords cable
operators much greater pricing flexibility, although Congress could revisit this
issue if confronted with substantial rate increases.

     Cable operators also face significant regulation of their channel capacity.
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

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programming, and unaffiliated commercial leased access programming. This
carriage burden could increase in the future, particularly if the Federal
Communications Commission (FCC) were to require cable systems to carry both the
analog and digital versions of local broadcast signals. The FCC is currently
conducting a proceeding in which it is considering this channel usage
possibility, although it recently issued a tentative decision against such dual
carriage.


     There is also uncertainty whether local franchising authorities, state
regulators, the FCC, or the U.S. Congress will impose obligations on cable
operators to provide unaffiliated Internet service providers with access to
cable plant on non-discriminatory terms. If they were to do so, and the
obligations were found to be lawful, it could complicate our operations in
general, and our Internet operations in particular, from a technical and
marketing standpoint. These access obligations could adversely impact our
profitability and discourage system upgrades and the introduction of new
products and services. Recently, two federal circuit courts struck down as
unlawful open-access requirements imposed by different franchising authorities.
In response to the first such ruling, the FCC initiated a proceeding to
categorize cable-delivered Internet service and perhaps establish an appropriate
regulatory scheme. Company-specific open access requirements were imposed on
Time Warner cable systems in connection with the AOL merger.


     Although cable system attachments to public utility poles historically have
been regulated at the federal or state level, the provision of non-traditional
cable services, like the provision of Internet access, may endanger that
regulatory protection. The Eleventh Circuit Court of Appeals recently ruled such
services left cable attachments ineligible for regulatory protection, and
certain utilities already have proposed vastly higher put attachment rates. The
Eleventh Circuit decision is now scheduled to be reviewed by the United States
Supreme Court.

INTEREST RATE RISK

     The use of interest rate risk management instruments, such as interest rate
exchange agreements, interest rate cap agreements and interest rate collar
agreements, is 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, 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 us to otherwise pay lower market rates. Collars
limit our exposure to and benefits from interest rate fluctuations on variable
rate debt to within a certain range of rates.

     Our participation in interest rate hedging transactions involves
instruments that have a close correlation with our debt, thereby managing our
risk. Interest rate hedge agreements have been designated for hedging purposes
and are not held or issued for speculative purposes.

     At March 31, 2001, we had outstanding $1.9 billion, $15.0 million and
$520.0 million in notional amounts of interest rate swaps, caps and collars,
respectively.

     The notional amounts of interest rate instruments are used to measure
interest to be paid or received and do not represent the amount of exposure to
credit loss. While swaps, caps and collars represent an integral part of our
interest rate risk management program, their incremental effect on interest
expense for the three months ended March 31, 2001 and 2000, was not significant.

     The fair value of fixed-rate debt at March 31, 2001, was $5.8 billion. The
fair value of fixed-rate debt is based on quoted market prices. The fair value
of variable-rate debt approximates the carrying value of $6.4 billion at March
31, 2001, since this debt bears interest at current market rates.

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                               THE EXCHANGE OFFER

TERMS OF THE EXCHANGE OFFER

GENERAL

     We sold the original notes on May 15, 2001 in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended. The initial
purchasers of the notes subsequently resold the original notes to qualified
institutional buyers in reliance on Rule 144A and under Regulation S under the
Securities Act.

     In connection with the sale of original notes to the initial purchasers
pursuant to the Purchase Agreement, dated May 15, 2001, among us and Morgan
Stanley & Co. Incorporated, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion Securities
Corporation, the holders of the original notes became entitled to the benefits
of the exchange and registration rights agreements dated May 15, 2001, among us
and the initial purchasers.

     Under the registration rights agreements, the issuers became obligated to
file a registration statement in connection with an exchange offer within 120
days after May 15, 2001 and to use their reasonable best efforts to have the
exchange offer registration statement declared effective within 180 days after
May 15, 2001. The exchange offer being made by this prospectus, if consummated
within the required time periods, will satisfy our obligations under the
registration rights agreements. This prospectus, together with the letter of
transmittal, is being sent to all beneficial holders of original notes known to
the issuers.

     Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, the issuers will accept all
original notes properly tendered and not withdrawn prior to the expiration date.
The issuers will issue $1,000 principal amount of new notes in exchange for each
$1,000 principal amount of outstanding original notes accepted in the exchange
offer. Holders may tender some or all of their original notes pursuant to the
exchange offer.

     Based on no-action letters issued by the staff of the Securities and
Exchange Commission to third parties we believe that holders of the new notes
issued in exchange for original notes may offer for resale, resell and otherwise
transfer the new notes, other than any holder that is an affiliate of ours
within the meaning of Rule 405 under the Securities Act, without compliance with
the registration and prospectus delivery provisions of the Securities Act. This
is true as long as the new notes are acquired in the ordinary course of the
holder's business, the holder has no arrangement or understanding with any
person to participate in the distribution of the new notes and neither the
holder nor any other person is engaging in or intends to engage in a
distribution of the new notes. A broker-dealer that acquired original notes
directly from the issuers cannot exchange the original notes in the exchange
offer. Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the new notes cannot rely on the no-action
letters of the staff of the Securities and Exchange Commission and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction.

     Each broker-dealer that receives new notes for its own account in exchange
for original notes, where original notes were acquired by such broker-dealer as
a result of market-making or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such new notes. See
"Plan of Distribution" for additional information.

     We shall be deemed to have accepted validly tendered original notes when,
as and if we have given oral or written notice of the acceptance of such notes
to the exchange agent. The exchange agent will act as agent for the tendering
holders of original notes for the purposes of receiving the new notes from the
issuers and delivering new notes to such holders.

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     If any tendered original notes are not accepted for exchange because of an
invalid tender or the occurrence of the conditions set forth under
"-- Conditions" without waiver by us, certificates for any such unaccepted
original notes will be returned, without expense, to the tendering holder of any
such original notes as promptly as practicable after the expiration date.

     Holders of original notes who tender in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
original notes, pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes in connection with the exchange
offer. See "-- Fees and Expenses."

SHELF REGISTRATION STATEMENT

     Pursuant to the registration rights agreements, if the exchange offer is
not completed prior to the date on which the earliest of any of the following
events occurs:

          (a) applicable interpretations of the staff of the Securities and
     Exchange Commission do not permit us to effect the exchange offer,

          (b) any holder of notes notifies us that either:

             (1) such holder is not eligible to participate in the exchange
        offer, or

             (2) such holder participates in the exchange offer and does not
        receive freely transferable new notes in exchange for tendered original
        notes, or

          (c) the exchange offer is not completed within 210 days after May 15,
     2001,

we will, at our cost:

     - file a shelf registration statement covering resales of the original
       notes,

     - use our reasonable best efforts to cause the shelf registration statement
       to be declared effective under the Securities Act at the earliest
       possible time, but no later than 90 days after the time such obligation
       to file arises, and

     - use our reasonable best efforts to keep effective the shelf registration
       statement until the earlier of two years after the date as of which the
       Securities and Exchange Commission declares such shelf registration
       statement effective or the shelf registration otherwise becomes
       effective, or the time when all of the applicable original notes are no
       longer outstanding.

     If any of the events described occurs, we will refuse to accept any
original notes and will return all tendered original notes.

     We will, if and when we file the shelf registration statement, provide to
each holder of the original notes copies of the prospectus which is a part of
the shelf registration statement, notify each holder when the shelf registration
statement has become effective and take other actions as are required to permit
unrestricted resales of the original notes. A holder that sells original notes
pursuant to the shelf registration statement generally must be named as a
selling security-holder in the related prospectus and must deliver a prospectus
to purchasers, a seller will be subject to civil liability provisions under the
Securities Act in connection with these sales. A seller of the original notes
also will be bound by applicable provisions of the registration rights
agreements, including indemnification obligations. In addition, each holder of
original notes must deliver information to be used in connection with the shelf
registration statement and provide comments on the shelf registration statement
in order to have its original notes included in the shelf registration statement
and benefit from the provisions regarding any liquidated damages in the
registration rights agreement.

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INCREASE IN INTEREST RATE

     If:

     (1) the registration statement, of which this prospectus is a part, has not
been declared effective by the Securities and Exchange Commission within 180
days of the issuance of the original notes, and we have not used or are not
continuing to use our reasonable best efforts to cause the registration
statement to become effective, or

     (2) the exchange offer has not been completed within 30 business days after
the initial effective date of the exchange offer registration statement, or

     (3) the exchange offer registration statement is either withdrawn by us or
subject to an effective stop order without being followed immediately by an
additional registration statement filed and declared effective, or

     (4) we are required to file the shelf registration statement and either

        (a) the shelf registration statement has not become effective or been
            declared effective on or before the 90th calendar day following the
            date such obligation to file arises, or

        (b) the shelf registration statement has been declared effective and
            such shelf registration statement ceases to be effective, except as
            specifically permitted in the registration rights agreements,
            without being succeeded promptly by an additional registration
            statement filed and declared effective,

the interest rate borne by the original notes will be increased by 0.25% per
year for the first 90 days of default, 0.50% per year for the second 90 days of
default, 0.75% per year for the third 90 days of default and 1.0% per year for
the remaining period of time in default.

     The sole remedy available to the holders of the original notes will be the
immediate increase in the interest rate on the original notes as described
above. Any amounts of additional interest due as described above will be payable
in cash on the same interest payments dates as the original notes.

EXPIRATION DATE; EXTENSIONS; AMENDMENT

     We will keep the exchange offer open for not less than 30 days, or longer
if required by applicable law, after the date on which notice of the exchange
offer is mailed to the holders of the old notes. The term "expiration date"
means the expiration date set forth on the cover page of this prospectus, unless
we extend the exchange offer, in which case the term "expiration date" means the
latest date to which the exchange offer is extended.

     In order to extend the expiration date, we will notify the exchange agent
of any extension by oral or written notice and will issue a public announcement
of the extension, each prior to 5:00 p.m., New York City time, on the next
business day after the previously scheduled expiration date.

     We reserve the right

          (a) to delay accepting any original notes, to extend the exchange
     offer or to terminate the exchange offer and not accept original notes not
     previously accepted if any of the conditions set forth under
     "-- Conditions" shall have occurred and shall not have been waived by us,
     if permitted to be waived by us, by giving oral or written notice of such
     delay, extension or termination to the exchange agent, or

          (b) to amend the terms of the exchange offer in any manner deemed by
     us to be advantageous to the holders of the original notes.

                                        68
   73

     Any delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice. If the exchange
offer is amended in a manner determined by us to constitute a material change,
we promptly will disclose such amendment in a manner reasonably calculated to
inform the holders of the original notes of such amendment. Depending upon the
significance of the amendment, we may extend the exchange offer if it otherwise
would expire during such extension period.

     Without limiting the manner in which we may choose to make a public
announcement of any extension, amendment or termination of the exchange offer,
we will not be obligated to publish, advertise, or otherwise communicate any
such announcement, other than by making a timely release to an appropriate news
agency.

PROCEDURES FOR TENDERING

     To tender in the exchange offer, a holder must complete, sign and date the
letter of transmittal, or a facsimile of the letter of transmittal, have the
signatures on the letter of transmittal guaranteed if required by instruction 2
of the letter of transmittal, and mail or otherwise deliver such letter of
transmittal or such facsimile or an agent's message in connection with a book
entry transfer, together with the original notes and any other required
documents. To be validly tendered, such documents must reach the exchange agent
before 5:00 p.m., New York City time, on the expiration date. Delivery of the
original notes may be made by book-entry transfer in accordance with the
procedures described below. Confirmation of such book-entry transfer must be
received by the exchange agent prior to the expiration date.

     The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent, forming a part of a
confirmation of a book-entry transfer, which states that such book-entry
transfer facility has received an express acknowledgment from the participant in
such book-entry transfer facility tendering the original notes that such
participant has received and agrees to be bound by the terms of the letter of
transmittal and that we may enforce such agreement against such participant.

     The tender by a holder of original notes will constitute an agreement
between such holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal.

     Delivery of all documents must be made to the exchange agent at its address
set forth below. Holders may also request their respective brokers, dealers,
commercial banks, trust companies or nominees to effect such tender for such
holders.

     THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL
NOTES SHOULD BE SENT TO US.

     Only a holder of original notes may tender original notes in the exchange
offer. The term "holder" with respect to the exchange offer means any person in
whose name original notes are registered on our books or any other person who
has obtained a properly completed bond power from the registered holder.

     Any beneficial holder whose original notes are registered in the name of
its broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on its behalf. If such beneficial holder wishes
to tender on its own behalf, such registered holder must, prior to completing
and executing the letter of transmittal and delivering its original notes,
either make appropriate

                                        69
   74

arrangements to register ownership of the original notes in such holder's name
or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.

     Signatures on a letter of transmittal or a notice of withdrawal, must be
guaranteed by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States referred to
as an "eligible institution", unless the original notes are tendered

     (a) by a registered holder who has not completed the box entitled "Special
         Issuance Instructions" or "Special Delivery Instructions" on the letter
         of transmittal or

     (b) for the account of an eligible institution. In the event that
         signatures on a letter of transmittal or a notice of withdrawal, are
         required to be guaranteed, such guarantee must be by an eligible
         institution.

     If the letter of transmittal is signed by a person other than the
registered holder of any original notes listed therein, such original notes must
be endorsed or accompanied by appropriate bond powers and a proxy which
authorizes such person to tender the original notes on behalf of the registered
holder, in each case signed as the name of the registered holder or holders
appears on the original notes.

     If the letter of transmittal or any original notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by us,
evidence satisfactory to us of their authority so to act must be submitted with
the letter of transmittal.

     All questions as to the validity, form, eligibility, including time of
receipt, and withdrawal of the tendered original notes will be determined by us
in our sole discretion, which determination will be final and binding. We
reserve the absolute right to reject any and all original notes not properly
tendered or any original notes our acceptance of which, in the opinion of
counsel for us, would be unlawful. We also reserve the right to waive any
irregularities or conditions of tender as to particular original notes. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of original notes must be cured within such time as we shall determine. None of
us, the exchange agent or any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of original
notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of original notes will not be deemed to have been made
until such irregularities have been cured or waived. Any original notes received
by the exchange agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned without cost to
such holder by the exchange agent to the tendering holders of original notes,
unless otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.

     In addition, we reserve the right in our sole discretion to

     (a) purchase or make offers for any original notes that remain outstanding
         subsequent to the expiration date or, as set forth under
         "-- Conditions," to terminate the exchange offer in accordance with the
         terms of the registration rights agreements and

     (b) to the extent permitted by applicable law, purchase original notes in
         the open market, in privately negotiated transactions or otherwise. The
         terms of any such purchases or offers may differ from the terms of the
         exchange offer.

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   75

     By tendering, each holder will represent to us that, among other things,

     (a) the new notes acquired pursuant to the exchange offer are being
         obtained in the ordinary course of business of such holder or other
         person,

     (b) neither such holder nor such other person is engaged in or intends to
         engage in a distribution of the new notes,

     (c) neither such holder or other person has any arrangement or
         understanding with any person to participate in the distribution of
         such new notes, and

     (d) such holder or other person is not our "affiliate," as defined under
         Rule 405 of the Securities Act, or, if such holder or other person is
         such an affiliate, will comply with the registration and prospectus
         delivery requirements of the Securities Act to the extent applicable.

     We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts with respect to the original
notes at The Depository Trust Company for the purpose of facilitating the
exchange offer, and subject to the establishment of such accounts, any financial
institution that is a participant in The Depository Trust Company's system may
make book-entry delivery of original notes by causing The Depository Trust
Company to transfer such original notes into the exchange agent's account with
respect to the original notes in accordance with The Depository Trust Company's
procedures for such transfer. Although delivery of the original notes may be
effected through book-entry transfer into the exchange agent's account at The
Depository Trust Company, an appropriate letter of transmittal properly
completed and duly executed with any required signature guarantee, or an agent's
message in lieu of the letter of transmittal, and all other required documents
must in each case be transmitted to and received or confirmed by the exchange
agent at its address set forth below on or prior to the expiration date, or, if
the guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to The
Depository Trust Company does not constitute delivery to the exchange agent.

GUARANTEED DELIVERY PROCEDURES

     Holders who wish to tender their original notes and

          (a) whose original notes are not immediately available or

          (b) who cannot deliver their original notes, the letter of transmittal
     or any other required documents to the exchange agent prior to the
     expiration date, may effect a tender if:

             (1) the tender is made through an eligible institution;

             (2) prior to the expiration date, the exchange agent receives from
        such eligible institution a properly completed and duly executed Notice
        of Guaranteed Delivery, by facsimile transmission, mail or hand
        delivery, setting forth the name and address of the holder of the
        original notes, the certificate number or numbers of such original notes
        and the principal amount of original notes tendered, stating that the
        tender is being made thereby, and guaranteeing that, within three
        business days after the expiration date, the letter of transmittal, or
        facsimile thereof or agent's message in lieu of the letter of
        transmittal, together with the certificate(s) representing the original
        notes to be tendered in proper form for transfer and any other documents
        required by the letter of transmittal will be deposited by the eligible
        institution with the exchange agent; and

             (3) such properly completed and executed letter of transmittal (or
        facsimile thereof) together with the certificate(s) representing all
        tendered original notes in proper form for transfer and all other
        documents required by the letter of transmittal are received by the
        exchange agent within three business days after the expiration date.

                                        71
   76

WITHDRAWAL OF TENDERS

     Except as otherwise provided in this prospectus, tenders of original notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date. However, where the expiration date has been extended, tenders
of original notes previously accepted for exchange as of the original expiration
date may not be withdrawn.

     To withdraw a tender of original notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth in this prospectus prior to 5:00 p.m., New York
City time, on the expiration date. Any such notice of withdrawal must:

          (a) specify the name of the depositor, who is the person having
     deposited the original notes to be withdrawn,

          (b) identify the original notes to be withdrawn, including the
     certificate number or numbers and principal amount of such original notes
     or, in the case of original notes transferred by book-entry transfer, the
     name and number of the account at The Depository Trust Company to be
     credited,

          (c) be signed by the depositor in the same manner as the original
     signature on the letter of transmittal by which such original notes were
     tendered, including any required signature guarantees, or be accompanied by
     documents of transfer sufficient to have the trustee with respect to the
     original notes register the transfer of such original notes into the name
     of the depositor withdrawing the tender and

          (d) specify the name in which any such original notes are to be
     registered, if different from that of the depositor. All questions as to
     the validity, form and eligibility, including time of receipt, of such
     withdrawal notices will be determined by us, and our determination shall be
     final and binding on all parties. Any original notes so withdrawn will be
     deemed not to have been validly tendered for purposes of the exchange offer
     and no new notes will be issued with respect to the original notes
     withdrawn unless the original notes so withdrawn are validly retendered.
     Any original notes which have been tendered but which are not accepted for
     exchange will be returned to its holder without cost to such holder as soon
     as practicable after withdrawal, rejection of tender or termination of the
     exchange offer. Properly withdrawn original notes may be retendered by
     following one of the procedures described above under "-- Procedures for
     Tendering" at any time prior to the expiration date.

CONDITIONS

     Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange, any new notes for any original
notes, and may terminate or amend the exchange offer before the expiration date,
if the exchange offer violates any applicable law or interpretation by the staff
of the Securities and Exchange Commission.

     If we determine in our reasonable discretion that the foregoing condition
exists, we may

          (1) refuse to accept any original notes and return all tendered
     original notes to the tendering holders,

          (2) extend the exchange offer and retain all original notes tendered
     prior to the expiration of the exchange offer, subject, however, to the
     rights of holders who tendered such original notes to withdraw their
     tendered original notes, or

          (3) waive such condition, if permissible, with respect to the exchange
     offer and accept all properly tendered original notes which have not been
     withdrawn. If such waiver constitutes a

                                        72
   77

     material change to the exchange offer, we will promptly disclose such
     waiver by means of a prospectus supplement that will be distributed to the
     holders, and we will extend the exchange offer as required by applicable
     law.

EXCHANGE AGENT

     The Bank of New York has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance and requests for additional copies
of this prospectus or of the letter of transmittal should be directed to The
Bank of New York addressed as follows:

                         For Information by Telephone:
                                 (212) 815-5788

                              The Bank of New York

<Table>
                                            
             By Overnight Courier                                 By Hand:
        or Registered/Certified Mail:                       The Bank of New York
             The Bank of New York                            101 Barclay Street
             Reorganization Unit                          New York, New York
10286
           101 Barclay Street -- 7E                   Corporate Trust Services
Window
           New York, New York 10286                             Ground Level
          Attn: Mr. William Buckley                         Attn: Reorg Unit-7E
</Table>

                           By Facsimile Transmission:
                                 (212) 815-6339
                            (Telephone Confirmation)
                                 (212) 815-5788

     The Bank of New York is an affiliate of the trustee under the indentures
governing the notes.

FEES AND EXPENSES

     We have agreed to bear the expenses of the exchange offer pursuant to the
exchange and registration rights agreements. We have not retained any
dealer-manager in connection with the exchange offer and will not make any
payments to brokers, dealers or others soliciting acceptances of the exchange
offer. We, however, will pay the exchange agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket expenses
in connection with providing the services.

     The cash expenses to be incurred in connection with the exchange offer will
be paid by us. Such expenses include fees and expenses of The Bank of New York
as exchange agent, accounting and legal fees and printing costs, among others.

ACCOUNTING TREATMENT

     The new notes will be recorded at the same carrying value as the original
notes as reflected in our accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by us.
The expenses of the exchange offer and the unamortized expenses related to the
issuance of the original notes will be amortized over the term of the notes.

                                        73
   78

CONSEQUENCES OF FAILURE TO EXCHANGE

     Holders of original notes who are eligible to participate in the exchange
offer but who do not tender their original notes will not have any further
registration rights, and their original notes will continue to be subject to
restrictions on transfer. Accordingly, such original notes may be resold only

     - to us, upon redemption of these notes or otherwise,

     - so long as the original notes are eligible for resale pursuant to Rule
       144A under the Securities Act, to a person inside the United States whom
       the seller reasonably believes is a qualified institutional buyer within
       the meaning of Rule 144A in a transaction meeting the requirements of
       Rule 144A,

     - in accordance with Rule 144 under the Securities Act, or under another
       exemption from the registration requirements of the Securities Act, and
       based upon an opinion of counsel reasonably acceptable to us,

     - outside the United States to a foreign person in a transaction meeting
       the requirements of Rule 904 under the Securities Act, or

     - under an effective registration statement under the Securities Act,

in each case in accordance with any applicable securities laws of any state of
the United States.

REGULATORY APPROVALS

     We do not believe that the receipt of any material federal or state
regulatory approval will be necessary in connection with the exchange offer,
other than the effectiveness of the exchange offer registration statement under
the Securities Act.

OTHER

     Participation in the exchange offer is voluntary and holders of original
notes should carefully consider whether to accept the terms and condition of
this exchange offer. Holders of the original notes are urged to consult their
financial and tax advisors in making their own decisions on what action to take
with respect to the exchange offer.

                                        74
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                                    BUSINESS

OVERVIEW

     Charter Communications Holdings, operating through its subsidiaries, is the
fourth largest operator of cable systems in the United States. Charter
Communications Holdings Capital Corporation is a wholly owned subsidiary of
Charter Holdings and was formed and exists solely as a co-issuer of our public
debt. Through our broadband network of coaxial and fiber optic cable, we provide
video, data, interactive and private business network services to approximately
7 million customers in 40 states. All of our systems offer traditional analog
cable television. We also offer digital television, along with an array of
advanced products and services such as high-speed Internet access, interactive
video programming and video-on-demand, in an increasing number of our systems.
We continue to explore opportunities to offer telephony through our broadband
network. The introduction and roll-out of new products and services represents
an important step toward the realization of our Wired World(TM) vision, where
cable's ability to transmit voice, video and data at high speeds enables it to
serve as the primary platform for the delivery of new services to the home and
workplace.

     For the year ended December 31, 2000, pro forma for the acquisitions
completed since the beginning of 2000, including the AT&T transactions in 2001,
our revenues would have been approximately $3.6 billion.

     Mr. Allen, the principal owner of Charter Communications, Inc. and one of
the computer industry's visionaries, has long believed in a Wired World in which
cable technology will facilitate the convergence of television, computers and
telecommunications. We believe cable's ability to deliver voice, video and data
at high speeds will enable it to serve as the primary platform for the delivery
of new services to the home and workplace.

BUSINESS STRATEGY

     Our ultimate objective is to increase our customer base and the amount of
cash flow per customer. To achieve this objective, we are pursuing the following
strategies:

     BUILD AND OPERATE A TECHNOLOGICALLY ADVANCED BROADBAND NETWORK.  We are
upgrading the technical quality and capacity of our existing systems. We will
build out new systems to a minimum bandwidth of 550 megahertz or greater, which
will allow us to:

     - offer advanced products and services, such as digital television,
       high-speed Internet access and other interactive services;

     - increase channel capacity up to 82 analog channels, and add even more
       channels and services when our bandwidth is used for digital signal
       transmission; and

     - permit two-way communication, so that Internet access does not require a
       separate telephone line and our systems can provide telephony services.

     By year-end 2002, when we anticipate that the upgrade of our existing
systems will be substantially complete, we expect that approximately 93% of our
customers will be served by cable systems with at least 550 megahertz bandwidth
capacity, 88% of our customers will be served by cable systems with at least 750
megahertz bandwidth capacity and 89% of our customers will have two-way
communication capability.

     It is anticipated that upon completion of our upgrade, approximately 87% of
our customers will be served by headends serving at least 10,000 customers.
Headends are the control centers of a cable television system, where incoming
signals are amplified, converted, processed and combined for

                                        75
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transmission to the customer. Reducing the number of headends will reduce
headend equipment and maintenance expenditures and, together with our other
upgrades, will provide enhanced picture quality and system reliability.

     In 2001, we plan to complete a national network operations center to
monitor and control all aspects of our network to enhance the reliability of our
upgraded systems and support our high-speed Internet access and other advanced
products.

     As we complete our planned upgrade and build out new systems, we will be
well positioned to migrate our customers to the digital platform and deploy new
technologically advanced products and services as they are developed.

     OFFER AN ARRAY OF ADVANCED PRODUCTS AND SERVICES.  We offer an array of
advanced products and services to our customers, consistent with our Wired
World(TM) vision. Using digital technology, we offer additional channels on our
standard service packages, create new service packages, introduce multiple
packages of premium services, increase the number of pay-per-view channels, and
offer programming of local interest. We also offer digital music services and
interactive program guides that are comprehensive guides to television program
listings that can be accessed by channel, time, date or programming type. In
addition, we offer interactive video programming, high-speed Internet access,
including Internet access over the television, and video-on-demand. We also are
currently exploring opportunities for telephony. We have entered into the Digeo,
Inc. joint venture to deliver high-speed Internet television portal services to
our customers.

     FOCUS ON THE CUSTOMER.  To maximize customer satisfaction and loyalty, we
operate our business to provide reliable, high-quality products and services and
superior customer care. We tailor our product and service packages to suit the
diverse communities we serve and satisfy local preferences for programming and
value. We maintain a strong management presence at the local system level to
improve our customer service and respond to local customer needs. We have
launched one state-of-the-art regional customer contact center that provides
customers with 24 x 7 access to specialized customer care representatives. Our
objective is to have a customer contact center serving each of our 12 operating
regions. We believe that our customer service efforts have contributed to our
superior customer growth and will strengthen the Charter brand name and increase
acceptance of our new advanced products and services.

     EMPLOY INNOVATIVE MARKETING.  We have developed and successfully
implemented a variety of innovative marketing techniques to attract new
customers, win back former customers, and increase revenue per customer. Our
marketing efforts focus on offering Charter-branded entertainment and
information services that provide value, choice, convenience and quality to our
customers. We offer our expanded product and service offerings on a stand-alone
basis and in varied packages that result in an attractive price/value
relationship. We utilize database marketing to target audiences through direct
mail and telemarketing. In addition, we promote our services in media
advertising, by door-to-door selling and through e-marketing. We are
implementing a retail sales strategy in coordination with consumer electronics
retailers and other retailers. In addition, we have retention and loyalty
program for retaining customers that includes televised advertising to reinforce
the link between quality service and the Charter brand name.

CHARTER ORGANIZATIONAL STRUCTURE


     The following is a description of the entities in our organizational
structure and how they relate to us. In our discussion of the following
entities, we make the same assumption as on page 2 with respect to our
organizational chart. All percentages are as of June 30, 2001.



     OWNERSHIP OF CHARTER COMMUNICATIONS, INC.  Mr. Allen owns approximately
3.7% of the outstanding capital stock of Charter Communications, Inc. and
controls approximately 92.0% of the voting power of Charter Communications,
Inc.'s capital stock. The remaining equity interests and


                                        76
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voting power are held by the public. Mr. Allen's voting control arises from his
ownership of Charter Communications, Inc.'s high-vote Class B common stock, his
Class A common stock and his ownership interests in Vulcan Cable III and Charter
Investment, both of which own membership units in Charter Communications Holding
Company that are exchangeable for shares of high-vote Class B common stock of
Charter Communications, Inc.

     Charter Communications, Inc. is the issuer of $750.0 million principal
amount of 5.75% convertible senior notes issued in October and November 2000 and
$550.0 million principal amount of 4.75% convertible senior notes issued in May
2001.

     The following table sets forth information as of June 30, 2001 with respect
to the outstanding shares of common stock of Charter Communications, Inc. and
pro forma for the exchange of membership units in two of its subsidiaries
(Charter Communications Holding Company and CC VIII, LLC), which are
exchangeable for shares of Charter Communications, Inc. Class A common stock on
a one-for-one basis at any time.

<Table>
<Caption>
                                                                         PRO
FORMA FOR EXCHANGE OF
                                              AS OF JUNE 30, 2001
EQUITY IN SUBSIDIARIES
                                          ---------------------------
- --------------------------
                                           NUMBER OF      PERCENT OF      NUMBER
OF     PERCENT OF
                                            SHARES       TOTAL SHARES
SHARES         SHARES
                                          OUTSTANDING    OUTSTANDING
OUTSTANDING    OUTSTANDING
                                          -----------    ------------
- -----------    -----------
                                                                
       
Class A Common Stock....................  294,095,712        99.98%
294,095,712       44.73%
Class B Common Stock....................       50,000         0.02
50,000      .00001
                                          -----------       ------
- -----------      ------
     Total Common Stock Outstanding.....  294,145,712       100.00%
294,145,712       44.73%
                                          ===========       ======
===========      ======
Exchangeable Equity in Subsidiaries:
  Charter Investment, Inc.(a)...........
217,585,246       33.09%
  Vulcan Cable III Inc.(a)..............
106,715,233       16.23
  Sellers of Bresnan cable systems(b)...
39,105,495        5.95

- -----------      ------
     Total Pro Forma Common Stock
       Outstanding......................
657,551,686      100.00%

===========      ======
</Table>

- ---------------
(a) Assumes exchange of units in Charter Communications Holding Company held by
    such entities. Both Charter Investment, Inc. and Vulcan Cable III, Inc. are
    controlled by Paul G. Allen.

(b) Assumes exchange of membership units in Charter Communications Holding
    Company and CC VIII, LLC held by such persons.


     VULCAN CABLE III INC.  Vulcan Cable III has an 16.9% equity interest and no
voting rights in Charter Communications Holding Company. Vulcan Cable III's
membership units in Charter Communications Holding Company are exchangeable for
shares of Charter Communications, Inc. Class B common stock on a one-for-one
basis at any time. Mr. Allen owns 100% of the outstanding capital stock of
Vulcan Cable III.



     CHARTER INVESTMENT, INC.  Charter Investment, Inc. has a 34.4% equity
interest and no voting rights in Charter Communications Holding Company. Charter
Investment's membership units in Charter Communications Holding Company are
exchangeable for shares of Charter Communications, Inc. Class B common stock at
any time on a one-for-one basis. Mr. Allen owns approximately 96.8% of the
outstanding capital stock of Charter Investment. The remaining 3.2% equity is
beneficially owned by our founders, Jerald L. Kent, Howard L. Wood and Barry L.
Babcock.


     SELLERS OF BRESNAN CABLE SYSTEMS.  Upon the closing of the Bresnan
acquisition, some of the sellers received a portion of their purchase price in
the form of equity interests in subsidiaries of Charter Communications, Inc.
rather than in cash. The common membership units in Charter Communications
Holding Company and the preferred membership units in CC VIII, LLC which

                                        77
   82


were issued to these sellers are exchangeable for shares of Charter
Communications, Inc. Class A common stock on a one-for-one basis at any time. If
all of the Bresnan sellers exchanged their membership units in Charter
Communications Holding Company or such indirect subsidiary, as applicable, these
equity holders as a group would have a total 5.9% equity interest in Charter
Communications, Inc.



     CHARTER COMMUNICATIONS HOLDING COMPANY, LLC.  Charter Communications
Holding Company is our direct 100% parent. Charter Communications Holding
Company is owned 46.4% by Charter Communications, Inc., 16.9% by Vulcan Cable
III Inc., 34.4% by Charter Investment and 2.3% by certain sellers in our Bresnan
acquisition. Charter Communications, Inc. controls 100% of the voting power of
Charter Communications Holding Company. All of the outstanding membership units
in Charter Communications Holding Company held by Vulcan Cable III and Charter
Investment are exchangeable for shares of Class B common stock of Charter
Communications, Inc. on a one-for-one basis at any time which are in turn
exchangeable for Class A common stock of Charter Communications, Inc. All of the
outstanding membership units held by Bresnan sellers are exchangeable for shares
of Class A common stock of Charter Communications, Inc. on a one-for-one basis
at any time.


     CHARTER COMMUNICATIONS HOLDINGS, LLC.  Charter Holdings is a co-issuer of
the notes, $3.575 billion aggregate principal amount of notes issued in March
1999, $1.532 billion aggregate principal amount of notes issued in January 2000
and $2.075 billion aggregate principal amount of notes issued in January 2001.
Charter Holdings owns 100% of Charter Communications Holdings Capital
Corporation, the co-issuer of the notes, and the March 1999, January 2000 and
January 2001 Charter Holdings notes. Charter Holdings also owns the various
subsidiaries that conduct all of our cable operations, including the Charter, CC
V, CC VI, CC VII and CC VIII Companies described below.

     CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORPORATION.  Charter Capital is a
wholly owned subsidiary of Charter Holdings and a co-issuer of the notes and the
Charter Holdings notes described in the preceding paragraph.

     OPERATING SUBSIDIARIES.  These companies are subsidiaries of Charter
Holdings and own or operate all of our cable systems. There are separate credit
facilities for each of four groups of these operating subsidiaries. As indicated
below, these groups include systems acquired in the acquisitions listed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." These groups consist of:

     - the Charter Companies, including Charter Operating and its subsidiaries,
       which own or operate all of the cable systems formerly operated by
       Charter Investment under the "Charter Communications" name, and the cable
       systems acquired in the following 1999 and 2000 transactions: Marcus,
       American Cable, Greater Media, Helicon, Vista, Rifkin, South Miami,
       Farmington and Capital Cable. The Charter Companies also include the
       issuers of outstanding publicly held notes of a subsidiary acquired in
       the Renaissance acquisition;

     - the CC V and CC VIII Companies, which own or operate all of the cable
       systems acquired in the Avalon, Interlake and Bresnan acquisitions, and
       include co-issuers of outstanding publicly held notes;

     - the CC VI Companies, which own or operate all of the cable systems
       acquired in the Fanch and Kalamazoo acquisitions; and

     - the CC VII Companies, which own or operate all of the cable systems
       acquired in the Falcon acquisition.

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  ACQUISITIONS COMPLETED IN 2000

     BRESNAN.  In February 2000, Charter Communications Holding Company and
Charter Holdings purchased Bresnan Communications Company Limited Partnership
for a total purchase price of approximately $3.1 billion, consisting of
approximately $1.1 billion in cash, $1.0 billion in membership units in Charter
Communications Holding Company and CC VIII, our indirect subsidiary, and $963.3
million in assumed debt. Charter Communications Holding Company transferred its
ownership interest to us. The cable systems acquired in the Bresnan acquisition
are located in Michigan, Minnesota, Wisconsin and Nebraska and served
approximately 697,400 customers as of December 31, 2000. For the year ended
December 31, 2000, these systems had revenues of $334.7 million.

     KALAMAZOO.  In September 2000, Charter Communications, Inc. completed a
stock-for-stock merger with Cablevision of Michigan, Inc., the owner of a cable
system in Kalamazoo, Michigan, in which Charter Communications, Inc. issued
shares of its Class A common stock valued at $170.6 million. After the merger,
Charter Communications, Inc. contributed 100% of the equity interests it
acquired to Charter Communications Holding Company in exchange for membership
units. Charter Communications Holding Company in turn contributed these equity
interests to us and we in turn contributed the equity interests to a subsidiary.
The Kalamazoo system served approximately 52,100 customers as of December 31,
2000 and had revenues of approximately $21.5 million for the year ended December
31, 2000.

     OTHER ACQUISITIONS.  In 2000, we completed several other acquisitions for
an aggregate purchase price of $88 million in cash. These systems served
approximately 34,200 customers as of December 31, 2000 and had revenues of
approximately $14.0 million for the year ended December 31, 2000.

AT&T TRANSACTIONS

     In February 2001, affiliates of Charter Holdings entered into several
agreements with AT&T Broadband, LLC involving several strategic cable system
transactions that would result in a net addition of customers for the Charter
cable systems. These affiliates assigned the agreements to us and the AT&T
transactions closed in June 2001. In the AT&T transactions, we acquired cable
systems from AT&T Broadband serving approximately 554,000 customers in Missouri,
Alabama, Nevada and California for a total of $1.77 billion consisting of $1.75
billion in cash and a Charter cable system valued at $24 million. A portion of
the net proceeds from the sale of the original notes was used to pay the cash
portion of the purchase price of the AT&T transactions. Charter systems in the
Miami Beach, Florida area, originally included in the AT&T transactions, will
remain with Charter.

PRODUCTS AND SERVICES

     We offer our customers traditional cable television services and
programming as well as new and advanced high bandwidth services such as digital
television and high-speed Internet access. We plan to continue to enhance and
upgrade these services by adding new programming and other advanced products and
services as they are developed. In 2001, we are continuing to focus on our
digital television and high-speed Internet services, both of which are
increasingly desired by customers. In addition, we plan to increase the number
of markets where we offer video-on-demand services.

     TRADITIONAL CABLE TELEVISION SERVICES.  Customers subscribing to both
"basic" and "expanded basic" service generally receive a line-up of between 33
and 82 channels of television programming, depending on the bandwidth capacity
of the system. Customers who pay additional amounts can also subscribe to
additional channels, either individually or in packages, as add-ons to the basic
channels. We tailor both our basic channel line-up and our additional channel
offerings to each system

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according to demographics, programming preferences, competition, price
sensitivity and local regulation.

     Our traditional cable television service offerings include the following:

      --   BASIC CABLE.  All of our 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.

      --   EXPANDED BASIC CABLE.  This expanded programming level includes a
           package of satellite-delivered or non-broadcast channels (such as
           ESPN, CNN and Lifetime Television) in addition to the basic channel
           line-up.

      --   PREMIUM CHANNELS.  These channels provide commercial-free movies,
           sports and other special event entertainment programming. Home Box
           Office, Cinemax, Showtime, the Movie Channel, Starz and Encore are
           examples of premium channels. Although we offer subscriptions to
           premium channels on an individual basis, we are offering an
           increasing number of premium channel packages and are bundling
           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.

     ADVANCED PRODUCTS AND SERVICES.  Cable's high bandwidth is a key factor in
the successful delivery of advanced products and services. A variety of emerging
technologies and increasing Internet usage by our customer base have presented
us with substantial opportunities to expand our sources of revenue. In an
increasing number of our systems, we now offer a variety of advanced products
and services, including:

      --   digital television and its related enhancements, such as an
           interactive programming guide;

      --   high-speed Internet access via cable modems;

      --   television-based Internet access, which allows customers to access
           the Internet through the use of our two-way cable plant without the
           need for a personal computer;

      --   video-on-demand;

      --   interactive services, such as Wink, which adds interactivity and
           electronic commerce opportunities to traditional programming and
           advertising; and

      --   private network services, such as voice and data transmission
           services to a network of interconnected locations of a single
           customer.

     The following table summarizes our customer statistics for our analog and
digital cable and advanced products and services. The pro forma statistics as of
December 31, 1999 reflect all

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acquisitions in 1999 and 2000 closed since that date as if such acquisitions
occurred on January 1, 1999:

<Table>
<Caption>
                                                     AS OF AND FOR THE YEAR
ENDED

- ----------------------------
                                                        ACTUAL        PRO FORMA
                                                     DECEMBER 31,    DECEMBER
31,
                                                         2000            1999
                                                     ------------
- ------------
                                                               
VIDEO SERVICES
Basic cable (analog signal)
  Homes passed(a)..................................   10,225,000      9,970,000
  Basic customers(b)...............................    6,350,900      6,193,700
  Penetration(c)...................................         62.1%          62.1%

Digital cable
  Homes passed(a)..................................    8,793,000      4,675,000
  Digital customers................................    1,069,500        155,400
  Penetration(c)...................................         12.2%           3.3%
  Number of digital terminals deployed.............    1,336,900        176,600

INTERNET AND OTHER DATA SERVICES
Cable modem high-speed Internet access
  Homes passed(a)..................................    5,550,800      4,422,000
  Cable modem customers............................      252,400         84,400
  Penetration......................................          4.5%           1.9%

Television-based Internet access
  Homes passed(a)..................................      472,100        429,000
  TV Internet customers............................        9,700          7,100
  Penetration......................................          2.1%           1.7%

INTERACTIVE TELEVISION (WINK)
  Homes passed(a)..................................    3,271,430        983,239
  Interactive TV customers.........................      304,362         39,477
</Table>

<Table>
<Caption>
                                                     PRO FORMA FOR THE YEAR
ENDED

- ----------------------------
                                                     DECEMBER 31,    DECEMBER
31,
                                                         2000            1999
                                                     ------------
- ------------
                                                               
Average monthly pro forma revenue per basic
  customer(b)(d)...................................     $43.31          $39.70
Average monthly pro forma operating cash flow per
  basic customer(b)(e).............................     $20.52          $17.67
</Table>

- ---------------
(a) Homes passed are the number of living units, such as single residence homes,
    apartments and condominium units, passed by the cable television
    distribution network in a given cable system service area to which we offer
    the named service.

(b) Basic customers are customers who receive basic cable service. All of our
    customers, including those receiving digital or advanced services, receive
    basic cable service.

(c) Penetration represents customers as a percentage of homes passed.

(d) Average pro forma monthly revenue per basic customer represents pro forma
    revenues from all sources, adjusted to illustrate the effect of all 1999 and
    2000 acquisitions as if they had closed on January 1, 1999, divided by
    twelve, divided by the number of basic customers at the end of the year
    (actual for December 31, 2000 and pro forma for December 31, 1999).

(e) Average pro forma monthly operating cash flow per basic customer represents
    operating cash flow (defined as revenues less the sum of operating, general
    and administrative expenses and corporate expense charges-related party),
    adjusted to illustrate the effect of all 1999 and 2000 acquisitions as if
    they had closed on January 1, 1999, divided by twelve, divided by the number
    of basic customers at the end of the year (actual for December 31, 2000 and
    pro forma for December 31, 1999).

     DIGITAL TELEVISION.  As part of our systems upgrade, we are installing
headend equipment capable of delivering digitally encoded cable transmissions to
a two-way digital-capable set-top terminal in the customer's home. This digital
connection offers significant advantages. For example,

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we can compress the digital signal to allow the transmission of up to twelve
digital channels in the bandwidth normally used by one analog channel. The
increased channel capacity will allow us to increase both programming and
service offerings, including offering video-on-demand to pay-per-view customers.

     We offer digital service to our customers in several different service
combination packages. All digital packages include a digital set-top terminal,
an interactive electronic programming guide, 45 channels of CD quality digital
music, an expanded menu of pay-per-view channels and at least thirty additional
digital channels. Certain digital packages also offer customers 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 broadcast (such as east and west coast time slots) or
programming content theme (such as westerns or romance). Other digital packages
bundle digital television with other advanced services, such as Internet access.

     We expect to increase our digital customers to approximately two million
and our digital penetration to over 30% of digital homes passed by December 31,
2001.


     CABLE MODEM-BASED HIGH-SPEED INTERNET ACCESS.  We offer high-speed data and
Internet access to our residential customers primarily via cable modems attached
to personal computers, at speeds of up to approximately 50 times the speed of a
conventional telephone modem. By December 31, 2001, we expect to have
approximately 550,000 to 600,000 cable-modem high-speed Internet customers.


     We generally offer high-speed Internet access services under the Charter
Pipeline(TM) brand. In some of our markets, however, our cable modem and
Internet access service is a co-branded service with an Internet service
provider.

     TRADITIONAL DIAL-UP MODEM INTERNET ACCESS.  Traditional dial-up Internet
access is available upon customer request in a limited number of our markets
where two-way cable modem Internet access is not yet available.

     TV-BASED INTERNET ACCESS.  We also have agreements with WorldGate, ICTV and
Digeo to offer our residential customers high-speed Internet access over the
television.

     Our WorldGate television-based Internet access service offers easy,
low-cost Internet access to customers at connection speeds ranging up to 128
kilobits per second. This service, with its user-friendly interface, appeals to
first-time Internet users and does not require the use of a PC, an existing or
additional telephone line, or any additional equipment. The Internet domain name
of the customers who use this service is "Charter.net." This allows customers to
switch or expand to our other Internet services without a change of e-mail
address.

     During 2001, we expect to offer Digeo, Inc.'s television-based Internet
access service in several markets. The Digeo product is designed to blend the
power of the Internet with the convenience of the television. Through the use of
an advanced digital set-top terminal, customers will be able to access
Internet-based streaming media on the television, including both local and
national news, sports and entertainment. The Internet domain name of customers
using this service will be "Charter TV." The Digeo product is a "portal," which
is an Internet web site that serves as a user's initial point of entry to the
World Wide Web. By offering selected content, services and links to other web
sites, a portal guides and directs users through the World Wide Web. In
addition, the portal generates revenues from advertising on its own web pages
and by sharing revenues generated by linked or featured web sites.

     We plan to use Digeo as our television-based portal for an initial six-year
period. A Charter subsidiary and an affiliate of Mr. Allen own equity interests
in Digeo. See "Certain Relationships and Related Transactions -- Business
Relationships."

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     VIDEO-ON-DEMAND.  In 2000, we began the roll-out of video-on-demand (VOD)
service to digital customers in some of our markets. With VOD service, customers
can access hundreds of movies and other programming at any time, with digital
picture quality. VOD allows full VCR functionality, including the ability to
pause, rewind and fast-forward programs. Customers can also stop a program and
resume watching it several hours later during the rental period. In addition,
the VOD programming available in a particular market can be customized for
market-based or customer preferences and local interest. For example, foreign
language or other local programming could be offered in markets where such
programming is likely to appeal to customers. Generally, customers pay for VOD
(such as movies) on a per-selection basis. Some VOD programming is also
available on a category basis (such as children's programming) for a single
monthly fee.

     At December 31, 2000, VOD was available to approximately 170,000 homes in
our Los Angeles and Atlanta markets with approximately 450 titles available to
customers. We expect VOD to be available to approximately 2.2 million homes
passed by the end of 2001. In systems where VOD is available, it is included as
a standard feature of our digital service packages. We utilize DIVA Systems
Corporation, a company providing interactive VOD products and services to the
cable industry, to provide us with hardware, software, programming and
operational support.


     INTERACTIVE VIDEO PROGRAMMING.  We provide interactive programming using
technology developed by Wink Communications, Inc. The Wink technology embeds
interactive features, such as additional information and statistics about a
television program or the option to order an advertised product, into
programming and advertisements. A customer with a Wink-enabled set-top terminal
and a Wink-enabled cable provider sees an icon flash on the screen when
additional Wink features are available to enhance a program or advertisement. By
pressing the select button on a standard remote control, a viewer of a
Wink-enhanced program is able to access additional information regarding such
program, including, for example, information on prior episodes or the program's
characters. A viewer watching an advertisement would be able to access
additional information regarding the advertised product and may also be able to
utilize the two-way transmission features to order a product. We have bundled
Wink's services with our traditional cable services in both our advanced analog
and digital platforms. Wink's services are provided free of charge to the
customer. A company controlled by Mr. Allen has an approximate 3% equity
interest in Wink.


     Various programming networks, including CNN, NBC, ESPN, HBO, Showtime,
Lifetime, VH1, the Weather Channel and Nickelodeon, together currently produce
over 2,000 hours of Wink-enhanced programming per week. Under certain
revenue-sharing arrangements, we will modify our headend technology to allow
Wink-enabled programming to be offered on our systems. We receive fees from Wink
each time one of our customers uses Wink to request certain additional
information or order advertised products. Our customers average approximately
246,000 clicks per week on Wink icons.

     PRIVATE BUSINESS NETWORKS.  During 2000, we established Charter Business
Networks as a separate division to offer integrated network solutions for data,
video, Internet and private voice communications to commercial and institutional
customers in certain of our markets. These solutions include virtual local area
and wide area networks with bandwidth and Internet access capacity based on
customer needs, supported by remote monitoring.

     TELEPHONY/VOICE SERVICES.  We expect to be able to offer cable telephony
services by the end of 2003 in selected markets using our systems' direct,
two-way connections to homes and other buildings. We are exploring technologies
using Internet protocol telephony to transmit digital voice signals over our
systems. We have already begun an Internet protocol (IP) telephony trial in
Wisconsin, and expect to launch a second trial in St. Louis in 2001. We have
marketed telephony services as a competitive access provider in the State of
Wisconsin through one of our subsidiaries, and are currently looking to expand
our services as a competitive access provider into other states.

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     OTHER NEW BUSINESS INITIATIVES.  We are seeking to provide our customers in
2001 with advanced digital set-top terminals that include digital video
recording capabilities (commonly referred to as "DVR"). Built-in DVR capability
in the set-top terminal will enable customers to store video, audio and Internet
content. We are also exploring deployment of wireless networking technology for
our cable modem customers.

     SALE OF LOCAL ADVERTISING.  We receive revenue from the sale of local
advertising on satellite-delivered networks such as MTV, CNN and ESPN. In any
particular system, we generally insert local advertising on a minimum of twelve
networks, and have covered up to 40 channels. Our system rebuild and additional
digital services launches have increased the number of channels, and made it
possible to insert local advertising.

     HOME SHOPPING.  In 2000, we also received revenues from channels devoted
exclusively to home shopping (such as HSN) and other channels that allow us to
insert infomercials during off-peak hours.

PRICING FOR OUR PRODUCTS AND SERVICES

     Our revenues are derived principally from the monthly fees our customers
pay for cable services. The rates we charge vary based on the market served and
level of service selected and are usually adjusted on an annual basis. As of
December 31, 2000, the average monthly fee was $13.16 for basic service and
$17.93 for expanded basic service. A one-time installation fee, which may be
waived in part during certain promotional periods, is charged to new customers.
We believe our rate practices are in accordance with Federal Communications
Commission Guidelines and are consistent with those prevailing in the industry
generally. See "Regulation and Legislation."

     In accordance with the Federal Communications Commission's rules, the rates
we charge for cable-related equipment, such as set-top terminals and remote
control devices, and installation services are based on actual costs plus a
permitted rate of return.

     Although our service offerings vary by market because of differences in the
bandwidth capacity of the cable systems in each of our markets and competitive
and regulatory factors, our services, when offered on a stand-alone basis, are
typically offered at monthly price ranges as follows.


<Table>
<Caption>
SERVICE                                                         PRICE RANGE
- -------                                                       ---------------
                                                           
Basic cable.................................................  $ 9.95 - $14.00
Expanded basic cable........................................  $15.00 - $29.00
Premium channel.............................................  $10.95 - $13.50
Pay-Per-View (per movie or event)...........................  $ 2.95 - $50.95
Digital cable video packages................................  $45.95 - $59.95
High-speed Internet access by cable modem...................  $29.95 - $39.95
Video-on-Demand (per selection).............................  $ 0.99 - $ 9.95
</Table>


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     The following table indicates the states covered by, and customer data for,
each of our operating regions as of December 31, 2000.

<Table>
<Caption>

   NUMBER OF
REGION                                               STATES COVERED
   CUSTOMERS
- ------                                               --------------
   ---------
                                      
   
WESTERN DIVISION
Central................................  Missouri, Illinois, Indiana, Arkansas
    486,800
North Central..........................  Wisconsin, Minnesota
    806,400
Southern California....................  Central and Southern California
    642,200
Northwest..............................  Northern California, Idaho, Oregon,
                                           Washington
    486,200
Michigan...............................  Michigan
    621,300
National...............................  Colorado, Kansas, Nebraska, New Mexico,
                                           Oklahoma, Texas, Utah, Arizona,
                                           Nevada
    461,200
EASTERN DIVISION
Southeast..............................  North Carolina, South Carolina
    568,400
South-Atlantic.........................  Georgia, Florida
    391,400
Mid-South..............................  Georgia, Kentucky, Tennessee
    557,800
Northeast..............................  Connecticut, Massachusetts, New York,
                                           Vermont, New Hampshire
    364,100
Gulf Coast.............................  Alabama, Louisiana, Mississippi
    427,400
Mid-Atlantic...........................  Maryland, New York, Ohio, Pennsylvania
                                           Virginia, W. Virginia, Delaware
    537,700
</Table>

OUR NETWORK TECHNOLOGY

     As of December 31, 2000, our cable systems consisted of approximately
220,347 sheath miles, including approximately 29,829 sheath miles of fiber optic
cable, passing approximately 10.2 million households and serving approximately
6.4 million customers. Fiber optic cable is a communication medium that uses
glass fibers to transmit signals over long distances with minimum signal loss or
distortion.

     The following table describes the current technological state of our
systems as of December 31, 2000 and the anticipated progress of planned upgrades
through 2002, based on the percentage of our customers who will have access to
the bandwidths listed below and two-way capability.

<Table>
<Caption>
                                       550 MEGAHERTZ
                         LESS THAN          TO
       TWO-WAY
                       550 MEGAHERTZ   660 MEGAHERTZ   750 MEGAHERTZ   870
MEGAHERTZ   CAPABILITY
                       -------------   -------------   -------------
- -------------   ----------
                                                           
      
December 31, 2000....       33.4%          12.6%           37.5%           16.5%
         57.1%
December 31, 2001....       19.6%          12.8%           39.3%           28.3%
         70.8%
December 31, 2002....        6.9%           5.5%           43.8%           43.8%
         89.0%
</Table>

     We have adopted the hybrid fiber coaxial cable (HFC) architecture as the
standard for our ongoing systems upgrades. HFC architecture combines the use of
fiber optic cable with coaxial cable. 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 380 homes passed. Our system design provides
for six strands of fiber to each node, with two strands

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activated and four strands reserved for future services (sometimes referred to
as "dark fiber"). We believe that this hybrid network design provides high
capacity and superior signal quality, and will enable us to provide the newest
forms of telecommunications services to our customers. It 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 otherwise occur with two-way communication
       capability;

     - improved picture quality and service reliability; and

     - operating efficiencies resulting from a reduced number of headends.

     In 2001, we will have a fully operational national network operations
center to monitor our networks and ensure maximum quality of service. Monitoring
becomes increasingly important as we increase the number of customers utilizing
two-way high-speed data service. We plan to open regional operations centers in
the future to augment our national center on an as-needed basis.

MANAGEMENT OF OUR SYSTEMS

     Our operating philosophy emphasizes decentralized management, with
decisions being made as close to the customer as possible. We are organized in
two divisions that contain a total of twelve operating regions. Each of the two
divisions is managed by a Senior Vice President, who is responsible for the
overall supervision of the operating regions within the division. Each operating
region is managed by a Senior Vice President or a Vice President, supported by
operational, marketing and engineering personnel at the regional and local
system level. Our consolidation of certain functions at the regional level has
resulted in numerous operating efficiencies and superior customer care. At the
same time, our centralized financial management by our corporate office enables
us to set financial and operating benchmarks and monitor system performance on
an ongoing basis. Our corporate office also performs certain financial control
functions such as accounting, finance and acquisitions, payroll and benefit
administration, internal audit, purchasing and programming contract
administration on a centralized basis.

SALES AND MARKETING

     We have a centralized team responsible for overseeing the sales and the
marketing strategies of our individual systems. For most of our systems with
over 30,000 customers we have a dedicated marketing manager, while smaller
systems are handled regionally. We believe our success in marketing comes in
large part from new and innovative ideas and from good interaction, quick
information flow and sharing of best practices between our corporate office,
which handles programs and administration, and our field offices, which
implement the various programs. In addition, we constantly monitor the
regulatory arena, customer perception, competition, pricing and product
preferences to increase our responsiveness to our customers.

     Our long-term marketing objective is to increase our cash flow through
deeper market penetration and growth in revenue per household. We hope that
customers will come to view their cable connection as the best "pipeline" to the
home for a multitude of services. To achieve this objective, we are pursuing the
following strategies:

      --   increase the number of residential consumers who subscribe to digital
           service, which enables them to receive a greater number of television
           channels and interactive services;

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      --   introduce new advanced products and services;

      --   design product offerings to enable greater opportunity for customer
           entertainment and information choices;

      --   package product offerings to promote the sale of premium services and
           niche programming providing an attractive price/value relationship
           with our customers;

      --   target marketing opportunities based on geodemographic data and past
           purchasing behavior;

      --   develop specialized programs to attract former customers, households
           that have never subscribed and customers of competitive services; and

      --   employ Charter branding of products to promote customer awareness and
           loyalty.

     We invest significant amounts of time, effort and financial resources in
marketing new and existing services. To increase customer penetration and
increase the level of services used by our customers, we use coordinated
marketing techniques, including door-to-door solicitation, telemarketing, media
advertising, e-marketing and direct mail solicitation. We believe we have one of
the cable industry's highest success rates in attracting and retaining customers
who have never before subscribed to cable services.

     In 2001, we began to sell our services through consumer electronics
retailers and other retailers that sell televisions or cable modems.

  PROGRAMMING

     GENERAL.  We believe that offering a wide variety of conveniently scheduled
programming is an important factor influencing a customer's decision to
subscribe to and retain our cable services. We devote considerable resources to
obtaining access to a wide range of programming that we believe will appeal to
both existing and potential customers. We rely on extensive 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 support for the launch of a new channel and ongoing marketing support.
We also try to negotiate volume discount pricing structures.

     COSTS.  Programming tends to be made available to us for a flat fee per
customer. However, some channels are available without cost to us. In connection
with the launch of a new channel, we may receive a distribution fee to support
the channel launch. For home shopping channels, we receive a percentage of the
amount spent in home shopping purchases by our customers on channels we carry.

     Our cable programming costs have increased in recent years and are expected
to continue to increase due to factors including:

      --   system acquisitions that increase the number of customers;

      --   additional programming being provided to customers as a result of
           system rebuilds that increase channel capacity;

      --   increased cost to produce or purchase cable programming; and

      --   inflationary or negotiated annual increases.

     In every year we have operated, our costs to acquire programming have
exceeded customary inflationary and cost-of-living type increases. In
particular, sports programming costs have increased

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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.

     Under rate regulations of the Federal Communications Commission, cable
operators may increase their rates to customers to cover increased costs for
programming, subject to certain limitations. See "Regulation and Legislation."

  FRANCHISES

     As of December 31, 2000, our systems operated pursuant to a total of
approximately 4,520 franchises, permits and similar authorizations issued by
local and state governmental authorities. Each franchise is awarded by a
governmental authority and is usually not transferable unless the granting
governmental authority consents. 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 gross
revenues as defined by the franchise agreements, which is the maximum amount
that may be charged under the applicable law.

     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 and often involves substantial
expense. The Communications Act provides for an orderly franchise renewal
process in which granting authorities may not unreasonably withhold renewals. If
a renewal is withheld and the granting authority takes over operation of the
affected cable system or awards the cable franchise to another party, the
granting authority must pay the existing cable operator the "fair market value"
of the system. The Communications Act also established comprehensive renewal
procedures requiring that an incumbent franchisee's renewal application be
evaluated on its own merit and not as part of a comparative process with
competing applications. In connection with the franchise renewal process, many
governmental authorities require the cable operator to make certain commitments,
such as technological upgrades to the system, which may require substantial
capital expenditures. We cannot assure you that any particular franchise will be
renewed or that it can be renewed on commercially favorable terms. Our failure
to obtain renewals of our franchises, especially those in major metropolitan
areas where we have the most customers, would have a material adverse effect on
our business, results of operations and financial condition. Approximately 44%
of our franchises covering approximately 42% of our basic cable customers expire
within five years after December 31, 2000.

     Under 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.

     We believe our relations with the franchising authorities under which our
systems are operated are generally good. Substantially all of the material
franchises relating to our systems which are eligible for renewal have been
renewed or extended at or prior to their stated expiration dates.

CUSTOMER CARE

     Maximizing customer satisfaction is a key element of our business strategy.
In support of our commitment to customer satisfaction, we operate a 24-hour
customer service hotline for nearly all of our systems and offer on-time
installation and service guarantees.

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     To better serve our customers, we are consolidating some of our local
customer care functions at the regional level. At December 31, 2000, we
maintained 22 call centers handling approximately 56% of our customers,
including our first state-of-the-art regional customer contact center that was
established in 2000. We expect to complete six additional state-of-the-art
regional customer contact centers in 2001. By establishing regional customer
contact centers, we are able to service our customers 24 hours a day, seven days
a week, with highly trained personnel. These regional centers utilize
state-of-the-art equipment that enhances all interactions with our customers and
provides a high-performance employee environment. Our customer care specialists
receive extensive training to develop customer contact skills and product
knowledge critical to high rates of customer retention as well as to selling
additional services and higher levels of service to our customers. We expect
that our customer care functions will benefit from the additional technologies
available when our national and regional network operations centers are opened.
We utilize surveys, focus groups and other research tools as part of our efforts
to determine and respond to customer needs.

     Consistent with our focus on customer satisfaction, we have implemented
stringent customer care standards that we believe meet or exceed those
established by the National Cable Television Association, the Washington,
D.C.-based trade association for the cable industry. It is our policy that if an
installer is late for a scheduled appointment the customer receives free
installation, and if a service technician is late for a service call the
customer receives a $20 credit.

COMPETITION

     We face competition in the areas of price, service offerings and service
reliability. We compete with other providers of television signals and other
sources of home entertainment. In addition, as we expand into additional
services such as interactive services and telephony, we will face competition
from other providers of each type of service. See "Risk Factors." We operate in
a very competitive business environment which can adversely affect our business
and operations.

     Through business developments such as the merger of Tele-Communications,
Inc. and AT&T and the merger of America Online, Inc. (AOL) and Time Warner Inc.,
customers have come to expect a variety of services from a single provider.
While these mergers are not expected to have a direct or immediate impact on our
business, they encourage providers of cable and telecommunications services to
expand their service offerings. They also encourage consolidation in the cable
industry as cable operators recognize the competitive benefits of a large
customer base and expanded financial resources.

     Our key competitors include:

     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. The recent licensing of digital spectrum by the Federal
Communications Commission will provide incumbent television licenses 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.

     DBS.  Direct broadcast satellite, known as 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 more than 15 million subscribers nationwide. DBS service allows the
subscriber to receive video services directly via satellite using a relatively
small dish antenna. Moreover, video compression technology allows DBS providers
to offer more than 100 digital channels, thereby surpassing the typical analog
cable system. DBS companies historically were

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prohibited from retransmitting popular local broadcast programming. However, a
change to the copyright laws in November 1999 eliminated this legal impediment.
As a result, DBS companies now need to secure retransmission consent from the
popular broadcast stations they wish to carry, and they will face mandatory
carriage obligations of less popular broadcast stations as of January 2002. In
response to the legislation, DirecTV, Inc. and EchoStar Communications
Corporation 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. It
is, therefore, expected that DBS companies will offer local broadcast
programming only in the larger U.S. markets in the foreseeable future. The DBS
industry recently initiated a judicial challenge to the 2002 requirement
mandating carriage of less popular broadcast stations. This lawsuit alleges that
the requirement (similar to the one applicable to cable systems) is
unconstitutional. The federal district court in Virginia rejected the DBS
industry's constitutional challenge, but the industry already has stated that it
will appeal the ruling. EchoStar began providing high-speed Internet access in
late 2000, and DirecTV, which partnered with AOL, reports that it will begin
providing its own version of high-speed Internet access shortly.

     DSL.  The deployment of digital subscriber line technology, known as DSL,
allows Internet access to subscribers at data transmission speeds greater than
available over conventional telephone lines. DSL service therefore is
competitive with high-speed Internet access over cable systems. Several
telephone companies and other companies offer DSL service. There are bills now
before Congress that would reduce regulation of Internet services offered by
incumbent telephone companies. The Federal Communications Commission has a
policy of encouraging the deployment of DSL and similar technologies, both by
incumbent telephone companies and newer, competing telephone companies. The
Federal Communication Commission's decisions and policies in this area are
subject to change. We cannot predict the likelihood of success of the Internet
access services offered by our competitors, or the impact on our business and
operations of these competitive ventures.

     TRADITIONAL OVERBUILDS.  Cable television 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 has been a
recent increase in the number of cities that have constructed their own cable
systems, in a manner similar to city-provided utility services. There also has
been an increased 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 us. Any such overbuild
operation would require either significant access to capital or access to
facilities already in place that are capable of delivering cable television
programming.

     As of December 31, 2000, we are aware of overbuild situations in some of
our cable systems. Approximately 139,000 basic customers, or 2% of our total
basic customers, are passed by these overbuilds. Additionally, we have been
notified that franchises have been awarded, and present potential overbuild
situations, in other systems. Approximately 253,000, or 4% of our total
customers, are located in areas with potential overbuilds. 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. We

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have upgraded many of these systems to at least 750 megahertz two-way HFC
architecture, and anticipate upgrading the other systems to at least 750
megahertz by December 31, 2001.

     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-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.

     Several telephone companies have obtained or are seeking cable franchises
from local governmental authorities and are constructing cable systems.
Cross-subsidization by local exchange carriers of video and telephony services
poses a strategic advantage over cable operators seeking to compete with local
exchange carriers that provide video services. Some local exchange carriers may
choose to make broadband services available under the open video regulatory
framework of the Federal Communications Commission or through wireless
technology. In addition, local exchange carriers 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, including Internet service, as well as data and other
non-video 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. Although enthusiasm on the part of local exchange carriers appears to
have waned in recent months, the entry of telephone companies as direct
competitors in the video marketplace may become more widespread and 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. Moreover, mergers, joint ventures and alliances among
franchise, 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.

     Additionally, we are subject to competition from utilities which possess
fiber optic transmission lines capable of transmitting signals with minimal
signal distortion.

     PRIVATE CABLE.  Additional competition is posed by satellite master antenna
television systems known as "SMATV systems" serving multiple dwelling units,
referred to in the cable industry as "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 which 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. The Federal Communications Commission ruled
in 1998 that private cable operators can lease video distribution capacity from
local telephone companies and distribute cable programming services over public
rights-of-way without obtaining a cable franchise. In 1999, both the Fifth and
Seventh Circuit Courts of Appeals upheld this Federal Communications Commission
policy.

     WIRELESS DISTRIBUTION.  Cable television systems also compete with wireless
program distribution services such as multi-channel multipoint distribution
systems or "wireless cable," known as MMDS. MMDS uses low-power microwave
frequencies to transmit television programming over-the-air to

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paying customers. Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital compression
technology is likely to increase significantly the channel capacity of their
systems. Both analog and digital MMDS services require unobstructed "line of
sight" transmission paths. Analog MMDS has impacted our customer growth in
Riverside and Sacramento, California and Missoula, Montana. Digital MMDS is a
more significant competitor, presenting potential challenges to us in Los
Angeles, California and Atlanta, Georgia.

PROPERTIES

     Our principal physical assets consist of a cable television 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 television systems.

     Our cable television 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 business
offices in many of the communities served by our systems and for our principal
executive offices. We own most of our service vehicles.

     Our subsidiaries own the real property and buildings for our regional data
center and call centers and our regional and divisional administrative offices.
Our subsidiaries generally have leased space for business offices throughout our
operating regions, although an increasing number of our systems are now
purchasing property for system offices. Our headend locations are generally
located on owned or leased parcels of land, and we generally own the towers on
which our equipment is located.

     We believe that our properties are in good operating condition and are
suitable for our business operations.

EMPLOYEES

     During 2000, pursuant to a mutual services agreement between Charter
Communications, Inc. and Charter Investment, Inc., Charter Investment leased the
necessary personnel and provided services to Charter Communications, Inc. to
manage Charter Communications Holding Company and its subsidiaries, including
us. Effective January 1, 2001, Charter Investment personnel became employees of
Charter Communications Holding Company and the mutual services agreement was
amended to add Charter Communications Holding Company as a party and provide
that both Charter Investment and Charter Communications Holding Company will
provide services to Charter Communications, Inc. on a cost reimbursement basis.

     Charter Communications, Inc. currently has only 15 employees, all of whom
are senior management. The corporate office also includes employees of Charter
Communications Holding Company. The corporate office is responsible for
coordinating and overseeing our operations, including certain critical
functions, such as marketing and engineering, that are conducted by personnel at
the regional and local system level. The corporate office also performs certain
financial control functions such as accounting, finance and acquisitions,
payroll and benefit administration, internal audit, purchasing and programming
contract administration on a centralized basis.

     As of December 31, 2000, we had approximately 13,490 full-time equivalent
employees of which approximately 300 were represented by collective bargaining
agreements. We believe we have a good relationship with our employees and have
never experienced a work stoppage.

LEGAL PROCEEDINGS

     We are involved from time to time in routine legal matters and other claims
incidental to our business. We believe that the resolution of such matters,
taking into account established reserves and insurance, will not have a material
adverse impact on our consolidated financial position or results of operations.

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                           REGULATION AND LEGISLATION

     The following summary addresses the key regulatory developments and
legislation affecting the cable industry.

     The operation of a cable system is extensively regulated by the Federal
Communications Commission, some state governments and most local governments.
The Federal Communications Commission 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 Federal Communications Commission licenses needed to
operate certain transmission facilities used in connection with cable
operations. The 1996 Telecom Act has 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 also 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 Federal Communications Commission to
undertake a host of implementing rulemakings. Moreover, Congress and the Federal
Communications Commission have frequently revisited the subject of cable
regulation. Future legislative and regulatory changes could adversely affect our
operations, and there have been calls in Congress and at the Federal
Communications Commission to maintain or even tighten cable regulation in the
absence of widespread effective competition.

     CABLE RATE REGULATION.  The 1992 Cable Act imposed an extensive rate
regulation regime on the cable television industry, which limited the ability of
cable companies to increase subscriber fees. Under that regime, all cable
systems were subjected to rate regulation, unless they faced "effective
competition" in their local franchise area. Federal law defines "effective
competition" on a community-specific basis as requiring satisfaction of
conditions not typically satisfied in the current marketplace.

     Although the Federal Communications Commission established the underlying
regulatory scheme, local government units, commonly referred to as local
franchising authorities, are primarily responsible for administering the
regulation of the lowest level of cable service--the basic service tier, which
typically contains local broadcast stations and public, educational, and
government access channels. Before a local franchising authority begins basic
service rate regulation, it must certify to the Federal Communications
Commission that it will follow applicable federal rules. Many local franchising
authorities have voluntarily declined to exercise their authority to regulate
basic service rates. Local franchising authorities also have primary
responsibility for regulating cable equipment rates. Under federal law, charges
for various types of cable equipment must be unbundled from each other and from
monthly charges for programming services.

     As of December 31, 2000, approximately 17% of our local franchising
authorities were certified to regulate basic tier rates. The 1992 Cable Act
permits communities to certify and regulate rates at any time, so that it is
possible that additional localities served by the systems may choose to certify
and regulate basic rates in the future.

     The Federal Communications Commission historically administered rate
regulation of cable programming service tiers, which are the expanded basic
programming packages that offer services other than basic programming and which
typically contain satellite-delivered programming. As of December 31, 2000, we
had cable programming service tier rate complaints relating to approximately
414,000 customers pending at the Federal Communications Commission. Under the
1996 Telecom Act, however, the Federal Communications Commission's authority to
regulate cable programming service tier rates expired on March 31, 1999. The
Federal Communications Commission has taken

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the position that it will still adjudicate pending cable programming service
tier complaints but will strictly limit its review, and possible refund orders,
to the time period until March 31, 1999. We do not believe any adjudications
regarding these complaints will have a material adverse effect on our business.
The elimination of cable programming service tier regulation affords us
substantially greater pricing flexibility.

     Under the rate regulations of the Federal Communication Commission, most
cable systems were required to reduce their basic service tier and cable
programming service tier rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. Operators also have the opportunity to
bypass this "benchmark" regulatory scheme in favor of traditional
"cost-of-service" regulation in cases where the latter methodology appears
favorable. Cost of service regulation is a traditional form of rate regulation,
under which a utility is allowed to recover its costs of providing the regulated
service, plus a reasonable profit. The Federal Communications Commission and
Congress have provided various forms of rate relief for smaller cable systems
owned by smaller operators. Premium cable services offered on a per-channel or
per-program basis remain unregulated. However, federal law requires that the
basic service tier be offered to all cable subscribers and limits the ability of
operators to require purchase of any cable programming service tier if a
customer seeks to purchase premium services offered on a per-channel or
per-program basis, subject to a technology exception which expires in 2002.

     As noted above, Federal Communications Commission regulation of cable
programming service tier rates for all systems, regardless of size, expired
pursuant to the 1996 Telecom Act on March 31, 1999. As a result, the regulatory
requirements just discussed are now essentially applicable only to the basic
service tier and cable equipment. The 1996 Telecom Act also relaxes existing
"uniform rate" requirements by specifying that uniform rate requirements do not
apply where the operator faces "effective competition," and by exempting bulk
discounts to multiple dwelling units, although complaints about predatory
pricing still may be made to the Federal Communications Commission.

     CABLE ENTRY INTO TELECOMMUNICATIONS.  The 1996 Telecom Act creates a more
favorable environment for us to provide telecommunications services beyond
traditional video delivery. It provides that no state or local laws or
regulations may prohibit or have the effect of prohibiting any entity from
providing any interstate or intrastate telecommunications service. A cable
operator is authorized under the 1996 Telecom Act to provide telecommunications
services without obtaining a separate local franchise. States are authorized,
however, to impose "competitively neutral" requirements regarding universal
service, public safety and welfare, service quality, and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require reasonable, competitively neutral compensation for
management of the public rights-of-way when cable operators provide
telecommunications service. The favorable pole attachment rates afforded cable
operators under federal law can be gradually increased by utility companies
owning the poles, beginning in 2001, if the operator provides telecommunications
service, as well as cable service, over its plant. The Federal Communications
Commission clarified that a cable operator's favorable pole rates are not
endangered by the provision of Internet access, but a recent decision by the
Eleventh Circuit Court of Appeals disagreed and suggested that Internet traffic
is neither cable service nor telecommunications service and might leave cable
attachments that carry Internet traffic ineligible for Pole Attachment Act
protections. This decision could lead to substantial increases in pole
attachment rates, and certain utilities have already proposed vastly higher pole
attachment rates based in part on the existing court decision. The United States
Supreme Court is now reviewing this decision and the Eleventh Circuit mandate
has been stayed pending Supreme Court action.

     Cable entry into telecommunications will be affected by the rulings and
regulations implementing the 1996 Telecom Act, including the rules governing
interconnection. A cable operator offering

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telecommunications services generally needs efficient interconnection with other
telephone companies to provide a viable service. A number of details designed to
facilitate interconnection are subject to ongoing regulatory and judicial
review, but the basic obligation of incumbent telephone companies to
interconnect with competitors, such as cable companies offering telephone
service, is well established. Even so, the economic viability of different
interconnection arrangements can be greatly affected by regulatory changes.
Consequently, we cannot predict whether reasonable interconnection terms will be
available in any particular market we may choose to enter.

     INTERNET SERVICE.  Although there is at present no significant federal
regulation of cable system delivery of Internet services, and the Federal
Communications Commission has issued several reports finding no immediate need
to impose such regulation, this situation may change as cable systems expand
their broadband delivery of Internet services. In particular, proposals have
been advanced at the Federal Communications Commission and Congress that would
require cable operators to provide access to unaffiliated Internet service
providers and online service providers. The Federal Communications Commission
rejected a petition by certain Internet service providers attempting to use
existing access rules designed for video programming service providers to gain
access to cable system delivery. The Federal Trade Commission and the Federal
Communications Commission recently imposed certain "open-access" requirements on
Time Warner and AOL in connection with their merger, but those requirements are
not applicable to other cable operators.


     Some states and local franchising authorities are considering the
imposition of mandatory Internet access requirements as part of cable franchise
renewals or transfers and a few local jurisdictions have adopted these
requirements. In June 2000, the Ninth Circuit Court of Appeals rejected an
attempt by the City of Portland, Oregon to impose mandatory Internet access
requirements on the local cable operator. In reversing a contrary ruling by the
lower court, the Ninth Circuit court held that Internet service was not a cable
service, and therefore could not be subject to local cable franchising. At the
same time, the court suggested that at least the transport component of
broadband Internet service could be subject to regulation as a
"telecommunications" service. Although regulation of this form of
telecommunications service would presumably be reserved for the Federal
Communications Commission (which has so far resisted requests for active
regulation), some states may argue that they are entitled to impose
"open-access" requirements pursuant to their authority over intrastate
telecommunications. In addition, some local governments may argue that a cable
operator must secure a local telecommunications franchise before providing
Internet service. In response to the Ninth Circuit decision, the Federal
Communications Commission has initiated a new proceeding to categorize
cable-delivered Internet service and perhaps establish an appropriate regulatory
scheme. In July 2001, the Fourth Circuit Court of Appeals struck down another
"open access" requirement as violating the Communications Act's prohibition
against local cable franchises mandating the provision of telecommunications
facilities. The court did not, however, decide whether Internet service itself
is a cable service, a telecommunications service, or an information service. It
deferred the issue to the pending FCC proceeding.



     The two circuit court decisions are now the leading cases on the issue and,
along with a Florida district court decision, they strongly suggest that local
authorities cannot mandate "open access" on cable franchises. If regulators were
allowed to impose Internet access requirements on cable operators, it could
burden the capacity of cable systems and complicate our own plans for providing
Internet service.


     TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION.  The 1996 Telecom Act allows
telephone companies to compete directly with cable operators by repealing the
historic telephone company/cable cross-ownership ban. Local exchange carriers,
including the regional telephone companies, can now compete with cable operators
both inside and outside their telephone service areas with certain regulatory
safeguards. Because of their resources, local exchange carriers could be

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formidable competitors to traditional cable operators. Various local exchange
carriers already are providing video programming services within their telephone
service areas through a variety of distribution methods, including both the
deployment of broadband wire facilities and the use of wireless transmission.

     Under the 1996 Telecom Act, local exchange carriers or any other cable
competitor providing video programming to subscribers through broadband wire
should be regulated as a traditional cable operator, subject to local
franchising and federal regulatory requirements, unless the local exchange
carrier or other cable competitor elects to deploy its broadband plant as an
open video system (OVS). To qualify for favorable open video system status, the
competitor must reserve two-thirds of the system's activated channels for
unaffiliated entities. The Fifth Circuit Court of Appeals reversed certain of
the Federal Communications Commission's open video system rules, including its
preemption of local franchising. The Federal Communications Commission
subsequently revised its OVS rules to eliminate this general preemption, thereby
leaving franchising discretion to state and local authorities. It is unclear
what effect this ruling will have on the entities pursuing open video system
operation.

     Although local exchange carriers and cable operators can now expand their
offerings across traditional service boundaries, the general prohibition remains
on local exchange carrier buyouts of co-located cable systems. Co-located cable
systems are cable systems serving an overlapping territory. Cable operator
buyouts of co-located local exchange carrier systems, and joint ventures between
cable operators and local exchange carriers in the same market are also
prohibited. The 1996 Telecom Act provides a few limited exceptions to this
buyout prohibition, including a carefully circumscribed "rural exemption." The
1996 Telecom Act also provides the Federal Communications Commission with the
limited authority to grant waivers of the buyout prohibition.

     ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE TELEVISION.  The 1996
Telecom Act provides that registered utility holding companies and subsidiaries
may provide telecommunications services, including cable television,
notwithstanding the Public Utility Holding Company Act. Electric utilities must
establish separate subsidiaries, known as "exempt telecommunications companies"
and must apply to the Federal Communications Commission for operating authority.
Like telephone companies, electric utilities have substantial resources at their
disposal, and could be formidable competitors to traditional cable systems.
Several such utilities have been granted broad authority by the Federal
Communications Commission to engage in activities which could include the
provision of video programming.

     ADDITIONAL OWNERSHIP RESTRICTIONS.  The 1996 Telecom Act eliminates
statutory restrictions on broadcast/cable cross-ownership, including broadcast
network/cable restrictions, but leaves in place existing Federal Communications
Commission regulations prohibiting local cross-ownership between co-located
television stations and cable systems.

     Pursuant to the 1992 Cable Act, the Federal Communications Commission
adopted rules precluding a cable system from devoting more than 40% of its
activated channel capacity to the carriage of affiliated national video program
services. Also pursuant to the 1992 Cable Act, the Federal Communications
Commission adopted rules that preclude any cable operator from serving more than
30% of all U.S. domestic multichannel video subscribers, including cable and
direct broadcast satellite subscribers. The D.C. District Court of Appeals
recently struck down these vertical and horizontal ownership limits as
unconstitutional, concluding that the Federal Communications Commission had not
adequately justified the specific rules (i.e., the 40% and 30% figures) adopted.
As a result, an existing divestiture requirement on AT&T was suspended. The
Federal Communications Commission is now considering replacement regulations.

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     MUST CARRY/RETRANSMISSION CONSENT.  The 1992 Cable Act contains broadcast
signal carriage requirements. Broadcast signal carriage is the transmission of
broadcast television signals over a cable system to cable customers. These
requirements, among other things, allow local commercial television broadcast
stations to elect once every three years between "must carry" status or
"retransmission consent" status. Less popular stations typically elect must
carry, which is the broadcast signal carriage requirement that allows local
commercial television broadcast stations to require a cable system to carry the
station. More popular stations, such as those affiliated with a national
network, typically elect retransmission consent which is the broadcast signal
carriage requirement that allows local commercial television broadcast stations
to negotiate for payments for granting permission to the cable operator to carry
the stations. Must carry requests can dilute the appeal of a cable system's
programming offerings because a cable system with limited channel capacity may
be required to forego carriage of popular channels in favor of less popular
broadcast stations electing must carry. Retransmission consent demands may
require substantial payments or other concessions. Either option has a
potentially adverse effect on our business. The burden associated with must
carry may increase substantially if broadcasters proceed with planned conversion
to digital transmission and the Federal Communications Commission determines
that cable systems must carry all analog and digital broadcasts in their
entirety. This burden would reduce capacity available for more popular video
programming and new Internet and telecommunication offerings. The Federal
Communications Commission tentatively decided against imposition of dual digital
and analog must carry in a January 2001 ruling. At the same time, however, it
initiated further fact-gathering which ultimately could lead to a
reconsideration of the tentative conclusion.

     ACCESS CHANNELS.  Local franchising authorities can include franchise
provisions requiring 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, up to 15% in some
cases, for commercial leased access by unaffiliated third parties. The Federal
Communications Commission has adopted rules regulating the terms, conditions and
maximum rates a cable operator may charge for commercial leased access use. We
believe that requests for commercial leased access carriages have been
relatively limited. The Federal Communications Commission recently rejected a
request that unaffiliated Internet service providers be found eligible for
commercial leased access.

     ACCESS TO PROGRAMMING.  To spur the development of independent cable
programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring their cable operators over new competitors and requires such
programmers to sell their programming to other multichannel video distributors.
This provision limits the ability of vertically integrated cable programmers to
offer exclusive programming arrangements to cable companies. This prohibition is
scheduled to expire in October 2002, unless the Federal Communications
Commission determines that an extension is necessary to protect competition and
diversity. There also has been interest expressed in further restricting the
marketing practices of cable programmers, including subjecting programmers who
are not affiliated with cable operators to all of the existing program access
requirements, and subjecting terrestrially-delivered programming to the program
access requirements. Terrestrially-delivered programming is programming
delivered other than by satellite and is currently exempt from the ban on
exclusivity. These changes should not have a dramatic impact on us, but would
limit potential competitive advantages we now enjoy. Pursuant to the Satellite
Home Viewer Improvement Act, the Federal Communications Commission has adopted
regulations governing retransmission consent negotiations between broadcasters
and all multichannel video programming distributors, including cable and DBS.

     INSIDE WIRING; SUBSCRIBER ACCESS.  In an order issued in 1997, the Federal
Communications Commission established rules that require an incumbent cable
operator upon expiration of a multiple

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dwelling unit service contract to sell, abandon, or remove "home run" wiring
that was installed by the cable operator in a multiple dwelling unit building.
These inside wiring rules are expected to assist building owners in their
attempts to replace existing cable operators with new programming providers who
are willing to pay the building owner a higher fee, where such a fee is
permissible. The Federal Communications Commission has also proposed terminating
all exclusive multiple dwelling unit service agreements held by incumbent
operators, but allowing such contracts when held by new entrants. In another
proceeding, the Federal Communications Commission has preempted restrictions on
the deployment of private antennae on rental property within the exclusive use
of a tenant, such as balconies and patios. This Federal Communications
Commission ruling may limit the extent to which we along with multiple dwelling
unit owners may enforce certain aspects of multiple dwelling unit agreements
which otherwise prohibit, for example, placement of digital broadcast satellite
receiver antennae in multiple dwelling unit areas under the exclusive occupancy
of a renter. These developments may make it even more difficult for us to
provide service in multiple dwelling unit complexes.

     OTHER REGULATIONS OF THE FEDERAL COMMUNICATIONS COMMISSION.  In addition to
the Federal Communications Commission regulations noted above, there are other
regulations of the Federal Communications Commission covering such areas as:

      --   equal employment opportunity,

      --   subscriber privacy,

      --   programming practices, including, among other things,

        (1)  syndicated program exclusivity, which is a Federal Communications
             Commission rule which requires a cable system to delete particular
             programming offered by a distant broadcast signal carried on the
             system which duplicates the programming for which a local broadcast
             station has secured exclusive distribution rights,

        (2)  network program nonduplication,

        (3)  local sports blackouts,

        (4)  indecent programming,

        (5)  lottery programming,

        (6)  political programming,

        (7)  sponsorship identification,

        (8)  children's programming advertisements, and

        (9)  closed captioning,

      --   registration of cable systems and facilities licensing,

      --   maintenance of various records and public inspection files,

      --   aeronautical frequency usage,

      --   lockbox availability,

      --   antenna structure notification,

      --   tower marking and lighting,

      --   consumer protection and customer service standards,

      --   technical standards,

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      --   consumer electronics equipment compatibility, and

      --   emergency alert systems.

     The Federal Communications Commission recently 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 basic converter functions,
which could then be satisfied by third party vendors. The first phase
implementation date was July 1, 2000. Compliance was technically and
operationally difficult in some locations, so we and several other cable
operators filed a request at the Federal Communications Commission that the
requirement be waived in those systems. The request resulted in a temporary
deferral of the compliance deadline for those systems.

     The Federal Communications Commission recently initiated an inquiry to
determine whether the cable industry's future provision of interactive services
should be subject to regulations ensuring equal access and competition among
service vendors. The inquiry, which grew out of the Commission's review of the
AOL-Time Warner merger, is in its earliest stages, but is yet another expression
of regulatory concern regarding control over cable capacity.

     COPYRIGHT.  Cable television systems are subject to federal copyright
licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool that varies depending on the size
of the system, the number of distant broadcast television signals carried, and
the location of the cable system, cable operators can obtain blanket permission
to retransmit copyrighted material included in broadcast signals. The U.S.
copyright office recently adopted an industry agreement providing for a modest
increase in the copyright royalty rates. The possible modification or
elimination of this compulsory copyright license is the 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. Copyright clearances for nonbroadcast programming services are
arranged through private negotiations.

     Cable operators distribute locally originated programming and advertising
that use music controlled by the two principal major music performing rights
organizations, the American Society of Composers, Authors and Publishers and
Broadcast Music, Inc. The cable industry has had a long series of negotiations
and adjudications with both organizations. A prior voluntarily negotiated
agreement with Broadcast Music has now expired, and is subject to further
proceedings. The governing rate court recently set retroactive and prospective
cable industry rates for American Society of Composers music based on the
previously negotiated Broadcast Music rate. Although we cannot predict the
ultimate outcome of these industry proceedings or the amount of any license fees
we may be required to pay for past and future use of association-controlled
music, we do not believe such license fees will be significant to our business
and operations.

     STATE AND LOCAL REGULATION.  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. Federal law now
prohibits local franchising authorities from granting exclusive franchises or
from unreasonably refusing to award additional franchises. Cable franchises
generally are granted for fixed terms and in many cases include monetary
penalties for non-compliance and may be terminable if the franchisee fails to
comply with material provisions.

     The specific terms and conditions of franchises vary materially between
jurisdictions. Each franchise generally contains provisions governing cable
operations, service rates, franchising fees, system construction and maintenance
obligations, system channel capacity, design and technical performance, customer
service standards, and indemnification protections. A number of states,
including Connecticut, subject cable systems to the jurisdiction of centralized
state governmental

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agencies, some of which impose regulation of a character similar to that of a
public utility. Although local franchising authorities have considerable
discretion in establishing franchise terms, there are certain federal
limitations. For example, local franchising authorities cannot insist on
franchise fees exceeding 5% of the system's gross cable-related revenues, cannot
dictate the particular technology used by the system, and cannot specify video
programming other than identifying broad categories of programming. Certain
states are considering the imposition of new broadly applied telecommunications
taxes.

     Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the local franchising authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and service or increased
franchise fees as a condition of renewal. Similarly, if a local franchising
authority's consent is required for the purchase or sale of a cable system or
franchise, such local franchising authority may attempt to impose more
burdensome or onerous franchise requirements in connection with a request for
consent. Historically, most franchises have been renewed for and consents
granted to cable operators that have provided satisfactory services and have
complied with the terms of their franchise.

     Under the 1996 Telecom Act, states and local franchising authorities are
prohibited from limiting, restricting, or conditioning the provision of
competitive telecommunications services, except for certain "competitively
neutral" requirements and as necessary to manage the public rights-of-way. This
law should facilitate entry into competitive telecommunications services,
although certain jurisdictions still may attempt to impose rigorous entry
requirements. In addition, local franchising authorities may not require a cable
operator to provide any telecommunications service or facilities, other than
institutional networks under certain circumstances, as a condition of an initial
franchise grant, a franchise renewal, or a franchise transfer. The 1996 Telecom
Act also provides that franchising fees are limited to an operator's
cable-related revenues and do not apply to revenues that a cable operator
derives from providing new telecommunications services.

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                                   MANAGEMENT

DIRECTORS

     Charter Holdings is a holding company with no operations. Charter Capital
is a direct wholly owned finance subsidiary of Charter Holdings that exists
solely for the purpose of serving as co-obligor of the notes and the March 1999,
January 2000, January 2001 Charter Holdings notes, and has no operations.
Neither Charter Holdings nor Charter Capital has any employees. We and our
direct and indirect subsidiaries are managed by Charter Communications, Inc. See
"Certain Relationships and Related Transactions."

     Charter Holdings has two directors, Jerald L. Kent and William D. Savoy.
The persons listed below are directors of Charter Communications, Inc., Charter
Communications Holding Company, Charter Holdings or Charter Capital, as
indicated. All of Charter Communications, Inc.'s directors are elected annually.

<Table>
<Caption>
DIRECTORS                              POSITION(S)
- ---------                              -----------
                                    
Paul G. Allen........................  Chairman of the Board of Directors of
Charter
                                       Communications, Inc. and Director of
Charter Communications
                                         Holding Company
William D. Savoy.....................  Director of Charter Communications, Inc.,
Charter
                                       Communications Holding Company and
Charter Holdings
Jerald L. Kent.......................  Director of Charter Communications, Inc.,
Charter
                                       Communications Holding Company, Charter
Holdings and Charter
                                         Capital
Marc B. Nathanson....................  Director of Charter Communications, Inc.
Ronald L. Nelson.....................  Director of Charter Communications, Inc.
Nancy B. Peretsman...................  Director of Charter Communications, Inc.
Howard L. Wood.......................  Director of Charter Communications, Inc.
</Table>

     The following sets forth certain biographical information with respect to
the directors listed above.

     PAUL G. ALLEN, 48, has been Chairman of the Board of Directors of Charter
Communications, Inc. since July 1999, and Chairman of the board of directors of
Charter Investment, Inc. (a predecessor to, and currently an affiliate of,
Charter Communications, Inc.) since December 1998. Mr. Allen, a co-founder of
Microsoft Corporation, has been a private investor for more than five years,
with interests in over 140 companies, many of which contribute to the Wired
World vision that we share. Mr. Allen's investments include Vulcan Ventures
Incorporated, Portland Trail Blazers NBA team, Seattle Seahawks NFL franchise,
Vulcan Programming, Inc. and Vulcan Cable III Inc., and he has investments in
USA Networks, Inc., TechTV, L.L.C., Dreamworks LLC, a multi-media entertainment
company, High Speed Access Corp., Wink Communications, Inc. and Oxygen Media,
LLC. He is a director of USA Networks, Inc., TechTV, L.L.C. and numerous
privately held companies.


     JERALD L. KENT, 45, has been the President, Chief Executive Officer and a
director of Charter Communications, Inc. since July 1999 and of Charter
Investment since April 1995. He previously held the position of chief financial
officer of Charter Investment. Prior to co-founding Charter Investment in 1993,
Mr. Kent was executive vice president and chief financial officer of Cencom
Cable Associates, Inc. Before that, he held other executive positions at Cencom.
Earlier, he was with Arthur Andersen LLP, where he attained the position of tax
manager. Mr. Kent is a member of the board of directors of Cable Television
Laboratories, Inc., Com21 Inc. and C-Span. He is also a member of the executive
committee and the board of directors of the National Cable Television
Association. Mr. Kent, a certified public accountant, received his undergraduate
and M.B.A. degrees


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from Washington University (St. Louis). Mr. Kent's employment agreement provides
that he serve on the board of directors of Charter Communications, Inc. See
"Certain Relationships and Related Transactions -- Employment and Consulting
Arrangements."


     MARC B. NATHANSON, 55, has been a director of Charter Communications, Inc.
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, and since 1998
has served as chairman of The Broadcasting Board of Governors. Pursuant to a May
1999 letter agreement, Mr. Nathanson serves as Vice-Chairman and as a director
of Charter Communications, Inc. See "Certain Relationships and Related
Transactions -- Employment and Consulting Arrangements."

     RONALD L. NELSON, 48, has been a director of Charter Communications, Inc.
since November 1999. Mr. Nelson is a founding member of Dreamworks LLC, where he
has served in executive management since 1994. Prior to that time, during his 15
years at Paramount Communications Inc., he served in a variety of operating and
executive positions. He currently serves as a member of the board of directors
of Advanced Tissue Sciences, Inc. and Centre Pacific, L.L.C., a registered
investment advisor. Mr. Nelson has a B.S. degree from the University of
California at Berkeley and an M.B.A. degree from the University of California at
Los Angeles.

     NANCY B. PERETSMAN, 47, has been a director of Charter Communications, Inc.
since November 1999. Ms. Peretsman has been a managing director and executive
vice president of Allen & Company Incorporated, an investment bank unrelated to
Paul G. Allen, since 1995. From 1983 to 1995, she was an investment banker at
Salomon Brothers Inc., where she was a managing director since 1990. She is a
director of Priceline.com Incorporated and several privately held companies. She
has a B.A. degree from Princeton University and an M.P.P.M. degree from Yale
University.


     WILLIAM D. SAVOY, 36, has been a director of Charter Communications, Inc.
since July 1999 and a director of Charter Investment since December 1998. Since
1990, Mr. Savoy has been an officer and a director of many affiliates of Mr.
Allen, including vice president and a director of Vulcan Ventures Incorporated,
president of Vulcan Northwest, Inc., and president and a director of Vulcan
Programming, Inc. and Vulcan Cable III Inc. Mr. Savoy also serves on the
advisory board of Dreamworks LLC and as a director of drugstore.com, Metricom,
Inc., Peregrine Systems, Inc., RCN Corporation, Telescan, Inc., USA Networks,
Inc., TechTV, L.L.C. and Digeo, Inc. Mr. Savoy holds a B.S. degree in computer
science, accounting and finance from Atlantic Union College.


     HOWARD L. WOOD, 62, has been a director of Charter Communications, Inc.
since January 2000. Mr. Wood co-founded Charter Investment in 1993 and served in
various executive capacities there until November 1999, when he became a
consultant to Charter Communications, Inc. Prior to 1993, Mr. Wood was chief
executive officer of Cencom Cable Associates, Inc., where he also served in
various other executive positions. Earlier he was partner-in-charge of the St.
Louis Tax Division of Arthur Andersen LLP. He is a director of First State
Community Bank, Gaylord Entertainment Company and Data Research, Inc. Mr. Wood,
a certified public accountant, graduated from Washington University (St. Louis)
School of Business.

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COMMITTEES OF THE BOARD OF CHARTER COMMUNICATIONS, INC.

     The Audit Committee oversees Charter Communications, Inc.'s internal
accounting and auditing procedures, reviews audit and examination results and
procedures with independent accountants, oversees reporting of financial
information including review of quarterly and annual financial information prior
to filing with the SEC, determines the objectivity and independence of the
independent accountants and makes recommendations to the board of directors as
to selection of independent accountants. The members of the Audit Committee are
Ronald L. Nelson, Nancy B. Peretsman and Howard L. Wood. The Audit Committee's
functions are detailed in a written Audit Committee Charter adopted by the board
of directors.

     The Compensation Committee was formed in February 2000 for the purpose of
reviewing and approving compensation and benefits programs, and approving
compensation for senior management of Charter Communications, Inc. and its
affiliates and subsidiaries. The members of the Compensation Committee are Paul
G. Allen, Marc B. Nathanson, William D. Savoy and Howard L Wood.

     The Option Plan Committee was formed in June 2000 for the purpose of
administering the 1999 Option Plan. The Option Plan Committee was also appointed
by the board of directors of Charter Communications, Inc. to administer the 2001
Stock Incentive Plan and Jerald L. Kent acts as a special committee for the 2001
Stock Incentive Plan to approve grants to eligible individuals below the Senior
Vice President level. The Option Plan Committee consists of directors Nancy B.
Peretsman and Ronald L. Nelson.

     The Executive Committee may act in place of the full board of directors and
exercise such powers of the full board as the board may delegate to such
committee from time to time. The Executive Committee consists of directors Paul
G. Allen, Jerald L. Kent and William D. Savoy.

DIRECTOR COMPENSATION

     Mr. Kent, the only director who is also an employee of Charter
Communications, Inc., does not receive any additional compensation for serving
as a director or attending any meeting of the board of directors. Each
non-employee director, other than Mr. Allen, was issued 40,000 fully vested
options for agreeing to join the board of directors of Charter Communications,
Inc. All non-employee directors of Charter Communications, Inc. received an
annual grant of 10,000 vested options in February 2001. All directors of Charter
Communications, Inc. are entitled to reimbursement for costs incurred in
connection with attendance at board and committee meetings and may receive
additional compensation to be determined.

     Mr. Kent is a party to an employment agreement with Charter Communications,
Inc. Mr. Wood is a party to a consulting agreement with Charter Communications,
Inc. and Mr. Nathanson is a party to a letter agreement with Charter
Communications, Inc. These agreements are summarized in "Certain Relationships
and Related Transactions -- Employment and Consulting Arrangements."

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EXECUTIVE OFFICERS

     The following persons are executive officers of each of Charter
Communications, Inc., Charter Communications Holding Company and the issuers of
the notes:

<Table>
<Caption>
EXECUTIVE OFFICERS                  POSITION
- ------------------                  --------
                                 
Jerald L. Kent....................  President and Chief Executive Officer
David G. Barford..................  Executive Vice President and Chief Operating
Officer
David C. Andersen.................  Senior Vice President -- Communications
Mary Pat Blake....................  Senior Vice President -- Marketing and
Charter Media
Eric A. Freesmeier................  Senior Vice President -- Administration
Thomas R. Jokerst.................  Senior Vice President -- Advanced Technology
Development
Kent D. Kalkwarf..................  Executive Vice President and Chief Financial
Officer
Ralph G. Kelly....................  Senior Vice President -- Treasurer
David L. McCall...................  Senior Vice President of Operations --
Eastern Division
Majid R. Mir......................  Senior Vice President -- Telephony and
Advanced Services
John C. Pietri....................  Senior Vice President -- Engineering
Michael E. Riddle.................  Senior Vice President and Chief Information
Officer
Steven A. Schumm..................  Executive Vice President, Assistant to the
President
Curtis S. Shaw....................  Senior Vice President, General Counsel and
Secretary
Stephen E. Silva..................  Senior Vice President -- Corporate
Development and
                                    Technology
James (Trey) H. Smith, III........  Senior Vice President of Operations --
Western Division
</Table>

     Information regarding our executive officers is set forth below.

     DAVID C. ANDERSEN, 52, Senior Vice President -- Communications.  Prior to
joining Charter Communications, Inc. in May 2000, Mr. Andersen served as vice
president of Communications for CNBC, the worldwide cable and satellite business
news network subsidiary of NBC. Before that, starting in 1982 when he
established their public relations department, Mr. Andersen served in various
management positions at Cox Communications, Inc., most recently as vice
president of Public Affairs. Mr. Andersen serves on the board of KIDSNET, and is
a former chairman of the National Captioning Institute's Cable Advisory Board.
He received a B.S. degree in Journalism from the University of Kansas.

     DAVID G. BARFORD, 42, Executive Vice President and Chief Operating
Officer.  Mr. Barford was promoted to his current position in July 2000, having
previously served as Senior Vice President of Operations -- Western Division.
Prior to joining Charter Investment in 1995, Mr. Barford held various senior
marketing and operating roles during nine years at Comcast Cable Communications,
Inc. He received a B.A. degree from California State University, Fullerton, and
an M.B.A. degree from National University.

     MARY PAT BLAKE, 46, Senior Vice President -- Marketing and Charter
Media.  Prior to joining Charter Investment in 1995, Ms. Blake was active in the
emerging business sector and formed Blake Investments, Inc. in 1993. She has 18
years of experience with senior management responsibilities in marketing, sales,
finance, systems, and general management. Ms. Blake received a B.S. degree from
the University of Minnesota and an M.B.A. degree from the Harvard Business
School.

     ERIC A. FREESMEIER, 48, Senior Vice President -- Administration.  From 1986
until joining Charter Investment in 1998, Mr. Freesmeier served in various
executive management positions at Edison Brothers Stores, Inc. Earlier he held
management and executive positions at Montgomery

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Ward. Mr. Freesmeier holds bachelor's degrees from the University of Iowa and a
master's degree from Northwestern University's Kellogg Graduate School of
Management.

     THOMAS R. JOKERST, 52, Senior Vice President -- Advanced Technology
Development. Mr. Jokerst joined Charter Investment in 1994. Previously he served
as a vice president of Cable Television Laboratories and as a regional director
of engineering for Continental Cablevision. Mr. Jokerst is a graduate of Ranken
Technical Institute and of Southern Illinois University.

     KENT D. KALKWARF, 41, Executive Vice President and Chief Financial
Officer.  Mr. Kalkwarf was promoted to the position of Executive Vice President
in July 2000, having previously served as Senior Vice President. Prior to
joining Charter Investment in 1995, Mr. Kalkwarf was employed for 13 years by
Arthur Andersen LLP, where he attained the position of senior tax manager. He
has extensive experience in cable, real estate and international tax issues. Mr.
Kalkwarf has a B.S. degree from Illinois Wesleyan University and is a certified
public accountant.

     RALPH G. KELLY, 44, Senior Vice President -- Treasurer.  Prior to joining
Charter Investment in 1993, Mr. Kelly was controller and then treasurer of
Cencom Cable Associates between 1984 and 1992. He left Charter Investment in
1994, to become chief financial officer of CableMaxx, Inc., and returned in
1996. Mr. Kelly received his bachelor's degree in accounting from the University
of Missouri -- Columbia and his M.B.A. degree from Saint Louis University. Mr.
Kelly is a certified public accountant.


     JERALD L. KENT, 45, President, Chief Executive Officer and Director.  Mr.
Kent has held these positions with Charter Communications, Inc. since July 1999
and with Charter Investment since April 1995. He previously held the position of
chief financial officer of Charter Investment. Prior to co-founding Charter
Investment in 1993, Mr. Kent was executive vice president and chief financial
officer of Cencom Cable Associates, Inc. Before that, he held other executive
positions at Cencom. Earlier, he was with Arthur Andersen LLP, where he attained
the position of tax manager. Mr. Kent is a member of the board of directors of
Digeo, Inc., Cable Television Laboratories, Inc., Com21 Inc. and C-Span. He is
also a member of the executive committee and the board of directors of the
National Cable Television Association. Mr. Kent, a certified public accountant,
received his undergraduate and M.B.A. degrees from Washington University (St.
Louis).


     DAVID L. MCCALL, 46, Senior Vice President -- Operations -- Eastern
Division.  Prior to joining Charter Investment in 1995, Mr. McCall was
associated with Crown Cable and its predecessor company, Cencom Cable
Associates, Inc., from 1983 to 1994. Mr. McCall is a member of the Southern
Cable Association's Tower Club.

     MAJID R. MIR, 50, Senior Vice President -- Telephony and Advanced
Services.  From 1999 until joining Charter Communications, Inc. in April 2001,
Mr. Mir was employed by Genuity, Inc. where he was vice president for local
fiber engineering. Prior to that, he was assistant vice president of global
network infrastructure for GTE Internetworking. Mr. Mir has been working in the
field of telephony since 1979. Mr. Mir earned a B.S. degree in computer science
from the University of West Florida and an M.B.A. degree from the University of
South Florida.

     JOHN C. PIETRI, 51, Senior Vice President -- Engineering.  Prior to joining
Charter Investment in 1998, Mr. Pietri was with Marcus Cable for nine years,
most recently serving as senior vice president and chief technical officer.
Earlier he was in operations with West Marc Communications and Minnesota Utility
Contracting. Mr. Pietri attended the University of Wisconsin-Oshkosh.

     MICHAEL E. RIDDLE, 42, Senior Vice President and Chief Information
Officer.  Prior to joining Charter Communications, Inc. in December 1999, Mr.
Riddle was director, applied technologies of Cox Communications for four years.
Prior to that, he held technical and management positions

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   110

during 17 years at Southwestern Bell and its subsidiaries. Mr. Riddle attended
Fort Hays State University.

     STEVEN A. SCHUMM, 48, Executive Vice President and Assistant to the
President.  Prior to joining Charter Investment in 1998, Mr. Schumm was managing
partner of the St. Louis office of Ernst & Young LLP for 14 years. He had joined
Ernst & Young in 1974. He served as one of 10 members of the firm's National Tax
Committee. Mr. Schumm earned a B.S. degree from Saint Louis University.

     CURTIS S. SHAW, 52, Senior Vice President, General Counsel and
Secretary.  From 1988 until he joined Charter Investment in 1997, Mr. Shaw
served as corporate counsel to NYNEX. 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 from Trinity College and a J.D. degree from Columbia
University School of Law.


     STEPHEN E. SILVA, 41, Senior Vice President -- Corporate Development and
Technology. Mr. Silva joined Charter Investment in 1995 and has also served as
vice president responsible for billing services and new product development. Mr.
Silva previously served in various management positions at U.S. Computer
Services, Inc., a billing service provider specializing in the cable industry.
He is a member of the board of directors of Diva Systems Corporation.


     JAMES H. (TREY) SMITH, III, 53, Senior Vice President of
Operations -- Western Division. Mr. Smith was appointed to his current position
in September 2000, previously serving as a division president of AT&T Broadband.
Before that, he was president and chief executive officer of Rogers Cablesystems
Ltd., senior vice president of the Western Region for MediaOne/Continental Cable
and executive vice president of operations for Times Mirror Cable TV, Inc. He
received B.B.A. and M.B.A. degrees from Georgia State University and is a
certified public accountant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     In February 2000, the board of directors of Charter Communications, Inc.
appointed a Compensation Committee comprised of Messrs. Allen, Savoy, Nathanson
and Wood, and executive officer compensation matters, including option grants,
were delegated to the Compensation Committee. In June 2000, the board of
directors of Charter Communications, Inc. appointed Nancy B. Peretsman and
Ronald L. Nelson to serve as a separate committee to administer the Charter
Communications 1999 Option Plan.

     During 2000 and through the date hereof, no member of the Compensation
Committee or the Option Plan Committee was an officer or employee of Charter
Communications, Inc. or any of its subsidiaries. Mr. Wood served as an officer
of Charter Communications, Inc. for several months in 1999, and served as a
consultant to Charter Communications, Inc. in 2000. Mr. Nathanson served as an
officer of certain of Charter Communications, Inc.'s subsidiaries prior to their
acquisition by Charter Communications, Inc. Transactions between Charter
Communications, Inc. and certain members of the Compensation Committee are more
fully described in "Certain Relationships and Related Transactions."


     None of the executive officers of Charter Communications, Inc., Charter
Communications Holding Company, or the issuers of the notes serve on the
compensation committee of any other company that has an executive officer
currently serving on the board of directors of Charter Communications, Inc. or
any of its affiliates, the Compensation Committee or the Option Plan Committee.


EXECUTIVE COMPENSATION

     The following table sets forth information regarding the compensation paid
for services rendered in 2000 to executive officers of Charter Communications,
Inc. for the fiscal years ended

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   111

December 31, 1998, 1999 and 2000, including the Chief Executive Officer and each
of the other four most highly compensated executive officers as of December 31,
2000. Through the beginning of November 1999, such executive officers had
received their compensation from Charter Investment. Since November 1999, such
officers receive their compensation from Charter Communications, Inc. Pursuant
to a mutual services agreement between Charter Communications, Inc. and Charter
Investment, each of those entities leases the necessary personnel and provides
services to each other, including the knowledge and expertise of their
respective officers. See "Certain Relationships and Related Transactions."

  SUMMARY COMPENSATION TABLE

<Table>
<Caption>

   LONG-TERM

  COMPENSATION
                                                  ANNUAL COMPENSATION
     AWARD
                              YEAR     -----------------------------------------
   SECURITIES
                              ENDED                               OTHER ANNUAL
   UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION  DEC. 31   SALARY($)   BONUS($)(1)   COMPENSATION(2)
   OPTIONS(#)    COMPENSATION($)(3)
- ---------------------------  -------   ---------   -----------   ---------------
  ------------   ------------------
                                                     
              
Jerald L. Kent............    2000     1,250,000    1,000,000        127,005(4)
          --             5,250
  President and Chief         1999     1,250,000      625,000         76,799(5)
          --             4,000
  Executive Officer           1998       790,481      641,353             --
   7,044,127            18,821

Steven A. Schumm(6).......    2000       410,000      444,000             --
          --             2,040
  Executive Vice President    1999       400,000       60,000             --
     782,681             1,920
                              1998        12,307       12,300             --
          --                --

David G. Barford..........    2000       255,000      250,500             --
      40,000             5,250
  Executive Vice President    1999       235,000       80,000             --
     200,000             7,000
  and Chief Operating         1998       220,000      225,000(7)          --
          --         8,395,235(8)
  Officer

Kent D. Kalkwarf..........    2000       225,000      250,500             --
      40,000             5,250
  Executive Vice President    1999       180,000       80,000             --
     200,000             2,586
  and Chief Financial         1998       135,000       55,000             --
          --         7,768,091(8)
  Officer

David L. McCall...........    2000       225,000      283,625             --
      25,000             4,237
  Senior Vice President of    1999       149,656      108,800             --
     200,000               505
  Operations -- Eastern       1998       133,414      107,180             --
          --         4,193,495(8)
  Division
</Table>

- ---------------
(1) Includes "stay" bonus of $321,000 for Mr. Schumm and $160,500 for each of
    Messrs. Barford, Kalkwarf and McCall in the form of principal and interest
    forgiven during 2000 under employee's promissory note, as more fully
    described in "Certain Relationships and Related Transactions -- Employment
    and Consulting Arrangements."

(2) Includes other annual non-cash compensation, such as company-paid health,
    disability and life insurance premiums pursuant to plans covering all
    employees, unless the aggregate amount does not exceed the lesser of $50,000
    or 10% of such officer's total annual salary and bonus shown in the table.

(3) Includes matching contributions under Charter Communications, Inc.'s 401(k)
    plan.

(4) Includes $35,499 attributed to personal use of a corporate airplane and
    $85,214 as reimbursement for purchase of a car.

(5) Includes $55,719 paid for club membership and dues and $20,351 attributed to
    personal use of corporate airplane.

(6) Mr. Schumm became affiliated with Charter Investment on December 16, 1998.

(7) Includes $150,000 received as a one-time bonus.

(8) Received in March 1999 in connection with a one-time change of control
    payment under the terms of a previous equity appreciation rights plan. This
    payment was triggered by Mr. Allen's acquisition of control on December 23,
    1998, but was income for 1999.

THE CHARTER COMMUNICATIONS 1999 OPTION PLAN

     Charter Holdings adopted an option plan on February 9, 1999, which was
assumed by Charter Communications Holding Company in May 1999. This plan
provides for the grant of options to

                                       107
   112

purchase up to 25,009,798 membership units in Charter Communications Holding
Company to current and prospective employees and consultants of Charter
Communications Holding Company and its affiliates and current and prospective
non-employee directors of Charter Communications, Inc. Membership units received
upon exercise of any options are immediately exchanged for shares of Charter
Communications, Inc. Class A common stock on a one-for-one basis.

     As of June 30, 2001, a total of 20,268,205 options to purchase membership
units in Charter Communications Holding Company were outstanding under the plan.
One-fourth of the options vest on the 15-month anniversary of the date of grant
and the remaining vest 1/45 on each month anniversary following the 15-month
anniversary of the date of grant. The options expire after ten years from the
date of grant. The plan administrator has the discretion to accelerate the
vesting of any options.

     Any shares not subject to outstanding options and any shares covered by
options that are terminated under the 1999 Option Plan will be transferred to
the Charter Communications, Inc. 2001 Stock Incentive Plan. As a result, there
are no options available for future grant under the 1999 Option Plan.

2000 AGGREGATED OPTION EXERCISES AND OPTION VALUE TABLE


     The following table sets forth, for such officers, information concerning
options, including the number of securities for which options were held at
December 31, 2000, 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 Charter Communications, Inc.'s Class A common stock on December 31,
2000) and the value of unexercised options as of December 31, 2000.


<Table>
<Caption>
                                                              NUMBER OF
                                                        SECURITIES UNDERLYING
     VALUE OF UNEXERCISED
                                                             OPTIONS AT
    IN-THE-MONEY OPTIONS AT
                              SECURITIES                DECEMBER 31, 2000(1)
     DECEMBER 31, 2000(2)
                               ACQUIRED     VALUE    ---------------------------
  ---------------------------
                              ON EXERCISE  REALIZED  EXERCISABLE   UNEXERCISABLE
  EXERCISABLE   UNEXERCISABLE
                              -----------  --------  -----------   -------------
  -----------   -------------
                                                       
             
Jerald L. Kent..............           --        --   3,522,063      3,522,064
  $10,460,527    $10,460,530
Steven A. Schumm............           --        --     300,027        482,654
      891,080      1,433,482
David G. Barford............           --        --      76,666        163,334
      229,869        506,302
Kent D. Kalkwarf............           --        --      76,666        163,334
      229,869        506,302
David L. McCall.............           --        --      76,666        148,334
      227,698        453,802
</Table>

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

(1) These options are exercisable as to 25% of the underlying securities at the
    fifteenth month after grant, and thereafter, as to 1/45 of the remaining
    securities in each of the next 45 months. These options were granted under
    the Charter Communications 1999 Option Plan and, when vested, are
    exercisable for membership units of Charter Communications Holding Company,
    which are immediately exchanged on a one-for-one basis for shares of Charter
    Communications, Inc.'s Class A common stock.



(2) Based on a per share market value of $22.97 for Charter Communications,
    Inc.'s Class A common stock.


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   113

2000 OPTION GRANTS

     The following table shows individual grants of options made to executive
officers named in the Summary Compensation Table during 2000. All such grants
were made under the Charter Communications 1999 Option Plan and the exercise
price was based upon the fair market value of the underlying securities on the
date of grant.

<Table>
<Caption>

  POTENTIAL REALIZABLE VALUE

   AT ASSUMED ANNUAL RATES
                             NUMBER OF     % OF TOTAL
        OF STOCK PRICE
                             SECURITIES     OPTIONS
       APPRECIATION FOR
                             UNDERLYING    GRANTED TO
        OPTION TERM(2)
                              OPTIONS      EMPLOYEES     EXERCISE    EXPIRATION
  --------------------------
NAME                         GRANTED(1)     IN 2000       PRICE         DATE
      5%            10%
- ----                         ----------    ----------    --------    ----------
  ----------    ------------
                                                         
             
Jerald L. Kent.............        --          --             --           --
        --              --
Steven A. Schumm...........        --          --             --           --
        --              --
David G. Barford...........    40,000         0.4         $19.47      2/15/10
   489,783       2,020,007
Kent D. Kalkwarf...........    40,000         0.4         $19.47      2/15/10
   489,783       2,020,007
David L. McCall............    25,000         0.2         $19.47      2/15/10
   306,114       1,262,504
</Table>

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

(1) These options are exercisable as to 25% of the underlying securities at the
    fifteenth month after grant, and thereafter, as to 1/45 of the remaining
    securities in each of the next 45 months. These options were granted under
    the Charter Communications 1999 Option Plan and, when vested, are
    exercisable for membership units of Charter Communications Holding Company,
    which are immediately exchanged on a one-for-one basis for shares of Charter
    Communications, Inc.'s Class A common stock.


(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 appreciation are mandated
    by the SEC and do not represent our estimate or projection of future prices.

THE CHARTER COMMUNICATIONS, INC. 2001 STOCK INCENTIVE PLAN


     On February 12, 2001, the board of directors of Charter Communications,
Inc. unanimously adopted the Charter Communications, Inc. 2001 Stock Incentive
Plan. This plan provides for the grant of up to 59,964,013 shares of Class A
common stock of Charter Communications, Inc. (38,895,911 newly authorized shares
under the 2001 Incentive Plan and up to 21,068,102 previously authorized shares
based on forfeitures, cancellations and terminations under the 1999 Option Plan)
to the employees (including future employees who have received a formal offer of
employment), officers, consultants and directors of Charter Communications, Inc.
and its subsidiaries and affiliates. The 2001 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 restricted stock (as each term is defined in the 2001
Incentive Plan).


     The 2001 Incentive Plan must be administered by at least one committee of
the board of directors of Charter Communications, Inc., which consists of one or
more directors and could consist of the entire board. In February 2001, the
board of directors of Charter Communications, Inc. appointed an Option Plan
Committee to authorize grants and awards under the 2001 Incentive Plan to any
eligible individuals and Jerald L. Kent to authorize grants to eligible
individuals below the Senior Vice President level. For purposes of this section,
"committee" shall mean either the Option Plan Committee or Jerald L. Kent acting
in his capacity as a special committee.

     The 2001 Incentive Plan will terminate as of the tenth anniversary of
February 12, 2001, and no option or award can be granted thereafter. The board
of directors of Charter Communications, Inc. may sooner terminate the plan and
the board may at any time and from time to time amend, modify or suspend the
plan, but it cannot impair or adversely alter any options or awards theretofore
granted under the plan, except with the consent of the optionee or grantee.

     Under the 2001 Incentive Plan, up to 59,964,013 authorized and unissued
shares (including up to 21,068,102 shares based on forfeitures, cancellations
and terminations under the 1999 Option Plan)

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   114

are available for grant. However, the maximum number of shares with respect to
which options and stock appreciation rights may be granted to any individual
during any calendar year is 3,889,501. In the event of any change in
capitalization, however, the committee may adjust the maximum number and class
of shares with respect to which options and awards may be granted, the number
and class of shares which are subject to outstanding options and awards and the
purchase price thereof. Of the total number of shares allotted under the 2001
Incentive Plan, no more than 3,000,000 of the allotted shares may be used for
grants of restricted stock.

STOCK OPTIONS

     If an optionee's employment or service is terminated other than for cause,
death, disability or retirement, the optionee has the right to exercise any
vested options within 60 days of the termination of employment. After this
60-day period, all vested and unvested options held by the optionee are
automatically canceled. If an optionee's employment or service is terminated for
cause, any unexercised options are automatically canceled. If an optionee's
employment is terminated because of death, disability or retirement, the options
can be exercised until the second anniversary of the event, with any options not
so exercised being automatically canceled.

STOCK APPRECIATION RIGHTS ("SARS")

     The 2001 Incentive Plan permits the granting of SARs either in connection
with the grant of an option or as a freestanding right. A SAR permits a grantee
to receive upon exercise of the SAR, cash and/or shares, at the discretion of
the committee, in an amount equal in value to the excess, if any, of the then
per share fair market value over the per share fair market value on the date
that the SAR was granted (or option exercise price in the case of a SAR granted
in connection with an option). When a SAR is granted, however, the committee may
establish a limit on the maximum amount a grantee may receive upon exercise. The
committee will decide at the time the SAR is granted, the date or dates at which
it will become vested and exercisable.

     If a grantee's employment or service is terminated other than for cause,
death, disability or retirement, the grantee has the right to exercise any
vested SARs within 60 days of the termination of employment. After this 60-day
period, all vested and unvested SARs held by the grantee are automatically
canceled. If a grantee's employment is terminated for cause, any unexercised
SARs are automatically canceled. If a grantee's employment is terminated because
of death, disability or retirement, the SARs may be exercised until the second
anniversary of the event, with any SARs no so exercised being automatically
canceled.

DIVIDEND EQUIVALENT RIGHTS ("DERS")

     DERs represent a right to receive all or some portion of the cash dividends
that are or would be payable with respect to shares of Charter Communications,
Inc.'s Class A common stock. DERs may be granted in tandem with any award under
the 2001 Incentive Plan and may be payable currently or deferred until the
lapsing of the restrictions on the DERs or until the vesting, exercise, payment,
settlement or other lapse of restrictions on the related awards. DERs may be
settled in cash or shares or a combination thereof, in a single or multiple
installments, as the committee determines.

RESTRICTED STOCK

     The committee will determine the terms of each restricted stock award at
the time of grant, including 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. In addition, at the time of grant, the
committee, in its discretion, may decide: (i) whether any deferred dividends
will be held for the account of the grantee or deferred until the restrictions
thereon lapse, (ii) whether any deferred

                                       110
   115

dividends will be reinvested in additional shares or held in cash, (iii) whether
interest will be accrued on any dividends not reinvested in additional shares of
restricted stock, and (iv) whether any stock dividends paid will be subject to
the restrictions applicable to the restricted stock award. Payment of deferred
dividends in respect of shares of restricted stock, together with any interest
accrued thereon, shall be made upon the lapsing of restrictions imposed on such
shares. Any dividends deferred (together with any interest accrued thereon) in
respect of any shares of restricted stock shall be forfeited upon the forfeiture
of such shares.

PERFORMANCE UNITS AND PERFORMANCE SHARES

     Performance units and performance shares will be awarded as the committee
may determine, and the vesting of performance units and performance shares will
be based upon specified performance objectives to be determined by the committee
among the following: revenue, net income, operating income, earnings, net
earnings, share price, cash flow, earnings before interest, taxes, depreciation
and amortization (EBITDA), total shareholder return, total shareholder return
relative to peers, financial returns (including, without limitation, return on
assets, return on equity and return on investment), cost reduction targets,
customer satisfaction, customer growth, employee satisfaction, pre-tax profits,
net earnings, or any combination of the foregoing. Performance objectives (and
underlying business criteria, as applicable) may be in respect of: (i) the
performance of Charter Communications, Inc., (ii) the performance of any of its
subsidiaries, (iii) the performance of any of its divisions, (iv) a per share
basis, (v) a per subscriber basis, or (vi) any combination of the foregoing.
Performance objectives may be absolute or relative (to prior performance of
Charter Communications, Inc. or to the performance of one or more other entities
or external indices) and may be expressed in terms of a progression within a
specified range. The formula for determining performance objectives may include
or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary, unusual or non-recurring gains and
losses, the cumulative effect of accounting changes, acquisitions or
divestitures, core process redesigns, structural changes/ outsourcing, and
foreign exchange impacts. The performance objectives with respect to a
performance cycle shall be established in writing by the committee by the
earlier of (x) the date on which a quarter of the performance cycle has elapsed
or (y) the date which is 90 days after the commencement of the performance
cycle, and in any event while the performance relating to the performance
objectives remains substantially uncertain.

OTHER STOCK-BASED AWARDS; PHANTOM STOCK

     The committee may grant other share awards to any eligible individual on
such terms and conditions as the committee may determine in its sole discretion.
Share awards may include grants of phantom stock. Upon the vesting of a phantom
stock award, the grantee shall be entitled to receive a cash payment in respect
of each share of phantom stock which shall be equal to the fair market value of
a share as of the date the phantom stock award was granted, or such other date
as determined by the committee in its discretion at the time the phantom stock
award was granted. The committee may, in its discretion, at the time a phantom
stock award is granted, provide a limitation on the amount payable in respect of
each share of phantom stock. In lieu of a cash payment, the committee may, in
its discretion, settle phantom stock awards with shares having a fair market
value equal to the cash payment to which the grantee has become entitled.

     If an optionee's or grantee's employment is terminated without "cause" or
for "good reason" during the 12-month period following a "change in control" (as
those terms are defined in the 2001 Incentive Plan), unless otherwise provided
in an agreement, with respect to such optionee's or grantee's awards under the
2001 Incentive Plan, all outstanding options will become immediately and fully
exercisable, all outstanding SARs will become immediately and fully exercisable,
the restrictions on the outstanding restricted stock will lapse, and all of the
outstanding performance units will vest

                                       111
   116

and the restrictions on all of the outstanding performance shares will lapse as
if all performance objectives had been satisfied at the maximum level. Upon a
change of control, the committee can shorten the exercise period, have the
survivor or successor entity assume the options with appropriate adjustments, or
cancel options and pay out in cash. Under the 2001 Incentive Plan, a change of
control occurs: (a) in the event of an acquisition by any person of beneficial
ownership of more than 50% of the outstanding voting securities of the Charter
Communications, Inc.; (b) if at least one-half of the Charter Communications,
Inc.'s board of directors ceases to be made up of those individuals who are
directors as of February 12, 2001; or (c) upon the consummation of a merger,
consolidation or reorganization with or into Charter Communications, Inc. in
which securities of Charter Communications, Inc. are issued, except for certain
transactions, including, among other things, a merger where Charter
Communications, Inc.'s shareholders own more than 50% of the surviving
corporation or constitute a majority of the board of the surviving corporation.

LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION MATTERS.  Charter
Communications, Inc.'s restated 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 shareholders;

          (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.

     Charter Communications, Inc.'s 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 Charter
Communications, Inc. 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.

                                       112
   117

                             PRINCIPAL SHAREHOLDERS

     The following table sets forth certain information regarding beneficial
ownership of Charter Communications, Inc.'s Class A common stock as of June 30,
2001 by:

      --  each of our directors and the directors of Charter Communications,
          Inc.;

      --  each of our executive officers and the executive officers of Charter
          Communications, Inc. named in the Summary Compensation Table;

      --  all directors and executive officers of Charter Holdings and Charter
          Communications, Inc. as a group; and

      --  each person known by us to own beneficially 5% or more of the
          outstanding Charter Communications, Inc. Class A common stock.

     With respect to the percentage of voting power set forth in the following
table:

      --  each holder of Charter Communications, Inc. Class A common stock is
          entitled to one vote per share; and

      --  each holder of Charter Communications, Inc. Class B common stock is
          entitled to a number of votes based on the number of such holder's and
          his affiliates' shares of Class B common stock and membership units of
          Charter Communications Holding Company 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 of Charter Communications Holding Company
          held by him or his affiliates.

<Table>
<Caption>
                                                          SHARES
  CLASS A COMMON STOCK
                                                       RECEIVABLE ON
- ----------------------------------------
                                        NUMBER OF       EXERCISE OF      SHARES
ISSUABLE                   % OF
                                      CLASS A SHARES      VESTED          UPON
EXCHANGE        % OF       VOTING
NAME AND ADDRESS OF BENEFICIAL OWNER     OWNED(1)       OPTIONS(2)       OR
CONVERSION(3)    EQUITY(4)   POWER(5)
- ------------------------------------  --------------   -------------
- ----------------    ---------   --------
                                                                
                     
Paul G. Allen(6).................       10,804,003          10,000
324,300,479(7)      54.19%      92.0%
Charter Investment, Inc.(8)......               --              --
217,585,246(9)      42.52%         *
Vulcan Cable III Inc.(6).........               --              --
106,715,233(11)     26.62%         *
Jerald L. Kent...................           34,000       4,696,084
               1.58%         *
Howard L. Wood...................               --         155,000
                  *          *
Marc B. Nathanson(10)............        9,967,435          50,000
               3.41%         *
Ronald L. Nelson.................           17,500          50,000
                  *          *
Nancy B. Peretsman...............           10,000          50,000
                  *          *
William D. Savoy.................               --          50,000
778,369(11)         *          *
Steven A. Schumm(12).............            3,700         404,385
                  *          *
David G. Barford.................            2,500         115,333
                  *          *
Kent D. Kalkwarf.................            9,000         115,333
                  *          *
David L. McCall..................            4,700         110,833
                  *          *
All current directors and executive
  officers as a group (22
  persons).......................       20,956,013       6,595,884
324,300,479         56.30%     92.44%
</Table>

- ---------------
  *  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 shares of Charter Communications, Inc. Class A common stock
     issuable upon exercise of options vested on or before August 29, 2001 under
     the 1999 Option Plan and options granted to directors under the 2001
     Incentive Plan, which were fully vested upon grant.

                                       113
   118

 (3) Beneficial ownership is determined in accordance with Rule 13d-3. The
     beneficial owners of Charter Communications, Inc.'s Class B common stock,
     Charter Communications Holding Company membership units and CC VIII, LLC
     membership units are deemed to be beneficial owners of an equal number of
     shares of Charter Communications, Inc.'s Class A common stock because such
     holdings are either convertible into Class A shares (in the case of Class B
     shares) 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.

 (4) The calculation of this percentage assumes for each person that:

        --  294,095,712 shares of Class A common stock are currently issued and
            outstanding;

        --  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;

        --  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 August 29, 2001;
            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 Option Plan. When
     vested, these options are exercisable for membership units of Charter
     Communications Holding Company, which are immediately exchanged on a
     one-for-one basis for shares of Charter Communications, Inc.'s 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 Incentive Plan.

 (5) 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 Communications Holding Company owned by both Vulcan Cable III Inc.
     and Charter Investment have not been exchanged for shares of Class A common
     stock); and that outstanding membership units of CC VIII, LLC owned by TCID
     of Michigan, Inc. have not been exchanged for shares of Class A common
     stock.

 (6) The address of these persons is 505 Fifth Avenue South, Suite 900, Seattle,
     WA 98104.

 (7) The total listed is comprised of:

        --  217,585,246 membership units in Charter Communications Holding
            Company held by Charter Investment;

        --  106,715,233 membership units in Charter Communications Holding
            Company held by Vulcan Cable III Inc.; and

        --  50,000 shares of Class B common stock held directly by Mr. Allen
            (100% of the Class B common stock issued and outstanding).


 (8) Includes 217,585,246 membership units in Charter Communications Holding
     Company 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) These membership units in Charter Communications Holding Company are
     exchangeable for shares of Class A common stock at any time on a
     one-for-one basis.

(10) Consists of the following shares:

        --  4,023,336 shares for which he has sole investment and voting power;

        --  5,543,654 shares for which he has shared investment and voting
            power; and

        --  400,445 shares for which he has sole investment power and shared
            voting power.

(11) Includes 778,369 shares of Class A common stock that may be acquired by Mr.
     Savoy upon exercise of options from Vulcan Cable III Inc. to purchase
     membership units in Charter Communications Holding Company that have vested
     or will vest by August 29, 2001.

(12) Includes 3,700 shares for which Mr. Schumm has shared investment and voting
     power.

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                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The following sets forth certain transactions in which we and our
directors, executive officers and affiliates are involved. We believe that each
of the transactions described below was on terms no less favorable to us than
could have been obtained from independent third parties.

MANAGEMENT AND CONSULTING ARRANGEMENTS

     MANAGEMENT ARRANGEMENTS.  Charter Communications, Inc. has entered into
management arrangements with Charter Communications Holding Company and certain
of its subsidiaries. Under these agreements, Charter Communications, Inc.
provides management services for and operates the cable television systems owned
or to be acquired. The management agreements covering the CC VI and CC VII
companies limit management fees payable to Charter Communications, Inc. to 5% of
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. However, the total amount paid by Charter
Communications Holding Company and all of its subsidiaries is limited to the
amount necessary to reimburse Charter Communications, Inc. 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. The expenses subject to reimbursement include any fees Charter
Communications, Inc. is obligated to pay under the mutual services agreement
described below. Payment of management fees by Charter Communications, Inc.'s
operating subsidiaries is subject to certain restrictions under the credit
facilities of such subsidiaries. In the event any portion of the management fee
due and payable is not paid, it is deferred by Charter Communications, Inc. 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.

     In 2000, Charter Communications, Inc. received a total of $4,957,000 as
management fees from Charter Communications Holding Company and its
subsidiaries, exclusive of amounts being paid to Charter Investment pursuant to
the mutual services agreement described below.

     MUTUAL SERVICES AGREEMENT WITH CHARTER INVESTMENT AND CHARTER
COMMUNICATIONS HOLDING COMPANY.  During 2000, pursuant to a mutual services
agreement between Charter Communications, Inc. and Charter Investment, Inc.,
Charter Investment leased the necessary personnel and provided services to
Charter Communications, Inc. to manage Charter Communications Holding Company
and its subsidiaries, including us. Effective January 1, 2001, Charter
Investment personnel became employees of Charter Communications Holding Company
and the mutual services agreement was amended to add Charter Communications
Holding Company as a party and provide that both Charter Investment and Charter
Communications Holding Company will provide services to Charter Communications,
Inc. on a cost reimbursement basis. Charter Communications, Inc. has only 15
employees, all of whom are also executive officers of Charter Communications
Holding Company. Charter Communications, Inc., Charter Investment and Charter
Communications Holding Company are parties to a mutual services agreement. The
mutual services agreement provides that each party shall provide rights and
services to the others as may be reasonably requested for the management of
Charter Communications Holding Company and Charter Holdings and the cable
systems owned by their subsidiaries. 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 Communications, Inc. 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'

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written notice to the other. During 2000, Charter Communications, Inc. paid
$50,285,700 to Charter Investment for services rendered pursuant to the mutual
services agreement. All such amounts are reimbursable to Charter Communications,
Inc. pursuant to a management arrangement with subsidiaries. See "--Management
Arrangements."

     CONSULTING AGREEMENT.  Charter Communications Holding Company is a party to
a consulting agreement with Vulcan Northwest and Charter Investment. Pursuant to
this consulting agreement, Vulcan Northwest and Charter Investment provide
advisory, financial and other consulting services with respect to the
acquisitions by Charter Communications Holding Company of the business, assets
or stock of other companies. Such services include participation in the
evaluation, negotiation and implementation of these acquisitions. The original
agreement had an expiration date of December 31, 2000, but automatically renewed
by its terms and automatically renews for successive one-year terms unless
otherwise terminated. For services rendered, the consulting agreement provides
for payment of a fee equal to 1% of the aggregate value of the acquisition for
their services rendered for each acquisition made by Charter Communications
Holding Company or any of its affiliates, reimbursement of reasonable
out-of-pocket expenses incurred and indemnification. In 2000, no fees were paid
with respect to consulting services by an affiliate of Mr. Allen.

     PREVIOUS MANAGEMENT AGREEMENT WITH CHARTER INVESTMENT. Prior to November
12, 1999, Charter Investment provided management and consulting services to our
operating subsidiaries for a fee equal to 3% of the gross revenues of the
systems then owned plus reimbursement of expenses. The balance of management
fees payable under the previous management agreement was accrued with payment at
the discretion of Charter Investment, with interest payable on unpaid amounts.
During 2000, Charter Communications, Inc.'s subsidiaries paid $5,369,000 to
Charter Investment to reduce management fees payable. At December 31, 2000,
total management fees payable to Charter Investment were $13,751,000, exclusive
of any interest that may be charged.

ALLOCATION OF BUSINESS OPPORTUNITIES WITH MR. ALLEN

     As described under "Business Relationships" 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 Communications, Inc. and
Charter Communications Holding Company, 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; the joint venture to develop a digital
video recorder set-top terminal; the investment in High Speed Access Corp.; the
investment in Cable Sports Southeast, LLC, a provider of regional sports
programming; as an owner and operator of the business of Interactive Broadcaster
Services Corporation (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 Communications, Inc.'s initial public
offering in November 1999. This restriction will remain in effect until all of
the shares of Charter Communications, Inc.'s high-vote Class B common stock have
been converted into shares of Class A common stock due to Mr. Allen's equity
ownership falling below specified thresholds.

     Should Charter Communications, Inc. or Charter Communications Holding
Company 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
Communications, Inc. 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 Communications, Inc. and the amended and restated
limited liability company agreement of Charter Communications Holding

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Company would 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 television
systems owned, operated or managed by Charter Communications, Inc., Charter
Communications Holding Company or any of their subsidiaries from time to time.
The businesses of RCN Corporation, a company in which Mr. Allen has made a
significant investment, are not considered cable transmission businesses under
these provisions. See "--Business Relationships - RCN Corporation."

     Under Delaware corporate law, each director of Charter Communications,
Inc., including Mr. Allen, is generally required to present to Charter
Communications, Inc., 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 Communications, Inc. and they may exploit
such opportunities for their own account.

INTERCOMPANY LOANS

     From time to time, there are intercompany borrowings and repayments between
or among Charter Communications, Inc. and its subsidiaries and between or among
its subsidiaries. For amounts borrowed, our practice is for the borrowing party
to pay interest to the lending party based on the borrower's cost of funds on
its revolving credit facility, which is based on a spread over LIBOR. On
occasion, indebtedness between companies has been forgiven in lieu of a
contribution to capital. The average month-end principal balance of indebtedness
from our subsidiaries to our parent companies during 2000 was $250 million. The
total interest paid by our operating subsidiaries for parent company
indebtedness was $22.8 million, and accrued interest on such debt at December
31, 2000 was $2.3 million.

EMPLOYMENT AND CONSULTING ARRANGEMENTS


     Jerald L. Kent is employed by Charter Communications, Inc. under an
employment agreement that terminates on December 23, 2001 with automatic
one-year renewals. Under this agreement, Mr. Kent serves as President and Chief
Executive Officer of Charter Communications, Inc., with responsibility for the
nationwide general management, administration and operation of all present and
future business of Charter Communications, Inc. and its subsidiaries. The
agreement provides that during the initial term, Mr. Kent would receive an
annual base salary of $1,250,000, or such higher rate as may from time to time
be determined by Charter Communications, Inc.'s board of directors in its
discretion and an annual bonus up to $625,000, in an amount to be determined by
the board based on an assessment of the performance of Mr. Kent as well as the
achievement of certain financial targets. Charter Communications, Inc. also
agreed to cause Mr. Kent to be elected to Charter Communications, Inc.'s board
of directors without any additional compensation. Effective for 2001, Mr. Kent's
base salary was increased to $1,500,000. Also in 2001, he received a $1,000,000
bonus for services rendered in 2000.


     Under the agreement, Mr. Kent is entitled to participate in any disability
insurance, pension or other benefit plan afforded to employees generally or to
executives of Charter Communications, Inc. Mr. Kent will be reimbursed by
Charter Communications, Inc. for life insurance premiums of up to $30,000 per
year and is granted personal use of the corporate airplane. Mr. Kent also is
entitled to the use of a car valued at up to $100,000 and the fees and dues for
his membership in a country club of his choice. In 2000, Mr. Kent did not avail
himself of reimbursement for life insurance premiums or country club dues.

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     In connection with this agreement, Mr. Kent received options to purchase
7,044,127 Charter Communications Holding Company membership units with an
exercise price of $20.00. The options have a term of 10 years and vested 25% on
December 23, 1998. The remaining 75% vest 1/36 on the first day of each of the
36 months commencing January 1, 2000. The terms of these options provide that
immediately following the issuance of membership units received upon exercise of
such options, these units will be automatically exchanged for shares of Charter
Communications, Inc.'s Class A common stock on a one-for-one basis.

     The agreement further provides that Charter Communications, Inc. will
indemnify and hold harmless Mr. Kent 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 Mr. Kent of his duties.

     If the agreement expires because Charter Communications, Inc. gives Mr.
Kent notice of its intention not to extend the initial term, or if the agreement
is terminated by Mr. Kent for good reason or by Charter Communications, Inc.
without cause:


      --  Charter Communications, Inc. will pay to Mr. Kent an amount equal to
          the total base salary due to Mr. Kent for the remaining term and the
          board of directors will consider additional amounts, if any, to be
          paid to Mr. Kent; and


      --  any unvested options held by Mr. Kent shall immediately vest.

     Pursuant to an automatically renewing consulting agreement between Charter
Communications, Inc. and Howard L. Wood, Mr. Wood provides consulting services
to Charter Communications, Inc. and also is responsible for such other duties as
the Chief Executive Officer determines. Mr. Wood receives annual cash
compensation at a rate of $60,000, and is entitled to receive health benefits as
well as use of an office and a full-time secretary. The cost of the office and
secretary in 2000 was $40,000. Charter Communications, Inc. will indemnify and
hold harmless Mr. Wood 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 him of his duties.

     Effective as of May 25, 1999, Marc B. Nathanson entered into a letter
agreement with Charter Communications, Inc. for a three-year term. Under this
agreement, Mr. Nathanson serves as Vice-Chairman and as a director of Charter
Communications, Inc. During the term of this agreement, Mr. Nathanson receives a
benefit equal to $193,197 per year, which amount is being paid by Charter
Communications, Inc. to a company controlled by Mr. Nathanson. In addition, Mr.
Nathanson is entitled to the rights and benefits provided to other directors of
Charter Communications, Inc. Charter Communications, Inc. will indemnify and
hold harmless Mr. Nathanson 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 Mr. Nathanson of his
duties.

     Charter Investment issued 1999 "stay bonuses" and Charter Communications,
Inc. issued 2000 "stay bonuses" to executive officers in the form of three-year
promissory notes. One-third of the original outstanding principal amount of each
of these notes and interest is forgiven at the end of each of the first three
anniversaries of the issue date, as long as the employee is still employed by
the issuer of the bonus or any of its affiliates. Generally, the promissory
notes bear interest at 7% per year. The following table provides certain
information about such notes as of December 31, 2000 for executive officers
employed as of that date.

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<Table>
<Caption>

OUTSTANDING

BALANCE
                      INDIVIDUAL                           ISSUE DATE      AS OF
12/31/00
                      ----------                         ---------------
- --------------
                                                                     
David C. Andersen......................................    April, 2000
$150,000
David G. Barford.......................................   January, 1999
300,000
Mary Pat Blake.........................................   January, 1999
300,000
Eric A. Freesmeier.....................................   January, 1999
300,000
Thomas R. Jokerst......................................   January, 1999
300,000
Kent D. Kalkwarf.......................................   January, 1999
300,000
Ralph G. Kelly.........................................   January, 1999
300,000
David L. McCall........................................   January, 1999
300,000
John C. Pietri.........................................   January, 1999
150,000
Steven A. Schumm.......................................   January, 1999
600,000
Curtis S. Shaw.........................................   January, 1999
300,000
Stephen E. Silva.......................................   January, 1999
300,000
James H. (Trey) Smith..................................  September, 2000
200,000
</Table>

OTHER RELATIONSHIPS

     David L. McCall, Senior Vice President - Operations - Eastern Division, is
a partner in a partnership that leases office space to us. In 2000, the
partnership received approximately $126,470 pursuant to such lease and related
agreements. In addition, approximately $457,000 was paid to a construction
company controlled by Mr. McCall's brother and $270,695 to a construction
company controlled by Mr. McCall's son.

     A company controlled by Mr. Wood occasionally leases an airplane to Charter
Communications, Inc. and its subsidiaries and affiliates for business travel. An
hourly time share rate is paid for such usage. Mr. Wood's affiliated company
reimburses Charter Communications, Inc. for the full annual cost of two
individuals qualified to operate the plane and who are otherwise available to
Charter Communications, Inc. in connection with its own flight operations, which
amount was $123,843 in 2000. Charter Communications, Inc. paid Mr. Wood's
affiliate $2,200 in 2000 for time share usage of the airplane. In addition, Mr.
Wood has also used Charter Communications, Inc.'s airplane for occasional
personal use in 2000, a benefit valued at $19,900.

     In addition, Mr. Wood's daughter, a Vice President of Charter
Communications Holding Company, 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 are forgiven as long as
she remains employed by our subsidiary 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 in 2000 was $80,250 and the outstanding balance
on the note as of December 31, 2000 was $150,000.

     In addition, companies controlled by Mr. Nathanson leased certain office
space in Pasadena, California, and warehouse space in Riverside, California, to
our subsidiaries. Mr. Nathanson's affiliates received total annual rent in 2000
of $430,918 and $122,581, respectively, for these premises. In April 2001,
Charter Communications, Inc. terminated the Pasadena office lease in exchange
for a payment of $638,622.

BUSINESS RELATIONSHIPS


     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 services or programming. Among these entities are High Speed Access
Corp., WorldGate Communications, Inc., Wink Communications, Inc., TechTV,
L.L.C., USA Networks, Inc., Oxygen Media, LLC, Digeo, Inc. and RCN Corporation.
Mr. Allen owns 100% of the equity of Vulcan Ventures and is its chief executive
officer. Mr. Savoy is


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also a vice president and a director of Vulcan Ventures. The various cable,
Internet and telephony companies that Mr. Allen has invested in may mutually
benefit one another. The agreements governing our relationship with Digeo, Inc.
are an example of a cooperative business relationship among his affiliated
companies. 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.
Also, conflicts could arise with respect to the allocation of corporate
opportunities between us and Mr. Allen and his affiliates. We have not
instituted any formal plan or arrangement to address potential conflicts of
interest.

     In June 1999, Charter Communications Holding Company entered into the
Bresnan purchase agreement. In February 2000, Charter Communications Holding
Company assigned its rights under the Bresnan purchase agreement to purchase
certain assets to Charter Holdings and Charter Holdings accepted such assignment
and assumed all obligations of Charter Communications Holding Company under the
Bresnan purchase agreement with respect to those assets.

     VULCAN VENTURES.  Vulcan Ventures Incorporated, Charter Communications,
Inc., Charter Investment and Charter Communications Holding Company are parties
to an agreement dated September 21, 1999 regarding the right of Vulcan Ventures
to use up to eight of our digital cable channels. Specifically, 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
television systems with local control of the digital product owned, operated,
controlled or managed by us 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 we will pay the programmer, if possible, a fee per digital
subscriber. If such fee arrangement is not achieved, then we and the programmer
shall enter into a standard programming agreement.

     HIGH SPEED ACCESS.  High Speed Access is a provider of high-speed Internet
access over cable modems. Charter Communications Holding Company is 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 provide High Speed Access with exclusive access to at least 750,000
of our homes that have either an installed cable drop from our cable system or
that are eligible for a cable drop by virtue of our cable system passing the
home. The term of the network services agreement is, as to a particular cable
system, five years from the date revenue billing commences for that cable
system. The programming content agreement provides 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 in 2000 were approximately $7.8 million.

     Additionally, Charter Communications Holding Company, as the assignee of
Vulcan Ventures, now holds warrants that were amended and restated on May 12,
2000, giving Charter Communications, Inc. the right to purchase up to 12,000,000
shares of High Speed Access common stock at an exercise price of $3.23 per
share. A portion of the warrants may be earned under the agreements described
above, and the other portion relates to warrants that may be earned under an
agreement entered into with High Speed Access on May 12, 2000, described below.
Warrants earned under the agreements described above become vested at the time
systems are committed by us and are based upon the number of homes passed.
Warrants under these agreements can only be earned until

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July 31, 2003, and are earned at the rate of 1.55 shares of common stock for
each home passed in excess of 750,000. Warrants earned under the agreements
described above are exercisable until May 25, 2006. Such warrants may be
forfeited in certain circumstances, generally if we withdraw a committed system.
As of December 31, 2000, Charter Communications, Inc. has earned 1,932,931
warrants under the agreements described above.

     On May 12, 2000, Charter Communications, Inc. entered into a separate
agreement with High Speed Access, which was assigned by Charter Communications,
Inc. to Charter Communications Holding Company on August 1, 2000. Under the
agreement, homes passed by our cable television systems will be committed to
High Speed Access for which High Speed Access will provide residential Tier 2
and above technical support and network operations center support. Such systems
will be in locations where we have launched or intend to launch cable
modem-based Internet access to residential customers. Tier 2 support is customer
service support beyond the initial screening of a problem.

     We have agreed to commit a total of 5,000,000 homes passed, including all
homes passed in systems previously committed by us, to High Speed Access (other
than full turnkey systems), on or prior to May 12, 2003. We may also commit
additional homes passed in excess of the initial 5,000,000. With respect to each
system launched or intended to be launched, we will pay a per customer fee to
High Speed Access according to agreed pricing terms. In addition, we will also
compensate High Speed Access for services that exceed certain minimum
thresholds.

     Warrants that may be earned under the agreement become vested at the time
we authorize High Speed Access to proceed with respect to a system, and will be
based upon the number of homes passed in such system. With respect to the
initial total 5,000,000 homes passed, the warrant provides that Charter
Communications Holding Company will have the right to purchase 0.775 shares of
common stock for every home passed. With respect to any additional homes passed
in excess of 5,000,000, the warrant provides that Charter Communications Holding
Company will have the right to purchase 1.55 shares of common stock for every
home passed. Warrants earned under the agreement are exercisable until 7 1/2
years from the date they are earned. Such warrants are generally not subject to
forfeiture, even if the agreement is terminated. High Speed Access has agreed to
increase the number of shares of common stock subject to the amended and
restated warrant, upon Charter Communications Holding Company's request, if the
number of warrants earned exceeds 11,500,000. High Speed Access also granted
Charter Communications Holding Company certain registration rights with respect
to shares of common stock held by Charter Communications Holding Company and its
direct and indirect subsidiaries, including shares of common stock issuable upon
exercise of the amended and restated warrant.

     The agreement governing the services to be provided by High Speed Access
has a term of five years starting in May 2000. Charter Communications Holding
Company has the option to renew the agreement for additional successive
five-year terms on similar terms. On each renewal date, High Speed Access will
issue Charter Communications Holding Company an additional warrant for each
renewal term. These renewal warrants will grant Charter Communications Holding
Company the right to purchase additional shares of common stock at a price of
$10.00 per share. The number of shares of common stock subject to a renewal
warrant will be determined based upon 0.50 shares of common stock for every home
passed in each system committed to High Speed Access during the initial
five-year term and each five-year renewal term.

     Either party may terminate the agreement, in whole or in part, if the other
party defaults, becomes insolvent or files for bankruptcy. Charter
Communications Holding Company may terminate the agreement if High Speed Access
merges with another party or experiences a change of control. If Charter
Communications Holding Company terminates the agreement, it may, in certain
circumstances, be required to pay a termination fee.

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     Additionally, on December 5, 2000, one of our subsidiaries, Charter
Communications Ventures, LLC, and Vulcan Ventures purchased 37,000 shares and
38,000 shares, respectively, of senior convertible preferred stock of High Speed
Access for $37.0 million and $38.0 million, respectively. The preferred stock
has a liquidation preference of $1,000 per share. The preferred stock generally
shares in dividends on High Speed Access common stock on an "as converted to
common stock" basis. Each share of Series D preferred stock may be converted
into that number of shares of common stock calculated by dividing the
liquidation price by the conversion price per share, which is $5.01875, subject
to adjustments for certain events. Each share of Series D preferred stock is
therefore convertible into 199.25 shares of High Speed Access common stock, so
long as no adjustments have occurred. Charter Communications Ventures and Vulcan
Ventures were granted certain preemptive, first refusal, registration and board
representation rights as part of the transaction.


     Through the various investments described above, Vulcan Ventures owns
20,222,139 shares of common stock and 38,000 shares of Series D convertible
preferred stock of High Speed Access. Charter Communications Ventures owns
37,000 shares of Series D convertible preferred stock. If all shares of
preferred stock owned by affiliates of Mr. Allen were converted into common
stock, then Mr. Allen, through such affiliates, would beneficially own 47.8% of
the stock of High Speed Access.


     On July 31, 2001, Charter Communications, Inc. extended an offer to High
Speed Access Corp. to purchase the contracts and associated assets of High Speed
Access that serve Charter's customers. The offer includes all assets used in or
necessary to perform the services provided under the turnkey contract and
network services agreement for Charter cable systems, including the call center
and network operations center in Louisville, KY, and all High Speed Access-owned
equipment in Charter headends and customer homes. The proposed purchase price
for those contracts and assets is approximately $73 million, consisting of cash
and the assumption of certain liabilities, subject to certain adjustments. In
addition, as part of the proposed transaction consideration, all of the shares
of Series D preferred stock of High Speed Access held by Charter Ventures and
its affiliate, Vulcan Ventures Incorporated, would be cancelled.



     Charter's offer has not been accepted by High Speed Access Corp. and is
subject to a number of conditions, including approval by the boards of directors
of Charter Communications, Inc. and High Speed Access Corp., approval by the
stockholders of High Speed Access Corp., third party consents, satisfactory
completion of due diligence and negotiation of definitive agreements.


     WORLDGATE.  WorldGate Communications, Inc. is a provider of Internet access
through cable systems. Charter Communications, Inc. has an affiliation agreement
with WorldGate for an initial term which expires in November 2002. The agreement
automatically renews for additional successive two-year periods upon expiration
of the initial five-year term, unless terminated by either party for failure of
the other party to perform any of its obligations or undertakings required under
the agreement. We started offering WorldGate service in 1998. Pursuant to the
agreement, Charter Communications, Inc. agreed to use its reasonable best
efforts to deploy the WorldGate Internet access service within a portion of our
cable systems and to install the appropriate headend equipment in all of our
major markets in those systems. Major markets for purposes of this agreement
include those in which we have more than 25,000 customers. We incur the cost for
the installation of headend equipment. In addition, to the extent we determine
that it is economically practical, we have agreed to use our reasonable best
efforts to deploy such service in all non-major markets that are technically
capable of providing interactive pay-per-view service. When WorldGate has a
telephone return path service available, we will, if economically practical, use
all reasonable efforts to install the appropriate headend equipment and deploy
the WorldGate service in our remaining markets. Telephone return path service is
the usage of telephone lines to connect to the Internet to transmit data or
receive data. We have also agreed to market the WorldGate service within our
market areas. We pay a monthly subscriber access fee to WorldGate based on the
number of subscribers to the

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WorldGate service. We have the discretion to determine what fees, if any, we
will charge our subscribers for access to the WorldGate service. For the year
ended December 31, 2000, we paid WorldGate approximately $5,089,200 consisting
of $4,985,200 for equipment purchases and $104,000 for subscriber access fees.
We charged our subscribers approximately $393,830 for the year ended December
31, 2000. Charter Communications, Inc. also owns 138,765 shares of WorldGate's
common stock for which it paid a total of $2,000,000.

     On July 25, 2000, Charter Communications Holding Company entered into a
joint venture, named TV Gateway LLC, with WorldGate and several other cable
operators to develop and deploy a server-based interactive program guide.
Charter Communications Holding Company invested $850,000, providing it a 16.25%
ownership interest in the joint venture. For the first four years after the
formation of TV Gateway, Charter Communications Holding Company will earn
additional ownership units, up to a maximum of 750,000 ownership units, as the
interactive program guide is deployed to our customers. In connection with the
formation of the joint venture, on August 15, 2000, Charter Communications
Holding Company purchased 31,211 shares of common stock of WorldGate at $16.02
per share for a total purchase price of $500,000. As a result of this purchase,
Charter Communications Holding Company received a $125,000 credit from WorldGate
against future equipment purchases relating to the deployment of its service.
Additionally, WorldGate granted Charter Communications Holding Company warrants
to purchase up to 500,000 shares of WorldGate common stock for a period of seven
years at a purchase price of $24.78. For a period of three years from the date
of closing, Charter Communications Holding Company will also be issued warrants
to purchase common stock of WorldGate based on the number of two-way digital
homes passed in the systems in which Charter Communications Holding Company has
deployed WorldGate service.


     WINK.  Wink Communications, Inc. offers an enhanced broadcasting system
that adds interactivity and electronic commerce opportunities to traditional
programming and advertising. Viewers can, among other things, find news, weather
and sports information on-demand and order products through use of a remote
control. The existing agreement between Wink and Charter Communications Holding
Company expired in October 2000 and a new agreement is being negotiated.
Pursuant to the expired agreement, Wink granted us the non-exclusive license to
use their software to deliver the enhanced broadcasting to all of our cable
systems. We continue to pay a fixed monthly license fee to Wink. We also supply
all server hardware required for deployment of Wink services. In addition, we
agreed to promote and market the Wink service to our customers within the area
of each system in which such service is being provided. We share in the revenue
generated by Wink from all fees collected for transactions generated by our
customers. The amount of revenue shared is based on the number of transactions
per month. For the year ended December 31, 2000, minimal revenue and expenses
have been recognized as a result of this agreement. Vulcan Ventures has an
approximate 3% equity interest in Wink.


     TECHTV.  TechTV, L.L.C. operates a cable television channel which
broadcasts shows about technology and the Internet. Pursuant to a carriage
agreement terminating in 2008, TechTV has provided us with programming for
broadcast via our cable television systems at no cost. Carriage fee amounts per
subscriber are determined based on the percentage of subscribers in a particular
system receiving the services. These fees will be waived for systems with higher
penetration levels until December 31, 2003, and for systems with lower
penetration levels through April 30, 2001. In certain circumstances, we are
entitled to a percentage of TechTV's net product revenues from infomercials and
home shopping and attributed to our carriage of the service. Additionally, we
receive incentive payments for channel launches through December 31, 2003.
TechTV may not offer its services to any other cable operator which serves the
same or fewer number of customers at a more favorable rate or on more favorable
carriage terms.

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     On February 5, 1999, Vulcan Programming, which is 100% owned by Mr. Allen,
acquired an approximate one-third interest in TechTV. Mr. Savoy is the president
and director of Vulcan Programming. In January 2000, Vulcan Ventures acquired an
additional 64% in TechTV for $204.8 million bringing its interest in TechTV to
approximately 97.4%. The remaining approximate 2.6% of TechTV is owned by its
management and employees. Mr. Allen is a director of TechTV and Mr. Savoy is
vice president of TechTV.


     USA NETWORKS.  USA Networks, Inc. operates the USA Network and The Sci-Fi
Channel cable television networks. USA Networks also operates Home Shopping
Network, which is a retail sales program available via cable television systems.
Pursuant to an agreement terminating in 2005, Charter Communications Holding
Company is a party to a non-exclusive affiliation agreement with USA Networks
for the cablecast of USA Network programming. Mr. Allen and Mr. Savoy are also
directors of USA Networks. As of March 15, 2001, Mr. Allen owned approximately
8.2% and Mr. Savoy owned less than 1% of the capital stock of USA Networks.


     OXYGEN MEDIA, LLC.  Oxygen Media provides programming content aimed at the
female audience for distribution over the Internet and cable television systems.
Vulcan Ventures invested $100 million in 1999 in Oxygen Media. Vulcan Ventures
has made equity investments in Oxygen Media of $100 million in 2000 and $75
million in 2001. Oxygen programming content is currently available to
approximately 2 million Charter customers. In the third quarter of 2001, Charter
Communications Holding Company expects to enter into an agreement with Oxygen
Media setting forth the terms of our carriage of Oxygen Media programming
content. Mr. Savoy, a director of Charter Communications, Inc. and Charter
Communications Holding Company, serves on the board of directors of Oxygen
Media. Mr. Allen owns an approximate 29% interest in Oxygen Media.


     PORTLAND TRAIL BLAZERS.  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. We continue to operate under the terms of these
agreements since our acquisition of the Falcon cable systems in November 1999.
Under the letter agreement, Trail Blazers Inc. is paid a fixed fee for each
subscriber in areas directly served by the Falcon cable systems. Under the cable
television agreement, we share subscription revenues with Trail Blazers Inc.
Trail Blazers Inc. provides technical facilities and services in connection with
the cable broadcast of the Portland Trail Blazers basketball games. The letter
agreement and the cable television agreement will terminate on September 30,
2001. We paid approximately $1.1 million for the year ended December 31, 2000 in
connection with the cable broadcast of Portland Trail Blazers basketball games
under the cable television agreement.

     DIGEO, INC. During 2001, we expect to offer Digeo's television-based
Internet access service in several markets. The Digeo product is designed to
blend the power of the Internet with the convenience of the television. Through
the use of an advanced digital set-top terminal, customers will be able to
access Internet-based streaming media on the television, including both local
and national news, sports and entertainment. The Internet domain name of
customers using this service will be "Charter TV." The Digeo product is a
"portal," which is an Internet web site that serves as a user's initial point of
entry to the World Wide Web. By offering selected content, services and links to
other web sites and a portal guide, it directs users through the World Wide Web.
In addition, the portal generates revenues from advertising on it own web pages
and by sharing revenues generated by linked or featured web sites.

     On March 5, 2001, Charter Communications, Inc. finalized a carriage
agreement with Digeo, which will function as its television-based Internet
portal for an initial six-year period. In connection with the execution of the
carriage agreement on March 5, 2001, our wholly owned subsidiary, Charter

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Communications Ventures, LLC, received an equity interest in Digeo funded by
Vulcan Ventures Incorporated's contribution to Digeo of approximately $21.2
million, which is subject to a priority return of capital to Vulcan up to the
amount so funded. Vulcan also agreed to make, through January 24, 2004, certain
additional contributions through Digeo Holdings to acquire Digeo equity in order
to maintain Charter Communications, Inc.'s pro rata interest in Digeo in the
event of certain future Digeo equity financings by Digeo's founders. These
additional equity interests will also be subject to a priority return of capital
to Vulcan up to the amount so contributed. Mr. Allen and Mr. Savoy are directors
of Digeo.


     RCN CORPORATION.  Vulcan Ventures, an entity controlled by Mr. Allen, owns
an approximate 27% equity interest in RCN Corporation, including its investment
of $1.65 billion in 2000. In October 1999, Charter Communications Holding
Company entered into a term sheet with RCN containing the principal terms of a
non-exclusive joint venture to provide telephony services to customers in our
Los Angeles cable systems. Charter Communications, Inc.'s certificate of
incorporation and Charter Communications Holding Company's limited liability
company agreement provide that the businesses of RCN are deemed not to be "cable
transmission businesses." Mr. Savoy, a director of Charter Communications, Inc.,
is also a director of RCN. To date, we have had only preliminary discussions
with RCN and have not entered into definitive agreements.


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                      DESCRIPTION OF CERTAIN INDEBTEDNESS

     The following description of the indebtedness is qualified in its entirety
by reference to the relevant credit facilities, indentures and related documents
governing the debt.

EXISTING CREDIT FACILITIES

     CHARTER OPERATING CREDIT FACILITIES.  On March 18, 1999, Charter Operating
entered into senior secured credit facilities arranged by Chase Securities Inc.,
NationsBanc Montgomery Securities LLC and TD Securities (USA) Inc. Obligations
under the Charter Operating credit facilities are guaranteed by Charter
Operating's parent, Charter Holdings, and by Charter Operating's subsidiaries.
The obligations under the Charter Operating credit facilities are secured by
pledges by Charter Operating of intercompany obligations and the ownership
interests of Charter Operating and its subsidiaries, but are not secured by the
other assets of Charter Operating or its subsidiaries. The obligations under the
Charter Operating credit facilities are also secured by pledges of intercompany
obligations and the ownership interests of Charter Holdings in Charter
Operating, but are not secured by the other assets of Charter Holdings or
Charter Operating.

     The Charter Operating credit facilities provide for borrowings of up to
$4.7 billion consisting of:

      --   an eight and one-half year reducing revolving loan in the amount of
           $1.25 billion;

      --   an eight and one-half year Tranche A term loan in the amount of $1.0
           billion; and

      --   a nine-year Tranche B term loan in the amount of $2.45 billion.

     The Charter Operating credit facilities provide for the amortization of the
principal amount of the Tranche A term loan facility and the reduction of the
revolving loan facility beginning on June 30, 2002 with respect to the Tranche A
term loan and on March 31, 2004 with respect to the revolving credit facility,
with a final maturity date, in each case, of September 18, 2007. The
amortization of the principal amount of the Tranche B term loan facility is
substantially "back-ended," with more than 90% of the principal balance due in
the year of maturity. The final maturity date of the Tranche B term loan
facility is March 18, 2008. The Charter Operating credit facilities also provide
for an incremental term facility of up to $1.0 billion conditioned upon receipt
of additional new commitments from lenders. Up to 50% of the borrowings under it
may be repaid on terms substantially similar to that of the Tranche A term loan
and the remaining portion on terms substantially similar to that of the Tranche
B term loan. In March 2000, $600.0 million of the incremental term facility was
drawn down, thereby increasing the Tranche B term loan. The maturity date for
this term loan is September 18, 2008.

     The Charter Operating credit facilities also contain provisions requiring
mandatory loan prepayments under some circumstances, such as when significant
amounts of assets are sold and the proceeds are not promptly reinvested in
assets useful in the business of Charter Operating. In the event that any
existing March 1999 8.250% Charter Holdings notes remain 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
facility will terminate on such date.

     The Charter Operating credit facilities provide Charter Operating with two
interest rate options, to which a margin is added: a base rate option, generally
the "prime rate" of interest; and an interest rate option based on the interbank
eurodollar rate. Interest rate margins for the Charter Operating credit
facilities depend upon performance measured by a leverage ratio, which is the
ratio of indebtedness to annualized operating cash flow. This leverage ratio is
based on the debt of Charter Operating and its subsidiaries, exclusive of
outstanding notes and other debt for money borrowed,

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including guarantees by Charter Operating and by Charter Holdings. The interest
rate margins for the Charter Operating credit facilities are as follows:

      --   with respect to the revolving loan and the Tranche A term loan, the
           margin ranges from 1.5% to 2.25% for eurodollar loans; and

      --   with respect to the Tranche B term loan, the margin ranges from 2.25%
           to 2.75% for eurodollar loans and from 1.25% to 1.75% for base rate
           loans.

     The Charter Operating credit facilities contain representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default include a
cross-default provision that is triggered by the failure of Charter Operating,
Charter Holdings or Charter Operating's subsidiaries to make payment on debt
with an outstanding total principal amount exceeding $50.0 million, the
acceleration of debt of this amount prior to its maturity or the failure to
comply with specified covenants. The financial covenants, which are generally
tested on a quarterly basis, measure performance against standards set for
leverage, debt service coverage, and operating cash flow coverage of cash
interest expense.

     The Charter Operating credit facilities also contain a change of control
provision, making it an event of default, and permitting acceleration of the
debt, in the event that either:

      --   Mr. Allen, including his estate, heirs and other related entities,
           fails to maintain a 25% direct or indirect voting and economic
           interest in Charter Operating; or

      --   a change of control occurs under the indentures governing the March
           1999 Charter Holdings notes or the January 2000 Charter Holdings
           notes.

     The various negative covenants place limitations on the ability of Charter
Holdings, Charter Operating and their subsidiaries to, among other things:

      --   incur debt;

      --   pay dividends or make other distributions;

      --   incur liens;

      --   make acquisitions;

      --   make investments or asset sales; or

      --   enter into transactions with affiliates.

     Distributions under the Charter Operating credit facilities to Charter
Holdings to pay interest on the March 1999 Charter Holdings notes are generally
permitted. Distributions under the Charter Operating credit facilities to
Charter Holdings to pay interest on the notes, the January 2000 Charter Holdings
notes and the January 2001 Charter Holdings notes are generally permitted,
provided Charter Operating's cash flow for the four complete quarters preceding
the distribution exceeds 1.75 times its cash interest expense, including the
amount of such distribution. In each case, such distributions to Charter
Holdings are not permitted during the existence of a default under the Charter
Operating credit facilities.

     As of March 31, 2001, approximately $3.8 billion was outstanding and
approximately $885.0 million was available for borrowing under the Charter
Operating credit facilities. As of March 31, 2001, pro forma for (1) the
issuance and sale of the original notes and the application of the net proceeds
therefrom; (2) the receipt of net proceeds from Charter Communications Holding
Company from the sale by Charter Communications, Inc. of its May 2001 senior
convertible notes and from the

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May 2001 sale by Charter Communications, Inc. of additional shares of its Class
A common stock; (3) the use of such proceeds to repay all amounts outstanding
under the Charter Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII
(Bresnan) revolving credit facilities; and (4) the closing of the AT&T
transactions and the borrowings under the Charter Operating credit facility to
pay a portion of the AT&T purchase price, outstanding borrowings would have been
approximately $3.5 billion and the unused availability would have been
approximately $1.25 billion.

     CC VII (FALCON) CREDIT FACILITIES.  In connection with the Falcon
acquisition, the required percentage of lenders under the senior secured credit
facilities of Falcon Cable Communications agreed to amend and restate the Falcon
credit agreement, which amendment and restatement was effective as of November
12, 1999, the date that Charter Communications Holding Company closed the Falcon
acquisition. The obligations under the CC VII (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.
The obligations under the CC VII (Falcon) credit facilities are secured by
pledges of the ownership interests and intercompany obligations of Falcon Cable
Communications and its subsidiaries, but are not secured by other assets of
Falcon Cable Communications or its subsidiaries.

     The CC VII (Falcon) credit facilities have maximum borrowing availability
of $1.25 billion consisting of the following:

      --   a revolving facility in the amount of approximately $646.0 million;

      --   a term loan B in the amount of approximately $196.5 million;

      --   a term loan C in the amount of approximately $294.8 million; and

      --   a supplemental revolving facility of $110.0 million.

     In addition to the above, the CC VII (Falcon) credit facilities provide
for, at the option of the lenders, supplemental credit facilities for a total of
$700.0 million, less the $110.0 million outstanding under the supplemental
revolving facility above. These supplemental credit facilities are available,
subject to the borrower's ability to obtain additional commitments from the
lenders. The terms of such additional borrowings are subject to certain
restrictions that may be no more materially restrictive than the provisions of
the CC VII (Falcon) credit facilities and will be determined at the time of
borrowing.

     The revolving facility and the supplemental revolving facility amortize
beginning in 2001 and 2003, respectively, and ending on December 29, 2006 and
December 31, 2007, respectively. The term loan B and term loan C facilities
amortize beginning in 1999 and ending on June 29, 2007 and December 31, 2007,
respectively.

     The CC VII (Falcon) credit facilities also contain provisions requiring
mandatory loan prepayments under certain circumstances, such as when significant
amounts of assets are sold and the proceeds are not promptly reinvested in
assets useful in the business of Falcon Cable Communications.

     The CC VII (Falcon) credit facilities provide Falcon Cable Communications
with two interest rate options, to which a margin is added: a base rate option,
generally the "prime rate" of interest; and an interest rate option based on the
interbank eurodollar rate. Interest rates for these credit facilities, as well
as a fee payable on unborrowed amounts available thereunder, depend upon
performance measured by a "leverage ratio" which is the ratio of indebtedness to
annualized operating cash flow. This leverage ratio is based on the debt of
Falcon Cable Communications and its

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subsidiaries, exclusive of the Falcon debentures described below. The interest
rate margins for the CC VII (Falcon) credit facilities are as follows:

      --   with respect to the revolving loan facility, the margin ranges from
           1.0% to 2.0% for eurodollar loans and from 0.0% to 1.0% for base rate
           loans;

      --   with respect to Term Loan B, the margin ranges from 1.75% to 2.25%
           for eurodollar loans and from 0.75% to 1.25% for base rate loans; and

      --   with respect to Term Loan C, the margin ranges from 2.0% to 2.5% for
           eurodollar loans and from 1.0% to 1.5% for base rate loans.

     The CC VII (Falcon) credit facilities contain representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default for the CC VII
(Falcon) credit facilities include a cross-default provision that is triggered
by, among other things, the failure to make payment relating to specified
outstanding debt of Falcon Cable Communications, its direct and indirect parent
companies, CC VII Holdings, LLC and Charter Communications VII, or specified
subsidiary guarantors in a total amount of principal and accrued interest
exceeding $10.0 million, the acceleration of debt of this amount prior to its
maturity or the failure to comply with specified covenants. The financial
covenants, which are generally tested on a quarterly basis, measure performance
against standards set for leverage, debt service coverage, and operating cash
flow coverage of cash interest expense.

     The CC VII (Falcon) credit facilities also contain a change of control
provision, making it an event of default, and permitting acceleration of the
debt, in the event that either:

      --   Mr. Allen, including his estate, heirs and other related entities,
           fails to maintain a 25% direct or indirect voting and economic
           interest in Falcon Cable Communications; or

      --   a change of control occurs under the terms of other specified debt of
           Falcon.

     The various negative covenants place limitations on the ability of Falcon
Cable Communications and its subsidiaries to, among other things:

      --   incur debt;

      --   pay dividends or make other distributions;

      --   incur liens;

      --   make acquisitions;

      --   make investments or asset sales; or

      --   enter into transactions with affiliates.

     Distributions under the CC VII (Falcon) credit facilities to Charter
Holdings to pay interest on the March 1999 Charter Holdings notes, the January
2000 Charter Holdings, the January 2001 Charter Holdings notes and the May 2001
Charter Holdings notes are generally permitted, provided Falcon Cable
Communications' cash flow for the most recent fiscal quarter preceding the
distribution exceeds 1.75 times its cash interest expense, including the amount
of such distribution. Distributions to Charter Holdings are also permitted if
Falcon Cable Communications meets specified financial ratios. In each case, such
distributions to Charter Holdings are not permitted during the existence of a
default under the CC VII (Falcon) credit facilities.

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     As of March 31, 2001, there was approximately $698.8 million outstanding
and approximately $547.2 million was available for borrowing under the CC VII
(Falcon) credit facilities. As of March 31, 2001, pro forma for (1) the issuance
and sale of the original notes and the application of the net proceeds
therefrom; (2) the receipt of net proceeds from Charter Communications Holding
Company from the sale by Charter Communications, Inc. of its May 2001 senior
convertible notes and from the May 2001 sale by Charter Communications, Inc. of
additional shares of its Class A common stock; (3) the use of such proceeds to
repay all amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
(Falcon) and CC VIII (Bresnan) revolving credit facilities; and (4) the closing
of the AT&T transactions and the borrowings under the Charter Operating credit
facility to pay a portion of the AT&T purchase price, outstanding borrowings
would have been approximately $489.8 million and the unused availability would
have been approximately $757.3 million.


     CC VI (FANCH) CREDIT FACILITIES.  On November 12, 1999, the Fanch
acquisition was closed and CC VI Operating Company, LLC, the parent company of
the Fanch cable systems, entered into senior secured credit facilities arranged
by Chase Securities Inc. and Banc of America Securities LLC. The obligations
under the CC VI (Fanch) credit facilities are guaranteed by CC VI Operating's
parent, CC VI Holdings, LLC, and by the subsidiaries of CC VI Operating. The
obligations under the CC VI (Fanch) credit facilities are secured by pledges of
the ownership interests and intercompany obligations of CC VI Operating and its
subsidiaries, but are not secured by other assets of CC VI Operating or its
subsidiaries.

     The CC VI (Fanch) credit facilities have maximum borrowings of $1.2
billion, consisting of:

      --   a revolving facility in the amount of approximately $350.0 million;

      --   a term loan A in the amount of approximately $450.0 million; and

      --   a term loan B in the amount of approximately $400.0 million.

     The revolving facility amortizes beginning in 2004 and ending in May 2008.
The term loan A and term loan B facilities amortize beginning in 2003 and ending
in May 2008 and November 2008, respectively.

     In addition to the foregoing, the CC VI (Fanch) credit facilities provide
for supplemental credit facilities in the maximum amount of $300.0 million.
These supplemental credit facilities may be in the form of an additional term
loan or an aggregate increase in the amount of the term loan A or the revolving
facility. These supplemental credit facilities are available, subject to the
borrower's ability to obtain additional commitments from lenders. The
amortization of the additional term loans under the supplemental credit
facilities prior to May 2009 is limited to 1% per annum of the aggregate
principal amount of such additional term loans.

     The CC VI (Fanch) credit facilities also 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 CC VI Operating.

     The CC VI (Fanch) credit facilities provide CC VI Operating with the
following two interest rate options, to which a margin is added: a base rate
option, generally the prime rate of interest; and an interest rate option rate
based on the interbank Eurodollar rate. Interest rates for the CC VI (Fanch)
credit facilities, as well as a fee payable on unborrowed amounts available
thereunder, depend upon performance measured by a leverage ratio, which is the
ratio of indebtedness to

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annualized operating cash flow. This leverage ratio is based on the debt of CC
VI Operating and its subsidiaries. The interest rate margins for the CC VI
(Fanch) credit facilities are as follows:

      --   with respect to the revolving loan facility and term loan A, the
           margin ranges from 1.0% to 2.25% for eurodollar loans and from 0.0%
           to 1.25% for base rate loans; and

      --   with respect to term loan B, the margin ranges from 2.50% to 3.00%
           for eurodollar loans and from 1.50% to 2.00% for base rate loans.

     The CC VI (Fanch) credit facilities contain representations and warranties,
affirmative and negative covenants, information requirements, events of default
and financial covenants. The events of default for the CC VI (Fanch) credit
facilities include a cross-default provision that is triggered by the failure to
make payment on debt of CC VI Operating, CC VI Holdings and the subsidiaries of
CC VI Operating in a total amount of $25.0 million, the acceleration of debt of
this amount prior to its maturity or the failure to comply with specified
covenants. The financial covenants, which are generally tested on a quarterly
basis, measure performance against standards set for leverage, debt service
coverage, and operating cash flow coverage of cash interest expense.

     The CC VI (Fanch) credit facilities also contain a change of control
provision, making it an event of default, and permitting acceleration of the
debt, in the event of any of the following:

      --   Mr. Allen, including his estate, heirs and other related entities,
           fails to maintain a 25% direct or indirect voting and economic
           interest in CC VI Operating;

      --   CC VI Operating is no longer a direct or indirect subsidiary of
           Charter Communications Holding Company; or

      --   A change of control occurs under specified indebtedness of CC VI
           Holdings, CC VI Operating or CC VI Operating's subsidiaries.

     Various negative covenants place limitations on the ability of CC VI
Operating and its subsidiaries to, among other things:

      --   incur debt;

      --   pay dividends or make other distributions;

      --   incur liens;

      --   make acquisitions;

      --   make investments or asset sales; or

      --   enter into transactions with affiliates.

     Distributions under the CC VI (Fanch) credit facilities to pay interest on
the notes, and the March 1999, January 2000 and January 2001 Charter Holdings
notes are generally permitted, provided CC VI Operating's cash flow for the four
complete quarters preceding the distribution exceeds 1.75 times its cash
interest expense, including the amount of such distribution. Distributions to
Charter Holdings will also be permitted if CC VI Operating meets specified
financial ratios. In each case, such distributions to Charter Holdings are not
permitted during the existence of a default under the CC VI (Fanch) credit
facilities.

     As of March 31, 2001, there was approximately $901.0 million outstanding
and approximately $299.0 million was available for borrowing under the CC VI
(Fanch) credit facilities. As of March 31, 2001, pro forma for (1) the issuance
and sale of the original notes and the application of

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the net proceeds therefrom; (2) the receipt of net proceeds from Charter
Communications Holding Company from the sale by Charter Communications, Inc. of
its May 2001 senior convertible notes and from the May 2001 sale by Charter
Communications, Inc. of additional shares of its Class A common stock; (3) the
use of such proceeds to repay all amounts outstanding under the Charter
Operating, CC VI (Fanch), CC VII (Falcon) and CC VIII (Bresnan) revolving credit
facilities; and (4) the closing of the AT&T transactions and the borrowings
under the Charter Operating credit facility to pay a portion of the AT&T
purchase price, outstanding borrowings would have been approximately $850.0
million and the unused availability would have been approximately $350.0
million. However, debt covenants limit the amount that can be borrowed to $122.3
million at March 31, 2001.

     BRESNAN CREDIT FACILITIES.  In connection with the CC VIII (Bresnan)
acquisition, our subsidiary, CC VIII Operating, LLC (formerly Bresnan
Telecommunications Company, LLC) amended and restated its previous senior
secured credit facilities and increased the available borrowings under the
facilities. At the closing of the Bresnan acquisition, we borrowed approximately
$599.9 million to replace the borrowings outstanding under the previous credit
facilities and an additional $31.3 million to fund a portion of the Bresnan
purchase price.

     Upon completion of the Bresnan/Avalon combination, the CC VIII (Bresnan)
credit facilities were again amended and restated. The following description
reflects such amendment and restatement.

     The obligations under the CC VIII (Bresnan) credit facilities are
guaranteed by the parent company of the Bresnan borrower, CC VIII Holdings, LLC
(formerly Bresnan Communications Group LLC), and by the subsidiaries of the
Bresnan borrower. The obligations under the CC VIII (Bresnan) credit facilities
are secured by pledges of the ownership interests and intercompany obligations
of the Bresnan borrower and its subsidiaries, but are not secured by other
assets of the Bresnan borrower or its subsidiaries. The CC VIII (Bresnan) credit
facilities are also secured by a pledge of CC VIII Holdings' equity interest in
the Bresnan borrower and intercompany obligations with respect to the Bresnan
borrower.

     The CC VIII (Bresnan) credit facilities provide for borrowings of up to
$1.45 billion, consisting of:

      --   a reducing revolving loan facility in the amount of $450.0 million;

      --   two tranch term loans A facilities in the aggregate amount of $500.0
           million; and

      --   two tranch term loans B facilities in the amount of $500.0 million.

     The CC VIII (Bresnan) credit facilities provide for the amortization of the
principal amount of the term loan A facilities and the reduction of the
revolving loan facility beginning March 31, 2002, with a final maturity date of
June 30, 2007. The amortization of the term loan B facilities is substantially
"back-ended", with more than ninety percent of the principal balance due on the
final maturity date of February 2, 2008. The CC VIII (Bresnan) credit facilities
also provide for two incremental facilities of up to a total $500.0 million,
which are conditioned upon receipt of additional commitments from lenders. If
the incremental facilities become available, they may be in the form of
revolving loans, term A loans or to a limited extent term B loans, but may not
amortize more quickly than the reducing revolving loan facility or the term loan
A facilities, and may not have a final maturity date earlier than six calendar
months after the maturity date of the term loan B facilities.

     The CC VIII (Bresnan) credit facilities provide the following two interest
rate options, to which a margin is added: a base rate, generally the "prime
rate" of interest; and an interest rate option based on the interbank eurodollar
rate. Interest rate margins for the CC VIII (Bresnan) credit

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facilities depend upon performance measured by a leverage ratio, which is the
ratio of total debt to annualized operating cash flow. The leverage ratio is
based on the debt of the Bresnan borrower and its subsidiaries. The interest
rate margins for the CC VIII (Bresnan) credit facilities are as follows:

      --   with respect to the term loan A facilities and the revolving loan
           facility, the margin ranges from 0.75% to 2.25% for eurodollar loans
           and from 0.0% to 1.25% for base rate loans; and

      --   with respect to the term loan B facilities, the margin ranges from
           2.5% to 2.75% for eurodollar loans and from 1.5% to 1.75% for base
           rate loans.

     The CC VIII (Bresnan) credit facilities contain various representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default for the CC VIII
(Bresnan) credit facilities include a cross-default provision that is triggered
by, among other things, the failure to make payment on the debt of the Bresnan
borrower, its subsidiaries and CC VIII Holdings in a total amount in excess of
$25.0 million, the acceleration of debt of this amount prior to its maturity or
failure to comply with specified covenants. The financial covenants, which are
generally tested on a quarterly basis, measure performance against standards set
for leverage, debt service coverage, and operating cash flow coverage of cash
interest expense.

     Certain negative covenants place limitations on the ability of the Bresnan
borrower and its restricted subsidiaries to, among other things:

      --   incur debt;

      --   pay dividends or make other distributions;

      --   incur liens;

      --   make acquisitions;

      --   make investments or asset sales; or

      --   enter into transactions with affiliates.

     The CC VIII (Bresnan) credit facilities contain a change in control
provision making it an event of default permitting acceleration of the debt in
the event of any of the following:

      --   Mr. Allen, including his estate, heirs and related entities, fails to
           maintain, directly or indirectly, at least 51% voting interest in the
           Bresnan borrower, or ceases to own of record or beneficially,
           directly or indirectly, at least 25% of the equity interests of the
           Bresnan borrower;

      --   a change of control or similar defined term shall occur in any
           agreement governing debt of CC VIII Holdings or the Bresnan borrower,
           and such debt is at least in the amount of $25.0 million;

      --   Charter Communications Holding Company shall cease to own, directly
           or indirectly, at least 51% of the equity interests in the Bresnan
           borrower; or

      --   the Bresnan borrower shall cease to be a direct wholly owned
           subsidiary of CC VIII Holdings.

     Distributions under the CC VIII (Bresnan) credit facilities to Charter
Holdings to pay interest on the notes, the March 1999, January 2000 and January
2001 Charter Holdings notes are generally permitted, provided the borrower's
consolidated cash flow for the four complete quarters preceding

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the distribution exceeds 1.75 times its cash interest expense, including the
amount of such distribution. Distributions to Charter Holdings are also
conditioned on the borrower meeting specified financial ratios. In each case,
such distributions to Charter Holdings are not permitted during the existence of
a default under the CC VIII (Bresnan) credit facilities. Distributions to
Charter Holdings to pay interest on the March 1999, January 2000, January 2001
and May 2001 Charter Holdings notes are also subject to the restricted payment
provisions contained in the indenture for the 11.875% notes of CC V Holdings,
LLC, the parent of the Bresnan borrower.

     As of March 31, 2001, there was approximately $1.0 billion outstanding and
approximately $445.0 million was available for borrowing under the CC VIII
(Bresnan) credit facilities. As of March 31, 2001, pro forma for (1) the
issuance and sale of the original notes and the application of the net proceeds
therefrom; (2) the receipt of net proceeds from Charter Communications Holding
Company from the sale by Charter Communications, Inc. of its May 2001 senior
convertible notes and from the May 2001 sale by Charter Communications, Inc. of
additional shares of its Class A common stock; (3) the use of such proceeds to
repay all amounts outstanding under the Charter Operating, CC VI (Fanch), CC VII
(Falcon) and CC VIII (Bresnan) revolving credit facilities; and (4) the closing
of the AT&T transactions and the borrowings under the Charter Operating credit
facility to pay a portion of the AT&T purchase price, outstanding borrowings
would have been approximately $1.0 billion and unused availability would have
been approximately $450.0 million.

EXISTING PUBLIC DEBT

     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.

     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, 2000, there was $600
million in total principal amount outstanding. The March 1999 8.625% Charter
Holdings notes mature on April 1, 2009 and as of December 31, 2000, there was
$1.5 billion in total principal amount outstanding. The March 1999 9.920%
Charter Holdings notes mature on April 1, 2011 and as of December 31, 2000, the
total accreted value was $1.08 billion. Cash interest on the March 1999 9.920%
Charter Holdings notes will 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 the current and future unsecured and
unsubordinated debt of Charter Holdings, including the January 2000 and January
2001 Charter Holdings notes.

     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. Before April 1, 2002, Charter Holdings and Charter Capital may redeem
up to 35% of each of the March 1999 8.625% Charter Holdings notes and the March
1999 9.920% Charter Holdings notes, in each case, at a premium with the proceeds
of certain offerings of equity securities. In addition, 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.

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     In the event of a specified change of control event, 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 notes contain
certain covenants that restrict the ability of Charter Holdings and Charter
Capital and their restricted subsidiaries to:

      --   incur additional debt;

      --   create specified liens;

      --   pay dividends on stock or repurchase stock;

      --   make investments;

      --   sell all or substantially all of our assets or merge with or into
           other companies;

      --   sell assets;

      --   in the case of restricted subsidiaries, create or permit to exist
           dividend or payment restrictions with respect to us; and

      --   engage in certain transactions with affiliates.

     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.

     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, 2000, there was
$675 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, 2000, there was $325 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, 2000, the total accreted value of these notes
was approximately $335.5 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 the current and future
unsecured and unsubordinated debt of Charter Holdings, including the March 1999
and January 2001 Charter Holdings 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. Before January 15, 2003, Charter Holdings and Charter Capital may
redeem up to 35% of the January 2000 10.25% Charter Holdings notes and the
January 2000 11.75% Charter Holdings notes, in each case, at a premium with the
proceeds of certain offerings of equity securities. In addition, 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.

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     In the event of a specified change of control event, Charter Holdings and
Charter Capital must offer to repurchase any then outstanding January 2000
Charter Holdings notes at 101% of their aggregate 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, registration rights or provisions for
special interest.

     The January 2001 Charter Holdings notes are general unsecured obligations
of Charter Holdings and Charter Capital. The January 2001 10.750% Charter
Holdings notes issued in the aggregate principal amount of $900 million mature
on October 1, 2009. The January 2001 11.125% Charter Holdings notes issued in
the aggregate principal amount of $500 million mature on January 15, 2011. The
January 2001 13.500% Charter Holdings notes issued in the aggregate principal
amount at maturity of $675 million mature on January 15, 2011. 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 the current and future
unsecured and unsubordinated debt of Charter Holdings, including the March 1999
and January 2000 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. Before January 15, 2004, Charter Holdings and Charter Capital
may redeem up to 35% of the January 2001 11.125% Charter Holdings notes and the
January 2001 13.500% Charter Holdings notes, in each case at a premium, with the
proceeds of certain offerings of equity securities. In addition, 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 of a specified change of control event, Charter Holdings and
Charter Capital must offer to repurchase any then outstanding January 2001
Charter Holdings notes at 101% of their aggregate 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.

     RENAISSANCE 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 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

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guarantor, respectively. In October 1998, the issuers of the Renaissance notes
exchanged $163.2 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 will not be any payment of interest in respect of the Renaissance
notes prior to October 15, 2003. Interest on the Renaissance notes shall be paid
semi-annually in cash at a rate of 10% per annum beginning on October 15, 2003.
The Renaissance notes are redeemable at the option of the issuers thereof, in
whole or in part, at any time on or after April 15, 2003, 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. In addition, at any time prior to April 15, 2001, the issuers of the
Renaissance notes may redeem up to 35% of the original total principal amount at
maturity of the Renaissance notes with the proceeds of one or more sales of
equity interests at 110% of their accreted value on the redemption date,
provided that after any such redemption at least $106.0 million total principal
amount at maturity of Renaissance notes remains outstanding.

     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 indentures governing the Renaissance 10% notes contain certain
covenants that restrict the ability of the issuers of the Renaissance notes and
their restricted subsidiaries to:

      --   incur additional debt;

      --   create liens;

      --   engage in sale-leaseback transactions;

      --   pay dividends or make other distributions in respect of their equity
           interests;

      --   redeem capital stock;

      --   make investments or certain other restricted payments;

      --   sell assets;

      --   issue or sell capital stock of restricted subsidiaries;

      --   enter into transactions with shareholders or affiliates; and

      --   effect a consolidation or merger.

     The Renaissance notes contain events of default that include a
cross-default provision triggered by the failure of Renaissance Media Group LLC
or any of its specified subsidiaries to make payment on debt at maturity with a
total principal amount of $10.0 million or more or the acceleration of debt of
this amount prior to maturity.

     As of March 31, 2001, there was outstanding $114.4 million total principal
amount at maturity of Renaissance notes, with an accreted value of $96.7
million.

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     AVALON 11.875% 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.) 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
Avalon notes for an equivalent amount of new Avalon notes. The form and terms of
the new Avalon notes are substantially identical to the original Avalon notes
except that they are registered under the Securities Act and, therefore, are not
subject to the same transfer restrictions.

     The Avalon notes are guaranteed by certain subsidiaries of CC V Holdings.

     There will be no current payments of cash interest on the Avalon notes
before December 1, 2003. The Avalon notes accrete in value at a rate of 11.875%
per annum, compounded semi-annually, to an aggregate principal amount of $196.0
million on December 1, 2003. After December 1, 2003, cash interest on the Avalon
notes:

      --   will accrue at the rate of 11.875% per year on the principal amount
           at maturity; and

      --   will be payable semi-annually in arrears on June 1 and December 1 of
           each year, commencing June 1, 2004.

     On December 1, 2003, the issuers of the Avalon notes will be required to
redeem an amount equal to $369.79 per $1,000 in principal amount at maturity of
each Avalon note, on a pro rata basis, at a redemption price of 100% of the
principal amount then outstanding at maturity of the Avalon notes so redeemed.

     On or after December 1, 2003, the issuers of the Avalon notes may redeem
the Avalon notes, in whole or in part, at a specified premium. The optional
redemption price declines to 100% of the principal amount of the Avalon notes
redeemed, plus accrued and unpaid interest, if any, for redemptions on or after
December 1, 2006. Before December 1, 2001, the issuers may redeem up to 35% of
the total principal amount at maturity of the Avalon notes with the proceeds of
one or more equity offerings and/or equity investments.

     In the event of specified change of control events, holders of the Avalon
notes have the right to sell their Avalon notes to the issuers of the Avalon
notes at 101% of:

      --   the accreted value of the Avalon notes in the case of repurchases of
           Avalon notes prior to December 1, 2003; or

      --   the total principal amount of the Avalon notes in the case of
           repurchases of Avalon notes on or after December 1, 2003, plus
           accrued and unpaid interest and liquidated damages, if any, to the
           date of purchase.

     Our acquisition of Avalon triggered this right. On December 3, 1999, we
commenced a change of control repurchase offer with respect to the Avalon notes.
In January 2000, we completed change of control offers in which we repurchased
$16.3 million aggregate principal amount of the 11.875% notes at a purchase
price of 101% of accreted value as of January 28, 2000. The aggregate repurchase
price of $10.5 million was funded with proceeds of the sale of the January 2000
Charter Holdings notes.

     Among other restrictions, the indenture governing the Avalon notes limits
the ability of the issuers and their specified subsidiaries to:

      --   incur additional debt;

      --   pay dividends or make other specified restricted payments;

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      --   enter into transactions with affiliates;

      --   make certain investments;

      --   sell assets or subsidiary stock;

      --   engage in sale-leaseback transactions;

      --   create liens;

      --   create or permit to exist restrictions dividends or other payments
           from restricted subsidiaries;

      --   redeem equity interests;

      --   merge, consolidate or sell all or substantially all of their combined
           assets; and

      --   with respect to restricted subsidiaries, issue capital stock.

     The Avalon notes contain events of default that include a cross-default
provision triggered by the failure of CC V Operating, CC V Holdings Finance,
Inc. or any specified subsidiary to make payment on debt with a total principal
amount of $5.0 million or more or the acceleration of debt of this amount prior
to maturity.

     As of March 31, 2001, the total principal amount at maturity of the
outstanding Avalon notes was $179.8 million, with an accreted value of $135.2
million.

     CHARTER COMMUNICATIONS, INC. OCTOBER 2000 CONVERTIBLE SENIOR NOTES.  The
Charter Communications, Inc. convertible senior notes were issued under an
indenture dated October 30, 2000 between Charter Communications, Inc., as the
issuer, and BNY Midwest Trust Company, as trustee. Charter Holdings is not an
obligor or guarantor with respect to the convertible senior notes.

     The Charter Communications, Inc. convertible senior notes are general
unsecured obligations of Charter Communications, Inc. The Charter
Communications, Inc. convertible senior notes mature on October 15, 2005. There
are $750.0 million total principal amount of these notes outstanding.

     The Charter Communication, Inc. convertible senior notes are senior debts
of Charter Communications, Inc. and rank equally with any of Charter
Communications, Inc.'s future unsecured and unsubordinated debt, but are
structurally subordinated to all existing and future indebtedness and other
liabilities of Charter Communications, Inc.'s subsidiaries.

     Charter Communications, Inc. has the right to redeem the Charter
Communications, Inc. convertible senior notes on or after October 15, 2003 at
specified redemption prices plus accrued and unpaid interest to the redemption
date. The Charter Communications, Inc. convertible senior notes are convertible
at the option of the holder into shares of Charter Communications, Inc.'s Class
A common stock at a conversion rate of 46.3822 shares of Class A common stock
per $1,000 principal amount of notes, which is equivalent to a conversion price
of approximately $21.56 per share. The conversion rate is subject to adjustment
in certain events. The Charter Communications, Inc. convertible senior notes are
convertible at any time before the close of business on October 15, 2005, unless
Charter Communications, Inc. has previously redeemed or repurchased the notes.
Holders of the convertible senior notes called for redemption or submitted for
repurchase are entitled to convert the notes up to and including, but not after,
the business day prior to the date fixed for redemption or repurchase, as the
case may be.

     In the event of a specified change of control event, Charter
Communications, Inc. must offer to repurchase any then-outstanding Charter
Communications, Inc. convertible senior notes at 100% of their principal amount
plus accrued interest to the repurchase date.

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INTERCOMPANY LOANS

     For a description of certain intercompany loans made by Charter
Communications, Inc., Charter Communications Holding Company and Charter
Holdings to certain of their subsidiaries, see "Certain Relationships and
Related Transactions--Transactions with Management and Others--Intercompany
Loans."

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                              DESCRIPTION OF NOTES

     You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the term
"Charter Holdings" refers only to Charter Communications Holdings, LLC and the
term "issuers" means Charter Holdings and Charter Communications Holdings
Capital Corporation.

     The original notes were issued and the new notes will be issued under three
separate indentures, each dated May 15, 2001 (the "Indentures"), among the
Issuers and BNY Midwest Trust Company, as trustee. Although, for convenience,
the eight-year senior notes, the ten-year senior notes and the senior discount
notes are referred to as the "new notes," the eight-year senior notes, the
ten-year senior notes and the senior discount notes will be issued each as a
separate series and will not together have any class voting or other rights. The
terms of the new notes include those stated in the indentures and those made
part of the indentures by reference to the Trust Indenture Act of 1939.

     The form and terms of the new notes are the same in all material respects
as to the form and terms of the original notes, except that the new notes will
have been registered under the Securities Act of 1933 and, therefore, will not
bear legends restricting their transfer. The original notes have not been
registered under the Securities Act of 1933 and are subject to certain transfer
restrictions.

     The following description is a summary of the material provisions of the
indentures. It does not restate the indentures in their entirety. We urge you to
read the indentures because they, and not this description, define your rights
as holders of the new notes. Copies of the indentures are available as set forth
under "-- Additional Information."

BRIEF DESCRIPTION OF THE NOTES

     The notes:

     - are general unsecured obligations of the issuers;

     - are effectively subordinated in right of payment to all existing and
       future secured Indebtedness of the issuers to the extent of the value of
       the assets securing such Indebtedness;

     - are structurally subordinated in the right of payment to all liabilities
       (including trade payables) of Charter Holdings' Subsidiaries (other than
       Charter Communications Holdings Capital Corporation);

     - are equal in right of payment to all existing and future unsubordinated,
       unsecured Indebtedness of the issuers, including the March 1999, January
       2000 and January 2001 Charter Holdings notes; and

     - are senior in right of payment to any future subordinated Indebtedness of
       the issuers.

     At March 31, 2001, pro forma for (1) the issuance and sale of the original
notes and the application of the net proceeds therefrom; (2) the issuance of
additional equity to Charter Communications Holding Company in exchange for the
net proceeds received from Charter Communications Holding Company from the sale
by Charter Communications, Inc. of its May 2001 senior convertible notes and
from the May 2001 sale by Charter Communications, Inc. of additional shares of
its Class A common stock; (3) the use of such proceeds to repay all amounts
outstanding under the Charter Operating, CC VI (Fanch), CC VII (Falcon) and CC
VIII (Bresnan) revolving credit facilities; and (4) the closing of the AT&T
transactions and the borrowings under the Charter Operating credit facility to
pay a portion of the purchase price, the outstanding Indebtedness of Charter
Holdings and its Subsidiaries would have totaled approximately $13.8 billion,
$6.0 billion of which would have been Indebtedness of our Subsidiaries and
structurally senior to the new notes.

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     The new notes will rank equally with the senior notes and senior discount
notes of the issuers that were issued in March 1999, January 2000 and January
2001.


     As of the date of the indentures, all the Subsidiaries of Charter Holdings
will be "Restricted Subsidiaries." However, under the circumstances described
below under "-- Certain Covenants -- Investments," Charter Holdings will be
permitted to designate certain of its Subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will generally not be subject to the
restrictive covenants in the Indentures.


PRINCIPAL, MATURITY AND INTEREST OF NOTES

  EIGHT-YEAR SENIOR NOTES

     The eight-year senior notes will be issued in denominations of $1,000 and
integral multiples of $1,000. The eight-year senior notes will mature on October
1, 2009.

     Interest on the eight-year senior notes will accrue at the rate of 9.625%
per annum and will be payable semi-annually in arrears on May 15 and November
15, commencing on November 15, 2001. The issuers will make each interest payment
to the holders of record of the eight-year senior notes on the immediately
preceding May 1 and November 1.

     Interest on the eight-year senior notes will accrue from the date of
issuance of the original notes or, if interest has already been paid, from the
date it was most recently paid. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.


     The eight-year senior notes will be issued initially in an aggregate
principal amount of $350 million. Subject to the limitations set forth under
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," Charter Holdings may issue additional eight-year senior notes under the
indenture for the eight-year senior notes from time to time. The eight-year
senior notes and any additional eight-year senior notes subsequently issued
under the indenture for the eight-year senior notes would be treated as a single
class for all purposes under such indenture. For purposes of this description,
references to the eight-year senior notes include the eight-year senior notes
issued on the date of the Indentures and any additional eight-year senior notes
subsequently issued under the Indenture for the eight-year senior notes.


  TEN-YEAR SENIOR NOTES

     The ten-year senior notes will be issued in denominations of $1,000 and
integral multiples of $1,000. The ten-year senior notes will mature on May 15,
2011.

     Interest on the ten-year senior notes will accrue at the rate of 10.000%
per annum and will be payable semi-annually in arrears on May 15 and November
15, commencing on November 15, 2001. The issuers will make each interest payment
to the holders of record of the ten-year senior notes on the immediately
preceding May 1 and November 1.

     Interest on the ten-year senior notes will accrue from the date of original
issuance or, if interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.


     The ten-year senior notes will be issued initially in an aggregate
principal amount of $575 million. Subject to the limitations set forth under
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," Charter Holdings may issue additional ten-year senior notes under the
Indenture for the ten-year senior notes from time to time. The ten-year senior
notes and any additional ten-year senior notes subsequently issued under the
Indenture for the ten-year senior notes would be treated as a single class for
all purposes under such Indenture. For purposes of this description, references
to the ten-year senior notes include the ten-year senior notes issued on the


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date of the Indentures and any additional senior notes subsequently issued under
the Indenture for the ten-year senior notes.


  SENIOR DISCOUNT NOTES

     The issue price of each senior discount note will be $565.02 per $1,000
principal amount at maturity, generating aggregate gross proceeds of
$575,190,360 and representing a yield to maturity of 11.750% (calculated on a
semi-annual bond equivalent basis) calculated from May 15, 2001. The issuers
will issue senior discount notes in denominations of $1,000 principal amount at
maturity and integral multiples of $1,000 principal amount at maturity. The
senior discount notes will mature on May 15, 2011.

     Cash interest on the senior discount notes will not accrue prior to May 15,
2006. Thereafter, cash interest on the senior discount notes will accrue at a
rate of 11.750% per annum and will be payable semi-annually in arrears on May 15
and November 15, commencing on November 15, 2006. The issuers will make each
interest payment to the holders of record of the senior discount notes on the
immediately preceding May 1 and November 1. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.

     The senior discount notes will accrete at a rate of 11.750% per year to an
aggregate amount of $1,018 million as of November 15, 2006. The senior discount
notes will be limited in aggregate principal amount at maturity to $1,018
million.

     For United States federal income tax purposes, holders of the senior
discount notes will be required to include amounts in gross income in advance of
the receipt of the cash payments to which the income is attributable. See
"Material United States Federal Income Tax Considerations."

OPTIONAL REDEMPTION

  EIGHT-YEAR SENIOR NOTES

     The eight-year senior notes will not be redeemable at the issuers' option
prior to maturity.

  TEN-YEAR SENIOR NOTES

     At any time prior to May 15, 2004, the issuers may, on any one or more
occasions, redeem up to 35% of the aggregate principal amount of the ten-year
senior notes on a pro rata basis (or nearly as pro rata as practicable) at a
redemption price of 110.000% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net cash proceeds of one or
more Equity Offerings, provided that

          (1) at least 65% of the aggregate principal amount of ten-year senior
     notes remains outstanding immediately after the occurrence of such
     redemption (excluding ten-year senior notes held by Charter Holdings and
     its Subsidiaries), and

          (2) the redemption must occur within 60 days of the date of the
     closing of such Equity Offering.

     Except pursuant to the preceding paragraph, the ten-year senior notes will
not be redeemable at the issuers' option prior to May 15, 2006.

     On or after May 15, 2006, the issuers may redeem all or a part of the
ten-year senior notes upon not less than 30 nor more than 60 days notice at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to the applicable

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redemption date, if redeemed during the twelve-month period beginning on May 15
of the years indicated below:

<Table>
<Caption>
                            YEAR                              PERCENTAGE
                            ----                              ----------
                                                           
2006........................................................   105.000%
2007........................................................   103.333%
2008........................................................   101.667%
2009 and thereafter.........................................   100.000%
</Table>

  SENIOR DISCOUNT NOTES

     At any time prior to May 15, 2004, the issuers may, on any one or more
occasions, redeem up to 35% of the aggregate principal amount at maturity of the
senior discount notes on a pro rata basis (or nearly as pro rata as practicable)
at a redemption price of 111.750% of the Accreted Value thereof, with the net
cash proceeds of one or more Equity Offerings, provided that

          (1) at least 65% of the aggregate principal amount at maturity of
     senior discount notes remains outstanding immediately after the occurrence
     of such redemption (excluding senior discount notes held by Charter
     Holdings and its Subsidiaries), and

          (2) the redemption must occur within 60 days of the date of the
     closing of such Equity Offering.

     Except pursuant to the preceding paragraph, the senior discount notes will
not be redeemable at the issuers' option prior to May 15, 2006.

     On or after May 15, 2006, the issuers may redeem all or a part of the
senior discount notes upon not less than 30 nor more than 60 days notice, at the
redemption prices (expressed as percentages of principal amount at maturity) set
forth below plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on January
15 of the years indicated below.

<Table>
<Caption>
                            YEAR                              PERCENTAGE
                            ----                              ----------
                                                           
2006........................................................   105.875%
2007........................................................   103.917%
2008........................................................   101.958%
2009 and thereafter.........................................   100.000%
</Table>

REPURCHASE AT THE OPTION OF HOLDERS

  CHANGE OF CONTROL

     If a Change of Control occurs, each holder of new notes will have the right
to require the issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that holder's new notes pursuant to a "Change of
Control Offer." In the Change of Control Offer, the issuers will offer a "Change
of Control Payment" in cash equal to:

          (x) with respect to the eight-year senior notes and the ten-year
     senior notes, 101% of the aggregate principal amount thereof repurchased
     plus accrued and unpaid interest thereon, if any, to the date of purchase;
     and

          (y) with respect to the senior discount notes, 101% of the Accreted
     Value plus, for any Change of Control Offer occurring after the Full
     Accretion Date, accrued and unpaid interest, if any, to the date of
     purchase.

     Within ten days following any Change of Control, the issuers will mail a
notice to each holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase notes on a certain date (the
"Change of Control Payment Date") specified in such notice,

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   149

pursuant to the procedures required by the indentures and described in such
notice. The issuers will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934 (or any successor rules) and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a Change of Control.

     On the Change of Control Payment Date, the issuers will, to the extent
lawful:

          (1)  accept for payment all notes or portions thereof properly
     tendered pursuant to the Change of Control Offer;

          (2)  deposit with the paying agent an amount equal to the Change of
     Control Payment in respect of all notes or portions thereof so tendered;
     and

          (3)  deliver or cause to be delivered to the trustee the notes so
     accepted together with an officers' certificate stating the aggregate
     principal amount of notes or portions thereof being purchased by the
     issuers.

     The paying agent will promptly pay to each holder of notes so tendered the
Change of Control Payment for such notes, and the trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount or principal amount at maturity, as
applicable, to any unpurchased portion of the notes surrendered, if any,
provided that each such new note will be in a principal amount or principal
amount at maturity, as applicable, of $1,000 or an integral multiple thereof.

     The provisions described above that require the issuers to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the indentures are applicable. Except as
described above with respect to a Change of Control, the indentures will not
contain provisions that permit the holders of the notes to require that the
issuers repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.

     The issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indentures applicable to a Change of Control Offer made by the issuers
and purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.

     The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Charter Holdings and its Subsidiaries, taken as a whole, or of
a Parent and its Subsidiaries, taken as a whole. Although there is a limited
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law. Accordingly,
the ability of a holder of notes to require the issuers to repurchase such notes
as a result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of Charter Holdings and its Subsidiaries, taken as a
whole, or of a Parent and its Subsidiaries, taken as a whole, to another Person
or group may be uncertain.

  ASSET SALES

     Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

          (1)  Charter Holdings or a Restricted Subsidiary of Charter Holdings
     receives consideration at the time of such Asset Sale at least equal to the
     fair market value of the assets or Equity Interests issued or sold or
     otherwise disposed of;

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   150

          (2) such fair market value is determined by Charter Holdings' board of
     directors and evidenced by a resolution of such board of directors set
     forth in an officers' certificate delivered to the trustee; and

          (3) at least 75% of the consideration therefor received by Charter
     Holdings or such Restricted Subsidiary is in the form of cash, Cash
     Equivalents or readily marketable securities.

          For purposes of this provision, each of the following shall be deemed
     to be cash:

             (a) any liabilities (as shown on Charter Holdings' or such
        Restricted Subsidiary's most recent balance sheet) of Charter Holdings
        or any Restricted Subsidiary of Charter Holdings (other than contingent
        liabilities and liabilities that are by their terms subordinated to the
        notes) that are assumed by the transferee of any such assets pursuant to
        a customary novation agreement that releases Charter Holdings or such
        Restricted Subsidiary from further liability;

             (b) any securities, notes or other obligations received by Charter
        Holdings or any such Restricted Subsidiary from such transferee that are
        converted by Charter Holdings or such Restricted Subsidiary into cash,
        Cash Equivalents or readily marketable securities within 60 days after
        receipt thereof (to the extent of the cash, Cash Equivalents or readily
        marketable securities received in that conversion); and

             (c) Productive Assets.

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Charter Holdings or a Restricted Subsidiary of Charter Holdings may apply such
Net Proceeds at its option:

          (1) to repay debt under the Credit Facilities or any other
     Indebtedness of the Restricted Subsidiaries of Charter Holdings (other than
     Indebtedness represented by a guarantee of a Restricted Subsidiary of
     Charter Holdings); or

          (2) to invest in Productive Assets, provided that any Net Proceeds
     which Charter Holdings or a Restricted Subsidiary of Charter Holdings has
     committed to invest in Productive Assets within 365 days of the applicable
     Asset Sale may be invested in Productive Assets within two years of such
     Asset Sale.

     The amount of any Net Proceeds received by Charter Holdings or a Restricted
Subsidiary of Charter Holdings from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $25 million, the issuers will make
an Asset Sale Offer to all holders of notes and all holders of other
Indebtedness that is of equal priority with the notes containing provisions
requiring offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of notes and such other Indebtedness of
equal priority that may be purchased out of the Excess Proceeds (which amount
includes the entire amount of the Net Proceeds). The offer price in any Asset
Sale Offer will be payable in cash and equal to:

          (1) with respect to the eight-year senior notes and the ten-year
     senior notes, 100% of the principal amount thereof plus accrued and unpaid
     interest, if any, to the date of purchase; and

          (2) with respect to the senior discount notes, 100% of the Accreted
     Value thereof plus, after the Full Accretion Date, accrued and unpaid
     interest, if any, to the date of purchase.

     If any Excess Proceeds remain after consummation of an Asset Sale Offer,
Charter Holdings or a Restricted Subsidiary of Charter Holdings may use such
Excess Proceeds for any purpose not otherwise prohibited by the indentures. If
the aggregate principal amount of notes and such other Indebtedness of equal
priority tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the trustee shall select the notes and such other Indebtedness of
equal priority to be

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   151

purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

SELECTION AND NOTICE

     If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:

          (1) if the notes are listed, in compliance with the requirements of
     the principal national securities exchange on which the notes are listed;
     or

          (2) if the notes are not so listed, on a pro rata basis, by lot or by
     such method as the trustee shall deem fair and appropriate.

     No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.

     If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on, or the Accreted Value ceases to increase on, as the case may be,
notes or portions of them called for redemption.

CERTAIN COVENANTS


     Set forth in this section are summaries of certain covenants contained in
the Indentures.



     During any period of time that (a) any of the eight-year senior notes,
ten-year senior notes or the senior discount notes have Investment Grade Ratings
from both Rating Agencies and (b) no Default or Event of Default has occurred
and is continuing under the applicable Indenture, Charter Holdings and its
Restricted Subsidiaries will not be subject to the provisions of the indentures
described under:


     - "-- Repurchase at the Option of Holders -- Asset Sales,"

     - "-- Restricted Payments,"

     - "-- Investments,"

     - "-- Incurrence of Indebtedness and Issuance of Preferred Stock,"

     - "-- Dividend and Other Payment Restrictions Affecting Subsidiaries,"

     - clause (D) of the first paragraph of "-- Merger, Consolidation and Sale
       of Assets,"

     - "-- Transactions with Affiliates" and

     - "-- Sale and Leaseback Transactions."


     If Charter Holdings and its Restricted Subsidiaries are not subject to
these covenants for any period of time as a result of the previous sentence and,
subsequently, one, or both, of the Rating Agencies withdraws its ratings or
downgrades the ratings assigned to the applicable notes below the required
Investment Grade Ratings or a Default or Event of Default occurs and is
continuing, then Charter Holdings and its Restricted Subsidiaries will
thereafter again be subject to these covenants. The ability of Charter Holdings
and its Restricted Subsidiaries to make Restricted Payments after the time of
such withdrawal, downgrade, Default or Event of Default will be calculated as if
the covenant governing Restricted Payments had been in effect during the entire
period of time from the date of the Indentures.


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   152

  RESTRICTED PAYMENTS

     Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

          (1) declare or pay any dividend or make any other payment or
     distribution on account of Charter Holdings' or any of its Restricted
     Subsidiaries' Equity Interests (including, without limitation, any payment
     in connection with any merger or consolidation involving Charter Holdings
     or any of its Restricted Subsidiaries) or to the direct or indirect holders
     of Charter Holdings' or any of its Restricted Subsidiaries' Equity
     Interests in their capacity as such (other than dividends or distributions
     payable (x) solely in Equity Interests (other than Disqualified Stock) of
     Charter Holdings or (y), in the case of Charter Holdings and its Restricted
     Subsidiaries, to Charter Holdings or a Restricted Subsidiary of Charter
     Holdings);

          (2) purchase, redeem or otherwise acquire or retire for value
     (including, without limitation, in connection with any merger or
     consolidation involving Charter Holdings or any of its Restricted
     Subsidiaries) any Equity Interests of Charter Holdings or any direct or
     indirect parent of Charter Holdings or any Restricted Subsidiary of Charter
     Holdings (other than, in the case of Charter Holdings and its Restricted
     Subsidiaries, any such Equity Interests owned by Charter Holdings or any
     Restricted Subsidiary of Charter Holdings); or

          (3) make any payment on or with respect to, or purchase, redeem,
     defease or otherwise acquire or retire for value, any Indebtedness that is
     subordinated to the notes, except a payment of interest or principal at the
     Stated Maturity thereof

(all such payments and other actions set forth in clauses (1) through (3) above
are collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:

          (1) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and

          (2) Charter Holdings would, at the time of such Restricted Payment and
     after giving pro forma effect thereto as if such Restricted Payment had
     been made at the beginning of the applicable quarter period, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Leverage Ratio test set forth in the first paragraph of the covenant
     described below under the caption "-- Incurrence of Indebtedness and
     Issuance of Preferred Stock"; and

          (3) such Restricted Payment, together with the aggregate amount of all
     other Restricted Payments made by Charter Holdings and each of its
     Restricted Subsidiaries after March 17, 1999 (excluding Restricted Payments
     permitted by clauses (2), (3), (4), (5), (6), (7) and (8) of the next
     succeeding paragraph), shall not exceed, at the date of determination, the
     sum of:

             (a) an amount equal to 100% of the Consolidated EBITDA of Charter
        Holdings since March 17, 1999 to the end of Charter Holdings' most
        recently ended full fiscal quarter for which internal financial
        statements are available, taken as a single accounting period, less the
        product of 1.2 times the Consolidated Interest Expense of Charter
        Holdings since March 17, 1999 to the end of Charter Holdings' most
        recently ended full fiscal quarter for which internal financial
        statements are available, taken as a single accounting period, plus

             (b) an amount equal to 100% of Capital Stock Sale Proceeds less any
        such Capital Stock Sale Proceeds used in connection with (i) an
        Investment made pursuant to clause (5) of the definition of "Permitted
        Investments" or (ii) the incurrence of Indebtedness pursuant to clause
        (10) of the covenant described under the caption "-- Incurrence of
        Indebtedness and Issuance of Preferred Stock," plus


             (c) $100 million.

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     So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:


          (1) the payment of any dividend within 60 days after the date of
     declaration thereof, if at said date of declaration such payment would have
     complied with the provisions of the Indentures;


          (2) the redemption, repurchase, retirement, defeasance or other
     acquisition of any subordinated Indebtedness of Charter Holdings in
     exchange for, or out of the net proceeds of, the substantially concurrent
     sale (other than to a Subsidiary of Charter Holdings) of Equity Interests
     of Charter Holdings (other than Disqualified Stock), provided that the
     amount of any such net cash proceeds that are utilized for any such
     redemption, repurchase, retirement, defeasance or other acquisition shall
     be excluded from clause (3)(b) of the preceding paragraph;

          (3) the defeasance, redemption, repurchase or other acquisition of
     subordinated Indebtedness of Charter Holdings or any of its Restricted
     Subsidiaries with the net cash proceeds from an incurrence of Permitted
     Refinancing Indebtedness;

          (4) regardless of whether a Default then exists, the payment of any
     dividend or distribution to the extent necessary to permit direct or
     indirect beneficial owners of shares of Capital Stock of Charter Holdings
     to pay federal, state or local income tax liabilities that would arise
     solely from income of Charter Holdings or any of its Restricted
     Subsidiaries, as the case may be, for the relevant taxable period and
     attributable to them solely as a result of Charter Holdings (and any
     intermediate entity through which the holder owns such shares) or any of
     its Restricted Subsidiaries being a limited liability company, partnership
     or similar entity for federal income tax purposes;

          (5) regardless of whether a Default then exists, the payment of any
     dividend by a Restricted Subsidiary of Charter Holdings to the holders of
     its common Equity Interests on a pro rata basis;

          (6) the payment of any dividend on the Helicon Preferred Stock or the
     redemption, repurchase, retirement or other acquisition of the Helicon
     Preferred Stock in an amount not in excess of its aggregate liquidation
     value;

          (7) the repurchase, redemption or other acquisition or retirement for
     value, or the payment of any dividend or distribution to the extent
     necessary to permit the repurchase, redemption or other acquisition or
     retirement for value, of any Equity Interests of Charter Holdings or a
     Parent held by any member of Charter Holdings' or such Parent's management
     pursuant to any management equity subscription agreement or membership or
     stock option agreement in effect as of the date of the indenture, provided
     that the aggregate price paid for all such repurchased, redeemed, acquired
     or retired Equity Interests shall not exceed $10 million in any fiscal year
     of Charter Holdings; and

          (8) payment of fees in connection with any acquisition, merger or
     similar transaction in an amount that does not exceed an amount equal to
     1.25% of the transaction value of such acquisition, merger or similar
     transaction.

     The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Charter Holdings or any of its
Restricted Subsidiaries pursuant to the Restricted Payment. The fair market
value of any assets or securities that are required to be valued by this
covenant shall be determined by the board of directors of Charter Holdings whose
resolution with respect thereto shall be delivered to the trustee. Such board of
directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $100 million.

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     Not later than the date of making any Restricted Payment, Charter Holdings
shall deliver to the trustee an officers' certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this "Restricted Payments" covenant were computed,
together with a copy of any fairness opinion or appraisal required by the
Indentures.


  INVESTMENTS

     Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

          (1) make any Restricted Investment; or

          (2) allow any Restricted Subsidiary of Charter Holdings to become an
     Unrestricted Subsidiary,

unless, in each case:

          (a) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and

          (b) Charter Holdings would, at the time of, and after giving effect
     to, such Restricted Investment or such designation of a Restricted
     Subsidiary as an Unrestricted Subsidiary, have been permitted to incur at
     least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test
     set forth in the first paragraph of the covenant described below under the
     caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock."

     An Unrestricted Subsidiary may be redesignated as a Restricted Subsidiary
if such redesignation would not cause a Default.

  INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK

     (a) Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and Charter Holdings will not issue any Disqualified Stock and will not
permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock
unless the Leverage Ratio would have been not greater than 8.75 to 1.0
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom) as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of the
most recently ended fiscal quarter.

     So long as no Default shall have occurred and be continuing or would be
caused thereby, the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

          (1) the incurrence by Charter Holdings and its Restricted Subsidiaries
     of Indebtedness under the Credit Facilities, provided that the aggregate
     principal amount of all Indebtedness of Charter Holdings and its Restricted
     Subsidiaries outstanding under all Credit Facilities, after giving effect
     to such incurrence, does not exceed an amount equal to $3.5 billion less
     the aggregate amount of all Net Proceeds of Asset Sales applied by Charter
     Holdings or any of its Subsidiaries in the case of an Asset Sale since
     March 17, 1999 to repay Indebtedness under a Credit Facility pursuant to
     the covenant described above under the caption "-- Repurchase at the Option
     of Holders -- Asset Sales";

          (2) the incurrence by Charter Holdings and its Restricted Subsidiaries
     of Existing Indebtedness (other than the Credit Facilities);

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          (3) the incurrence on the date of the Indentures by Charter Holdings
     and its Restricted Subsidiaries of Indebtedness represented by the notes;


          (4) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of Indebtedness represented by Capital Lease Obligations,
     mortgage financings or purchase money obligations, in each case, incurred
     for the purpose of financing all or any part of the purchase price or cost
     of construction or improvement (including, without limitation, the cost of
     design, development, construction, acquisition, transportation,
     installation, improvement, and migration) of Productive Assets of Charter
     Holdings Company or any of its Restricted Subsidiaries, in an aggregate
     principal amount not to exceed $75 million at any time outstanding;

          (5) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
     net proceeds of which are used to refund, refinance or replace, in whole or
     in part, Indebtedness (other than intercompany Indebtedness) that was
     permitted by the indentures to be incurred under the first paragraph of
     this covenant or clauses (2) or (3) of this paragraph;

          (6) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of intercompany Indebtedness between or among Charter Holdings
     and any of its Wholly Owned Restricted Subsidiaries, provided that:

             (a) if Charter Holdings is the obligor on such Indebtedness, such
        Indebtedness must be expressly subordinated to the prior payment in full
        in cash of all obligations with respect to the notes; and

             (b) (i) any subsequent issuance or transfer of Equity Interests
        that results in any such Indebtedness being held by a Person other than
        Charter Holdings or a Wholly Owned Restricted Subsidiary thereof and
        (ii) any sale or other transfer of any such Indebtedness to a Person
        that is not either Charter Holdings or a Wholly Owned Restricted
        Subsidiary thereof, shall be deemed, in each case, to constitute an
        incurrence of such Indebtedness by Charter Holdings or any of its
        Restricted Subsidiaries that was not permitted by this clause (6);

          (7) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of Hedging Obligations that are incurred for the purpose of
     fixing or hedging interest rate risk with respect to any floating rate
     Indebtedness that is permitted by the terms of the indentures to be
     outstanding;

          (8) the guarantee by Charter Holdings of Indebtedness of a Restricted
     Subsidiary of Charter Holdings that was permitted to be incurred by another
     provision of this covenant;

          (9) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of additional Indebtedness in an aggregate principal amount at
     any time outstanding not to exceed $300 million;

          (10) the incurrence by Charter Holdings or any of its Restricted
     Subsidiaries of additional Indebtedness in an aggregate principal amount at
     any time outstanding not to exceed 200% of the net cash proceeds received
     by Charter Holdings from the sale of its Equity Interests (other than
     Disqualified Stock) after March 17, 1999 to the extent such net cash
     proceeds have not been applied to make Restricted Payments or to effect
     other transactions pursuant to the covenant described above under the
     subheading "-- Restricted Payments" or to make Permitted Investments
     pursuant to clause (5) of the definition thereof; and

          (11) the accretion or amortization of original issue discount and the
     write up of Indebtedness in accordance with purchase accounting.

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   156

     For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness (a) meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (11) above or (b)
is entitled to be incurred pursuant to the first paragraph of this covenant,
Charter Holdings will be permitted to classify and from time to time to
reclassify such item of Indebtedness in any manner that complies with this
covenant. For avoidance of doubt, Indebtedness incurred pursuant to a single
agreement, instrument, program, facility or line of credit may be classified as
Indebtedness arising in part under one of the clauses listed above, and in part
under any one or more of the clauses listed above, to the extent that such
Indebtedness satisfies the criteria for such clauses.

     (b) Notwithstanding the foregoing, in no event shall any Restricted
Subsidiary of Charter Holdings consummate a Subordinated Debt Financing or a
Preferred Stock Financing. A "Subordinated Debt Financing" or a "Preferred Stock
Financing," as the case may be, with respect to any Restricted Subsidiary of
Charter Holdings shall mean a public offering or private placement (whether
pursuant to Rule 144A under the Securities Act or otherwise) of Subordinated
Notes or Preferred Stock (whether or not such Preferred Stock constitutes
Disqualified Stock), as the case may be, of such Restricted Subsidiary to one or
more purchasers (other than to one or more Affiliates of Charter Holdings).
"Subordinated Notes" with respect to any Restricted Subsidiary of Charter
Holdings shall mean Indebtedness of such Restricted Subsidiary that is
contractually subordinated in right of payment to any other Indebtedness of such
Restricted Subsidiary (including, without limitation, Indebtedness under the
Credit Facilities). The foregoing limitation shall not apply to

          (i) any Indebtedness or Preferred Stock of any Person existing at the
     time such Person is merged with or into or became a Subsidiary of Charter
     Holdings, provided that such Indebtedness or Preferred Stock was not
     incurred or issued in connection with, or in contemplation of, such Person
     merging with or into, or becoming a Subsidiary of, Charter Holdings, and

          (ii) any Indebtedness or Preferred Stock of a Restricted Subsidiary
     issued in connection with, and as part of the consideration for, an
     acquisition, whether by stock purchase, asset sale, merger or otherwise, in
     each case involving such Restricted Subsidiary, which Indebtedness or
     Preferred Stock is issued to the seller or sellers of such stock or assets,
     provided that such Restricted Subsidiary is not obligated to register such
     Indebtedness or Preferred Stock under the Securities Act or obligated to
     provide information pursuant to Rule 144A under the Securities Act.

  LIENS

     Charter Holdings will not, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or
trade payables on any asset now owned or hereafter acquired, except Permitted
Liens.

  DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES

     Charter Holdings will not, directly or indirectly, create or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of Charter Holdings to:

          (1) pay dividends or make any other distributions on its Capital Stock
     to Charter Holdings or any of its Restricted Subsidiaries, or with respect
     to any other interest or participation in, or measured by, its profits, or
     pay any Indebtedness owed to Charter Holdings or any of its Restricted
     Subsidiaries;

          (2) make loans or advances to Charter Holdings or any of its
     Restricted Subsidiaries; or

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          (3) transfer any of its properties or assets to Charter Holdings or
     any of its Restricted Subsidiaries.

     However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:


          (1) Existing Indebtedness as in effect on the date of the Indentures
     (including, without limitation, the Credit Facilities) and any amendments,
     modifications, restatements, renewals, increases, supplements, refundings,
     replacements or refinancings thereof, provided that such amendments,
     modifications, restatements, renewals, increases, supplements, refundings,
     replacements or refinancings are no more restrictive, taken as a whole,
     with respect to such dividend and other payment restrictions than those
     contained in such Existing Indebtedness, as in effect on the date of the
     Indentures;



          (2) the Indentures and the notes;


          (3) applicable law;


          (4) any instrument governing Indebtedness or Capital Stock of a Person
     acquired by Charter Holdings or any of its Restricted Subsidiaries as in
     effect at the time of such acquisition (except to the extent such
     Indebtedness was incurred in connection with or in contemplation of such
     acquisition), which encumbrance or restriction is not applicable to any
     Person, or the properties or assets of any Person, other than the Person,
     or the property or assets of the Person, so acquired, provided that, in the
     case of Indebtedness, such Indebtedness was permitted by the terms of the
     Indentures to be incurred;


          (5) customary non-assignment provisions in leases entered into in the
     ordinary course of business and consistent with past practices;

          (6) purchase money obligations for property acquired in the ordinary
     course of business that impose restrictions on the property so acquired of
     the nature described in clause (3) of the preceding paragraph;

          (7) any agreement for the sale or other disposition of a Restricted
     Subsidiary of Charter Holdings that restricts distributions by such
     Restricted Subsidiary pending its sale or other disposition;

          (8) Permitted Refinancing Indebtedness, provided that the restrictions
     contained in the agreements governing such Permitted Refinancing
     Indebtedness are no more restrictive, taken as a whole, than those
     contained in the agreements governing the Indebtedness being refinanced;

          (9) Liens securing Indebtedness otherwise permitted to be incurred
     pursuant to the provisions of the covenant described above under the
     caption "-- Liens" that limit the right of Charter Holdings or any of its
     Restricted Subsidiaries to dispose of the assets subject to such Lien;

          (10) provisions with respect to the disposition or distribution of
     assets or property in joint venture agreements and other similar agreements
     entered into in the ordinary course of business;

          (11) restrictions on cash or other deposits or net worth imposed by
     customers under contracts entered into in the ordinary course of business;


          (12) restrictions contained in the terms of Indebtedness permitted to
     be incurred under the covenant described under the caption "-- Incurrence
     of Indebtedness and Issuance of Preferred Stock," provided that such
     restrictions are no more restrictive than the terms contained in the Credit
     Facilities as in effect on the date of the Indentures; and


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          (13) restrictions that are not materially more restrictive than
     customary provisions in comparable financings and the management of Charter
     Holdings determines that such restrictions will not materially impair
     Charter Holdings' ability to make payments as required under the notes.

  MERGER, CONSOLIDATION, OR SALE OF ASSETS

     Neither of the issuers may, directly or indirectly, (1) consolidate or
merge with or into another Person (whether or not such issuer is the surviving
corporation) or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions, to another Person; unless:

          (A) either:

             (i) such issuer is the surviving corporation; or

             (ii) the Person formed by or surviving any such consolidation or
        merger (if other than such issuer) or to which such sale, assignment,
        transfer, conveyance or other disposition shall have been made is a
        Person organized or existing under the laws of the United States, any
        state thereof or the District of Columbia, provided that if the Person
        formed by or surviving any such consolidation or merger with either
        issuer is a limited liability company or a Person other than a
        corporation, a corporate co-issuer shall also be an obligor with respect
        to the notes;


          (B) the Person formed by or surviving any such consolidation or merger
     (if other than Charter Holdings) or the Person to which such sale,
     assignment, transfer, conveyance or other disposition shall have been made
     assumes all the obligations of Charter Holdings under the notes and the
     Indentures pursuant to agreements reasonably satisfactory to the trustee;


          (C) immediately after such transaction no Default or Event of Default
     exists; and

          (D) Charter Holdings or the Person formed by or surviving any such
     consolidation or merger (if other than Charter Holdings) will, on the date
     of such transaction after giving pro forma effect thereto and any related
     financing transactions as if the same had occurred at the beginning of the
     applicable four-quarter period, either:

             (i) be permitted to incur at least $1.00 of additional Indebtedness
        pursuant to the Leverage Ratio test set forth in the first paragraph of
        the covenant described above under the caption "-- Incurrence of
        Indebtedness and Issuance of Preferred Stock" or

             (ii) have a Leverage Ratio immediately after giving effect to such
        consolidation or merger no greater than the Leverage Ratio immediately
        prior to such consolidation or merger.

     In addition, Charter Holdings may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation, or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among Charter Holdings and any of its
Wholly Owned Subsidiaries.

  TRANSACTIONS WITH AFFILIATES

     Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,

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agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:

          (1) such Affiliate Transaction is on terms that are no less favorable
     to Charter Holdings or the relevant Restricted Subsidiary than those that
     would have been obtained in a comparable transaction by Charter Holdings or
     such Restricted Subsidiary with an unrelated Person; and

          (2) Charter Holdings delivers to the trustee:

             (a) with respect to any Affiliate Transaction or series of related
        Affiliate Transactions involving aggregate consideration in excess of
        $15 million, a resolution of the board of directors of Charter Holdings
        set forth in an officers' certificate certifying that such Affiliate
        Transaction complies with this covenant and that such Affiliate
        Transaction has been approved by a majority of the members of the board
        of directors; and

             (b) with respect to any Affiliate Transaction or series of related
        Affiliate Transactions involving aggregate consideration in excess of
        $50 million, an opinion as to the fairness to the holders of such
        Affiliate Transaction from a financial point of view issued by an
        accounting, appraisal or investment banking firm of national standing.

     The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:

          (1) any existing employment agreement entered into by Charter Holdings
     or any of its Subsidiaries and any employment agreement entered into by
     Charter Holdings or any of its Restricted Subsidiaries in the ordinary
     course of business and consistent with the past practice of Charter
     Holdings or such Restricted Subsidiary;

          (2) transactions between or among Charter Holdings and/or its
     Restricted Subsidiaries;

          (3) payment of reasonable directors fees to Persons who are not
     otherwise Affiliates of Charter Holdings, and customary indemnification and
     insurance arrangements in favor of directors, regardless of affiliation
     with Charter Holdings or any of its Restricted Subsidiaries;


          (4) payment of management fees pursuant to management agreements
     either (A) existing on the date of the Indentures or (B) entered into after
     the date of the Indentures, to the extent that such management agreements
     provide for percentage fees no higher than the percentage fees existing
     under the management agreements existing on the date of the Indentures;


          (5) Restricted Payments that are permitted by the provisions of the
     covenant described above under the caption "-- Restricted Payments" and
     Restricted Investments that are permitted by the provisions of the covenant
     described above under the caption "-- Investments"; and

          (6) Permitted Investments.

  SALE AND LEASEBACK TRANSACTIONS

     Charter Holdings will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction, provided that
Charter Holdings may enter into a sale and leaseback transaction if:

          (1) Charter Holdings could have

             (a) incurred Indebtedness in an amount equal to the Attributable
        Debt relating to such sale and leaseback transaction under the Leverage
        Ratio test in the first paragraph of the covenant described above under
        the caption "-- Incurrence of Additional Indebtedness and Issuance of
        Preferred Stock" and

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   160

             (b) incurred a Lien to secure such Indebtedness pursuant to the
        covenant described above under the caption "-- Liens"; and

          (2) the transfer of assets in that sale and leaseback transaction is
     permitted by, and Charter Holdings applies the proceeds of such transaction
     in compliance with, the covenant described above under the caption
     "-- Repurchase at the Option of Holders -- Asset Sales."

     The foregoing restrictions do not apply to a sale and leaseback transaction
if the lease is for a period, including renewal rights, of not in excess of
three years.

  LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS

     Charter Holdings will not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee or pledge any assets to secure the payment
of any other Indebtedness of Charter Holdings, except in respect of the Credit
Facilities (the "Guaranteed Indebtedness") unless

          (1) such Restricted Subsidiary simultaneously executes and delivers a
     supplemental indenture providing for the Guarantee (a "Subsidiary
     Guarantee") of the payment of the notes by such Restricted Subsidiary, and

          (2) until one year after all the notes have been paid in full in cash,
     such Restricted Subsidiary waives and will not in any manner whatsoever
     claim or take the benefit or advantage of, any rights of reimbursement,
     indemnity or subrogation or any other rights against Charter Holdings or
     any other Restricted Subsidiary of Charter Holdings as a result of any
     payment by such Restricted Subsidiary under its Subsidiary Guarantee,
     provided that this paragraph shall not be applicable to any Guarantee or
     any Restricted Subsidiary that existed at the time such Person became a
     Restricted Subsidiary and was not incurred in connection with, or in
     contemplation of, such Person becoming a Restricted Subsidiary.

     If the Guaranteed Indebtedness is subordinated to the notes, then the
Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the notes.

  PAYMENTS FOR CONSENT


     Charter Holdings will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indentures or the notes
unless such consideration is offered to be paid and is paid to all holders of
the notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.


  REPORTS

     Whether or not required by the Securities and Exchange Commission, so long
as any notes are outstanding, Charter Holdings will furnish to the holders of
notes, within the time periods specified in the Securities and Exchange
Commission's rules and regulations:

          (1) all quarterly and annual financial information that would be
     required to be contained in a filing with the Securities and Exchange
     Commission on Forms 10-Q and 10-K if Charter Holdings were required to file
     such forms, including a "Management's Discussion and Analysis of Financial
     Condition and Results of Operations" section and, with respect to the
     annual information only, a report on the annual financial statements by
     Charter Holdings' independent public accountants; and

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   161

          (2) all current reports that would be required to be filed with the
     Securities and Exchange Commission on Form 8-K if Charter Holdings were
     required to file such reports.

     If Charter Holdings has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of Charter
Holdings and its Restricted Subsidiaries separate from the financial condition
and results of operations of the Unrestricted Subsidiaries of Charter Holdings.

     In addition, whether or not required by the Securities and Exchange
Commission, Charter Holdings will file a copy of all of the information and
reports referred to in clauses (1) and (2) above with the Securities and
Exchange Commission for public availability within the time periods specified in
the Securities and Exchange Commission's rules and regulations, unless the
Securities and Exchange Commission will not accept such a filing, and make such
information available to securities analysts and prospective investors upon
request.

EVENTS OF DEFAULT AND REMEDIES

     Each of the following is an Event of Default with respect to the notes of
each series:

          (1) default for 30 days in the payment when due of interest on the
     notes;

          (2) default in payment when due of the principal of or premium, if
     any, on the notes;

          (3) failure by Charter Holdings or any of its Restricted Subsidiaries
     to comply with the provisions described under the captions "-- Repurchase
     at the Option of Holders -- Change of Control" or "-- Certain
     Covenants -- Merger, Consolidation, or Sale of Assets";


          (4) failure by Charter Holdings or any of its Restricted Subsidiaries
     for 30 days after written notice thereof has been given to Charter Holdings
     by the trustee or to Charter Holdings and the trustee by holders of at
     least 25% of the aggregate principal amount of the notes outstanding to
     comply with any of their other covenants or agreements in the Indentures;



          (5) default under any mortgage, indenture or instrument under which
     there may be issued or by which there may be secured or evidenced any
     Indebtedness for money borrowed by Charter Holdings or any of its
     Restricted Subsidiaries (or the payment of which is guaranteed by Charter
     Holdings or any of its Restricted Subsidiaries) whether such Indebtedness
     or guarantee now exists, or is created after the date of the Indentures, if
     that default:


             (a) is caused by a failure to pay at final stated maturity the
        principal amount on such Indebtedness prior to the expiration of the
        grace period provided in such Indebtedness on the date of such default
        (a "Payment Default"); or

             (b) results in the acceleration of such Indebtedness prior to its
        express maturity,

     and, in each case, the principal amount of any such Indebtedness, together
     with the principal amount of any other such Indebtedness under which there
     has been a Payment Default or the maturity of which has been so
     accelerated, aggregates $100 million or more;

          (6) failure by Charter Holdings or any of its Restricted Subsidiaries
     to pay final judgments which are non-appealable aggregating in excess of
     $100 million (net of applicable insurance which has not been denied in
     writing by the insurer) which judgments are not paid, discharged or stayed
     for a period of 60 days; and

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   162

          (7) Charter Holdings or any of its Significant Subsidiaries pursuant
     to or within the meaning of bankruptcy law:

             (a) commences a voluntary case,

             (b) consents to the entry of an order for relief against it in an
        involuntary case,

             (c) consents to the appointment of a custodian of it or for all or
        substantially all of its property, or

             (d) makes a general assignment for the benefit of its creditors; or

          (8) a court of competent jurisdiction enters an order or decree under
     any bankruptcy law that:

             (a) is for relief against Charter Holdings or any of its
        Significant Subsidiaries in an involuntary case;

             (b) appoints a custodian of Charter Holdings or any of its
        Significant Subsidiaries or for all or substantially all of the property
        of Charter Holdings or any of its Significant Subsidiaries; or

             (c) orders the liquidation of Charter Holdings or any of its
        Significant Subsidiaries;

     and the order or decree remains unstayed and in effect for 60 consecutive
     days.

     In the case of an Event of Default described in the foregoing clauses (7)
and (8) with respect to Charter Holdings, all outstanding notes will become due
and payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee or the holders of at least 25% in
principal amount of the then outstanding notes of each series may declare their
respective notes to be due and payable immediately.


     Holders of notes of each series may not enforce the Indentures or the notes
except as provided in the Indentures. Subject to certain limitations, holders of
a majority in principal amount of the then outstanding notes of each series may
direct the trustee in its exercise of any trust or power. The trustee may
withhold from holders of the notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.


     The holders of a majority in aggregate principal amount of the notes of
each series then outstanding by notice to the trustee may on behalf of the
holders of all of the notes waive any existing Default or Event of Default and
its consequences under the Indentures except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the notes.


     Charter Holdings will be required to deliver to the trustee annually a
statement regarding compliance with the Indentures. Upon becoming aware of any
Default or Event of Default, Charter Holdings will be required to deliver to the
trustee a statement specifying such Default or Event of Default.


NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, MEMBERS AND
STOCKHOLDERS

     No director, officer, employee, incorporator, member or stockholder of
Charter Holdings, as such, shall have any liability for any obligations of
Charter Holdings under the notes or the indentures, or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each holder
of notes by accepting a note waives and releases all such liability. The waiver
and release will be part of the consideration for issuance of the notes. The
waiver may not be effective to waive liabilities under the federal securities
laws.

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LEGAL DEFEASANCE AND COVENANT DEFEASANCE

     Charter Holdings may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding notes ("Legal
Defeasance") except for:

          (1) the rights of holders of outstanding notes to receive payments in
     respect of the Accreted Value or principal of, premium, if any, and
     interest on such notes when such payments are due from the trust referred
     to below;

          (2) Charter Holdings' obligations with respect to the notes concerning
     issuing temporary notes, registration of notes, mutilated, destroyed, lost
     or stolen notes and the maintenance of an office or agency for payment and
     money for security payments held in trust;

          (3) the rights, powers, trusts, duties and immunities of the trustee,
     and Charter Holdings' obligations in connection therewith; and


          (4) the Legal Defeasance provisions of the Indentures.



     In addition, Charter Holdings may, at its option and at any time, elect to
have the obligations of Charter Holdings released with respect to certain
covenants that are described in the Indentures ("Covenant Defeasance") and
thereafter any omission to comply with those covenants shall not constitute a
Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.


     In order to exercise either Legal Defeasance or Covenant Defeasance:

          (1) Charter Holdings must irrevocably deposit with the trustee, in
     trust, for the benefit of the holders of the notes, cash in U.S. dollars,
     non-callable Government Securities, or a combination thereof, in such
     amounts as will be sufficient, in the opinion of a nationally recognized
     firm of independent public accountants, to pay the principal of, premium,
     if any, and interest on the outstanding notes on the stated maturity or on
     the applicable redemption date, as the case may be, and Charter Holdings
     must specify whether the notes are being defeased to maturity or to a
     particular redemption date;

          (2) in the case of Legal Defeasance, Charter Holdings shall have
     delivered to the trustee an opinion of counsel reasonably acceptable to the
     trustee confirming that

             (a) Charter Holdings has received from, or there has been published
        by, the Internal Revenue Service a ruling or

             (b) since the date of the Indentures, there has been a change in
        the applicable federal income tax law,

     in either case to the effect that, and based thereon such opinion of
     counsel shall confirm that, the holders of the outstanding notes will not
     recognize income, gain or loss for federal income tax purposes as a result
     of such Legal Defeasance and will be subject to federal income tax on the
     same amounts, in the same manner and at the same times as would have been
     the case if such Legal Defeasance had not occurred;

          (3) in the case of Covenant Defeasance, Charter Holdings shall have
     delivered to the trustee an opinion of counsel reasonably acceptable to the
     trustee confirming that the holders of the outstanding notes will not
     recognize income, gain or loss for federal income tax purposes as a result
     of such Covenant Defeasance and will be subject to federal income tax on
     the same amounts, in the same manner and at the same times as would have
     been the case if such Covenant Defeasance had not occurred;

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          (4) no Default or Event of Default shall have occurred and be
     continuing either:

             (a) on the date of such deposit (other than a Default or Event of
        Default resulting from the borrowing of funds to be applied to such
        deposit); or

             (b) insofar as Events of Default from bankruptcy or insolvency
        events are concerned, at any time in the period ending on the 91st day
        after the date of deposit;

          (5) such Legal Defeasance or Covenant Defeasance will not result in a
     breach or violation of, or constitute a default under any material
     agreement or instrument (other than the indentures) to which Charter
     Holdings or any of its Restricted Subsidiaries is a party or by which
     Charter Holdings or any of its Restricted Subsidiaries is bound;

          (6) Charter Holdings must have delivered to the trustee an opinion of
     counsel to the effect that after the 91st day, assuming no intervening
     bankruptcy, that no holder is an insider of Charter Holdings following the
     deposit and that such deposit would not be deemed by a court of competent
     jurisdiction a transfer for the benefit of either issuer in its capacity as
     such, the trust funds will not be subject to the effect of any applicable
     bankruptcy, insolvency, reorganization or similar laws affecting creditors'
     rights generally;

          (7) Charter Holdings must deliver to the trustee an officers'
     certificate stating that the deposit was not made by Charter Holdings with
     the intent of preferring the holders of notes over the other creditors of
     Charter Holdings with the intent of defeating, hindering, delaying or
     defrauding creditors of Charter Holdings or others; and

          (8) Charter Holdings must deliver to the trustee an officers'
     certificate and an opinion of counsel, each stating that all conditions
     precedent relating to the Legal Defeasance or the Covenant Defeasance have
     been complied with.

     Notwithstanding the foregoing, the opinion of counsel required by clause
(2) above with respect to a Legal Defeasance need not be delivered if all notes
not theretofore delivered to the trustee for cancellation

          (a) have become due and payable or

          (b) will become due and payable on the maturity date within one year
     under arrangements satisfactory to the trustee for the giving of notice of
     redemption by the trustee in the name, and at the expense, of the issuers.

AMENDMENT, SUPPLEMENT AND WAIVER


     Except as provided below, the Indentures or the notes of each series may be
amended or supplemented with the consent of the holders of at least a majority
in aggregate principal amount, in the case of the eight-year senior notes and
the ten-year senior notes, and aggregate principal amount at maturity, in the
case of the senior discount notes, of the then outstanding notes of each series.
This includes consents obtained in connection with a purchase of notes, a tender
offer for notes or an exchange offer for notes. Any existing Default or
compliance with any provision of the Indentures or the notes may be waived with
the consent of the holders of a majority in aggregate principal amount, in the
case of the eight-year senior notes and the ten-year senior notes, and aggregate
principal amount at maturity, in the case of the senior discount notes, of the
then outstanding notes of each series. This includes consents obtained in
connection with a purchase of notes, a tender offer for notes or an exchange
offer for notes. Without the consent of each holder affected, an amendment or
waiver may not (with respect to any notes held by a non-consenting holder):


          (1) reduce the principal amount of notes whose holders must consent to
     an amendment, supplement or waiver;

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          (2) reduce the principal of or change the fixed maturity of any note
     or alter the payment provisions with respect to the redemption of the notes
     (other than provisions relating to the covenants described above under the
     caption "-- Repurchase at the Option of Holders");

          (3) reduce the rate of or extend the time for payment of interest on
     any note;

          (4) waive a Default or an Event of Default in the payment of principal
     of or premium, if any, or interest on the notes (except a rescission of
     acceleration of the notes by the holders of at least a majority in
     aggregate principal amount of the notes and a waiver of the payment default
     that resulted from such acceleration);

          (5) make any note payable in money other than that stated in the
     notes;


          (6) make any change in the provisions of the Indentures relating to
     waivers of past Defaults or the rights of holders of notes to receive
     payments of Accreted Value or principal of, or premium, if any, or interest
     on the notes;


          (7) waive a redemption payment with respect to any note (other than a
     payment required by one of the covenants described above under the caption
     "-- Repurchase at the Option of Holders");

          (8) make any change in the preceding amendment and waiver provisions.


     Notwithstanding the preceding, without the consent of any holder of notes,
the issuers and the trustee may amend or supplement the Indentures or the notes:


          (1) to cure any ambiguity, defect or inconsistency;

          (2) to provide for uncertificated notes in addition to or in place of
     certificated notes;

          (3) to provide for the assumption of either issuer's obligations to
     holders of notes in the case of a merger or consolidation or sale of all or
     substantially all of such issuer's assets;


          (4) to make any change that would provide any additional rights or
     benefits to the holders of notes or that does not adversely affect the
     legal rights under the Indentures of any such holder; or


          (5) to comply with requirements of the Securities and Exchange
     Commission in order to effect or maintain the qualification of the
     indentures under the Trust Indenture Act or otherwise as necessary to
     comply with applicable law.

GOVERNING LAW


     The Indentures and the notes will be governed by the laws of the State of
New York.


CONCERNING THE TRUSTEE


     If the trustee becomes a creditor of Charter Holdings, the Indentures limit
its right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Securities and Exchange Commission for permission to continue
or resign.



     The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The Indentures provide that in case an Event of Default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the


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trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request of any holder of notes, unless such holder
shall have offered to the trustee security and indemnity satisfactory to it
against any loss, liability or expense.


ADDITIONAL INFORMATION


     Anyone who receives this prospectus may obtain a copy of the Indentures and
the registration rights agreements without charge by writing to Charter
Communications Holdings, LLC, Charter Plaza 12405 Powerscourt Drive, St. Louis,
Missouri 63131, Attention: Corporate Secretary.


BOOK-ENTRY, DELIVERY AND FORM

     Except as set forth below, notes will be issued in registered, global form
in minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.

     The notes initially will be issued in the form of global securities filed
in book-entry form. The notes will be deposited upon issuance with the trustee,
as custodian for The Depository Trust Company ("DTC"), in New York, New York,
and registered in the name of DTC or its nominee, the DTC, and the DTC or its
nominee will initially be the sole registered holder of the notes for all
purposes under the Indentures. Unless it is exchanged in whole or in part for
debt securities in definitive form as described below, a global security may not
be transferred. However, transfers of the whole security between the DTC and its
nominee or their respective successors are permitted.

     Upon the issuance of a global security, the DTC or its nominee will credit
on its internal system the principal amount at maturity of the individual
beneficial interest represented by the global security acquired by the persons
in sale of the original notes. Ownership of beneficial interests in a global
security will be limited to persons that have accounts with the DTC or persons
that hold interests through participants. Ownership of beneficial interests will
be shown on, and the transfer of such ownership will be effected only through,
records maintained by the DTC or its nominee with respect to interests of
participants and the records of participants with respect to interests of
persons other than participants. The laws of some jurisdictions require that
some purchasers of securities take physical delivery of the securities in
definitive form. These limits and laws may impair the ability to transfer
beneficial interests in a global security. Principal and interest payments on
global securities registered in the name of the DTC's nominee will be made in
immediate available funds to the DTC's nominee as the registered owner of the
global securities. The issuers and the trustee will treat the DTC's nominee as
the owner of the global securities for all other purposes as well. Accordingly,
the issuers, the trustee, any paying agent and the initial purchasers will have
no direct responsibility or liability for any aspect of the records relating to
payments made on account of beneficial interests in the global securities or for
maintaining, supervising or reviewing any records relating to these beneficial
interests. It is the DTC's current practice, upon receipt of any payment of
principal or interest, to credit direct participants' accounts on the payment
date according to their respective holdings of beneficial interests in the
global securities. These payments will be the responsibility of the direct and
indirect participants and not of the DTC, the issuers, the trustee or the
initial purchasers.

     So long as the DTC or its nominee is the registered owner or holder of the
global security, the DTC or its nominee, as the case may be, will be considered
the sole owner or holder of the notes represented by the global security for the
purposes of:

          (1) receiving payment on the notes;

          (2) receiving notices; and

          (3) for all other purposes under the Indentures and the notes.

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     Beneficial interests in the notes will be evidenced only by, and transfers
of the notes will be effected only through, records maintained by the DTC and
its participants.


     Except as described above, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of certificated notes
in definitive form and will not be considered the holders of the global security
for any purposes under the Indentures. Accordingly, each person owning a
beneficial interest in a global security must rely on the procedures of the DTC.
And, if that person is not a participant, the person must rely on the procedures
of the participant through which that person owns its interest, to exercise any
rights of a holder under the Indentures. Under existing industry practices, if
the issuers request any action of holders or an owner of a beneficial interest
in a global security desires to take any action under the Indentures, the DTC
would authorize the participants holding the relevant beneficial interest to
take that action. The participants then would authorize beneficial owners owning
through the participants to take the action or would otherwise act upon the
instructions of beneficial owners owning through them.


     The DTC has advised the issuers that it will take any action permitted to
be taken by a holder of notes only at the direction of one or more participants
to whose account the DTC interests in the global security are credited. Further,
the DTC will take action only as to the portion of the aggregate principal
amount at maturity of the notes as to which the participant or participants has
or have given the direction. Although the DTC has agreed to the procedures
described above in order to facilitate transfers of interests in global
securities among participants of the DTC, it is under no obligation to perform
these procedures, and the procedures may be discontinued at any time. None of
the issuers, the trustee, any agent of the issuers or the initial purchasers
will have any responsibility for the performance by the DTC or its participants
or indirect participants of their respective obligations under the rules and
procedures governing their operations.

     The DTC has provided the following information to us. The DTC is a:

          (1) limited-purpose trust company organized under the New York Banking
     Law;

          (2) a banking organization within the meaning of the New York Banking
     Law;

          (3) a member of the United States Federal Reserve System;

          (4) a clearing corporation within the meaning of the New York Uniform
     Commercial Code; and

          (5) a clearing agency registered under the provisions of Section 17A
     of the Securities Exchange Act.

EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES

     Notes represented by a global security are exchangeable for certificated
notes only if:

          (1) the DTC notifies the issuers that it is unwilling or unable to
     continue as depository or if the DTC ceases to be a registered clearing
     agency, and a successor depository is not appointed by the issuers within
     90 days;

          (2) the issuers determine not to require all of the notes to be
     represented by a global security and notifies the trustee of its decision;
     or

          (3) an Event of Default or an event which, with the giving of notice
     or lapse of time, or both, would constitute an Event of Default relating to
     the notes represented by the global security has occurred and is
     continuing.

     Any global security that is exchangeable for certificated notes in
accordance with the preceding sentence will be transferred to, and registered
and exchanged for, certificated notes in authorized denominations and registered
in the names as the DTC or its nominee may direct. However, a global

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security is only exchangeable for a global security of like denomination to be
registered in the name of the DTC or its nominee. If a global security becomes
exchangeable for certificated notes:

          (1) certificated notes will be issued only in fully registered form in
     denominations of $1,000 or integral multiples of $1,000;

          (2) payment of principal, premium, if any, and interest on the
     certificated notes will be payable, and the transfer of the certificated
     notes will be registrable, at the office or agency of the issuers
     maintained for these purposes; and

          (3) no service charge will be made for any issuance of the
     certificated notes, although the issuers may require payment of a sum
     sufficient to cover any tax or governmental charge imposed in connection
     with the issuance.

CERTAIN DEFINITIONS


     This section sets forth certain defined terms used in the Indentures.
Reference is made to the Indentures for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.


     "ACCRETED VALUE" is defined to mean, for any specified date, the amount
calculated pursuant to (1), (2), (3) or (4) for each $1,000 of principal amount
at maturity of the senior discount notes:

          (1) if the specified date occurs on one or more of the following dates
     (each a "Semi-Annual Accrual Date") the Accreted Value will equal the
     amount set forth below for such Semi-Annual Accrual Date:

<Table>
<Caption>
                   SEMI-ANNUAL                      ACCRETED
                   ACCRUAL DATE                       VALUE
                   ------------                     --------
                                                 
Issue Date........................................  $  565.02
November 15, 2001.................................     598.21
May 15, 2002......................................     633.36
November 15, 2002.................................     670.57
May 15, 2003......................................     709.96
November 15, 2003.................................     751.67
May 15, 2004......................................     795.84
November 15, 2004.................................     842.59
May 15, 2005......................................     892.09
November 15, 2005.................................     944.51
May 15, 2006......................................   1,000.00
</Table>

          (2) if the specified date occurs before the first Semi-Annual Accrual
     Date, the Accreted Value will equal the sum of

           (a) $565.02 and

           (b) an amount equal to the product of

                (x) the Accreted Value for the first Semi-Annual Accrual Date
                    less $565.02 multiplied by

                (y) a fraction, the numerator of which is the number of days
                    from the date of the Indentures to the specified date, using
                    a 360-day year of twelve 30-day months, and the denominator
                    of which is the number of days elapsed from the date of the
                    Indentures to the first Semi-Annual Accrual Date, using a
                    360-day year of twelve 30-day months;

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          (3) if the specified date occurs between two Semi-Annual Accrual
     Dates, the Accreted Value will equal the sum of

             (a) the Accreted Value for the Semi-Annual Accrual Date immediately
        preceding such specified date and

             (b) an amount equal to the product of

                (x) the Accreted Value for the immediately following Semi-Annual
                    Accrual Date less the Accreted Value for the immediately
                    preceding Semi-Annual Accrual Date multiplied by

                (y) a fraction, the numerator of which is the number of days
                    from the immediately preceding Semi-Annual Accrual Date to
                    the specified date, using a 360-day year of twelve 30-day
                    months, and the denominator of which is 180, or;

          (4) if the specified date occurs after the last Semi-Annual Accrual
     Date, the Accreted Value will equal $1,000.

     "ACQUIRED DEBT" means, with respect to any specified Person:

          (1) Indebtedness of any other Person existing at the time such other
     Person is merged with or into or became a Subsidiary of such specified
     Person, whether or not such Indebtedness is incurred in connection with, or
     in contemplation of, such other Person merging with or into, or becoming a
     Subsidiary of, such specified Person; and

          (2) Indebtedness secured by a Lien encumbering any asset acquired by
     such specified Person.

     "AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise, provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.

     "ASSET ACQUISITION" means

          (a) an Investment by Charter Holdings or any of its Restricted
     Subsidiaries in any other Person pursuant to which such Person shall become
     a Restricted Subsidiary of Charter Holdings or any of its Restricted
     Subsidiaries or shall be merged with or into Charter Holdings or any of its
     Restricted Subsidiaries, or

          (b) the acquisition by Charter Holdings or any of its Restricted
     Subsidiaries of the assets of any Person which constitute all or
     substantially all of the assets of such Person, any division or line of
     business of such Person or any other properties or assets of such Person
     other than in the ordinary course of business.

     "ASSET SALE" means:

          (1) the sale, lease, conveyance or other disposition of any assets or
     rights, other than sales of inventory in the ordinary course of business
     consistent with past practices, provided that the sale, conveyance or other
     disposition of all or substantially all of the assets of Charter Holdings
     and its Restricted Subsidiaries, taken as a whole, will be governed by the
     provisions of the Indentures described above under the caption
     "-- Repurchase at the Option of Holders -- Change of Control" and/or the
     provisions described above under the caption "-- Certain

                                       165
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     Covenants -- Merger, Consolidation, or Sale of Assets" and not by the
     provisions of the Asset Sale covenant; and

          (2) the issuance of Equity Interests by any of Charter Holdings'
     Restricted Subsidiaries or the sale of Equity Interests in any of Charter
     Holdings' Restricted Subsidiaries.

     Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:

          (1) any single transaction or series of related transactions that:

             (a) involves assets having a fair market value of less than $100
        million; or

             (b) results in net proceeds to Charter Holdings and its Restricted
        Subsidiaries of less than $100 million;

          (2) a transfer of assets between or among Charter Holdings and its
     Restricted Subsidiaries;

          (3) an issuance of Equity Interests by a Wholly Owned Restricted
     Subsidiary of Charter Holdings to Charter Holdings or to another Wholly
     Owned Restricted Subsidiary of Charter Holdings;

          (4) a Restricted Payment that is permitted by the covenant described
     above under the caption "-- Certain Covenants -- Restricted Payments" and a
     Restricted Investment that is permitted by the covenant described above
     under the caption "-- Certain Covenants -- Investments"; and

          (5) the incurrence of Permitted Liens and the disposition of assets
     related to such Permitted Liens by the secured party pursuant to a
     foreclosure.

     "ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessee, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

     "BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act) such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.

     "CABLE RELATED BUSINESS" means the business of owning cable television
systems and businesses ancillary, complementary and related thereto.

     "CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.

     "CAPITAL STOCK" means:

          (1) in the case of a corporation, corporate stock;

          (2) in the case of an association or business entity, any and all
     shares, interests, participations, rights or other equivalents (however
     designated) of corporate stock;

          (3) in the case of a partnership or limited liability company,
     partnership or membership interests (whether general or limited); and

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          (4) any other interest (other than any debt obligation) or
     participation that confers on a Person the right to receive a share of the
     profits and losses of, or distributions of assets of, the issuing Person.

     "CAPITAL STOCK SALE PROCEEDS" means the aggregate net cash proceeds
(including the fair market value of the non-cash proceeds, as determined by an
independent appraisal firm) received by Charter Holdings since March 17, 1999

          (x) as a contribution to the common equity capital or from the issue
     or sale of Equity Interests of Charter Holdings (other than Disqualified
     Stock) or

          (y) from the issue or sale of convertible or exchangeable Disqualified
     Stock or convertible or exchangeable debt securities of Charter Holdings
     that have been converted into or exchanged for such Equity Interests (other
     than Equity Interests (or Disqualified Stock or debt securities) sold to a
     Subsidiary of Charter Holdings).

        "CASH EQUIVALENTS" means:

          (1) United States dollars;

          (2) securities issued or directly and fully guaranteed or insured by
     the United States government or any agency or instrumentality thereof
     (provided that the full faith and credit of the United States is pledged in
     support thereof) having maturities of not more than twelve months from the
     date of acquisition;

          (3) certificates of deposit and eurodollar time deposits with
     maturities of twelve months or less from the date of acquisition, bankers'
     acceptances with maturities not exceeding six months and overnight bank
     deposits, in each case, with any domestic commercial bank having combined
     capital and surplus in excess of $500 million and a Thompson Bank Watch
     Rating at the time of acquisition of "B" or better;

          (4) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clauses (2) and (3) above
     entered into with any financial institution meeting the qualifications
     specified in clause (3) above;

          (5) commercial paper having a rating of at least "P-1" from Moody's or
     at least "A-1" from S&P and in each case maturing within twelve months
     after the date of acquisition;

          (6) corporate debt obligations maturing within twelve months after the
     date of acquisition thereof, rated at the time of acquisition at least
     "Aaa" or "P-1" by Moody's or "AAA" or "A-1" by S&P;

          (7) auction-rate preferred stocks of any corporation maturing not
     later than 45 days after the date of acquisition thereof, rated at the time
     of acquisition at least "Aaa" by Moody's or "AAA" by S&P;

          (8) securities issued by any state, commonwealth or territory of the
     United States, or by any political subdivision or taxing authority thereof,
     maturing not later than six months after the date of acquisition thereof,
     rated at the time of acquisition at least "A" by Moody's or S&P; and

          (9) money market or mutual funds at least 90% of the assets of which
     constitute Cash Equivalents of the kinds described in clauses (1) through
     (8) of this definition.

        "CHANGE OF CONTROL" means the occurrence of any of the following:

          (1) the sale, transfer, conveyance or other disposition (other than by
     way of merger or consolidation), in one or a series of related
     transactions, of all or substantially all of the assets of Charter Holdings
     and its Subsidiaries, taken as a whole, or of a Parent and its
     Subsidiaries,

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   172

     taken as a whole, to any "person" (as such term is used in Section 13(d)(3)
     of the Exchange Act) other than Paul G. Allen or a Related Party;

          (2) the adoption of a plan relating to the liquidation or dissolution
     of Charter Holdings or a Parent;

          (3) the consummation of any transaction (including, without
     limitation, any merger or consolidation) the result of which is that any
     "person" (as defined above) other than Paul G. Allen and Related Parties
     becomes the Beneficial Owner, directly or indirectly, of more than 35% of
     the Voting Stock of Charter Holdings or a Parent, measured by voting power
     rather than the number of shares, unless Paul G. Allen or a Related Party
     Beneficially Owns, directly or indirectly, a greater percentage of Voting
     Stock of Charter Holdings or such Parent, as the case may be, measured by
     voting power rather than the number of shares, than such person;

          (4) after the date of the Indentures, the first day on which a
     majority of the members of the board of directors of Charter Holdings or a
     Parent are not Continuing Directors; or

          (5) Charter Holdings or a Parent consolidates with, or merges with or
     into, any Person, or any Person consolidates with, or merges with or into,
     Charter Holdings or a Parent, in any such event pursuant to a transaction
     in which any of the outstanding Voting Stock of Charter Holdings or such
     Parent is converted into or exchanged for cash, securities or other
     property, other than any such transaction where the Voting Stock of Charter
     Holdings or such Parent outstanding immediately prior to such transaction
     is converted into or exchanged for Voting Stock (other than Disqualified
     Stock) of the surviving or transferee Person constituting a majority of the
     outstanding shares of such Voting Stock of such surviving or transferee
     Person immediately after giving effect to such issuance.

     "CONSOLIDATED EBITDA" means with respect to any Person, for any period, the
net income of such Person and its Restricted Subsidiaries for such period plus,
to the extent such amount was deducted in calculating such net income:

          (1) Consolidated Interest Expense;

          (2) income taxes;

          (3) depreciation expense;

          (4) amortization expense;

          (5) all other non-cash items, extraordinary items, nonrecurring and
     unusual items and the cumulative effects of changes in accounting
     principles reducing such net income, less all non-cash items, extraordinary
     items, nonrecurring and unusual items and cumulative effects of changes in
     accounting principles increasing such net income, all as determined on a
     consolidated basis for such Person and its Restricted Subsidiaries in
     conformity with GAAP;

          (6) amounts actually paid during such period pursuant to a deferred
     compensation plan; and

          (7) for purposes of the covenant described under the caption
     "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
     Preferred Stock" only, Management Fees;

provided that Consolidated EBITDA shall not include:

          (x) the net income (or net loss) of any Person that is not a
     Restricted Subsidiary ("Other Person"), except

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             (i) with respect to net income, to the extent of the amount of
        dividends or other distributions actually paid to such Person or any of
        its Restricted Subsidiaries by such Other Person during such period and

             (ii) with respect to net losses, to the extent of the amount of
        investments made by such Person or any Restricted Subsidiary of such
        Person in such Other Person during such period;

          (y) solely for the purposes of calculating the amount of Restricted
     Payments that may be made pursuant to clause (3) of the covenant described
     under the caption "-- Certain Covenants -- Restricted Payments" (and in
     such case, except to the extent includable pursuant to clause (x) above)
     the net income (or net loss) of any Other Person accrued prior to the date
     it becomes a Restricted Subsidiary or is merged into or consolidated with
     such Person or any Restricted Subsidiaries or all or substantially all of
     the property and assets of such Other Person are acquired by such Person or
     any of its Restricted Subsidiaries; and

          (z) the net income of any Restricted Subsidiary of Charter Holdings to
     the extent that the declaration or payment of dividends or similar
     distributions by such Restricted Subsidiary of such net income is not at
     the time permitted by the operation of the terms of such Restricted
     Subsidiary's charter or any agreement, instrument, judgment, decree, order,
     statute, rule or governmental regulation applicable to such Restricted
     Subsidiary (other than any agreement or instrument evidencing Indebtedness
     or Preferred Stock (i) outstanding on the Issue Date, or (ii) incurred or
     issued thereafter in compliance with the covenant described under the
     caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
     Preferred Stock", provided that (a) the terms of any such agreement or
     instrument restricting the declaration and payment of dividends or similar
     distributions apply only in the event of a default with respect to a
     financial covenant or a covenant relating to payment (beyond any applicable
     period of grace) contained in such agreement or instrument, (b) such terms
     are determined by such Person to be customary in comparable financings and
     (c) such restrictions are determined by Charter Holdings not to materially
     affect the issuers' ability to make principal or interest payments on the
     notes when due).

     "CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any
date of determination, the sum, without duplication, of:

          (1) the total amount of outstanding Indebtedness of such Person and
     its Restricted Subsidiaries, plus

          (2) the total amount of Indebtedness of any other Person, that has
     been Guaranteed by the referent Person or one or more of its Restricted
     Subsidiaries, plus

          (3) the aggregate liquidation value of all Disqualified Stock of such
     Person and all Preferred Stock of Restricted Subsidiaries of such Person,
     in each case, determined on a consolidated basis in accordance with GAAP.

     "CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any
period, without duplication, the sum of:

          (1) the consolidated interest expense of such Person and its
     Restricted Subsidiaries for such period, whether paid or accrued
     (including, without limitation, amortization or original issue discount,
     non-cash interest payments, the interest component of any deferred payment
     obligations, the interest component of all payments associated with Capital
     Lease Obligations, commissions, discounts and other fees and charges
     incurred in respect of letter of credit or bankers' acceptance financings,
     and net payments (if any) pursuant to Hedging Obligations); and

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          (2) the consolidated interest expense of such Person and its
     Restricted Subsidiaries that was capitalized during such period; and

          (3) any interest expense on Indebtedness of another Person that is
     guaranteed by such Person or one of its Restricted Subsidiaries or secured
     by a Lien on assets of such Person or one of its Restricted Subsidiaries
     (whether or not such Guarantee or Lien is called upon);

excluding, however, any amount of such interest of any Restricted Subsidiary of
the referent Person if the net income of such Restricted Subsidiary is excluded
in the calculation of Consolidated EBITDA pursuant to clause (z) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Consolidated EBITDA
pursuant to clause (z) of the definition thereof), in each case, on a
consolidated basis and in accordance with GAAP.

     "CONTINUING DIRECTORS" means, as of any date of determination, any member
of the board of directors of Charter Holdings or a Parent who:

          (1) was a member of such board of directors on the date of the
     Indentures; or

          (2) was nominated for election or elected to such board of directors
     with the approval of a majority of the Continuing Directors who were
     members of such board of directors at the time of such nomination or
     election or whose election or appointment was previously so approved.

     "CREDIT FACILITIES" means, with respect to Charter Holdings and/or its
Restricted Subsidiaries, one or more debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.

     "DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

     "DISPOSITION" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the surviving Person) or the sale, assignment, or transfer, lease conveyance
or other disposition of all or substantially all of such Person's assets or
Capital Stock.

     "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof) or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require Charter Holdings to repurchase such
Capital Stock upon the occurrence of a change of control or an asset sale shall
not constitute Disqualified Stock if the terms of such Capital Stock provide
that Charter Holdings may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
the covenant described above under the caption "-- Certain Covenants --
Restricted Payments."

     "EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

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     "EQUITY OFFERING" means any private or underwritten public offering of
Qualified Capital Stock of Charter Holdings or a Parent of which the gross
proceeds (x) to Charter Holdings or (y) received by Charter Holdings as a
capital contribution from such Parent, as the case may be, are at least $25
million.

     "EXISTING INDEBTEDNESS" means Indebtedness of Charter Holdings and its
Restricted Subsidiaries in existence on the date of the Indentures, until such
amounts are repaid.

     "FULL ACCRETION DATE" means January 15, 2006, the first date on which the
Accreted Value of the senior discount notes has accreted to an amount equal to
the principal amount at maturity of the senior discount notes.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indentures.

     "GUARANTEE" or "GUARANTEE" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness, measured as the lesser of the
aggregate outstanding amount of the Indebtedness so guaranteed and the face
amount of the guarantee.

     "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under:

          (1) interest rate swap agreements, interest rate cap agreements and
     interest rate collar agreements;

          (2) interest rate option agreements, foreign currency exchange
     agreements, foreign currency swap agreements; and

          (3) other agreements or arrangements designed to protect such Person
     against fluctuations in interest and currency exchange rates.

     "HELICON PREFERRED STOCK" means the preferred limited liability company
interest of Charter-Helicon LLC with an aggregate liquidation value of $25
million outstanding on the date of the Indentures.

     "INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

          (1) in respect of borrowed money;

          (2) evidenced by bonds, notes, debentures or similar instruments or
     letters of credit (or reimbursement agreements in respect thereof);

          (3) in respect of banker's acceptances;

          (4) representing Capital Lease Obligations;

          (5) in respect of the balance deferred and unpaid of the purchase
     price of any property, except any such balance that constitutes an accrued
     expense or trade payable; or

          (6) representing the notional amount of any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with

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GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others
secured by a Lien on any asset of the specified Person (whether or not such
Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person.

     The amount of any Indebtedness outstanding as of any date shall be:

          (1) the accreted value thereof, in the case of any Indebtedness issued
     with original issue discount; and

          (2) the principal amount thereof, together with any interest thereon
     that is more than 30 days past due, in the case of any other Indebtedness.

     "INVESTMENT GRADE RATING" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's and BBB- (or the equivalent) by S&P.

     "INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business) and
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

     "LEVERAGE RATIO" means, as of any date, the ratio of:

          (1) the Consolidated Indebtedness of Charter Holdings on such date to

          (2) the aggregate amount of Consolidated EBITDA for Charter Holdings
     for the most recently ended fiscal quarter for which internal financial
     statements are available multiplied by four (the "Reference Period").

     In addition to the foregoing, for purposes of this definition,
"Consolidated EBITDA" shall be calculated on a pro forma basis after giving
effect to

          (1) the issuance of the notes;

          (2) the incurrence of the Indebtedness or the issuance of the
     Disqualified Stock or other Preferred Stock of a Restricted Subsidiary (and
     the application of the proceeds therefrom) giving rise to the need to make
     such calculation and any incurrence or issuance (and the application of the
     proceeds therefrom) or repayment of other Indebtedness or Disqualified
     Stock or other Preferred Stock of a Restricted Subsidiary, other than the
     incurrence or repayment of Indebtedness for ordinary working capital
     purposes, at any time subsequent to the beginning of the Reference Period
     and on or prior to the date of determination, as if such incurrence (and
     the application of the proceeds thereof), or the repayment, as the case may
     be, occurred on the first day of the Reference Period; and

          (3) any Dispositions or Asset Acquisitions (including, without
     limitation, any Asset Acquisition giving rise to the need to make such
     calculation as a result of such Person or one of its Restricted
     Subsidiaries (including any person that becomes a Restricted Subsidiary as
     a result of such Asset Acquisition) incurring, assuming or otherwise
     becoming liable for or issuing Indebtedness, Disqualified Stock or
     Preferred Stock) made on or subsequent to the first day of the Reference
     Period and on or prior to the date of determination, as if such Disposition
     or Asset Acquisition (including the incurrence, assumption or liability for
     any such Indebtedness, Disqualified Stock or Preferred Stock and also
     including any Consolidated EBITDA associated with such Asset Acquisition,
     including any cost savings adjustments in compliance with

                                       172
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     Regulation S-X promulgated by the Securities and Exchange Commission) had
     occurred on the first day of the Reference Period.

     "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.


     "MANAGEMENT FEES" means the fees payable to Charter Communications, Inc.
pursuant to the management agreements between Charter Communications, Inc. and
Charter Communications Operating, LLC and between Charter Communications, Inc.
and Restricted Subsidiaries of Charter Holdings and pursuant to the limited
liability company agreements of certain Restricted Subsidiaries, as such
management or limited liability company agreements exist on the Issue Date (or
if later, on the date any new Restricted Subsidiary is acquired or created),
including any amendment or replacement thereof, provided that any such amendment
or replacement is not more disadvantageous to the holders of the notes in any
material respect from such management or limited liability company agreements
existing on the date of the Indentures.


     "MOODY'S" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.

     "NET PROCEEDS" means the aggregate cash proceeds received by Charter
Holdings or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof or taxes paid or payable as a
result thereof (including amounts distributable in respect of owners', partners'
or members' tax liabilities resulting from such sale), in each case after taking
into account any available tax credits or deductions and any tax sharing
arrangements and amounts required to be applied to the repayment of
Indebtedness.

     "NON-RECOURSE DEBT" means Indebtedness:

          (1) as to which neither Charter Holdings nor any of its Restricted
     Subsidiaries

             (a) provides credit support of any kind (including any undertaking,
        agreement or instrument that would constitute Indebtedness);

             (b) is directly or indirectly liable as a guarantor or otherwise;
        or

             (c) constitutes the lender;

          (2) no default with respect to which (including any rights that the
     holders thereof may have to take enforcement action against an Unrestricted
     Subsidiary) would permit upon notice, lapse of time or both any holder of
     any other Indebtedness (other than the notes) of Charter Holdings or any of
     its Restricted Subsidiaries to declare a default on such other Indebtedness
     or cause the payment thereof to be accelerated or payable prior to its
     stated maturity; and

          (3) as to which the lenders have been notified in writing that they
     will not have any recourse to the Capital Stock or assets of Charter
     Holdings or any of its Restricted Subsidiaries.

     "PARENT" means Charter Communications, Inc. and/or Charter Communications
Holding Company, LLC, as applicable, and any successor Person or any Person
succeeding to the direct or indirect ownership of Charter Holdings.

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     "PERMITTED INVESTMENTS" means:

          (1) any Investment by Charter Holdings in a Restricted Subsidiary of
     Charter Holdings or any Investment by a Restricted Subsidiary of Charter
     Holdings in Charter Holdings;

          (2) any Investment in Cash Equivalents;

          (3) any Investment by Charter Holdings or any Restricted Subsidiary of
     Charter Holdings in a Person, if as a result of such Investment:

             (a) such Person becomes a Restricted Subsidiary of Charter
        Holdings; or

             (b) such Person is merged, consolidated or amalgamated with or
        into, or transfers or conveys substantially all of its assets to, or is
        liquidated into, Charter Holdings or a Restricted Subsidiary of Charter
        Holdings;

          (4) any Investment made as a result of the receipt of non-cash
     consideration from an Asset Sale that was made pursuant to and in
     compliance with the covenant described above under the caption
     "-- Repurchase at the Option of Holders -- Asset Sales";

          (5) any Investment made out of the net cash proceeds of the issue and
     sale since March 17, 1999 (other than to a Subsidiary of Charter Holdings)
     of Equity Interests (other than Disqualified Stock) of Charter Holdings to
     the extent that

             (a) such net cash proceeds have not been applied to make a
        Restricted Payment or to effect other transactions pursuant to the
        covenant described above under the caption "-- Certain
        Covenants -- Restricted Payments," or

             (b) such net cash proceeds have not been used to incur Indebtedness
        pursuant to clause (10) of the covenant described above under the
        caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance
        of Preferred Stock";

          (6) Investments in Productive Assets having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to subsequent changes in value), when taken together with all
     other Investments in Productive Assets made by Charter Holdings and its
     Restricted Subsidiaries pursuant to this clause (6) since March 17, 1999,
     not to exceed $150 million, provided that either Charter Holdings or any of
     its Restricted Subsidiaries, after giving effect to such Investments, will
     own at least 20% of the Voting Stock of any Person in which any such
     Investment is made;

          (7) other Investments in any Person having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to subsequent changes in value), when taken together with all
     other Investments in any Person made by Charter Holdings and its Restricted
     Subsidiaries pursuant to this clause (7) since March 17, 1999, not to
     exceed $50 million; and

          (8) Investments in customers and suppliers in the ordinary course of
     business which either

             (A) generate accounts receivable, or

             (B) are accepted in settlement of bona fide disputes.

     "PERMITTED LIENS" means:

          (1) Liens on the assets of Charter Holdings securing Indebtedness and
     other Obligations under clause (1) of the covenant described under the
     caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
     Preferred Stock";

          (2) Liens in favor of Charter Holdings;

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   179

          (3) Liens on property of a Person existing at the time such Person is
     merged with or into or consolidated with Charter Holdings, provided that
     such Liens were in existence prior to the contemplation of such merger or
     consolidation and do not extend to any assets other than those of the
     Person merged into or consolidated with Charter Holdings;

          (4) Liens on property existing at the time of acquisition thereof by
     Charter Holdings, provided that such Liens were in existence prior to the
     contemplation of such acquisition;

          (5) Liens to secure the performance of statutory obligations, surety
     or appeal bonds, performance bonds or other obligations of a like nature
     incurred in the ordinary course of business;

          (6) purchase money mortgages or other purchase money liens (including
     without limitation any Capitalized Lease Obligations) incurred by Charter
     Holdings upon any fixed or capital assets acquired after the date of the
     indentures or purchase money mortgages (including without limitation
     Capitalized Lease Obligations) on any such assets, whether or not assumed,
     existing at the time of acquisition of such assets, whether or not assumed,
     so long as

             (a) such mortgage or lien does not extend to or cover any of the
        assets of Charter Holdings, except the asset so developed, constructed,
        or acquired, and directly related assets such as enhancements and
        modifications thereto, substitutions, replacements, proceeds (including
        insurance proceeds), products, rents and profits thereof, and

             (b) such mortgage or lien secures the obligation to pay the
        purchase price of such asset, interest thereon and other charges, costs
        and expenses (including, without limitation, the cost of design,
        development, construction, acquisition, transportation, installation,
        improvement, and migration) and is incurred in connection therewith (or
        the obligation under such Capitalized Lease Obligation) only;


          (7) Liens existing on the date of the Indentures (other than in
     connection with the Credit Facilities);


          (8) Liens for taxes, assessments or governmental charges or claims
     that are not yet delinquent or that are being contested in good faith by
     appropriate proceedings promptly instituted and diligently concluded,
     provided that any reserve or other appropriate provision as shall be
     required in conformity with GAAP shall have been made therefor;

          (9) statutory and common law Liens of landlords and carriers,
     warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
     Liens arising in the ordinary course of business and with respect to
     amounts not yet delinquent or being contested in good faith by appropriate
     legal proceedings promptly instituted and diligently conducted and for
     which a reserve or other appropriate provision, if any, as shall be
     required in conformity with GAAP shall have been made;

          (10) Liens incurred or deposits made in the ordinary course of
     business in connection with workers' compensation, unemployment insurance
     and other types of social security;

          (11) Liens incurred or deposits made to secure the performance of
     tenders, bids, leases, statutory or regulatory obligation, bankers'
     acceptance, surety and appeal bonds, government contracts, performance and
     return-of-money bonds and other obligations of a similar nature incurred in
     the ordinary course of business (exclusive of obligations for the payment
     of borrowed money);

          (12) easements, rights-of-way, municipal and zoning ordinances and
     similar charges, encumbrances, title defects or other irregularities that
     do not materially interfere with the ordinary course of business of Charter
     Holdings or any of its Restricted Subsidiaries;

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   180

          (13) Liens of franchisors or other regulatory bodies arising in the
     ordinary course of business;

          (14) Liens arising from filing Uniform Commercial Code financing
     statements regarding leases or other Uniform Commercial Code financing
     statements for precautionary purposes relating to arrangements not
     constituting Indebtedness;

          (15) Liens arising from the rendering of a final judgment or order
     against Charter Holdings or any of its Restricted Subsidiaries that does
     not give rise to an Event of Default;

          (16) Liens securing reimbursement obligations with respect to letters
     of credit that encumber documents and other property relating to such
     letters of credit and the products and proceeds thereof;

          (17) Liens encumbering customary initial deposits and margin deposits,
     and other Liens that are within the general parameters customary in the
     industry and incurred in the ordinary course of business, in each case,
     securing Indebtedness under Hedging Obligations and forward contracts,
     options, future contracts, future options or similar agreements or
     arrangements designed solely to protect Charter Holdings or any of its
     Restricted Subsidiaries from fluctuations in interest rates, currencies or
     the price of commodities;

          (18) Liens consisting of any interest or title of licensor in the
     property subject to a license;

          (19) Liens on the Capital Stock of Unrestricted Subsidiaries;

          (20) Liens arising from sales or other transfers of accounts
     receivable which are past due or otherwise doubtful of collection in the
     ordinary course of business;

          (21) Liens incurred in the ordinary course of business of Charter
     Holdings, with respect to obligations which in the aggregate do not exceed
     $50 million at any one time outstanding;


          (22) Liens in favor of the trustee arising under the provisions in the
     Indentures under the subheading "-- Compensation and Indemnity"; and


          (23) Liens in favor of the trustee for its benefit and the benefit of
     holders of the notes, as their respective interests appear.


     "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Charter
Holdings or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of Charter Holdings or any of its Restricted
Subsidiaries (other than intercompany Indebtedness), provided that unless
permitted otherwise by the Indentures, no Indebtedness of Charter Holdings or
any of its Restricted Subsidiaries may be issued in exchange for, nor may the
net proceeds of Indebtedness be used to extend, refinance, renew, replace,
defease or refund, Indebtedness of Charter Holdings or any of its Restricted
Subsidiaries, provided further that:


          (1) the principal amount (or accreted value, if applicable) of such
     Permitted Refinancing Indebtedness does not exceed the principal amount of
     (or accreted value, if applicable) plus accrued interest and premium, if
     any, on the Indebtedness so extended, refinanced, renewed, replaced,
     defeased or refunded (plus the amount of reasonable expenses incurred in
     connection therewith);

          (2) such Permitted Refinancing Indebtedness has a final maturity date
     later than the final maturity date of, and has a Weighted Average Life to
     Maturity equal to or greater than the Weighted Average Life to Maturity of,
     the Indebtedness being extended, refinanced, renewed, replaced, defeased or
     refunded;

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   181

          (3) if the Indebtedness being extended, refinanced, renewed, replaced,
     defeased or refunded is subordinated in right of payment to the notes, such
     Permitted Refinancing Indebtedness has a final maturity date later than the
     final maturity date of, and is subordinated in right of payment to, the
     notes on terms at least as favorable to the holders of notes as those
     contained in the documentation governing the Indebtedness being extended,
     refinanced, renewed, replaced, defeased or refunded; and

          (4) such Indebtedness is incurred either by Charter Holdings or by any
     of its Restricted Subsidiaries who is the obligor on the Indebtedness being
     extended, refinanced, renewed, replaced, defeased or refunded.

     "PERSON" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.

     "PREFERRED STOCK," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which by its terms is
preferred in right of payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.

     "PRODUCTIVE ASSETS" means assets (including assets of a referent Person
owned directly or indirectly through ownership of Capital Stock) of a kind used
or useful in the Cable Related Business.

     "QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified
Stock.

     "RATING AGENCIES" means Moody's and S&P.

     "RELATED PARTY" means: (1) the spouse or an immediate family member, estate
or heir of Paul G. Allen; or (2) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
Paul G. Allen and/or such other Persons referred to in the immediately preceding
clause (1).

     "RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.

     "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

     "S&P" means Standard & Poor's Ratings Service, a division of the
McGraw-Hill Companies, Inc. or any successor to the rating agency business
thereof.

     "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary of Charter
Holdings which is a "Significant Subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act.


     "STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness on the date of the Indentures, or, if none, the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.


     "SUBSIDIARY" means, with respect to any Person:

          (1) any corporation, association or other business entity of which at
     least 50% of the total voting power of shares of Capital Stock entitled
     (without regard to the occurrence of any contingency) to vote in the
     election of directors, managers or trustees thereof is at the time owned or
     controlled, directly or indirectly, by such Person or one or more of the
     other

                                       177
   182

     Subsidiaries of that Person (or a combination thereof) and, in the case of
     any such entity of which 50% of the total voting power of shares of Capital
     Stock is so owned or controlled by such Person or one or more of the other
     Subsidiaries of such Person, such Person and its Subsidiaries also have the
     right to control the management of such entity pursuant to contract or
     otherwise; and

          (2) any partnership

             (a) the sole general partner or the managing general partner of
        which is such Person or a Subsidiary of such Person, or

             (b) the only general partners of which are such Person or of one or
        more Subsidiaries of such Person (or any combination thereof).

     "UNRESTRICTED SUBSIDIARY" means any Subsidiary of Charter Holdings that is
designated by the board of directors of Charter Holdings as an Unrestricted
Subsidiary pursuant to a board resolution, but only to the extent that such
Subsidiary:

          (1) has no Indebtedness other than Non-Recourse Debt;

          (2) is not party to any agreement, contract, arrangement or
     understanding with Charter Holdings or any Restricted Subsidiary of Charter
     Holdings unless the terms of any such agreement, contract, arrangement or
     understanding are no less favorable to Charter Holdings or any Restricted
     Subsidiary than those that might be obtained at the time from Persons who
     are not Affiliates of Charter Holdings unless such terms constitute
     Investments permitted by the covenant described above under the caption
     "-- Certain Covenants -- Investments";

          (3) is a Person with respect to which neither Charter Holdings nor any
     of its Restricted Subsidiaries has any direct or indirect obligation

             (a) to subscribe for additional Equity Interests or

             (b) to maintain or preserve such Person's financial condition or to
        cause such Person to achieve any specified levels of operating results;

          (4) has not guaranteed or otherwise directly or indirectly provided
     credit support for any Indebtedness of Charter Holdings or any of its
     Restricted Subsidiaries; and

          (5) has at least one director on its board of directors that is not a
     director or executive officer of Charter Holdings or any of its Restricted
     Subsidiaries or has at least one executive officer that is not a director
     or executive officer of Charter Holdings or any of its Restricted
     Subsidiaries.

     Any designation of a Subsidiary of Charter Holdings as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the trustee a
certified copy of the board resolution of Charter Holdings giving effect to such
designation and an officers' certificate certifying that such designation
complied with the preceding conditions and was permitted by the covenant
described above under the caption "-- Certain Covenants -- Investments." If, at
any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the indentures and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Charter Holdings as of such date and, if such Indebtedness is not permitted to
be incurred as of such date under the covenant described under the caption
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," Charter Holdings shall be in default of such covenant. The board of
directors of Charter Holdings may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of

                                       178
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Charter Holdings of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if:

          (1) such Indebtedness is permitted under the covenant described under
     the caption "-- Certain Covenants -- Incurrence of Indebtedness and
     Issuance of Preferred Stock," calculated on a pro forma basis as if such
     designation had occurred at the beginning of the four-quarter reference
     period; and

          (2) no Default or Event of Default would be in existence following
     such designation.

     "VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors of such Person.

     "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:

          (1) the sum of the products obtained by multiplying

             (a) the amount of each then remaining installment, sinking fund,
        serial maturity or other required payments of principal, including
        payment at final maturity, in respect thereof, by

             (b) the number of years (calculated to the nearest one-twelfth)
        that will elapse between such date and the making of such payment; by

          (2) the then outstanding principal amount of such Indebtedness.

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

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            MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

GENERAL

     The following sets forth the opinion of Paul, Hastings, Janofsky & Walker
LLP, our legal counsel, as to the material United States federal income tax
consequences of

          (1) the exchange offer relevant to U.S. holders; and

          (2) the ownership and disposition of the new notes relevant to U.S.
     holders and, in certain circumstances, non-U.S. holders.

Except where noted, the summary deals only with notes held as capital assets
within the meaning of section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"), and does not deal with special situations, such as those
of broker-dealers, tax-exempt organizations, individual retirement accounts and
other tax deferred accounts, financial institutions, insurance companies, or
persons holding notes as part of a hedging or conversion transaction or a
straddle, or a constructive sale. Furthermore, the discussion below is based
upon the provisions of the Code and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked,
or modified, possibly with retroactive effect, so as to result in U.S. federal
income tax consequences different from those discussed below. In addition,
except as otherwise indicated, the following does not consider the effect of any
applicable foreign, state, local or other tax laws or gift tax considerations.

     We have not sought, and will not seek, any rulings from the IRS with
respect to the positions discussed below. There can be no assurance that the IRS
will not take a different position concerning the tax consequences of the
exchange offer and ownership or disposition of the original notes or new notes,
or that any such position would not be sustained.

     As used herein, a "U.S. person" is

          (1) a citizen or resident of the United States,

          (2) a corporation, partnership or other entity created or organized in
     or under the laws of the United States or any political subdivision
     thereof,

          (3) an estate the income of which is subject to U.S. federal income
     taxation regardless of its source,

          (4) a trust if

             (A) a U.S. court is able to exercise primary supervision over the
        administration of the trust and

             (B) one or more U.S. persons have the authority to control all
        substantial decisions of the trust,

          (5) a certain type of trust in existence on August 20, 1996, which was
     treated as a U.S. person under the Code in effect immediately prior to such
     date and which has made a valid election to be treated as a U.S. person
     under the Code, and

          (6) any person otherwise subject to U.S. federal income tax on a net
     income basis in respect of its worldwide taxable income.

A "U.S. Holder" is a beneficial owner of a note who is a U.S. person. A
"Non-U.S. Holder" is a beneficial owner of a note that is not a U.S. Holder.

     PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED BELOW TO THEIR
PARTICULAR SITUATIONS, AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN
OR OTHER TAX LAWS, OR SUBSEQUENT REVISIONS THEREOF.

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THE EXCHANGE OFFER

     Pursuant to the exchange offer, holders are entitled to exchange the
original notes for new notes that will be substantially identical in all
material respects to the original notes, except that the new notes will be
registered with the Securities and Exchange Commission and therefore will not be
subject to transfer restrictions. The exchange pursuant to the exchange offer as
described above will not result in a taxable event. Accordingly,

     (1) no gain or loss will be realized by a U.S. Holder upon receipt of a new
note,

     (2) the holding period of the new note will include the holding period of
the original note exchanged therefor, and

     (3) the adjusted tax basis of the new note will be the same as the adjusted
tax basis of the original note exchanged at the time of such exchange.

UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS

  PAYMENTS OF INTEREST ON THE EIGHT-YEAR SENIOR NOTES AND TEN-YEAR SENIOR NOTES

     Interest on the eight-year senior notes and ten-year senior notes will be
taxable to a U.S. Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the U.S. Holder's regular method of
accounting for tax purposes.

  ORIGINAL ISSUE DISCOUNT ON THE SENIOR DISCOUNT NOTES

     The senior discount notes will be issued with original issue discount. Such
notes will be issued with original issue discount because they will be issued at
an issue price which is substantially less than their stated principal amount at
maturity, and because interest on the senior discount notes will not be payable
until November 15, 2006. Each U.S. Holder will be required to include in income
in each year, in advance of receipt of cash payments on such senior discount
notes to which such income is attributable, original issue discount income as
described below.

     The amount of original issue discount with respect to the senior discount
notes will be equal to the excess of the senior discount note's "stated
redemption price at maturity" over its "issue price." The issue price of the
senior discount notes will be equal to the price to the public at which a
substantial amount of the senior discount notes is initially sold for money,
excluding any sales to a bond house, broker or similar person or organization
acting in the capacity of an underwriter, placement agent or wholesaler. The
stated redemption price at maturity of a senior discount note is the total of
all payments provided by the senior discount note, including stated interest
payments.

     A U.S. Holder of a senior discount note is required to include in gross
income for U.S. federal income tax purposes an amount equal to the sum of the
"daily portions" of such original issue discount for all days during the taxable
year on which the holder holds the senior discount note. The daily portions of
original issue discount required to be included in such holder's gross income in
a taxable year will be determined on a constant yield basis. A pro rata portion
of the original issue discount on such senior discount note which is
attributable to the "accrual period" in which such day is included will be
allocated to each day during the taxable year in which the holder holds the
senior discount notes. Accrual periods with respect to a senior discount note
may be of any length and may vary in length over the term of the senior discount
note as long as

          (1) no accrual period is longer than one year, and

          (2) each scheduled payment of interest or principal on the senior
     discount note occurs on either the first or final day of an accrual period.

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     The amount of original issue discount attributable to each accrual period
will be equal to the product of

          (1) the "adjusted issue price" at the beginning of such accrual period
     and

          (2) the "yield to maturity" of the instrument stated in a manner
     appropriately taking into account the length of the accrual period.

     The yield to maturity is the discount rate that, when used in computing the
present value of all payments to be made under the senior discount notes,
produces an amount equal to the issue price of the senior discount notes. The
adjusted issue price of a senior discount note at the beginning of an accrual
period is generally defined as the issue price of the senior discount note plus
the aggregate amount of original issue discount that accrued in all prior
accrual periods, less any cash payments made on the senior discount note.
Accordingly, a U.S. Holder of a senior discount note will be required to include
original issue discount thereon in gross income for U.S. federal tax purposes in
advance of the receipt of cash attributable to such income. The amount of
original issue discount allocable to an initial short accrual period may be
computed using any reasonable method if all other accrual periods, other than a
final short accrual period, are of equal length. The amount of original issue
discount allocable to the final accrual period at maturity of a senior discount
note is the difference between

          (1) the amount payable at the maturity of the senior discount note and

          (2) the senior discount note's adjusted issue price as of the
     beginning of the final accrual period.

     Payments on the senior discount notes, including principal and stated
interest payments, are not separately included in a U.S. Holder's income, but
rather are treated first as payments of accrued original issue discount to the
extent of such accrued original issue discount and the excess as payments of
principal, which reduce the U.S. Holder's adjusted tax basis in such senior
discount notes.

  EFFECT OF OPTIONAL REDEMPTION ON ORIGINAL ISSUE DISCOUNT

     In the event of a Change of Control, we will be required to offer to redeem
all of the notes, at redemption prices specified elsewhere herein. In the event
that we receive net proceeds from one or more Equity Offerings, we may, at our
option, use all or a portion of such net proceeds to redeem in the aggregate up
to 35% of the aggregate principal amount at maturity of the senior notes and up
to 35% of the aggregate principal amount at maturity of the senior discount
notes at redemption prices specified elsewhere herein, provided that at least
65% of the aggregate principal amount at maturity of the senior notes and the
senior discount notes, respectively, remains outstanding after each such
redemption. Computation of the yield and maturity of the notes is not affected
by such redemption rights and obligations if, based on all the facts and
circumstances as of the issue date, the stated payment schedule of the notes,
which does not reflect the Change of Control event or Equity Offering event, is
significantly more likely than not to occur. We have determined that, based on
all of the facts and circumstances as of the issue date, it is significantly
more likely than not that the notes will be paid according to their stated
schedule.

     We may redeem the ten-year senior notes and the senior discount notes, in
whole or in part, at any time on or after May 15, 2006, at redemption prices
specified elsewhere herein plus accrued and unpaid stated interest, if any, on
the notes so redeemed but excluding the date of redemption. The United States
Treasury Regulations contain rules for determining the "maturity date" and the
stated redemption price at maturity of an instrument that may be redeemed prior
to its stated maturity date at the option of the issuer. Under United States
Treasury Regulations, solely for the purposes of the accrual of original issue
discount, it is assumed that an issuer will exercise any option to redeem a
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debt instrument if such exercise would lower the yield to maturity of the debt
instrument. We believe that we will not be presumed to redeem the notes prior to
their stated maturity under these rules because the exercise of such options
would not lower the yield to maturity of the notes.

     U.S. Holders may wish to consult their own tax advisors regarding the
treatment of such contingencies.

  APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS

     Because the senior discount notes constitute "applicable high yield
discount obligations" referred to as "AHYDOs", the portion of each senior
discount note that is allocable to beneficial owners of Charter Holdings that
are C corporations, such as Charter Communications, Inc., will be treated as an
AHYDO for U.S. federal income tax purposes. The senior discount notes constitute
AHYDOs because they have a yield to maturity that is at least five percentage
points above the applicable federal rate at the time of issuance of the senior
discount notes and the senior discount notes are issued with "significant
original issue discount." A senior discount note is treated as having
significant original issue discount if the aggregate amount that will be
includable in gross income with respect to such senior discount note for periods
before the close of any accrual period ending after the date that is five years
after the date of issue exceeds the sum of (1) the aggregate amount of interest
to be paid in cash under the senior discount note before the close of such
accrual period and (2) the product of the initial issue price of such senior
discount note and its yield to maturity.

     Because the senior discount notes constitute AHYDOs, to the extent that the
senior discount notes are allocable to beneficial owners of Charter Holdings
that are C corporations, such as Charter Communications, Inc.,

     (1) the "disqualified portion" of the original issue discount that accrues
on the senior discount notes allocable to beneficial owners of Charter Holdings
that are C corporations, such as Charter Communications, Inc., may be treated as
a dividend generally eligible for the dividends received deduction in the case
of corporate U.S. Holders,

     (2) beneficial owners of Charter Holdings that are C corporations, such as
Charter Communications, Inc., will not be entitled to deduct their distributive
share of the disqualified portion of original issue discount that accrues on the
senior discount notes, and

     (3) beneficial owners of Charter Holdings that are C corporations, such as
Charter Communications, Inc., will be allowed to deduct the remainder of their
distributive share of original issue discount only when Charter Holdings pays
amounts attributable to such original issue discount in cash.

     The disqualified portion of original issue discount is equal to the lesser
of the amount of original issue discount or the portion of the "total return"
with respect to the senior discount notes in excess of the applicable federal
rate plus six percentage points. The total return is the excess of all payments
to be made with respect to a senior discount note over its issue price.

  SALE, EXCHANGE OR RETIREMENT OF THE NOTES

     Upon the sale, exchange, retirement or other taxable disposition of a note,
the holder will generally recognize gain or loss in an amount equal to the
difference between

     (1) the amount of cash and the fair market value of other property received
in exchange therefor and

     (2) the holder's adjusted tax basis in such note.

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     Amounts attributable to accrued but unpaid interest on the senior notes
will be treated as ordinary interest income. A holder's adjusted tax basis in a
note will equal the purchase price paid by such holder for the note increased by
the amount of any market discount that the holder elected to include in income,
and, in the case of a senior discount note, by any original issue discount
previously included in income by such holder with respect to such note and
decreased by the amount of any amortizable bond premium applied to reduce
interest on the notes and, in the case of a senior discount note, by any
payments received thereon.

     Gain or loss realized on the sale, exchange, retirement or other taxable
disposition of a note will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange, retirement, or other taxable
disposition, the note has been held by the holder for more than 12 months. The
maximum rate of tax on long-term capital gains with respect to notes held by an
individual is 20%. The deductibility of capital losses is subject to certain
limitations.

MARKET DISCOUNT

     A holder receives a "market discount" when he/she

     (1) purchases a senior note for an amount below the issue price, or

     (2) purchases a senior discount note for an amount below the adjusted issue
price on the date of purchase (as determined in accordance with the original
issue discount rules above.)

     Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment on, or any gain on the sale, exchange, retirement
or other disposition of, a note as ordinary income to the extent of the market
discount which has not previously been included in income and is treated as
having accrued on such note at the time of such payment or disposition. In
addition, the U.S. Holder may be required to defer, until the maturity of the
note or its earlier disposition in a taxable transaction, the deduction of a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such notes.

     Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the note, unless the U.S.
Holder elects to accrue such discount on a constant interest rate method. A U.S.
Holder may elect to include market discount in income currently as it accrues,
on either a ratable or constant interest rate method. If this election is made,
the holder's basis in the note will be increased to reflect the amount of income
recognized and the rules described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service.

AMORTIZABLE BOND PREMIUM; ACQUISITION PREMIUM

     A U.S. Holder that

     (1) purchases a senior note for an amount in excess of the amount payable
on maturity, or

     (2) purchases a senior discount note for an amount in excess of the stated
redemption price at maturity will be considered to have purchased such note with
"amortizable bond premium."

     A U.S. Holder generally may elect to amortize the premium over the
remaining term of the note on a constant yield method. However, because the
notes could be redeemed for an amount in excess of their principal amount, the
amortization of bond premium could be deferred until later in the term of the
note. The amount amortized in any year will be treated as a reduction of the
U.S. Holder's interest income, including original issue discount income, from
the note. Bond premium on a note held by a U.S. Holder that does not elect
annual amortization will decrease the gain or increase the

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loss otherwise recognized upon disposition of the note. The election to amortize
premium on a constant yield method, once made, applies to all debt obligations
held or subsequently acquired by the electing U.S. Holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service.

     A U.S. Holder that purchases a senior discount note for an amount that is
greater than the adjusted issue price of the senior discount note on the date of
purchase, as determined in accordance with the original issue discount rules,
above will be considered to have purchased such senior discount note at an
"acquisition premium." A holder of a senior discount note that is purchased at
an acquisition premium may reduce the amount of the original issue discount
otherwise includible in income with respect to the senior discount note by the
"acquisition premium fraction." The acquisition premium fraction is that
fraction the numerator of which is the excess of the holder's adjusted tax basis
in the senior discount note immediately after its acquisition over the adjusted
issue price of the senior discount note and the denominator of which is the
excess of the sum of all amounts payable on the senior discount note after the
purchase date over the adjusted issue price of the senior discount note.
Alternatively, a holder of a senior discount note that is purchased at an
acquisition premium may elect to compute the original issue discount accrual on
the senior discount note by treating the purchase as a purchase of the senior
discount note at original issuance, treating the purchase price as the issue
price, and applying the original issue discount rules thereto using a constant
yield method.

UNITED STATES FEDERAL INCOME TAXATION OF NON-U.S. HOLDERS

     Assuming, based on the description of the DTC's book-entry procedures
discussed in the section entitled "Description of Notes -- Book-Entry, Delivery
and Form," that upon issuance and throughout their term, the notes will be in
registered form within the meaning of the Code and applicable regulations, the
payment to a Non-U.S. Holder of interest on a note generally will not be subject
to U.S. federal income or withholding tax pursuant to the "portfolio interest
exception," provided that

     (1) the Non-U.S. Holder (A) does not actually or constructively own 10% or
more of the capital or profits interest in the issuers and (B) is neither a
controlled foreign corporation that is related to the issuers within the meaning
of the Code, nor a bank that received notes on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of its trade or
business; and

     (2) either (A) the beneficial owner of the notes certifies to the issuers
or their agent, under penalties of perjury, that it is not a U.S. Holder and
provides its name and address on Internal Revenue Service Form W-8BEN (or a
suitable substitute form) or (B) a securities clearing organization, bank or
other financial institution that holds the notes on behalf of such Non-U.S.
Holder in the ordinary course of its trade or business (a "financial
institution") certifies under penalties of perjury that such a Form W-8BEN or
W-8IMY or suitable substitute form has been received from the beneficial owner
by it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof. In the case of notes held by a foreign
partnership, the certificate described above must be provided by the partners
rather than by the foreign partnership, and the partnership is required to
provide certain information, including a U.S. tax identification number.

     If a Non-U.S. Holder cannot satisfy the requirements of the portfolio
interest exception described above, payments of interest, including the amount
of any payment that is attributable to original issue discount that accrued
while such Non-U.S. Holder held the note, made to such

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Non-U.S. Holder will be subject to a 30% withholding tax, unless the beneficial
owner of the note provides us or our paying agent, as the case may be, with a
properly executed

     (1) Internal Revenue Service Form W-8BEN (or suitable substitute form)
claiming an exemption from or reduction in the rate of withholding under an
income tax treaty or

     (2) Internal Revenue Service Form W-8ECI (or suitable substitute form)
providing a United States identification number and stating that interest paid
on the note is effectively connected with the beneficial owner's conduct of a
trade or business in the United States.

     In addition, the Non-U.S. Holder may under certain circumstances be
required to obtain a U.S. taxpayer identification number and make certain
certifications to us.

     If a Non-U.S. Holder of a note is engaged in a trade or business in the
United States and has filed Form W-8ECI (or suitable substitute form), interest,
including original issue discount, on the note that is effectively connected
with the conduct of such trade or business and, where a 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. In addition, if
such Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits,
subject to adjustment, for that taxable year unless it qualifies for a lower
rate under an applicable income tax treaty.

     Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a person other than a U.S. Holder generally
will not be subject to U.S. federal income tax provided that

     (1) such gain is not effectively connected with the conduct by such holder
of a trade or business in the United States and, if required by an applicable
income tax treaty as a condition for subjecting the Non-U.S. Holder to U.S.
taxation on a net income basis, such gain is not attributable to a permanent
establishment maintained in the United States by the Non-U.S. Holder;

     (2) in the case of gains derived by an individual, such individual is not
present in the United States for 183 days or more in the taxable year of the
disposition and certain other conditions are met;

     (3) the Non-U.S. Holder is not subject to tax pursuant to the provisions of
U.S. federal income tax law applicable to certain expatriates; and

     (4) we are not and have not been a "U.S. real property holding corporation"
for U.S. federal income tax purposes, which we believe has been and will
continue to be the case.

  FEDERAL ESTATE TAX

     Subject to applicable estate tax treaty provisions, notes held by an
individual who is not a citizen or resident of the United States for federal
estate tax purposes at the time of his or her death generally will not be
subject to U.S. federal estate tax if the interest on the notes qualifies for
the portfolio interest exemption from U.S. federal income tax under the rules
described above and payments with respect to such notes would not have been
effectively connected with the conduct of a trade or business in the U.S. by a
non-resident decedent. The United States federal estate tax generally has been
repealed for decedents dying in 2010. Unless extended by new legislation,
however, the repeal expires and the estate tax is reinstated beginning January
1, 2011.

  INFORMATION REPORTING AND BACKUP WITHHOLDING

     Backup withholding and information reporting requirements may apply to
certain payments of principal, premium, if any, and interest, and accruals of
original issue discount, on a note, and to the

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proceeds of the sale or redemption of a note. We, our agent, a broker, the
Trustee or the paying agent, as the case may be, will be required to withhold
from any payment that is subject to backup withholding a tax if a U.S. Holder
fails to (i) furnish his taxpayer identification number, (ii) certify that such
number is correct, (iii) certify that such holder is not subject to backup
withholding or (iv) otherwise comply with the applicable backup withholding
rules. Certain U.S. Holders, including all corporations, are not subject to
backup withholding and information reporting.

     Pursuant to recent tax legislation, the rate of backup withholding tax will
be 30.5% for payments made after August 6, 2001 and will be reduced to: 30% on
January 1, 2002, 29% on January 1, 2004 and 28% on January 1, 2006.

     Non-U.S. Holders other than corporations may be subject to backup
withholding and additional information reporting requirements. However, backup
withholding and additional information reporting requirements do not apply to
payments of portfolio interest, including original issue discount, made by the
issuers or a paying agent to Non-U.S. Holders if the certification described
under "-- United States Federal Income Taxation of Non-U.S. Holders" is
received, provided that the payor does not have actual knowledge that the holder
is a U.S. Holder.

     The payments of proceeds from the disposition of a note effected by or
through the foreign office of a foreign custodian, foreign nominee or other
foreign agent of such beneficial owner, or if the foreign office of a foreign
"broker", as defined in the applicable Treasury Regulations, pays the proceeds
from the disposition of note or a coupon to the seller thereof, backup
withholding and additional information reporting requirements generally will not
apply. Information reporting requirements, but not backup withholding, will
apply, however, to a payment by a foreign office of a broker that is a U.S.
person, a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States, a
"controlled foreign corporation", that is, a foreign corporation controlled by
certain U.S. shareholders, with respect to the United States, or, a foreign
partnership that at any time during its tax year either is engaged in the
conduct of a trade or business in the United States or has as partners one or
more United States persons that, in aggregate, hold more than 50% of the income
or capital interest in the partnership, unless such broker has documentary
evidence in its records that the holder is a Non-U.S. Holder and certain other
conditions are met or the holder otherwise establishes an exemption. Payment of
proceeds from the disposition of a note by a U.S. office of a broker generally
is subject to both backup withholding and additional information reporting
unless the Non-U.S. Holder provides the payor with such Non-U.S. Holder's name
and address and either certifies under penalties of perjury that it is a
Non-U.S. Holder or otherwise establishes an exemption.

     Any amounts withheld under the backup withholding rules from a payment to a
holder of the notes will be allowed as a refund or a credit against such
holder's U.S. federal income tax liability, provided that the required
information is furnished to the IRS.

     We must report annually to the IRS and to each Non-U.S. Holder the amount
of interest paid and any tax withheld with respect to the interest, regardless
of whether withholding was required. Copies of these information returns may
also be made available under the provisions of an income tax treaty or agreement
to the tax authorities of the country in which the Non-U.S. Holder resides.

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                              PLAN OF DISTRIBUTION

     A broker-dealer that is the holder of original notes that were acquired for
the account of such broker-dealer as a result of market-making or other trading
activities, other than original notes acquired directly from us or any of our
affiliates may exchange such original notes for new notes pursuant to the
exchange offer. This is true so long as each broker-dealer that receives new
notes for its own account in exchange for original notes, where such original
notes were acquired by such broker-dealer as a result of market-making or other
trading activities acknowledges that it will deliver a prospectus in connection
with any resale of such new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for original notes where such
original notes were acquired as a result of market-making activities or other
trading activities. We have agreed that for a period of 180 days after
consummation of the exchange offer or such time as any broker-dealer no longer
owns any registrable securities, we will make this prospectus, as it may be
amended or supplemented from time to time, available to any broker-dealer for
use in connection with any such resale. All dealers effecting transactions in
the new notes will be required to deliver a prospectus.

     We will not receive any proceeds from any sale of new notes by
broker-dealers or any other holder of new notes. New notes received by
broker-dealers for their own account in the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the new notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such new
notes. Any broker-dealer that resells new notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.

     For a period of 180 days after consummation of the exchange offer or until
such time as any broker-dealer no longer owns any registrable securities, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer and to our performance of, or compliance with, the registration
rights agreements (other than commissions or concessions of any brokers or
dealers) and will indemnify the holders of the notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

                                 LEGAL MATTERS

     The legality of the notes offered in this prospectus and other matters will
be passed upon for us by Paul, Hastings, Janofsky & Walker LLP, New York, New
York.

                                    EXPERTS

     The consolidated financial statements of Charter Communications Holdings,
LLC and subsidiaries, the financial statements of CCA Group, CharterComm
Holdings, L.P. and subsidiaries, Marcus Cable Holdings, LLC and subsidiaries,
Greater Media Cablevision Systems, Helicon

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Partners I, L.P., and affiliates, Sonic Communications Cable Television Systems,
and CC V Holdings, LLC and subsidiaries, all included in this prospectus have
been audited by Arthur Andersen LLP, independent public accountants, to the
extent and for the periods indicated in their reports. In the report for Charter
Communications Holdings, LLC and subsidiaries related to the financial
statements for the year ended December 31, 1999, that firm states that with
respect to certain subsidiaries its opinion is based on the reports of other
independent public accountants, namely Ernst & Young LLP. The financial
statements referred to above have been included herein in reliance upon the
authority of those firms as experts in giving said reports.


     The combined financial statements of Helicon Partners I, L.P. and
affiliates as of December 31, 1997 and 1998 and for each of the years in the
three-year period ended December 31, 1998, the combined financial statements of
TCI Falcon Systems as of September 30, 1998 and December 31, 1997 and for the
nine-month period ended September 30, 1998, and for each of the years in the
two-year period ended December 31, 1997, the consolidated financial statements
of Marcus Cable Holdings, LLC and subsidiaries as of December 31, 1998 and 1997,
and for each of the years in the three-year period ended December 31, 1998, and
the consolidated financial statements of Bresnan Communications Group LLC as of
December 31, 1998 and 1999 and February 14, 2000, and for each of the years in
the three-year period ended December 31, 1999, and the period from January 1,
2000 to February 14, 2000, have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

     The consolidated financial statements of Renaissance Media Group LLC and
the combined financial statements of the Picayune, MS, LaFourche, LA, St.
Tammany, LA, St. Landry, LA, Pointe Coupee, LA, and Jackson, TN cable systems,
appearing in this prospectus and registration statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
on the authority of such firm as experts in accounting and auditing.


     The combined financial statements of InterMedia Cable Systems as of
September 30, 1999 and December 31, 1998 and for the nine months ended September
30, 1999 and each of the two years in the period ended December 31, 1998
included in this Prospectus, have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.


     The financial statements of Rifkin Acquisition Partners, L.L.L.P. and
Rifkin Cable Income Partners LP for the year ended December 31, 1998 and Rifkin
Acquisition Partners, L.L.L.P., Rifkin Cable Income Partners LP, Indiana Cable
Associates, Ltd and R/N South Florida Cable Management Limited Partnership for
the period ended September 13, 1999 included in this registration statement,
have been audited by PricewaterhouseCoopers LLP, independent accountants. The
entities and periods covered by these audits are indicated in their reports. The
financial statements have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

     The consolidated financial statements of Avalon Cable of Michigan Holdings,
Inc. and subsidiaries, the consolidated financial statements of Cable Michigan,
Inc. and subsidiaries, the consolidated financial statements of Avalon Cable LLC
and subsidiaries, the financial statements of Amrac Clear View, a Limited
Partnership, the combined financial statements of The Combined Operations of
Pegasus Cable Television of Connecticut, Inc. and the Massachusetts Operations
of Pegasus Cable Television, Inc., included in this registration statement, have
been audited by PricewaterhouseCoopers LLP, independent accountants. The
entities and periods covered by these audits are indicated in their reports. The
financial statements have been so included in reliance on the

                                       189
   194

reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

     The consolidated financial statements of R/N South Florida Cable Management
Limited Partnership and Indiana Cable Associates, Ltd. and the combined
financial statements of Fanch Cable Systems Sold to Charter Communications, Inc.
(comprised of Components of TWFanch-one Co., Components of TWFanch-two Co., Mark
Twain Cablevision, North Texas Cablevision LTD., Post Cablevision of Texas L.P.,
Spring Green Communications L.P., Fanch Narragansett CSI L.P., Cable Systems
Inc., ARH, and Tioga) appearing in this prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere herein, and are included in reliance
upon such reports given on the authority of such firm as experts in accounting
and auditing.

     The combined financial statements of Charter Communications VI Operating
Company LLC not separately presented in this prospectus and registration
statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given on the authority of such firm as experts in
accounting and auditing.

     The financial statements of Amrac Clear View, a Limited Partnership as of
December 31, 1996 and 1997 and for each of the three years in the period ended
December 31, 1997, included in this registration statement, have been so
included in reliance on the report of Greenfield, Altman, Brown, Berger, & Katz,
P.C., independent accountants, given on the authority of said firm as experts in
auditing and accounting.

     Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Falcon Communications, L.P. at December 31, 1998 and
November 12, 1999 and for each of the two years in the period ended December 31,
1998 and for the period from January 1, 1999 to November 12, 1999 (date of
disposition), as set forth in their report. We've included these financial
statements in the prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.

     Ernst & Young LLP, independent auditors, have audited the combined
financial statements of CC VII-Falcon Systems at December 31, 1999, and for the
period from November 13, 1999 (commencement date) to December 31, 1999, not
separately presented herein, as set forth in their report. We've included their
report in the prospectus and elsewhere in the registration statement in reliance
on Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.

     The financial statements of Cable Systems, Inc. and Fanch Narragan
Settlement CSI Limited Partnership, the consolidated financial statements of
North Texas Cablevision, Ltd. and the financial statements of Spring Green
Communications, L.P., appearing in this prospectus, have been audited by Shields
& Co., independent auditors, as set forth in their reports thereon and appearing
elsewhere herein, and are included in reliance on the authority of such firm as
experts in accounting and auditing.

                                       190
   195

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           

CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES:
  Report of Independent Public Accountants..................  F-8
  Report of Independent Auditors............................  F-9
  Report of Independent Auditors............................  F-10
  Consolidated Balance Sheets as of December 31, 1999 and
    1998....................................................  F-11
  Consolidated Statements of Operations for the Year ended
    December 31, 1999, and for the Period from December 24,
    1998, through December 31, 1998.........................  F-12
  Consolidated Statements of Changes in Member's Equity for
    the Year ended December 31, 1999, and for the Period
    from December 24, 1998, through December 31, 1998.......  F-13
  Consolidated Statements of Cash Flows for the Year ended
    December 31, 1999, and for the Period from December 24,
    1998, through December 31, 1998.........................  F-14
  Notes to Consolidated Financial Statements................  F-15

CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES:
  Report of Independent Public Accountants..................  F-36
  Consolidated Statements of Operations for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Year ended December 31, 1997............................  F-37
  Consolidated Statements of Changes in Shareholder's
    Investment for the Period from January 1, 1998, through
    December 23, 1998 and for the Year ended December 31,
    1997....................................................  F-38
  Consolidated Statements of Cash Flows for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Year ended December 31, 1997............................  F-39
  Notes to Consolidated Financial Statements................  F-40

CCA GROUP:
  Report of Independent Public Accountants..................  F-46
  Combined Balance Sheet as of December 31, 1997............  F-47
  Combined Statements of Operations for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-48
  Combined Statements of Shareholders' Deficit for the
    Period from January 1, 1998, through December 23, 1998
    and for the Years Ended December 31, 1997 and 1996......  F-49
  Combined Statements of Cash Flows for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-50
  Notes to Combined Financial Statements....................  F-51

CHARTERCOMM HOLDINGS, L.P. AND SUBSIDIARIES:
  Report of Independent Public Accountants..................  F-64
  Consolidated Balance Sheet as of December 31, 1997........  F-65
  Consolidated Statements of Operations for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-66
  Consolidated Statements of Partners' Capital for the
    Period from January 1, 1998, through December 23, 1998
    and for the Years Ended December 31, 1997 and 1996......  F-67
  Consolidated Statements of Cash Flows for the Period from
    January 1, 1998, through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-68
  Notes to Consolidated Financial Statements................  F-69
</Table>

                                       F-1
   196

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES:
  Report of Independent Public Accountants..................  F-81
  Consolidated Statement of Operations for the Three Months
    Ended March 31, 1999....................................  F-82
  Consolidated Statement of Members' Deficit for the Three
    Months Ended March 31, 1999.............................  F-83
  Consolidated Statement of Cash Flows for the Three Months
    Ended March 31, 1999....................................  F-84
  Notes to Consolidated Financial Statements................  F-85
  Independent Auditors' Report..............................  F-90
  Consolidated Balance Sheets as of December 31, 1998 and
    1997....................................................  F-91
  Consolidated Statements of Operations for Each of the
    Years in the Three-Year Period Ended December 31,
    1998....................................................  F-92
  Consolidated Statements of Members' Equity/Partners'
    Capital for Each of the Years in the Three-Year Period
    Ended December 31, 1998.................................  F-93
  Consolidated Statements of Cash Flows for Each of the
    Years in the Three-Year Period Ended December 31,
    1998....................................................  F-94
  Notes to Consolidated Financial Statements................  F-95

RENAISSANCE MEDIA GROUP LLC:
  Report of Independent Auditors............................  F-106
  Consolidated Balance Sheet as of April 30, 1999...........  F-107
  Consolidated Statement of Operations for the Four Months
    Ended April 30, 1999....................................  F-108
  Consolidated Statement of Changes in Members' Equity for
    the Four Months Ended April 30, 1999....................  F-109
  Consolidated Statement of Cash Flows for the Four Months
    Ended April 30, 1999....................................  F-110
  Notes to Consolidated Financial Statements................  F-111
  Report of Independent Auditors............................  F-119
  Consolidated Balance Sheet as of December 31, 1998........  F-120
  Consolidated Statement of Operations for the Year Ended
    December 31, 1998.......................................  F-121
  Consolidated Statement of Changes in Members' Equity for
    the Year Ended December 31, 1998........................  F-122
  Consolidated Statement of Cash Flows for the Year Ended
    December 31, 1998.......................................  F-123
  Notes to Consolidated Financial Statements for the Year
    Ended December 31, 1998.................................  F-124

PICAYUNE, MS, LAFOURCHE, LA, ST. TAMMANY, LA, ST. LANDRY,
  LA, POINTE COUPEE, LA AND JACKSON, TN CABLE TELEVISION
  SYSTEMS:
  Report of Independent Auditors............................  F-133
  Combined Balance Sheet as of April 8, 1998................  F-134
  Combined Statement of Operations for the Period from
    January 1, 1998 through April 8, 1998...................  F-135
  Combined Statement of Changes in Net Assets for the Period
    from January 1, 1998 through April 8, 1998..............  F-136
  Combined Statement of Cash Flows for the Period from
    January 1, 1998 through April 8, 1998...................  F-137
  Notes to Combined Financial Statements....................  F-138
  Report of Independent Auditors............................  F-144
  Combined Balance Sheets as of December 31, 1996 and
    1997....................................................  F-145
  Combined Statements of Operations for the Years Ended
    December 31, 1995, 1996 and 1997........................  F-146
  Combined Statements of Changes in Net Assets for the Years
    Ended December 31, 1996 and 1997........................  F-147
  Combined Statements of Cash Flows for the Years Ended
    December 31, 1995, 1996 and 1997........................  F-148
  Notes to Combined Financial Statements....................  F-149
</Table>

                                       F-2
   197

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
GREATER MEDIA CABLEVISION SYSTEMS:
  Report of Independent Public Accountants..................  F-156
  Combined Statement of Income for the Nine Months Ended
    June 30, 1999...........................................  F-157
  Combined Statement of Changes in Net Assets for the Nine
    Months Ended June 30, 1999..............................  F-158
  Combined Statement of Cash Flows for the Nine Months Ended
    June 30, 1999...........................................  F-159
  Notes to Combined Financial Statements....................  F-160
  Report of Independent Public Accountants..................  F-164
  Combined Balance Sheets as of September 30, 1998 and
    1997....................................................  F-165
  Combined Statements of Income for the Years Ended
    September 30, 1996, 1997 and 1998.......................  F-166
  Combined Statements of Changes in Net Assets for the Years
    Ended September 30, 1996, 1997 and 1998.................  F-167
  Combined Statements of Cash Flows for the Years Ended
    September 30, 1996, 1997 and 1998.......................  F-168
  Notes to Combined Financial Statements....................  F-169

HELICON PARTNERS I, L.P. AND AFFILIATES:
  Report of Independent Public Accountants..................  F-175
  Combined Statement of Operations for the Seven Months
    Ended July 30, 1999.....................................  F-176
  Combined Statement of Changes in Partners' Deficit for the
    Seven Months Ended July 30, 1999........................  F-177
  Combined Statement of Cash Flows for the Seven Months
    Ended July 30, 1999.....................................  F-178
  Notes to Combined Financial Statements....................  F-179
  Independent Auditors' Report..............................  F-184
  Combined Balance Sheets as of December 31, 1997 and
    1998....................................................  F-185
  Combined Statements of Operations for Each of the Years in
    the Three-Year Period Ended December 31, 1998...........  F-186
  Combined Statements of Changes in Partners' Deficit for
    Each of the Years in the Three-Year Period Ended
    December 31, 1998.......................................  F-187
  Combined Statements of Cash Flows for Each of the Years in
    the Three-Year Period Ended December 31, 1998...........  F-188
  Notes to Combined Financial Statements....................  F-189

RIFKIN CABLE INCOME PARTNERS L.P.:
  Report of Independent Accountants.........................  F-201
  Balance Sheet as of September 13, 1999....................  F-202
  Statement of Operations for the period January 1, 1999 to
    September 13, 1999......................................  F-203
  Statement of Equity for the period January 1, 1999 to
    September 13, 1999......................................  F-204
  Statement of Cash Flows for the period January 1, 1999 to
    September 13, 1999......................................  F-205
  Notes to Financial Statements.............................  F-206
  Report of Independent Accountants.........................  F-209
  Balance Sheet at December 31, 1997 and 1998...............  F-210
  Statement of Operations for Each of the Three Years in the
    Period Ended December 31, 1998..........................  F-211
  Statement of Partners' Equity (Deficit) for Each of the
    Three Years in the Period Ended December 31, 1998.......  F-212
  Statement of Cash Flows for Each of the Three Years in the
    Period Ended December 31, 1998..........................  F-213
  Notes to Financial Statements.............................  F-214
</Table>

                                       F-3
   198

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
RIFKIN ACQUISITION PARTNERS, L.L.L.P.:
  Report of Independent Accountants.........................  F-218
  Consolidated Balance Sheet as of September 13, 1999.......  F-219
  Consolidated Statement of Operations for the period
    January 1, 1999 through September 13, 1999..............  F-220
  Consolidated Statement of Partners' Capital for the period
    January 1, 1999 through September 13, 1999..............  F-221
  Consolidated Statement of Cash Flows for the period
    January 1, 1999 through September 13, 1999..............  F-222
  Notes to Consolidated Financial Statements................  F-223
  Report of Independent Accountants.........................  F-231
  Consolidated Balance Sheet at December 31, 1998 and
    1997....................................................  F-232
  Consolidated Statement of Operations for Each of the Three
    Years in the Period Ended December 31, 1998.............  F-233
  Consolidated Statement of Cash Flows for Each of the Three
    Years in the Period Ended December 31, 1998.............  F-234
  Consolidated Statement of Partners' Capital (Deficit) for
    Each of the Three Years in the Period Ended December 31,
    1998....................................................  F-235
  Notes to Consolidated Financial Statements................  F-236

INDIANA CABLE ASSOCIATES, LTD.:
  Report of Independent Accountants.........................  F-249
  Balance Sheet as of September 13, 1999....................  F-250
  Statement of Operations for the period January 1, 1999 to
    September 13, 1999......................................  F-251
  Statement of Equity for the period January 1, 1999 to
    September 13, 1999......................................  F-252
  Statement of Cash Flows for the period January 1, 1999 to
    September 13, 1999......................................  F-253
  Notes to Financial Statements.............................  F-254
  Report of Independent Auditors............................  F-258
  Balance Sheet as of December 31, 1997 and 1998............  F-259
  Statement of Operations for the Years Ended December 31,
    1996, 1997 and 1998.....................................  F-260
  Statement of Partners' Deficit for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-261
  Statement of Cash Flows for the Years Ended December 31,
    1996, 1997 and 1998.....................................  F-262
  Notes to Financial Statements.............................  F-263

R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP:
  Report of Independent Accountants.........................  F-267
  Consolidated Balance Sheet as of September 13, 1999.......  F-268
  Consolidated Statement of Operations for the period
    January 1, 1999 to September 13, 1999...................  F-269
  Consolidated Statement of Equity for the period January 1,
    1999 to September 13, 1999..............................  F-270
  Consolidated Statement of Cash Flows for the period
    January 1, 1999 to September 13, 1999...................  F-271
  Notes to Consolidated Financial Statements................  F-272
  Report of Independent Auditors............................  F-276
  Consolidated Balance Sheet as of December 31, 1997 and
    1998....................................................  F-277
  Consolidated Statement of Operations for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-278
  Consolidated Statement of Partners' Equity (Deficit) for
    the Years Ended December 31, 1996, 1997 and 1998........  F-279
  Consolidated Statement of Cash Flows for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-280
  Notes to Consolidated Financial Statements................  F-281
</Table>

                                       F-4
   199

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
INTERMEDIA CABLE SYSTEMS (COMPRISED OF COMPONENTS OF
  INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS IV,
  L.P.):
  Report of Independent Accountants.........................  F-285
  Combined Balance Sheets as of September 30, 1999 and
    December 31, 1998.......................................  F-286
  Combined Statements of Operations for the Nine Months
    Ended September 30, 1999 and for the Years ended
    December 31, 1998 and 1997..............................  F-287
  Combined Statements of Changes in Equity for the Nine
    Months Ended September 30, 1999 and for the Years ended
    December 31, 1998 and 1997..............................  F-288
  Combined Statements of Cash Flows for the Nine Months
    Ended September 30, 1999 and for the Years ended
    December 31, 1998 and 1997..............................  F-289
  Notes to Combined Financial Statements....................  F-290

SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS:
  Report of Independent Public Accountants..................  F-300
  Statement of Operations and Changes in Net Assets for the
    Period from April 1, 1998, through May 20, 1998.........  F-301
  Statement of Cash Flows for the Period from April 1, 1998,
    through May 20, 1998....................................  F-302
  Notes to Financial Statements.............................  F-303

LONG BEACH ACQUISITION CORP.:
  Report of Independent Public Accountants..................  F-306
  Statement of Operations for the Period from April 1, 1997,
    through May 23, 1997....................................  F-307
  Statement of Stockholder's Equity for the Period from
    April 1, 1997, through May 23, 1997.....................  F-308
  Statement of Cash Flows for the Period from April 1, 1997,
    through May 23, 1997....................................  F-309
  Notes to Financial Statements.............................  F-310

FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.:
  Report of Independent Auditors............................  F-314
  Report of Independent Auditors............................  F-315
  Report of Independent Auditors............................  F-316
  Report of Independent Auditors............................  F-317
  Combined Balance Sheets as of November 11, 1999 and
    December 31, 1998.......................................  F-318
  Combined Statements of Operations for the Period from
    January 1, 1999 to November 11, 1999 and for the Years
    Ended December 31, 1998 and 1997........................  F-319
  Combined Statements of Net Assets for the Period from
    January 1, 1999 to November 11, 1999 and for the Years
    Ended December 31, 1998 and 1997........................  F-320
  Combined Statements of Cash Flows for the Period from
    January 1, 1999 to November 11, 1999 and for the Years
    Ended December 31, 1998 and 1997........................  F-321
  Notes to Combined Financial Statements....................  F-322

FALCON COMMUNICATIONS, L.P.:
  Report of Independent Auditors............................  F-327
  Consolidated Balance Sheets as of December 31, 1998 and
    November 12, 1999.......................................  F-328
  Consolidated Statements of Operations for each of the two
    years in the period ended December 31, 1998 and for the
    Period from January 1, 1999 to November 12, 1999........  F-329
  Consolidated Statements of Partners' Equity (Deficit) for
    the each of the two years in the period ended December
    31, 1998 and for the Period from January 1, 1999 to
    November 12, 1999.......................................  F-330
  Consolidated Statements of Cash Flows for each of the two
    years in the period ended December 31, 1998 and for the
    Period from January 1, 1999 to November 12, 1999........  F-331
  Notes to Consolidated Financial Statements................  F-332
</Table>

                                       F-5
   200

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
TCI FALCON SYSTEMS:
  Independent Auditors' Report..............................  F-351
  Combined Balance Sheets at September 30, 1998 and December
    31, 1997................................................  F-352
  Combined Statements of Operations and Parent's Investment
    for the period from January 1, 1998 through September
    30, 1998 and for the years ended December 31, 1997 and
    1996....................................................  F-353
  Combined Statements of Cash Flows for the period from
    January 1, 1998 through September 30, 1998 and for the
    years ended December 31, 1997 and 1996..................  F-354
  Notes to Combined Financial Statements for the period from
    January 1, 1998 through September 30, 1998 and for the
    years ended December 31, 1997 and 1996..................  F-355

CC V HOLDINGS, LLC AND SUBSIDIARIES:
  Report of Independent Public Accountants..................  F-361
  Consolidated Balance Sheet as of December 31, 1999........  F-362
  Consolidated Statements of Operations for the Period from
    November 15, 1999, through December 31, 1999, and for
    the Period from January 1, 1999, through November 14,
    1999....................................................  F-363
  Consolidated Statement of Changes in Shareholders' Equity
    for the Period from January 1, 1999, through November
    14, 1999................................................  F-364
  Consolidated Statements of Cash Flows for the Period from
    November 15, 1999, through December 31, 1999, and for
    the Period from January 1, 1999, through November 14,
    1999....................................................  F-365
  Notes to Consolidated Financial Statements................  F-366

AVALON CABLE LLC AND SUBSIDIARIES:
  Report of Independent Accountants.........................  F-377
  Consolidated Balance Sheet as of December 31, 1998 and
    1997....................................................  F-378
  Consolidated Statement of Operations for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-379
  Consolidated Statement of Changes in Members' Interest
    from September 4, 1997 (inception) through December 31,
    1998....................................................  F-380
  Consolidated Statement of Cash Flows for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-381
  Notes to Consolidated Financial Statements................  F-382

AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES:
  Report of Independent Accountants.........................  F-394
  Consolidated Balance Sheet as of December 31, 1998 and
    1997....................................................  F-395
  Consolidated Statements of Operations for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-396
  Consolidated Statement of Changes in Shareholders' Equity
    for the period from September 4, 1997 (inception)
    through December 31, 1998...............................  F-397
  Consolidated Statement of Cash Flows for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-398
  Notes to Consolidated Financial Statements................  F-399

CABLE MICHIGAN, INC. AND SUBSIDIARIES:
  Report of Independent Accountants.........................  F-412
  Consolidated Balance Sheets as of December 31, 1997 and
    November 5, 1998........................................  F-413
  Consolidated Statements of Operations for the years ended
    December 31, 1996 and 1997 and for the period from
    January 1, 1998 to November 5, 1998.....................  F-414
  Consolidated Statements of Changes in Shareholders'
    Deficit for the years ended December 31, 1996 and 1997
    and for the period from January 1, 1998 to November 5,
    1998....................................................  F-415
  Consolidated Statements of Cash Flows for the years ended
    December 31, 1996 and 1997 and for the period from
    January 1, 1998 to November 5, 1998.....................  F-416
  Notes to Consolidated Financial Statements................  F-417
</Table>

                                       F-6
   201

<Table>
<Caption>
                                                               PAGE
                                                              -------
                                                           
AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP:
  Report of Independent Accountants.........................  F-430
  Balance Sheet as of May 28, 1998..........................  F-431
  Statement of Operations for the period from January 1,
    1998 through May 28, 1998...............................  F-432
  Statement of Changes in Partners' Equity (Deficit) for the
    period from January 1, 1998 through May 28, 1998........  F-433
  Statement of Cash Flows for the period from January 1,
    1998 through May 28, 1998...............................  F-434
  Notes to Financial Statements.............................  F-435
  Independent Auditors' Report..............................  F-439
  Balance Sheets at December 31, 1996 and 1997..............  F-440
  Statements of Net Earnings for the years ended December
    31, 1995, 1996 and 1997.................................  F-441
  Statements of Changes in Partners' Equity (Deficit) for
    the years ended December 31, 1995, 1996 and 1997........  F-442
  Statements of Cash Flows for the years ended December 31,
    1995, 1996 and 1997.....................................  F-443
  Notes to Financial Statements.............................  F-444

PEGASUS CABLE TELEVISION, INC.:
  Report of Independent Accountants.........................  F-447
  Combined Balance Sheets as of December 31, 1996 and 1997
    and June 30, 1998.......................................  F-448
  Combined Statements of Operations for the years ended
    December 31, 1995, 1996 and 1997 and for the six months
    ended June 30, 1998.....................................  F-449
  Combined Statements of Changes in Stockholder's Deficit
    for the three years ended December 31, 1997 and for the
    six months ended June 30, 1998..........................  F-450
  Combined Statements of Cash Flows for the years ended
    December 31, 1995, 1996 and 1997 and for the six months
    ended June 30, 1998.....................................  F-451
  Notes to Combined Financial Statements....................  F-452

BRESNAN COMMUNICATIONS GROUP LLC:
  Independent Auditors' Report..............................  F-458
  Consolidated Balance Sheets as of December 31, 1998 and
    1999....................................................  F-459
  Consolidated Statements of Operations and Members' Equity
    (Deficit) for the Years Ended December 31, 1997, 1998
    and 1999................................................  F-460
  Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1997, 1998 and 1999........................  F-461
  Notes to Consolidated Financial Statements................  F-462
  Independent Auditors' Report..............................  F-469
  Consolidated Balance Sheets as of December 31, 1999 and
    February 14, 2000.......................................  F-470
  Consolidated Statements of Operations and Members' Equity
    (Deficit) for the Year ended December 31,1999 and for
    the Period from January 1, 2000 to February 14, 2000....  F-471
  Consolidated Statements of Cash Flows for the Year ended
    December 31, 1999 and for the Period from January 1,
    2000 to February 14, 2000...............................  F-472
  Notes to Consolidated Financial Statements................  F-473

CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES:
  Consolidated Balance Sheets as of September 30, 2000 and
    December 31, 1999 (unaudited)...........................  F-480
  Consolidated Statements of Operations for the Three Months
    and Nine Months Ended September 30, 2000 and 1999
    (unaudited).............................................  F-481
  Consolidated Statements of Cash Flows for the Nine Months
    Ended September 30, 2000 and 1999 (unaudited)...........  F-483
  Notes to Consolidated Financial Statements (unaudited)....  F-484
</Table>

                                       F-7
   202

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Holdings, LLC:

We have audited the accompanying consolidated balance sheets of Charter
Communications Holdings, LLC and subsidiaries (collectively, "the Company") as
of December 31, 1999 and 1998, and the related consolidated statements of
operations, changes in member's equity and cash flows for the year ended
December 31, 1999, and for the period from December 24, 1998, through December
31, 1998. The consolidated statements give retroactive effect to the transfer of
certain cable systems from Charter Communications Holding Company, LLC to the
Company on January 1, 2000, which has been accounted for as a reorganization of
entities under common control as described in Note 1. 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 did not audit the financial statements of Charter Communications VI Operating
Company, LLC and subsidiaries, and CC VII -- Falcon Systems, included in the
consolidated financial statements of the Company, as of December 31, 1999, and
for the periods from the dates of acquisition through December 31, 1999, which
statements on a combined basis reflect total assets and total revenues of 31
percent and 6 percent, respectively, of the related consolidated totals of the
Company. Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for those entities, is based solely on the reports of the other auditors.

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

In our opinion, based upon our audit and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Charter Communications Holdings,
LLC and subsidiaries as of December 31, 1999 and 1998, and results of their
operations and their cash flows for the year ended December 31, 1999, and for
the period from December 24, 1998, through December 31, 1998, after giving
retroactive effect to the transfer of certain cable systems described in Note 1,
all in conformity with accounting principles generally accepted in the United
States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  March 2, 2000

                                       F-8
   203

                         REPORT OF INDEPENDENT AUDITORS

Charter Communications VI
Operating Company, LLC

     We have audited the consolidated balance sheet of Charter Communications VI
Operating Company, LLC and subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, member's equity and cash flows for the
period from inception (November 9, 1999) to December 31, 1999 (not presented
separately herein). These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Charter
Communications VI Operating Company, LLC and subsidiaries at December 31, 1999,
and the consolidated results of its operations and its cash flows for the period
from November 9, 1999 to December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
                                                 /s/ ERNST & YOUNG LLP

Denver, Colorado
February 11, 2000

                                       F-9
   204

                         REPORT OF INDEPENDENT AUDITORS

Sole Member
CC VII Holdings, LLC

     We have audited the combined balance sheet of the CC VII -- Falcon Systems
as of December 31, 1999, and the related combined statements of operations and
parent's investment and cash flows for the period from November 13, 1999
(commencement date) to December 31, 1999 (not presented separately herein).
These combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audit.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the CC
VII -- Falcon Systems at December 31, 1999 and the results of its operations and
its cash flows for the period from November 13, 1999 (commencement date) to
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

/s/ ERNST & YOUNG LLP
Los Angeles, California
March 2, 2000

                                      F-10
   205

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                    (DOLLARS IN THOUSANDS, EXCEPT UNIT DATA)

<Table>
<Caption>
                                                                    DECEMBER 31,

- -------------------------
                                                                 1999
1998
                                                              -----------
- ----------
                                                                       
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $   114,096    $
 9,573
  Accounts receivable, net of allowance for doubtful
     accounts of $11,471 and $1,728, respectively...........       93,743
15,108
  Prepaid expenses and other................................       34,513
 2,519
                                                              -----------
- ----------
     Total current assets...................................      242,352
27,200
                                                              -----------
- ----------
INVESTMENT IN CABLE PROPERTIES:
  Property, plant and equipment.............................    3,490,573
716,242
  Franchises................................................   14,985,793
3,590,054
                                                              -----------
- ----------
                                                               18,476,366
4,306,296
                                                              -----------
- ----------
OTHER ASSETS................................................      220,759
 2,031
                                                              -----------
- ----------
                                                              $18,939,477
$4,335,527
                                                              ===========
==========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt......................  $        --    $
10,450
  Accounts payable and accrued expenses.....................      704,734
127,586
  Payables to manager of cable systems -- related parties...        6,713
 4,334
                                                              -----------
- ----------
     Total current liabilities..............................      711,447
142,370
                                                              -----------
- ----------
LONG-TERM DEBT, less current maturities.....................    8,936,455
1,991,756
                                                              -----------
- ----------
LOANS PAYABLE -- RELATED PARTIES............................    1,079,163
    --
                                                              -----------
- ----------
DEFERRED MANAGEMENT FEES -- RELATED PARTIES.................       21,623
15,561
                                                              -----------
- ----------
OTHER LONG-TERM LIABILITIES.................................      142,836
38,461
                                                              -----------
- ----------
MEMBER'S EQUITY
  Member's equity (217,585,246 and 100 units issued and
     outstanding at December 31, 1999 and 1998,
     respectively)..........................................    8,045,737
2,147,379
  Accumulated other comprehensive income....................        2,216
    --
                                                              -----------
- ----------
     Total member's equity..................................    8,047,953
2,147,379
                                                              -----------
- ----------
                                                              $18,939,477
$4,335,527
                                                              ===========
==========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-11
   206

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                               YEAR ENDED
THROUGH
                                                              DECEMBER 31,
DECEMBER 31,
                                                                  1999
 1998
                                                              ------------
- ------------
                                                           

REVENUES....................................................   $1,428,090
$13,713
                                                               ----------
- -------
OPERATING EXPENSES:
  Operating, general and administrative.....................      737,957
 7,134
  Depreciation and amortization.............................      745,315
 8,318
  Option compensation expense...............................       79,979
   845
  Corporate expense charges -- related parties..............       51,428
   473
                                                               ----------
- -------
                                                                1,614,679
16,770
                                                               ----------
- -------
     Loss from operations...................................     (186,589)
(3,057)
                                                               ----------
- -------
OTHER INCOME (EXPENSE):
  Interest expense..........................................     (471,871)
(2,353)
  Interest income...........................................       18,821
   133
  Other, net................................................         (245)
    --
                                                               ----------
- -------
                                                                 (453,295)
(2,220)
     Loss before income tax expense.........................     (639,884)
(5,277)
INCOME TAX EXPENSE..........................................       (1,030)
    --
                                                               ----------
- -------
     Loss before extraordinary item.........................     (640,914)
(5,277)
EXTRAORDINARY ITEM -- Loss from early extinguishment of
  debt......................................................       (7,794)
    --
                                                               ----------
- -------
     Net loss...............................................   $ (648,708)
$(5,277)
                                                               ==========
=======
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-12
   207

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

ACCUMULATED
                                                                         OTHER
       TOTAL
                                                        MEMBER'S
COMPREHENSIVE     MEMBER'S
                                                         EQUITY         INCOME
       EQUITY
                                                       ----------
- -------------    ----------
                                                               
     
BALANCE, December 24, 1998...........................  $2,151,811       $   --
     $2,151,811
  Option compensation expense........................         845           --
            845
  Net loss...........................................      (5,277)          --
         (5,277)
                                                       ----------       ------
     ----------
BALANCE, December 31, 1998...........................   2,147,379           --
      2,147,379
  Capital contributions..............................   6,477,363           --
      6,477,363
  Distributions to Charter Investment and Charter....     (10,276)          --
        (10,276)
  Option compensation expense........................      79,979           --
         79,979
  Net loss...........................................    (648,708)          --
       (648,708)
  Unrealized gain on marketable securities available
     for sale........................................          --        2,216
          2,216
                                                       ----------       ------
     ----------
BALANCE, December 31, 1999...........................  $8,045,737       $2,216
     $8,047,953
                                                       ==========       ======
     ==========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-13
   208

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                               YEAR ENDED
THROUGH
                                                              DECEMBER 31,
DECEMBER 31,
                                                                  1999
 1998
                                                              ------------
- ------------
                                                           

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $   (648,708)
$ (5,277)
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
     Depreciation and amortization..........................       745,315
  8,318
     Option compensation expense............................        79,979
    845
     Noncash interest expense...............................        98,920
     --
     Loss from early extinguishment of debt.................         7,794
     --
  Changes in assets and liabilities, net of effects from
     acquisitions --
     Accounts receivable....................................       (32,366)
 (8,753)
     Prepaid expenses and other.............................        14,256
   (211)
     Accounts payable and accrued expenses..................       175,280
 10,227
     Receivables from and payables to manager of cable
      systems, including deferred management fees...........        21,183
    473
  Other operating activities................................        (1,245)
  2,022
                                                              ------------
- --------
       Net cash provided by operating activities............       460,408
  7,644
                                                              ------------
- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................      (741,508)
(13,672)
  Payments for acquisitions, net of cash acquired...........    (7,629,564)
     --
  Loan to Marcus Cable Holdings.............................    (1,680,142)
     --
  Other investing activities................................       (22,198)
     --
                                                              ------------
- --------
       Net cash used in investing activities................   (10,073,412)
(13,672)
                                                              ------------
- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt, including proceeds from
     Charter Holdings Notes.................................    10,114,188
 14,200
  Repayments of long-term debt..............................    (5,694,375)
     --
  Borrowings from related parties...........................     1,079,163
     --
  Payments for debt issuance costs..........................      (113,481)
     --
  Capital contributions.....................................     4,360,971
     --
  Distributions to Charter Investment and Charter...........       (10,276)
     --
  Other financing activities................................       (18,663)
     --
                                                              ------------
- --------
       Net cash provided by financing activities............     9,717,527
 14,200
                                                              ------------
- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................       104,523
  8,172
CASH AND CASH EQUIVALENTS, beginning of period..............         9,573
  1,401
                                                              ------------
- --------
CASH AND CASH EQUIVALENTS, end of period....................  $    114,096
$  9,573
                                                              ============
========
CASH PAID FOR INTEREST......................................  $    314,606
$  5,538
                                                              ============
========
NONCASH TRANSACTIONS:
  Transfer of operating subsidiaries to the Company.........  $  1,252,370
$     --
  Transfer of equity interests to the Company...............       864,022
     --
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-14
   209

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1. ORGANIZATION AND BASIS OF PRESENTATION:

  General

     Charter Communications Holdings, LLC (Charter Holdings), a Delaware limited
liability company, owns and operates cable systems serving approximately 6.1
million (unaudited) customers, including cable systems acquired, in February
2000 (see Note 17). Charter Holdings offers a full range of traditional cable
television services and has begun to offer digital cable television services,
interactive video programming and high-speed Internet access. Charter Holdings
is a subsidiary of Charter Communications Holding Company, LLC (Charter Holdco),
which is a subsidiary of Charter Communications, Inc. (Charter). In November
1999, Charter completed an initial public offering of the sale of 195.5 million
shares of Class A common stock. Proceeds from the offering were used by Charter
to purchase membership units in Charter Holdco, which used the funds received
from Charter for the acquisition of additional cable television systems.

  Organization and Basis of Presentation

     Charter Holdings was formed in February 1999 as a wholly owned subsidiary
of Charter Investment, Inc. (Charter Investment). Charter Investment, through
its wholly owned subsidiary, Charter Communications Properties Holdings, LLC
(CCPH), commenced operations with the acquisition of a cable system on September
30, 1995.

     Effective December 23, 1998, through a series of transactions, Paul G.
Allen acquired approximately 94% of Charter Investment for an aggregate purchase
price of $2.2 billion, excluding $2.0 billion in debt assumed (the "Paul Allen
Transaction"). In conjunction with the Paul Allen Transaction, Charter
Investment acquired, for fair value from unrelated third parties, all of the
interests it did not already own in CharterComm Holdings, LLC (CharterComm
Holdings) and CCA Group (comprised of CCA Holdings Corp., CCT Holdings Corp. and
Charter Communications Long Beach, Inc.), all cable operating companies, for
$2.0 billion, excluding $1.8 billion in debt assumed. Charter Investment
previously managed and owned minority interests in these companies. These
acquisitions were accounted for using the purchase method of accounting, and
accordingly, results of operations of CharterComm Holdings and CCA Group are
included in the consolidated financial statements from the date of acquisition.
In February 1999, Charter Investment transferred all of its cable operating
subsidiaries to Charter Communications Operating, LLC (Charter Operating), a
wholly owned subsidiary of Charter Holdings. This transfer was accounted for as
a reorganization of entities under common control similar to a pooling of
interests.

     As a result of the change in ownership of CCPH, CharterComm Holdings and
CCA Group, Charter Holdings has applied push-down accounting in the preparation
of its consolidated financial statements. Accordingly, on December 23, 1998,
Charter Holdings increased its member's equity by $2.2 billion to reflect the
amounts paid by Mr. Allen and Charter Investment. The purchase price was
allocated to assets acquired and liabilities assumed based on their relative
fair values, including amounts assigned to franchises of $3.6 billion.

     On April 23, 1998, Mr. Allen and a company controlled by Mr. Allen,
(collectively, the "Mr. Allen Companies") purchased substantially all of the
outstanding partnership interests in Marcus Cable Company, L.L.C. (Marcus Cable)
for $1.4 billion, excluding $1.8 billion in assumed liabilities. The owner of
the remaining partnership interest retained voting control of Marcus Cable. In
February 1999, Marcus Cable Holdings, LLC (Marcus Holdings) was formed and Mr.
Allen's interests in Marcus Cable were transferred to Marcus Holdings on March
15, 1999. On March 31, 1999, Mr. Allen purchased the remaining partnership
interests in Marcus Cable, including voting control. On April 7, 1999, Marcus
Holdings was merged into Charter Holdings and Marcus Cable was transferred to
Charter Holdings. For financial reporting purposes, the merger was accounted for
as an acquisition of Marcus Cable effective March 31, 1999, the date Mr. Allen

                                      F-15
   210
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

obtained voting control of Marcus Cable. Accordingly, the results of operations
of Marcus Cable have been included in the consolidated financial statements from
April 1, 1999. The assets and liabilities of Marcus Cable have been recorded in
the consolidated financial statements using historical carrying values reflected
in the accounts of the Mr. Allen Companies. Total member's equity increased by
$1.3 billion as a result of the Marcus Cable acquisition. Previously, on April
23, 1998, the Mr. Allen Companies recorded the assets acquired and liabilities
assumed of Marcus Cable based on their relative fair values.

     On January 1, 2000, Charter Holdco and Charter Holdings effected a number
of transactions in which cable systems acquired by Charter Holdco in November
1999 were contributed to Charter Holdings (the "Transferred Systems"). As a
result of these transactions, Charter Holdings became the indirect parent of the
CC VI Holdings, LLC ("Fanch"), CC VII Holdings, LLC ("Falcon") and CC V
Holdings, LLC ("Avalon") cable systems. Effective January 1, 2000 the Company
accounted for the contribution of the Transferred Systems to Charter Holdings as
a reorganization of entities under common control in a manner similar to a
pooling of interests. These consolidated financial statements have been restated
to present this reorganization. The accounts of the Transferred Systems are
included in these consolidated financial statements from the date the
Transferred Systems were acquired by Charter Holdco.

     The consolidated financial statements of Charter Holdings include the
accounts of Charter Operating and CCPH, the accounts of CharterComm Holdings and
CCA Group and their subsidiaries since December 23, 1998 (date acquired by
Charter Investment), the accounts of Marcus Cable since March 31, 1999, and the
accounts of the Transferred Systems since November 12, 1999 (the date acquired
by Charter Holdco), and are collectively referred to as the "Company" herein.
All subsidiaries are, directly or indirectly, wholly owned by Charter Holdings.
All material intercompany transactions and balances have been eliminated.

     Pursuant to a membership interests purchase agreement, as amended, Vulcan
Cable III Inc. (Vulcan), a company controlled by Mr. Allen, contributed $500
million in cash in August 1999 to Charter Holdco, contributed an additional
$180.7 million in certain equity interests acquired in connection with Charter
Holdings' acquisition of Rifkin Acquisitions Partners, L.L.L.P. and InterLink
Communications Partners, LLLP (collectively, "Rifkin") in September 1999, and
contributed $644.3 million in cash in September 1999 to Charter Holdco. All
funds and equity interests were contributed by Charter Holdco to Charter
Holdings to finance certain acquisitions. In addition, certain Rifkin sellers
received $133.3 million of the purchase price in the form of preferred equity in
Charter Holdco. Also, certain Falcon sellers received $550.0 million of the
purchase price in the form of membership units of Charter Holdco.

2. 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 that approximates market value.

  Property, Plant and Equipment

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installations. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for repairs and maintenance are charged to
expense as incurred, while equipment replacement and betterments are
capitalized.

                                      F-16
   211
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:

<Table>
                                                           
Cable distribution systems..................................  3-15 years
Buildings and leasehold improvements........................  5-15 years
Vehicles and equipment......................................   3-5 years
</Table>

  Franchises

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable systems represent management's estimate
of fair value and are generally amortized using the straight-line method over a
period of 15 years. The period of 15 years is management's best estimate of the
useful lives of the franchises and assumes substantially all of those franchises
that expire during the period will be renewed by the Company. Accumulated
amortization related to franchises was $650.5 million and $5.3 million, as of
December 31, 1999 and 1998, respectively. Amortization expense related to
franchises for the year ended December 31, 1999, and for the period from
December 24, 1998, through December 31, 1998, was $520.0 million and $5.3
million, respectively.

  Deferred Financing Costs

     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, 1999, other assets include $120.7 million of deferred financing
costs, net of accumulated amortization of $10.3 million.

  Impairment of Assets

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted net cash flows
related to the asset over its remaining life, the carrying value of such asset
is reduced to its estimated fair value.

  Revenues

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable system. As of December 31, 1999 and 1998, no installation revenue has been
deferred, as direct selling costs have exceeded installation revenue.

     Local governmental authorities impose franchise fees on the Company ranging
up to a federally mandated maximum of 5.0% of gross revenues. 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 and expenses.

  Channel Launch Payments

     The Company receives upfront payments from certain programmers to launch
and promote new cable television channels. A portion of these payments
represents reimbursement of advertising costs paid by the Company to promote the
new channels. These reimbursements have been immaterial. The remaining portion

                                      F-17
   212
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

is being amortized as an offset to programming expense over the respective terms
of the program agreements, which range from one to 20 years. For the year ended
December 31, 1999, and for the period from December 24, 1998, through December
31, 1998, the Company amortized and recorded as a reduction of programming costs
$3.4 million and $12, respectively. As of December 31, 1999, the unamortized
portion of payments received totaled $13.4 million and is included in other
long-term liabilities.

  Direct Response Advertising

     The Company expenses the production costs of advertising as incurred,
except for direct response advertising, which is deferred and amortized over its
expected period of future benefits. Direct response advertising consists
primarily of direct mailings and radio, newspaper and cross-channel television
advertisements that include a phone number for use in ordering the Company's
products and services. The deferred advertising costs are amortized to
advertising expense over the periods during which the future benefits are
expected to be received. These periods range from two to four years depending on
the type of service the customer subscribes to and represents the period the
customer is expected to remain connected to the cable system. As of December 31,
1999, $700 of deferred advertising costs is included in other assets.
Advertising expense was $30.0 million for the year ended December 31, 1999,
including amortization of deferred advertising costs totaling $87.

  Investments and Other Comprehensive Income

     Investments in equity securities are accounted for in accordance with SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities. The
Company owns common stock of WorldGate Communications, Inc. (WorldGate) that is
classified as "available for sale" and reported at market value with unrealized
gains and losses recorded as accumulated other comprehensive income. Based on
quoted market prices, the investment was valued at $3.2 million as of December
31, 1999 and is included in other assets. Comprehensive loss for the year ended
December 31, 1999, and for the period from December 24, 1998, through December
31, 1998, is $646.5 million and $5.3 million, respectively.

  Interest Rate Hedge Agreements

     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain debt agreements. Interest rate swaps,
caps and collars are accounted for as hedges of debt obligations, and
accordingly, the net settlement amounts are recorded as adjustments to interest
expense in the period incurred. Premiums paid for interest rate caps are
deferred, included in other assets, and are amortized over the original term of
the interest rate agreement as an adjustment to interest expense.

     The Company's interest rate swap agreements require the Company to pay a
fixed rate and receive a floating rate thereby creating fixed rate debt.
Interest rate caps and collars are entered into by the Company to reduce the
impact of rising interest rates on floating rate debt.

     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designated for hedging purposes
and are not held or issued for speculative purposes.

  Income Taxes

     Certain indirect subsidiaries of Charter Holdings are Corporations and file
separate federal and state income tax returns. Results of operations from these
subsidiaries are not material to the consolidated results of operations of the
Company. Income tax expense for the year ended December 31, 1999, represents
taxes assessed by certain state jurisdictions. Deferred income tax assets and
liabilities are not material.

                                      F-18
   213
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Segments

     In 1998, the Company adopted SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information. Segments have been identified based upon
management responsibility. The individual segments have been aggregated into one
segment, cable services.

  Use of Estimates

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

3. ACQUISITIONS:

     During 1999, the Company acquired cable systems in eight separate
transactions for an aggregate purchase price of $3.6 billion, net of cash
acquired, excluding debt assumed of $354.0 million and equity issued of $314.0
million. In connection with the Rifkin acquisition, Charter Holdco issued equity
interests totaling $133.3 million to certain sellers. In addition, Vulcan
purchased $180.7 million of equity interests Rifkin and then contributed the
equity interests to Charter Holdings. The purchase prices were allocated to
assets acquired and liabilities assumed based on their relative fair values,
including amounts assigned to franchises of $3.9 billion. The allocation of the
purchase prices for these acquisitions are based, in part, on preliminary
information, which is subject to adjustment upon obtaining complete valuation
information. Management believes that finalization of the purchase prices and
allocations will not have a material impact on the consolidated financial
position or results of operations of the Company.

     During 1999, Charter Holdco acquired the cable systems of Fanch, Falcon and
Avalon and on January 1, 2000, Charter Holdco transferred its equity these cable
systems to Charter Holdings (see Note 1). Charter Holdco acquired these cable
systems for an aggregate purchase price $4.0 billion, net of cash acquired,
excluding debt assumed of $2.2 billion and equity issued by Charter Holdco of
$550 million. The purchase prices were allocated to assets acquired and
liabilities assumed based on their relative fair values, including amounts
assigned to franchises of $5.8 billion.

     The above acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the dates of acquisition,
including the Transferred Systems.

     Unaudited pro forma operating results as though the acquisitions discussed
above, including the Paul Allen Transaction, the acquisition of Marcus Holdings,
the March 1999 refinancing discussed herein, had occurred on January 1, 1998,
with adjustments to give effect to amortization of franchises, interest expense
and certain other adjustments are as follows:

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER
31,

- --------------------------
                                                               1999
1998
                                                            -----------
- -----------
                                                                   (UNAUDITED)
                                                                     
Revenues..................................................  $ 2,624,394    $
2,412,252
Loss from operations......................................     (355,030)
(333,595)
Net Loss..................................................   (1,181,635)
(1,165,806)
</Table>

     The unaudited pro forma financial information has been presented for
comparative purposes and does not purport to be indicative of the results of
operations had these transactions been completed as of the assumed date or which
may be obtained in the future.

                                      F-19
   214
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Activity in the allowance for doubtful accounts is summarized as follows:

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,
                                                             FOR THE YEAR
1998,
                                                                ENDED
THROUGH
                                                             DECEMBER 31,
DECEMBER 31,
                                                                 1999
1998
                                                             ------------
- ------------
                                                                       
Balance, beginning of period...............................    $  1,728
$1,702
Acquisitions of cable systems..............................       5,860
   --
Charged to expense.........................................      20,872
   26
Uncollected balances written off, net of recoveries........     (16,989)
   --
                                                               --------
- ------
Balance, end of period.....................................    $ 11,471
$1,728
                                                               ========
======
</Table>

5. PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consists of the following at December 31:

<Table>
<Caption>
                                                                 1999
1998
                                                              ----------
- --------
                                                                      
Cable distribution systems..................................  $3,523,217
$661,749
Land, buildings and leasehold improvements..................     108,214
26,670
Vehicles and equipment......................................     176,221
30,590
                                                              ----------
- --------
                                                               3,807,652
719,009
Less -- Accumulated depreciation............................    (317,079)
(2,767)
                                                              ----------
- --------
                                                              $3,490,573
$716,242
                                                              ==========
========
</Table>

     For the year ended December 31, 1999, and for the period from December 24,
1998, through December 31, 1998, depreciation expense was $225.0 million and
$2.8 million, respectively.

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

     Accounts payable and accrued expenses consist of the following at December
31:

<Table>
<Caption>
                                                                1999        1998
                                                              --------
- --------
                                                                    
Accounts payable............................................  $112,233    $
7,439
Liability for pending transfer of cable system..............    88,200
- --
Accrued interest............................................    99,946
30,809
Capital expenditures........................................    66,713
15,560
Programming costs...........................................    72,245
11,856
Accrued general and administrative..........................    39,648
6,688
Franchise fees..............................................    46,524
12,534
Accrued income taxes........................................     4,188
15,205
Other accrued liabilities...................................   175,037
27,495
                                                              --------
- --------
                                                              $704,734
$127,586
                                                              ========
========
</Table>

     The liability for pending transfer of cable system represents the fair
value of a cable system to be transferred upon obtaining necessary regulatory
approvals in connection with the transaction with InterMedia

                                      F-20
   215
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Capital Partners IV L. P., InterMedia Partners and their affiliates. Such
approvals were subsequently obtained and the system assets were transferred
subsequent to December 31, 1999.

7. LONG-TERM DEBT:

     Long-term debt consists of the following at December 31:

<Table>
<Caption>
                                                                 1999
1998
                                                              ----------
- ----------
                                                                      
Charter Holdings:
  14.000% Senior Secured Discount Debentures................  $       --    $
109,152
  11.250% Senior Notes......................................          --
125,000
  8.250% Senior Notes.......................................     600,000
   --
  8.625% Senior Notes.......................................   1,500,000
   --
  9.920% Senior Discount Notes..............................   1,475,000
   --
Renaissance:
  10.000% Senior Discount Notes.............................     114,413
   --
Rifkin:
  11.125% Senior Subordinated Notes.........................         900
   --
Avalon:
  9.375% Senior Subordinated Notes..........................     150,000
   --
  11.875% Senior Discount Notes.............................     196,000
   --
  7.000% Note payable, due 2003.............................         500
   --
CC VII Holdings, LLC (Falcon):
  8.375% Senior Debentures..................................     375,000
   --
  9.285% Senior Discount Debentures.........................     435,250
   --
Credit Facilities:
  Credit Agreements (including CCPH, CCA Group and
     CharterComm Holdings)..................................          --
1,726,500
  Charter Operating.........................................   2,906,000
   --
  CC Michigan, LLC and CC New England, LLC (Avalon).........     170,000
   --
  CC VI Operating Company, LLC (Fanch)......................     850,000
   --
  Falcon Cable Communications, LLC..........................     865,500
   --
                                                              ----------
- ----------
                                                               9,638,563
1,960,652
  Current maturities........................................          --
(10,450)
  Unamortized net (discount) premium........................    (702,108)
41,554
                                                              ----------
- ----------
                                                              $8,936,455
$1,991,756
                                                              ==========
==========
</Table>

     In March 1999, the Company extinguished substantially all existing
long-term debt, excluding borrowings of the Company under its credit agreements,
and refinanced substantially all existing credit agreements at various
subsidiaries with a new credit agreement entered into by Charter Operating (the
"Charter Operating Credit Facilities"). The excess of the amount paid over the
carrying value, net of deferred financing costs, of the Company's long-term debt
of $7.8 million was recovered as an extraordinary item-loss from early
extinguishment of debt in the accompanying consolidated statements of
operations.

  Charter Holdings Notes

     In March 1999, Charter Holdings and Charter Communications Holdings Capital
Corporation, a wholly owned subsidiary of Charter Holdings, (collectively, the
"Issuers") issued $600.0 million 8.250% Senior

                                      F-21
   216
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Notes due 2007 (the "8.250% Senior Notes") for net proceeds of $598.4 million,
$1.5 billion 8.625% Senior Notes due 2009 (the "8.625% Senior Notes") for net
proceeds of $1,495.4 million, and $1,475.0 million 9.920% Senior Discount Notes
due 2011 (the "9.920% Senior Discount Notes") for net proceeds of $905.5
million, (collectively with the 8.250% Senior Notes and the 8.625% Senior Notes,
referred to as the "Charter Holdings Notes").

     The 8.250% Senior Notes are not redeemable prior to maturity. Interest is
payable semi-annually in arrears on April 1 and October 1, beginning October 1,
1999 until maturity.

     The 8.625% Senior Notes are redeemable at the option of the Issuers at
amounts decreasing from 104.313% to 100% of par value beginning on April 1,
2004, plus accrued and unpaid interest, to the date of redemption. At any time
prior to April 1, 2002, the Company may redeem up to 35% of the aggregate
principal amount of the 8.625% Senior Notes at a redemption price of 108.625% of
the principal amount under certain conditions. Interest is payable semi-annually
in arrears on April 1 and October 1, beginning October 1, 1999, until maturity.

     The 9.920% Senior Discount Notes are redeemable at the option of the
Issuers at amounts decreasing from 104.960% to 100% of accreted value beginning
April 1, 2004. At any time prior to April 1, 2002, the Issuers may redeem up to
35% of the aggregate principal amount of the 9.920% Senior Discount Notes at a
redemption price of 109.920% of the accreted value under certain conditions.
Thereafter, cash interest is payable semi-annually in arrears on April 1 and
October 1 beginning April 1, 2004, until maturity. The discount on the 9.920%
Senior Discount Notes is being accreted using the effective interest method. The
unamortized discount was $497.2 million at December 31, 1999.

     The Charter Holdings Notes rank equally with current and future unsecured
and unsubordinated indebtedness (including accounts payables of the Company).
The Issuers are required to make an offer to repurchase all of the Charter
Holdings Notes, at a price equal to 101% of the aggregate principal or 101% of
the accreted value, together with accrued and unpaid interest, upon a change of
control of the Company.

  Renaissance Notes

     In connection with the acquisition of Renaissance Media Group LLC
(Renaissance) during the second quarter of 1999, the Company assumed $163.2
million principal amount at maturity of senior discount notes due April 2008
(the "Renaissance Notes"). As a result of the change in control of Renaissance,
the Company was required to make an offer to repurchase the Renaissance Notes at
101% of their accreted value. In May 1999, the Company made an offer to
repurchase the Renaissance Notes pursuant to this requirement, and the holders
of the Renaissance Notes tendered an amount representing 30% of the total
outstanding principal amount at maturity for repurchase. These notes were
repurchased using a portion of the proceeds from the Charter Holdings Notes.

     As of December 31, 1999, $114.4 million aggregate principal amount at
maturity of Renaissance Notes with an accreted value of $83.0 million remain
outstanding. Interest on the Renaissance Notes shall be paid semi-annually at a
rate of 10% per annum beginning on October 15, 2003.

     The Renaissance Notes are redeemable at the option of the Company, in whole
or in part, at any time on or after April 15, 2003, initially at 105% of their
principal amount at maturity, plus accrued and unpaid interest, declining to
100% of the principal amount at maturity, plus accrued and unpaid interest, on
or after April 15, 2006. In addition, at any time prior to April 15, 2001, the
Company may redeem up to 35% of the original principal amount at maturity with
the proceeds of one or more sales of membership units at 110% of their accreted
value, plus accrued and unpaid interest on the redemption date, provided that
after any such redemption, at least $106 million aggregate principal amount at
maturity remains outstanding.

                                      F-22
   217
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Rifkin Notes

     The Company acquired Rifkin Acquisition Partners L.L.L.P. and InterLink
Communications, Partners, LLLP (collectively, "Rifkin") in September 1999 and
assumed Rifkin's 11.125% senior subordinated notes due 2006 (the "Rifkin Notes")
together with a $3.0 million promissory note payable to Monroe Rifkin. Interest
on the Rifkin Notes is payable semi-annually on January 15 and July 15 of each
year. In September 1999, the Company commenced an offer to repurchase any and
all of the outstanding Rifkin Notes, for cash at a premium over the principal
amounts. In conjunction with this tender offer, the Company sought and obtained
the consent of a majority in principal amount of the note holders of the
outstanding Rifkin Notes to proposed amendments to the indenture governing the
Rifkin Notes, which eliminated substantially all of the restrictive covenants.
In October 1999, the Company repurchased a portion of the Rifkin Notes with a
total outstanding principal amount of $124.1 million for a total of $140.6
million, including a consent fee to the holders who delivered timely consents
amending the indenture, and repurchased the promissory note issued to Monroe
Rifkin for $3.4 million. These notes were paid using borrowings from the Charter
Operating Credit Facilities. At December 31, 1999, $900 aggregate principal of
Rifkin Notes remain outstanding.

  Avalon Notes

     The Company acquired CC V Holdings, LLC (Avalon) (formerly known as Avalon
Cable LLC) in November 1999 and assumed Avalon's 11.875% Senior Discount Notes
Due 2008 (the "Avalon 11.875% Notes") and 9.375% Subordinated Notes Due 2008
(the "Avalon 9.375% Notes"). As of December 31, 1999, $196.0 million aggregate
principal amount of the Avalon 11.875% Notes with an accreted value of $124.8
million and $150.0 million principal amount of the Avalon 9.375% Notes were
outstanding. After December 1, 2003, cash interest on the Avalon 11.875% Notes
will be payable semi-annually on June 1 and December 1 of each year, commencing
June 1, 2004.

     On December 3, 1999, the Company commenced a change of control offer with
respect to the Avalon 9.375% Notes and a change of control offer with respect to
the Avalon 11.875% Notes at purchase prices of 101% of principal amount or
accreted value, as applicable. In January 2000, the Company completed the
repurchase of the Avalon 9.375% Notes with a total outstanding principal amount
of $134.0 million for a total of $137.4 million. In addition to the change of
control repurchase, the Company repurchased the remaining outstanding principal
amount of $16.0 million in the open market for $16.3 million. Also in January
2000, the Company repurchased a portion of the Avalon 11.875% Notes with a total
outstanding principal amount of $16.3 million for a total of $10.5 million. The
repurchase of the Avalon 9.375% Notes and the Avalon 11.875% Notes was funded by
a portion of the cash proceeds from the issuance of additional notes by Charter
Holdings in January 2000 (the "January 2000 Charter Holdings Notes"). Avalon
11.875% Notes with a total principal amount at maturity of $179.8 million and an
accreted value of $116.4 million remain outstanding after the repurchases.

  Falcon Debentures

     The Company acquired CC VII Holdings, LLC (Falcon) (formerly known as
Falcon Communications, L.P.) in November 1999 and assumed Falcon's 8.375% Senior
Debentures Due 2010 (the "Falcon 8.375% Debentures") and 9.285% Senior Discount
Debentures Due 2010 (the "Falcon 9.285% Debentures", collectively, with the
Falcon 8.375% Debentures, the "Falcon Debentures"). As of December 31, 1999,
$375.0 million aggregate principal amount of the Falcon 8.375% Debentures and
$435.3 million aggregate principal amount of the Falcon 9.285% Debentures, with
an accreted value of $323.0 million were outstanding.

     On December 10, 1999, the Company commenced change of control offers and
offered to repurchase the Falcon Debentures at purchase prices of 101% of
principal amount, plus unpaid and accrued interest, or accreted value, as
applicable. In February 2000, the Company completed the repurchase of the Falcon
8.375%
                                      F-23
   218
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Debentures with a total outstanding principal amount of $317.4 million for a
total of $328.6 million. In addition to the change of control repurchase, the
Company repurchased the Falcon 8.375% Debentures with a total outstanding
principal amount of $57.6 million in the open market for $59.4 million. Also, in
February 2000, the Company repurchased the Falcon 9.285% Debentures with an
aggregate principal amount of $230.0 million for a total of $173.8 million. In
addition to the change of control repurchase, the Company repurchased the Falcon
9.285% Debentures with an aggregate principal amount of $205.3 million in the
open market for $154.3 million. The repurchase of all the Falcon Debentures was
funded by a portion of the proceeds from the January 2000 Charter Holdings
Notes.

  Helicon Notes

     The Company acquired Helicon I, L.P. and affiliates (Helicon) in July 1999
and assumed Helicon's 11% Senior Secured Notes due 2003 (the "Helicon Notes").
On November 1, 1999, the Company redeemed all of the Helicon Notes at a purchase
price equal to 103% of their principal amount, plus accrued interest, for $124.8
million using borrowings from the Charter Operating Credit Facilities.

  Charter Operating Credit Facilities

     The Charter Operating Credit Facilities provide for two term facilities,
one with a principal amount of $1.0 billion that matures September 2007 (Term
A), and the other with the principal amount of $1.85 billion that matures March
2008 (Term B). The Charter Operating Credit Facilities also provide for a $1.25
billion revolving credit facility with a maturity date of September 2007 and at
the options of the lenders, supplemental credit facilities, in the amount of
$500.0 million available until March 18, 2002. Amounts under the Charter
Operating Credit Facilities bear interest at the Base Rate or the Eurodollar
rate, as defined, plus a margin of up to 2.75% (8.22% to 8.97% as of December
31, 1999). A quarterly commitment fee of between 0.25% and 0.375% per annum is
payable on the unborrowed balance of Term A and the revolving credit facility.
As of December 31, 1999, the unused availability was $1.2 billion. In March
2000, the credit agreement was amended to increase the amount of the
supplemental credit facility to $1.0 billion. In connection with this amendment,
$600.0 million of the supplemental credit facility (the "Incremental Term Loan")
was drawn down. The Incremental Term Loan maturity date is September 18, 2008.

  Avalon Credit Facilities

     In connection with the Avalon acquisition, the Company entered into a new
credit agreement (the "Avalon Credit Facilities"). The Avalon Credit Facilities
have maximum borrowings of $300.0 million, consisting of a revolving facility in
the amount of $175.0 million that matures May 15, 2008, and a Term B loan in the
amount of $125.0 million that matures on November 15, 2008. The Avalon Credit
Facilities also provide for, at the options of the lenders, supplemental credit
facilities in the amounts of $75 million available until December 31, 2003. All
amounts mature in June 2008. Amounts under the Avalon Credit Facilities bear
interest at the Base Rate or the Eurodollar rate, as defined, plus a margin up
to 2.75% (7.995% to 8.870% as of December 31, 1999). A quarterly commitment fee
of between 0.250% and 0.375% per annum is payable on the unborrowed balance. The
Company borrowed $170.0 million under the Avalon Credit Facilities to fund a
portion of the Avalon purchase price. As of December 31, 1999, unused
availability was $ 130.0 million.

  Fanch Credit Facilities

     In connection with the acquisition of cable systems of Fanch Cablevision
L.P. and affiliates (Fanch), the Company entered into a new credit agreement
(the "Fanch Credit Facilities"). The Fanch Credit Facilities provide for two
term facilities, one with a principal amount of $450.0 million that matures May
2008 (Term A), and the other with the principal amount of $400.0 million that
matures November 2008 (Term B). The Fanch Credit Facilities also provide for a
$350.0 million revolving credit facility with a maturity date of

                                      F-24
   219
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

May 2008 and at the options of the lenders, supplemental credit facilities, in
the amount of $300.0 million available until December 31, 2004. Amounts under
the Fanch Credit Facilities bear interest at the Base Rate or the Eurodollar
rate, as defined, plus a margin of up to 2.75% (8.12% to 8.87% as of December
31, 1999). A quarterly commitment fee of between 0.250% and 0.375% per annum is
payable on the unborrowed balance. The Company used $850.0 million of the credit
facilities to fund a portion of the Fanch purchase price. As of December 31,
1999, unused availability was $ 350.0 million.

  Falcon Credit Facilities

     In connection with the Falcon acquisition, the existing Falcon credit
agreement (the "Falcon Credit Facilities") was amended to provide for two term
facilities, one with a principal amount of $200.0 million that matures June 2007
(Term B), and the other with the principal amount of $300.0 million that matures
December 2007 (Term C). The Falcon Credit Facilities also provide for a $646.0
million revolving credit facility with a maturity date of December 2006 and at
the options of the lenders, supplemental credit facilities in the amounts of
$700.0 million with a maturity date of December 2007. At December 31, 1999,
$110.0 million was outstanding under the supplemental credit facilities. Amounts
under the Falcon Credit Facilities bear interest at the Base Rate or the
Eurodollar rate, as defined, plus a margin of up to 2.5% (7.57% to 8.73% as of
December 31, 1999). A quarterly commitment fee of between 0.25% and 0.375% per
annum is payable on the unborrowed balance. As of December 31, 1999, unused
availability was $390.5 million. However, debt covenants limit the amount that
can be borrowed to $342.0 million at December 31, 1999.

     The indentures governing the debt agreements require issuers of the debt
and/or its subsidiaries to comply with various financial and other covenants,
including the maintenance of certain operating and financial ratios. These debt
instruments also contain substantial limitations on, or prohibitions of
distributions, additional indebtedness, liens, asset sales and certain other
items. As a result of limitations and prohibitions of distributions,
substantially all of the net assets of the consolidated subsidiaries are
restricted for distribution to Charter Holdings, Charter Holdco and Charter.

     Based upon outstanding indebtedness at December 31, 1999, 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, aggregate future principal payments on the total borrowings
under all debt agreements at December 31, 1999, are as follows:

<Table>
<Caption>
YEAR                                                              AMOUNT
- ----                                                            ----------
                                                             
2000........................................................    $       --
2001........................................................         5,000
2002........................................................        93,875
2003........................................................       284,229
2004........................................................       261,423
Thereafter..................................................     8,994,036
                                                                ----------
                                                                $9,638,563
                                                                ==========
</Table>

                                      F-25
   220
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

     A summary of debt and the related interest rate hedge agreements at
December 31, 1999, is as follows:

<Table>
<Caption>
                                                     CARRYING     NOTIONAL
FAIR
DEBT                                                  VALUE        AMOUNT
VALUE
- ----                                                ----------    --------
- ----------
                                                            

Charter Holdings:
  8.250% Senior Notes.............................  $  598,557       $--      $
558,000
  8.625% Senior Notes.............................   1,495,787       --
1,395,000
  9.920% Senior Discount Notes....................     977,807       --
881,313
Renaissance:
  10.000% Senior Discount Notes...................      86,507       --
 79,517
Rifkin:
  11.125% Senior Subordinated Notes...............         954       --
    990
Avalon:
  9.375% Senior Subordinated Notes................     151,500       --
151,500
  11.875% Senior Discount Notes...................     129,212       --
129,212
  7.000% Note payable, due 2003...................         500       --
    500
CC VII Holdings, LLC (Falcon):
  8.375% Senior Debentures........................     378,750       --
378,750
  9.285% Senior Discount Debentures...............     325,381       --
325,381
Credit Facilities:
  Charter Operating...............................   2,906,000       --
2,906,000
  CC Michigan LLC and CC New England LLC
     (Avalon).....................................     170,000       --
170,000
  CC VI Operating, LLC (Fanch)....................     850,000       --
850,000
  Falcon Cable Communications, LLC................     865,500       --
865,500
  Loans payable -- related parties................   1,079,163
1,079,163
</Table>

<Table>
<Caption>
                                                     CARRYING     NOTIONAL
FAIR
INTEREST RATE HEDGE AGREEMENTS                        VALUE        AMOUNT
VALUE
- ------------------------------                       --------    ----------
- --------
                                                           

Swaps..............................................  $(6,827)    $4,542,713
$(47,220)
Caps...............................................       --         15,000
    16
Collars............................................    1,361        240,000
  (199)
</Table>

     A summary of debt and the related interest rate hedge agreements at
December 31, 1998, is as follows:

<Table>
<Caption>
                                                  CARRYING      NOTIONAL
FAIR
                                                   VALUE         AMOUNT
VALUE
                                                 ----------    ----------
- ----------
                                                                    
DEBT
Credit Agreements (including CCPH, CCA
  Group and CharterComm Holdings)..............  $1,726,500    $       --
$1,726,500
14.000% Senior Secured Discount Debentures.....     138,102            --
138,102
11.250% Senior Notes...........................     137,604            --
137,604
INTEREST RATE HEDGE AGREEMENTS
Swaps..........................................  $   23,216    $1,105,000    $
23,216
Caps...........................................          --        15,000
    --
Collars........................................       4,174       310,000
 4,174
</Table>

                                      F-26
   221
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As the long-term debt under the credit agreements bears interest at current
market rates, their carrying amount approximates market value at December 31,
1999 and 1998. The fair values of the notes and the debentures are based on
quoted market prices.

     The weighted average interest pay rate for the Company's interest rate swap
agreements was 8.06% and 7.66% at December 31, 1999 and 1998, respectively. The
weighted average interest rate for the Company's interest rate cap agreements
was 9.0% and 8.55% at December 31, 1999 and 1998, respectively. The weighted
average interest rate for the Company's interest rate collar agreements were
9.13% and 7.74% for the cap and floor components, respectively, at December 31,
1999, and 8.61% and 7.31%, respectively, at December 31, 1998.

     The notional amounts of interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of interest rate hedge agreements. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.

     The fair value of interest rate hedge agreements generally reflects the
estimated amounts that the Company would (receive) or pay (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Company's interest rate hedge agreements.

     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. In addition, some
of the interest rate hedge 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 position or results of operations.

9. REVENUES:

     Revenues consist of the following:

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                              YEAR ENDED
THROUGH
                                                             DECEMBER 31,
DECEMBER 31,
                                                                 1999
1998
                                                             ------------
- ------------
                                                                       
Basic......................................................   $1,002,954       $
9,347
Premium....................................................      124,788
1,415
Pay-per-view...............................................       27,537
  260
Digital video..............................................        8,299
   10
Advertising sales..........................................       71,997
  493
Cable modem................................................       10,107
   55
Other......................................................      182,408
2,133
                                                              ----------
- -------
                                                              $1,428,090
$13,713
                                                              ==========
=======
</Table>

                                      F-27
   222
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES:

     Operating, general and administrative expenses consist of the following:

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                              YEAR ENDED
THROUGH
                                                             DECEMBER 31,
DECEMBER 31,
                                                                 1999
1998
                                                             ------------
- ------------
                                                                       
Programming................................................    $330,754
$3,137
General and administrative.................................     237,480
2,377
Service....................................................      99,486
  847
Advertising................................................      31,281
  344
Marketing..................................................      23,447
  225
Other......................................................      15,509
  204
                                                               --------
- ------
                                                               $737,957
$7,134
                                                               ========
======
</Table>

11. RELATED PARTY TRANSACTIONS:

     Charter Investment and Charter provide management services to the Company
including centralized customer 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.
Certain costs for services are billed and charged directly to the Company's
operating subsidiaries and are included in operating costs. These billings are
allocated based on the number of basic customers. Such costs totaled $16.5
million and $128 for the year ended December 31, 1999, and for the period from
December 24, 1998, through December 31, 1998, respectively. All other costs
incurred by Charter Investment and Charter on behalf of the Company are recorded
as expenses in the accompanying consolidated financial statements and are
included in corporate expense charges -- related parties. Management believes
that costs incurred by Charter Investment and Charter on the Company's behalf
and included in the accompanying financial statements are not materially
different than costs the Company would have incurred as a stand-alone entity.

     The Company pays certain costs on behalf of Charter Investment and Charter.
These costs are reimbursed by Charter Investment and Charter and are recorded as
receivables from manager of cable systems-related parties in the accompanying
consolidated financial statements.

     Charter Investment utilizes a combination of excess insurance coverage and
self-insurance programs for its medical, dental and workers' compensation
claims. Charges are made to the Company as determined by independent actuaries
at the present value of the actuarially computed present and future liabilities
for such benefits. Medical coverage provides for $1.0 million aggregate stop
loss protection and a loss limitation of $100 per person per year. Workers'
compensation coverage provides for $1.0 million aggregate stop loss protection
and a loss limitation of $250 per person per year.

     The Company is charged a management fee as stipulated in the management
agreements between Charter Investment, Charter and the Company. As of December
31, 1999 and 1998, management fees currently payable of $9.2 million and $473,
respectively, are included in payables to manager of cable television
systems-related parties. To the extent management fees charged to the Company
are greater (less) than the corporate expenses incurred by Charter Investment
and Charter, the Company will record distributions to (capital contributions
from) Charter Investment and Charter. For the year ended December 31, 1999, the
Company recorded distributions of $10.3 million. For the period from December
24, 1998, through December 31, 1998, the management fee charged to the Company
approximated the corporate expenses incurred by Charter Investment and Charter
on behalf of the Company. The Charter Operating

                                      F-28
   223
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Credit Facilities and notes outstanding prohibit payments of management fees in
excess of 3.5% of revenues until repayment of the outstanding indebtedness. Any
amount in excess of 3.5% of revenues owed to Charter Investment or Charter based
on the management agreement is recorded as deferred management fees -- related
parties.

     Charter, Mr. Allen and certain affiliates of Mr. Allen own equity interests
or warrants to purchase equity interests in various entities that provide
services or programming to the Company, including High Speed Access Corp. (High
Speed Access), WorldGate, Wink Communications, Inc. (Wink), ZDTV, LLC (ZDTV),
USA Networks, Inc. (USA Networks) and Oxygen Media Inc. (Oxygen Media). In
addition, certain officers of the Company or directors of Charter also serve as
directors of High Speed Access and USA Networks. The Company and its affiliates
do not hold controlling interests in any of these companies.

     Certain of the Company's cable customers receive cable modem-based Internet
access through High Speed Access and TV-based Internet access through WorldGate.
For the year ended December 31, 1999, and for the period from December 24, 1998,
through December 31, 1998, revenues attributable to these services were less
than 1% of total revenues.

     The Company receives or will receive programming and certain interactive
features embedded into the programming for broadcast via its cable systems from
Wink, ZDTV, USA Networks and Oxygen Media. The Company pays a fee for the
programming service generally based on the number of subscribers receiving the
service. Such fees for the year ended December 31, 1999, and for the period from
December 24, 1998, through December 31, 1998, were approximately 1% of total
operating costs. In addition, the Company receives commissions from USA Networks
for home shopping sales generated by its customers. Such revenues for the year
ended December 31, 1999, and for the period from December 24, 1998, through
December 31, 1998, were less than 1% of total revenues.

     In the second quarter of 1999, Charter Holdings loaned $50 million to
Charter Holdco. The promissory note bears interest at 7.5% compounded annually.
For the year ended December 31, 1999, Charter Holdings recognized $1.2 million
of interest income pertaining to this promissory note. This note was repaid in
November 1999.

     In connection with the issuance of the Charter Holdings Notes in March
1999, the Company extinguished substantially all existing long-term debt
including debt at Marcus Cable. Prior to the merger with Marcus Cable in March
1999, the Company loaned Marcus Cable $1.7 billion. In April 1999, the loan was
repaid.

     During November 1999, the Company received $1.1 billion from Charter and
Charter Holdco that was used to pay down the Credit Facilities. The Company
recorded the funds as loans payable-related parties. The loans will be repaid
with additional long-term borrowings made in connection with the Bresnan
acquisition (see Note 17) and accordingly, the loans have been classified as
long-term. The loans carry interest rates from 7.82% to 7.91%. Interest expense
on the loans totaled $10.4 million for the year ended December 31, 1999.

12. OPTION PLAN:

     In accordance with an employment agreement between Charter Investment and
the President and Chief Executive Officer of Charter and a related option
agreement with the President and Chief Executive Officer, an option to purchase
7,044,127 Charter Holdco membership interests, was issued to the President and
Chief Executive Officer. The option vests over a four year period from the date
of grant and expires ten years from the date of grant.

     In February 1999, Charter Holdings adopted an option plan providing for the
grant of options. The plan was assumed by Charter Holdco. The option plan
provides for grants of options to employees, officers and directors of Charter
Holdco and its affiliates and consultants who provide services to Charter
Holdco. Options

                                      F-29
   224
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

granted vest over five years from the grant date, commencing 15 months after the
date of grant. Options not exercised accumulate and are exercisable, in whole or
in part, in any subsequent period, but not later than ten years from the date of
grant.

     Membership units received upon exercise of the options are automatically
exchanged for shares of Class A common stock of Charter on a one-for-one basis.

     A summary of the activity for the Company's option plan for the year ended
December 31, 1999, and for the period from December 24, 1998, through December
31, 1998 is as follows:

<Table>
<Caption>
                                                            1999
     1998
                                                   ----------------------
- ----------------------
                                                                 WEIGHTED
          WEIGHTED
                                                                 AVERAGE
          AVERAGE
                                                                 EXERCISE
          EXERCISE
                                                     SHARES       PRICE
SHARES       PRICE
                                                   -----------   --------
- -----------   --------
                                                                    
          
Options outstanding, beginning of period.........    7,044,127    $20.00
     --    $   --
Granted:
  December 23, 1998..............................           --        --
7,044,127     20.00
  February 9, 1999...............................    9,111,681     20.00
     --        --
  April 5, 1999..................................      473,000     20.73
     --        --
  November 8, 1999...............................    4,741,400     19.00
     --        --
Cancelled........................................     (612,600)    19.95
     --        --
                                                   -----------    ------
- -----------    ------
Options outstanding, end of period...............   20,757,608    $19.79
7,044,127    $20.00
                                                   ===========    ======
===========    ======
Weighted Average Remaining Contractual Life......    9.2 years
10.0 years
                                                   ===========
===========
Options Exercisable, end of period...............    2,091,032    $19.90
1,761,032    $20.00
                                                   ===========    ======
===========    ======
Weighted average fair value of options granted...  $     12.59               $
  12.50
                                                   ===========
===========
</Table>

     In February 2000, the Company granted 5.7 million options at $19.47 per
share.

     The Company uses the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to
account for the option plans. Option compensation expense of $80.0 million and
$845 for the year ended December 31, 1999, and for the period from December 24,
1998, to December 31, 1998, respectively, has been recorded in the consolidated
financial statements since the exercise prices were less than the estimated fair
values of the underlying membership interests on the date of grant. Estimated
fair values were determined by the Company using the valuation inherent in the
Paul Allen Transaction and valuations of public companies in the cable
television industry adjusted for factors specific to the Company. Compensation
expense is being recorded over the vesting period of each grant that varies from
four to five years. As of December 31, 1999, deferred compensation remaining to
be recognized in future periods totaled $79.4 million. No option compensation
expense was recorded for the options granted on November 8, 1999, since the
exercise price is equal to the estimated fair value of the underlying membership
interests 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 initial offering price of Class A common stock.

     Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123), requires pro forma disclosure of the impact
on earnings as if the compensation costs for these

                                      F-30
   225
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

plans had been determined consistent with the fair value methodology of this
statement. The Company's net loss would have been increased to the following
unaudited pro forma amounts under SFAS 123:

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                              YEAR ENDED
THROUGH
                                                             DECEMBER 31,
DECEMBER 31,
                                                                 1999
1998
                                                             ------------
- ------------
                                                                       
Net loss:
  As reported..............................................   $(648,708)
$(5,277)
  Pro forma (unaudited)....................................    (673,042)
(5,495)
</Table>

     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 year ended December 31, 1999, and
for the period from December 24, 1998, through December 31, 1998, respectively:
risk-free interest rates of 5.5% and 4.8%; expected volatility of 43.8% and
43.7%; and expected lives of 10 years. The valuations assume no dividends are
paid.

13. COMMITMENTS AND CONTINGENCIES:

  Leases

     The Company leases certain facilities and equipment under noncancelable
operating leases. Leases and rental costs charged to expense for the year ended
December 31, 1999, and for the period from December 24, 1998, through December
31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999,
future minimum lease payments are as follows:

<Table>
                                                           
2000........................................................  $9,036
2001........................................................   7,141
2002........................................................   4,645
2003........................................................   3,153
2004........................................................   2,588
Thereafter..................................................   8,845
</Table>

     The Company also rents utility poles 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
year ended December 31, 1999, and for the period from December 24, 1998, through
December 31, 1998, was $14.3 million and $137, respectively.

  Litigation

     The Company is a party to lawsuits and claims that arose in the ordinary
course of conducting its business. In the opinion of management, after
consulting with legal counsel, the outcome of these lawsuits and claims will not
have a material adverse effect on the Company's consolidated financial position
or results of operations.

  Regulation in the Cable Television Industry

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communica-

                                      F-31
   226
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tions Commission (FCC) has principal responsibility for implementing the
policies of the Cable Acts. Many aspects of such regulation are currently the
subject of judicial proceedings and administrative or legislative proposals.
Legislation and regulations continue to change, and the Company cannot predict
the impact of future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. During 1999, the
amounts refunded by the Company have been insignificant. The Company may be
required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. As of
December 31, 1999, approximately 18% of the Company's local franchising
authorities are certified to regulate basic tier rates. The Company is unable to
estimate at this time the amount of refunds, if any, that may be payable by the
Company in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. The Company does
not believe that the amount of any such refunds would have a material adverse
effect on the consolidated financial position or results of operations of the
Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulated rates on the cable
programming service tier (CPST). The FCC has taken the position that it will
still adjudicate pending CPST complaints but will strictly limit its review, and
possible refund orders, to the time period predating the sunset date, March 31,
1999. The Company does not believe any adjudications regarding their pre-sunset
complaints will have a material adverse effect on the Company's consolidated
financial position or results of operations.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

14. EMPLOYEE BENEFIT PLANS:

     The Company's employees may participate in 401(k) plans (the "401(k)
Plans"). Employees that qualify for participation can contribute up to 15% of
their salary, on a before 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)
Plans totaling $2.9 million and $20 for the year ended December 31, 1999, and
for the period from December 24, 1998, through December 31, 1998, respectively.

15. ACCOUNTING STANDARD NOT YET IMPLEMENTED:

     The Company is required to adopt Statement of Financial Accounting
Standards Board No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133) on January 1, 2001. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset
                                      F-32
   227
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

or liability measured at its fair value and that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. The
Company has not yet quantified the impact of adopting SFAS No. 133 on the
consolidated financial statements nor has the Company determined the timing of
the adoption of SFAS No. 133. However, SFAS No. 133 could increase the
volatility in earnings (losses).

16. PARENT COMPANY ONLY FINANCIAL STATEMENTS:

     As the result of limitations on and prohibition of distributions,
substantially all of the net assets of the consolidated subsidiaries are
restricted for distribution to Charter Holdings, the parent company. The
following parent company only financial statements of Charter Holdings account
for the investment in Charter Operating, Fanch, Falcon and Avalon 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 HOLDINGS, LLC (PARENT COMPANY ONLY)
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                   DECEMBER 31,

- -------------------------
                                                                1999
1998
                                                             -----------
- ----------
                                                                      
ASSETS
Cash and cash equivalents..................................  $     9,762    $
   --
Investment in subsidiaries.................................   11,090,874
2,147,379
Other assets...............................................       69,793
   --
                                                             -----------
- ----------
                                                             $11,170,429
$2,147,379
                                                             ===========
==========
LIABILITIES AND MEMBER'S EQUITY
Current liabilities........................................  $    47,365    $
   --
Payables to manager of cable systems -- related parties....        2,960
   --
Long-term debt.............................................    3,072,151
   --
Member's equity............................................    8,047,953
2,147,379
                                                             -----------
- ----------
                                                             $11,170,429
$2,147,379
                                                             ===========
==========
</Table>

                                      F-33
   228
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

           CHARTER COMMUNICATIONS HOLDINGS, LLC (PARENT COMPANY ONLY)

                       CONDENSED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                              YEAR ENDED
THROUGH
                                                             DECEMBER 31,
DECEMBER 31,
                                                                 1998
1998
                                                             ------------
- ------------
                                                                       
Interest expense...........................................   $(221,925)       $
   --
Interest income............................................      11,833
   --
Equity in loss of subsidiaries.............................    (438,616)
(5,277)
                                                              ---------
- -------
  Net loss.................................................   $(648,708)
$(5,277)
                                                              =========
=======
</Table>

           CHARTER COMMUNICATIONS HOLDINGS, LLC (PARENT COMPANY ONLY)

                       CONDENSED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>

PERIOD FROM

DECEMBER 24,

1998,
                                                               YEAR ENDED
THROUGH
                                                              DECEMBER 31,
DECEMBER 31,
                                                                  1999
 1998
                                                              ------------
- ------------
                                                           

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $  (648,708)
$(5,277)
  Noncash interest expense..................................       78,473
    --
  Equity in losses of subsidiaries..........................      438,616
 5,277
  Changes in assets and liabilities.........................       48,825
    --
                                                              -----------
- -------
     Net cash used in operating activities..................      (82,794)
    --
                                                              -----------
- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in Charter Operating...........................   (1,730,466)
    --
  Loans to Marcus Cable Holdings, LLC.......................   (1,680,142)
  Repayment of debt on behalf of Charter Operating..........     (663,259)
  Distributions received from Charter Operating.............       96,748
    --
                                                              -----------
- -------
     Net cash used in investing activities..................   (3,977,119)
    --
                                                              -----------
- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from debt offering...........................    2,999,385
    --
  Payments for debt issuance costs..........................      (74,000)
    --
  Capital contributions.....................................    1,144,290
    --
                                                              -----------
- -------
     Net cash used in financing activities..................    4,069,675
    --
                                                              -----------
- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................        9,762
    --
CASH AND CASH EQUIVALENTS, beginning of period..............           --
    --
                                                              -----------
- -------
CASH AND CASH EQUIVALENTS, end of period....................  $     9,762
$    --
                                                              ===========
=======
</Table>

                                      F-34
   229
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. SUBSEQUENT EVENTS:

     On January 6, 2000, Charter Holdings issued notes with a principal amount
of $1.5 billion (January 2000 Charter Holdings Notes). The January 2000 Charter
Holdings Notes are comprised of $675.0 million 10.00% Senior Notes due 2009,
$325.0 million 10.25% Senior Notes due 2010, and $532.0 million 11.75% Senior
Discount Notes due 2010. The net proceeds were approximately $1.3 billion, after
giving effect to discounts, commissions and expenses. The proceeds from the
January 2000 Charter Holdings Notes were used to finance the repurchases of debt
assumed in the acquisitions of Fanch, Falcon and Avalon, and the Bresnan
acquisition (as defined below).

     On February 14, 2000, Charter Holdco and Charter Holdings completed the
acquisition of Bresnan Communications Company Limited Partnership (Bresnan).
Prior to the acquisition, Charter Holdco assigned a portion of its rights to
purchase Bresnan to Charter Holdings. Charter Holdco and Charter Holdings
purchased 52% of Bresnan from certain sellers for cash and certain sellers
contributed 18% of Bresnan to Charter Holdco for 14.8 million Class C common
membership units of Charter Holdco, an approximate 2.6% equity interest in
Charter Holdco. Charter Holdco then transferred its ownership interest to
Charter Holdings. Thereafter, Charter Holdings and certain sellers contributed
all of the outstanding interests in Bresnan to CC VIII, LLC (CC VIII), a
subsidiary of Charter Holdings and Bresnan was dissolved. In exchange for the
contribution of their interests in Bresnan, the sellers received approximately
24.2 million Class A preferred membership units in CC VIII representing 30% of
the equity of CC VIII and are entitled to a 2% annual return on their preferred
membership units. The purchase price for Bresnan was approximately $3.1 billion
subject to adjustment and was comprised of $1.1 billion in cash, $384.6 million
and $629.5 million in equity in Charter Holdco and CC VIII, respectively, and
approximately $1.0 billion in assumed debt. All the membership units received by
the sellers are exchangeable on a one-for-one basis for Class A common stock of
Charter. The Bresnan cable systems acquired are located in Michigan, Minnesota,
Wisconsin and Nebraska, and serve approximately 686,000 (unaudited) customers.

     Subsequent to the completion of the Bresnan acquisition, Charter
repurchased all of the outstanding Bresnan 9.25% Senior Discount Notes Due 2009
with an accreted value of $192.1 million and Bresnan 8.00% Senior Notes Due 2009
with a principal amount of $170.0 million for a total of $369.7 million. The
notes were repurchased using a portion of the proceeds of the January 2000
Charter Holdings Notes.

                                      F-35
   230

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Holdings, LLC:

     We have audited the accompanying consolidated statements of operations,
changes in shareholder's investment and cash flows of Charter Communications
Holdings, LLC and subsidiaries for the period from January 1, 1998, through
December 23, 1998, and for the year ended December 31, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of the operations and the cash flows of
Charter Communications Holdings, LLC and subsidiaries for the period from
January 1, 1998, through December 23, 1998, and for the year ended December 31,
1997, in conformity with accounting principles generally accepted in the United
States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  February 5, 1999

                                      F-36
   231

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                 JANUARY 1,
                                                                1998, THROUGH
 YEAR ENDED
                                                                DECEMBER 23,
DECEMBER 31,
                                                                    1998
    1997
                                                                -------------
- ------------
                                                             

REVENUES....................................................      $ 49,731
  $18,867
                                                                  --------
  -------
OPERATING EXPENSES:
  Operating, general and administrative.....................        25,952
   11,767
  Depreciation and amortization.............................        16,864
    6,103
  Corporate expense allocation -- related party.............         6,176
      566
                                                                  --------
  -------
                                                                    48,992
   18,436
                                                                  --------
  -------
     Income from operations.................................           739
      431
                                                                  --------
  -------
OTHER INCOME (EXPENSE):
  Interest expense..........................................       (17,277)
   (5,120)
  Interest income...........................................            44
       41
  Other, net................................................          (728)
       25
                                                                  --------
  -------
                                                                   (17,961)
   (5,054)
                                                                  --------
  -------
     Net loss...............................................      $(17,222)
  $(4,623)
                                                                  ========
  =======
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-37
   232

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S INVESTMENT
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                         COMMON    PAID-IN
ACCUMULATED
                                                         STOCK     CAPITAL
DEFICIT       TOTAL
                                                         ------    -------
- -----------    --------
                                                             
            
BALANCE, December 31, 1996...........................      $--     $ 5,900     $
(3,252)     $  2,648
  Net loss...........................................      --           --
(4,623)       (4,623)
                                                           --      -------
- --------      --------
BALANCE, December 31, 1997...........................      --        5,900
(7,875)       (1,975)
  Capital contributions..............................      --       10,800
    --        10,800
  Net loss...........................................      --           --
(17,222)      (17,222)
                                                           --      -------
- --------      --------
BALANCE, December 23, 1998...........................      $--     $16,700
$(25,097)     $ (8,397)
                                                           ==      =======
========      ========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-38
   233

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               PERIOD FROM
                                                               JANUARY 1,
                                                              1998, THROUGH
YEAR ENDED
                                                              DECEMBER 23,
DECEMBER 31,
                                                                  1998
 1997
                                                              -------------
- ------------
                                                           

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $ (17,222)
$ (4,623)
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
       Depreciation and amortization........................       16,864
  6,103
       Noncash interest expense.............................          267
    123
       Loss on sale of cable system.........................           --
  1,363
       (Gain) loss on disposal of property, plant and
        equipment...........................................          (14)
    130
  Changes in assets and liabilities, net of effects from
     acquisition --
     Receivables............................................           10
   (227)
     Prepaid expenses and other.............................         (125)
     18
     Accounts payable and accrued expenses..................       16,927
    894
     Payables to manager of cable systems-related party.....        5,288
   (153)
     Other operating activities.............................          569
     --
                                                                ---------
- --------
          Net cash provided by operating activities.........       22,564
  3,628
                                                                ---------
- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................      (15,364)
 (7,880)
  Payment for acquisition, net of cash acquired.............     (167,484)
     --
  Proceeds from sale of cable system........................           --
 12,528
  Other investing activities................................         (486)
     --
                                                                ---------
- --------
          Net cash (used in) provided by investing
            activities......................................     (183,334)
  4,648
                                                                ---------
- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..............................      217,500
  5,100
  Repayments of long-term debt..............................      (60,200)
(13,375)
  Capital contributions.....................................        7,000
     --
  Payments for debt issuance costs..........................       (3,487)
    (12)
                                                                ---------
- --------
          Net cash provided by (used in) financing
            activities......................................      160,813
 (8,287)
                                                                ---------
- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........           43
    (11)
CASH AND CASH EQUIVALENTS, beginning of period..............          626
    637
                                                                ---------
- --------
CASH AND CASH EQUIVALENTS, end of period....................    $     669
$    626
                                                                =========
========
CASH PAID FOR INTEREST......................................    $   7,679
$  3,303
                                                                =========
========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-39
   234

             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1.   ORGANIZATION AND BASIS OF PRESENTATION:

     Charter Communications Holdings, LLC (Charter Holdings), a Delaware limited
liability company, was formed in February 1999 as a wholly owned subsidiary of
Charter Investment, Inc. (Charter Investment). Charter Investment, through its
wholly owned cable television operating subsidiary, Charter Communications
Properties Holdings, LLC (CCPH), commenced operations with the acquisition of a
cable television system on September 30, 1995.

     Effective December 23, 1998, as a part of a series of transactions, through
which Paul G. Allen acquired Charter Investment, Mr. Allen acquired CCPH for an
aggregate purchase price of $211 million, excluding $214 million in debt assumed
(the "Paul Allen Transaction"). In conjunction with the Paul Allen Transaction,
CCPH was converted from a corporation to a limited liability company. Also, in
conjunction with the Paul Allen Transaction, Charter Investment for fair value
acquired from unrelated third parties all of the interest it did not already own
in CharterComm Holdings, LLC (CharterComm Holdings) and CCA Group (comprised of
CCA Holdings, Corp., CCT Holdings Corp. and Charter Communications Long Beach,
Inc.), all cable television operating companies, for $2.0 billion, excluding
$1.8 billion in debt assumed. Charter Investment previously managed and owned
minority interests in these companies. These acquisitions were accounted for
using the purchase method of accounting, and accordingly results of operations
of CharterComm Holdings and CCA Group are included in the financial statements
of Charter Holdings from the date of acquisition. In February 1999, Charter
Investment transferred all of its cable television operating subsidiaries to a
wholly owned subsidiary of Charter Holdings, Charter Communications Operating,
LLC (Charter Operating). Charter Holdings is a wholly owned subsidiary of
Charter Communications Holding Company, LLC (Charter Holdco). The transfer was
accounted for as a reorganization of entities under common control similar to a
pooling of interests.

     The accompanying consolidated financial statements include the accounts of
CCPH and CCP, its wholly owned cable operating subsidiary, representing the
consolidated financial statements of Charter Holdings and subsidiaries
(collectively, the "Company") for all periods presented. The accounts of
CharterComm Holdings and CCA Group are not included since these companies were
not owned and controlled by Charter Investment prior to December 23, 1998.

     As a result of the change in ownership of CCPH, CharterComm Holdings and
CCA Group, Charter Holdings has applied push-down accounting in the preparation
of the consolidated financial statements effective December 23, 1998.
Accordingly, the consolidated financial statements of Charter Holdings for
periods ended on or before December 23, 1998, are presented on a different cost
basis than the consolidated financial statements for the periods after December
23, 1998 (not presented herein), and are not comparable.

2.   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 that approximates market value.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installations. The
costs of disconnecting a customer are charged to expense in the period incurred.
Expenditures for repairs and maintenance are charged to expense as incurred,
while equipment replacement and betterments are capitalized.

                                      F-40
   235
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:

<Table>
                                                             
Cable distribution systems..................................    3-15 years
Buildings and leasehold improvements........................    5-15 years
Vehicles and equipment......................................     3-5 years
</Table>

     For the period from January 1, 1998, through December 23, 1998, and for the
year ended December 31, 1997, depreciation expense was $6.2 million and $3.9
million, respectively.

FRANCHISES

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable systems represent management's estimate
of fair value and are generally amortized using the straight-line method over a
period of 15 years. The period of 15 years is management's best estimate of the
useful lives of the franchises and assumes substantially all of those franchises
that expire during the period will be renewed by the Company.

OTHER ASSETS

     Debt issuance costs are being amortized to interest expense using the
effective interest method over the term of the related debt. The interest rate
cap costs are being amortized over the terms of the agreement, which
approximates three years.

IMPAIRMENT OF ASSETS

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted net cash flows
related to the asset over its remaining life, the carrying value of such asset
is reduced to its estimated fair value.

REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable system. As of December 23, 1998, and December 31, 1997, no installation
revenue has been deferred, as direct selling costs have exceeded installation
revenue.

     Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts. Local governmental
authorities impose franchise fees on the Company ranging up to a federally
mandated maximum of 5.0% of gross revenues. 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 and expenses.

INTEREST RATE HEDGE AGREEMENTS

     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain debt agreements. Interest rate swaps,
caps and collars are accounted for as hedges of debt obligations, and
accordingly, the net settlement amounts are recorded as adjustments to interest
expense in the period incurred. Premiums paid for interest rate caps are
deferred, included in other assets, and are amortized over the original term of
the interest rate agreement as an adjustment to interest expense.

                                      F-41
   236
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The Company's interest rate swap agreements require the Company to pay a
fixed rate and receive a floating rate thereby creating fixed rate debt.
Interest rate caps and collars are entered into by the Company to reduce the
impact of rising interest rates on floating rate debt.

     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designated for hedging purposes
and are not held or issued for speculative purposes.

INCOME TAXES

     The Company filed a consolidated income tax return with Charter Investment.
Income taxes are allocated to the Company in accordance with the tax-sharing
agreement between the Company and Charter Investment.

USE OF ESTIMATES

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

3.   ACQUISITION:

     In 1998, the Company acquired a cable system for an aggregate purchase
price, net of cash acquired, of $228.4 million, comprised of $167.5 million in
cash and $60.9 million in a note payable to the seller. The excess of the cost
of properties acquired over the amounts assigned to net tangible assets at the
date of acquisition was $207.6 million and is included in franchises.

     The above acquisition was accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the dates of acquisition. The
purchase price was allocated to tangible and intangible assets based on
estimated fair values at the acquisition date.

     Unaudited pro forma operating results as though the acquisition discussed
above, excluding the Paul Allen Transaction, had occurred on January 1, 1997,
with adjustments to give effect to amortization of franchises, interest expense
and certain other adjustments are as follows:

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                 JANUARY 1,
                                                                1998, THROUGH
 YEAR ENDED
                                                                DECEMBER 23,
DECEMBER 31,
                                                                    1998
    1997
                                                                -------------
- ------------

(UNAUDITED)
                                                             

Revenues....................................................      $ 67,007
  $ 63,909
Loss from operations........................................        (7,097)
    (7,382)
Net loss....................................................      $(24,058)
  $(26,099)
</Table>

     The unaudited pro forma information has been presented for comparative
purposes and does not purport to be indicative of the results of operations had
the transaction been completed as of the assumed date or which may be obtained
in the future.

                                      F-42
   237
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

4.   ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Activity in the allowance for doubtful accounts is summarized as follows:

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                 JANUARY 1,
  FOR THE
                                                                1998, THROUGH
 YEAR ENDED
                                                                DECEMBER 23,
DECEMBER 31,
                                                                    1998
    1997
                                                                -------------
- ------------
                                                             

Balance, beginning of period................................       $   52
   $  87
Acquisition of system.......................................           96
      --
Charged to expense..........................................        1,122
     325
Uncollected balances written off, net of recoveries.........         (778)
    (360)
                                                                       --
      --
                                                                   ------
   -----
Balance, end of period......................................       $  492
   $  52
                                                                   ======
   =====
</Table>

5.   SALE OF FT. HOOD SYSTEM:

     In February 1997, the Company sold the net assets of the Ft. Hood system,
which served customers in Texas, for an aggregate sales price of approximately
$12.5 million. The sale of the Ft. Hood system resulted in a loss of
approximately $1.4 million, which is included in operating, general and
administrative costs in the accompanying consolidated statement of operations
for the year ended December 31, 1997.

6.   INCOME TAXES:

     Deferred tax assets and liabilities are recognized for the estimated future
tax consequence attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred income tax assets and liabilities are measured using the enacted
tax rates in effect for the year in which those temporary differences are
expected to be recovered or settled. Deferred income tax expense or benefit is
the result of changes in the liability or asset recorded for deferred taxes. A
valuation allowance must be established for any portion of a deferred tax asset
for which it is more likely than not that a tax benefit will not be realized.

     No current provision (benefit) for income taxes was recorded. The effective
income tax rate is less than the federal rate of 35% primarily due to providing
a valuation allowance on deferred income tax assets.

7.   RELATED-PARTY TRANSACTIONS:

     Charter Investment provides management services to the Company including
centralized customer 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.
Certain costs for services are billed and charged directly to the Company's
operating subsidiaries and are included in operating costs. These billings are
determined based on the number of basic customers. Such costs totaled $437 and
$220, respectively, for the period from January 1, 1998, through December 23,
1998, and the year ended December 31, 1997. All other costs incurred by Charter
Investment on behalf of the Company are expensed in the accompanying
consolidated financial statements and are included in corporate expense
allocations -- related party. The cost of these services is allocated based on
the number of basic customers. Management considers these allocations to be
reasonable for the operations of the Company.

     Charter Investment utilizes a combination of excess insurance coverage and
self-insurance programs for its medical, dental and workers' compensation
claims. Charges are made to the Company as determined by independent actuaries,
at the present value of the actuarially computed present and future liabilities
for such benefits. Medical coverage provides for $2.4 million aggregate stop
loss protection and a loss limitation of $100 per person per year. Workers'
compensation coverage provides for $800 aggregate stop loss protection and a
loss limitation of $150 per person per year.

                                      F-43
   238
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     The Company is charged a management fee based on percentages of revenues as
stipulated in the management agreement between Charter Investment and the
Company. For the period from January 1, 1998, through December 23, 1998, and the
year ended December 31, 1997, the management fee charged to the Company
approximated the corporate expenses incurred by Charter Investment on behalf of
the Company.

8.   COMMITMENTS AND CONTINGENCIES:

LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Leases and rental costs charged to expense for the period from
January 1, 1998, through December 23, 1998, and for the year ended December 31,
1997, were $278 and $130, respectively.

     The Company also rents utility poles 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
period from January 1, 1998, through December 23, 1998, and for the year ended
December 31, 1997, was $421 and $271, respectively.

LITIGATION

     The Company is a party to lawsuits that arose in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.

REGULATION IN THE CABLE TELEVISION INDUSTRY

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable systems. The Federal Communications Commission (FCC) has
principal responsibility for implementing the policies of the Cable Acts. Many
aspects of such regulation are currently the subject to judicial proceedings and
administrative or legislative proposals. Legislation and regulations continue to
change, and the Company cannot predict the impact of future developments on the
cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable systems and have
resulted in additional regulatory oversight by the FCC and local or state
franchise authorities. The Cable Acts and the corresponding FCC regulations have
established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 31,
1998, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999,

                                      F-44
   239
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

deregulated rates on the cable programming service tier (CPST). The FCC has
taken the position that it will still adjudicate pending CPST complaints but
will strictly limit its review, and possible refund orders, to the time period
predating the sunset date, March 31, 1999. The Company does not believe any
adjudications regarding their pre-sunset complaints will have a material adverse
effect on the Company's consolidated financial position or results of
operations.

     A number of states subject cable systems to the jurisdiction of centralized
state governmental agencies, some of which impose regulation of a character
similar to that of a public utility. State governmental agencies are required to
follow FCC rules when prescribing rate regulation, and thus, state regulation of
cable television rates is not allowed to be more restrictive than the federal or
local regulation. The Company is subject to state regulation in Connecticut.

9.   EMPLOYEE BENEFIT PLAN:

401(K) PLAN

     The Company's employees may participate in the Charter Communications, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 15% of their salary, on or before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Company contributes an amount equal to 50% of the first 5% of contributions by
each employee. The Company contributed $74 and $29 for the period from January
1, 1998, through December 23, 1998, and for the year ended December 31, 1997,
respectively.

APPRECIATION RIGHTS PLAN

     Certain employees of Charter participated in the 1995 Charter
Communications, Inc. Appreciation Rights Plan (the "Plan"). The Plan permitted
Charter Investment to grant 1,500,000 units to certain key employees, of which
1,251,500 were outstanding at December 31, 1997. Units received by an employee
vest at a rate of 20% per year, unless otherwise provided in the participant's
Appreciation Rights Unit Agreement. The appreciation rights entitled the
participants to receive payment, upon termination or change in control of
Charter Investment, of the excess of the unit value over the base value (defined
as the appreciation value) for each vested unit. The unit value was based on
adjusted equity, as defined in the Plan. Deferred compensation expense was based
on the appreciation value since the grant date and was being amortized over the
vesting period.

     As a result of the acquisition of Charter Investment by Mr. Allen, the Plan
was terminated, all outstanding units became 100% vested and all amounts were
paid by Charter Investment in 1999. The cost of this plan was allocated to the
Company based on the number of basic customers. The company considers this
allocation to be reasonable for the operations of the Company. For the period
January 1, 1998, through December 23, 1998, the Company expensed $3,800,
included in corporate expense allocation-related parties, and increased
shareholder's investment for the cost of this plan.

10. ACCOUNTING STANDARD NOT YET IMPLEMENTED:

     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, Accounting for Derivatives Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument, including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged items in the income statement,
and requires that a company formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133 -- An Amendment of FASB Statement No.
133, has delayed the effective date of SFAS No. 133 to fiscal years beginning
after June 15, 2000. The Company has not yet quantified the impact of adopting
SFAS No. 133 on the consolidated financial statements nor has determined the
timing of the adoption of SFAS No. 133. However, SFAS No. 133 could increase
volatility in earnings (losses).

                                      F-45
   240

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CCA Group:

     We have audited the accompanying combined balance sheet of CCA Holdings
Corp., CCT Holdings Corp. and Charter Communications Long Beach, Inc.
(collectively CCA Group) and subsidiaries as of December 31, 1997, and the
related combined statements of operations, shareholders' deficit and cash flows
for the period from January 1, 1998, through December 23, 1998, and for the
years ended December 31, 1997 and 1996. These combined financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of CCA Group and
subsidiaries as of December 31, 1997, and the combined results of their
operations and their cash flows for the period from January 1, 1998, through
December 23, 1998, and for the years ended December 31, 1997 and 1996, in
conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  February 5, 1999

                                      F-46
   241

                                   CCA GROUP

                  COMBINED BALANCE SHEET -- DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

<Table>
                                                           
                                 ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $    4,501
  Accounts receivable, net of allowance for doubtful
     accounts of $926.......................................       9,407
  Prepaid expenses and other................................       1,988
  Deferred income tax asset.................................       5,915
                                                              ----------
          Total current assets..............................      21,811
                                                              ----------
RECEIVABLE FROM RELATED PARTY, including accrued interest...      13,090
                                                              ----------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment.............................     352,860
  Franchises, net of accumulated amortization of $132,871...     806,451
                                                              ----------
                                                               1,159,311
                                                              ----------
OTHER ASSETS................................................      13,731
                                                              ----------
                                                              $1,207,943
                                                              ==========
                 LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Current maturities of long-term debt......................  $   25,625
  Accounts payable and accrued expenses.....................      48,554
  Payables to manager of cable television systems -- related
     party..................................................       1,975
                                                              ----------
          Total current liabilities.........................      76,154
                                                              ----------
DEFERRED REVENUE............................................       1,882
                                                              ----------
DEFERRED INCOME TAXES.......................................     117,278
                                                              ----------
LONG-TERM DEBT, less current maturities.....................     758,795
                                                              ----------
DEFERRED MANAGEMENT FEES....................................       4,291
                                                              ----------
NOTES PAYABLE, including accrued interest...................     348,202
                                                              ----------
SHAREHOLDERS' DEFICIT:
  Common stock..............................................           1
  Additional paid-in capital................................     128,499
  Accumulated deficit.......................................    (227,159)
                                                              ----------
          Total shareholders' deficit.......................     (98,659)
                                                              ----------
                                                              $1,207,943
                                                              ==========
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-47
   242

                                   CCA GROUP

                       COMBINED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                          PERIOD FROM
                                                           JANUARY 1,
                                                             1998,
YEAR ENDED
                                                            THROUGH
DECEMBER 31
                                                          DECEMBER 23,
- ---------------------
                                                              1998          1997
        1996
                                                          ------------      ----
        ----
                                                                    
      
REVENUES................................................   $ 324,432      $
289,697    $233,392
                                                           ---------
- ---------    --------
EXPENSES:
  Operating costs.......................................     135,705
122,917     102,977
  General and administrative............................      28,440
26,400      18,687
  Depreciation and amortization.........................     136,689
116,080      96,547
  Management fees -- related parties....................      17,392
11,414       8,634
                                                           ---------
- ---------    --------
                                                             318,226
276,811     226,845
                                                           ---------
- ---------    --------
     Income from operations.............................       6,206
12,886       6,547
                                                           ---------
- ---------    --------
OTHER INCOME (EXPENSE):
  Interest income.......................................       4,962
2,043       1,883
  Interest expense......................................    (113,824)
(108,122)    (88,999)
  Other, net............................................        (294)
171      (2,504)
                                                           ---------
- ---------    --------
                                                            (109,156)
(105,908)    (89,620)
                                                           ---------
- ---------    --------
     Net loss...........................................   $(102,950)     $
(93,022)   $(83,073)
                                                           =========
=========    ========
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-48
   243

                                   CCA GROUP

                  COMBINED STATEMENTS OF SHAREHOLDERS' DEFICIT
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                           ADDITIONAL
                                                 COMMON     PAID-IN
ACCUMULATED
                                                 STOCK      CAPITAL
DEFICIT        TOTAL
                                                 ------    ----------
- -----------      -----
                                                                
       
BALANCE, December 31, 1995.....................   $ 1       $ 99,999      $
(51,064)    $  48,936
  Net loss.....................................    --             --
(83,073)      (83,073)
                                                  ---       --------
- ---------     ---------
BALANCE, December 31, 1996.....................     1         99,999
(134,137)      (34,137)
  Capital contributions........................    --         28,500
- --        28,500
  Net loss.....................................    --             --
(93,022)      (93,022)
                                                  ---       --------
- ---------     ---------
BALANCE, December 31, 1997.....................     1        128,499
(227,159)      (98,659)
  Capital contributions........................    --          5,684
- --         5,684
  Net loss.....................................    --             --
(102,950)     (102,950)
                                                  ---       --------
- ---------     ---------
BALANCE, December 23, 1998.....................   $ 1       $134,183
$(330,109)    $(195,925)
                                                  ===       ========
=========     =========
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-49
   244

                                   CCA GROUP

                       COMBINED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                          PERIOD FROM
                                                           JANUARY 1,
                                                             1998,
YEAR ENDED
                                                            THROUGH
DECEMBER 31
                                                          DECEMBER 23,
- ---------------------
                                                              1998          1997
       1996
                                                          ------------      ----
       ----
                                                                    
     
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..............................................   $(102,950)
$(93,022)   $ (83,073)
  Adjustments to reconcile net loss to net cash provided
     by operating activities --
     Depreciation and amortization......................     136,689
116,080       96,547
     Amortization of debt issuance costs and non cash
       interest cost....................................      44,701
49,107       39,927
     (Gain) loss on sale of property, plant and
       equipment........................................         511
(156)       1,257
     Changes in assets and liabilities, net of effects
       from acquisitions --
       Accounts receivable, net.........................       4,779
222       (1,393)
       Prepaid expenses and other.......................         243
(175)         216
       Accounts payable and accrued expenses............       3,849
8,797        3,855
       Payables to manager of cable television systems,
          including deferred management fees............       3,485
784          448
       Deferred revenue.................................       1,336
559         (236)
       Other operating activities.......................       5,583
(3,207)       1,372
                                                           ---------
- --------    ---------
       Net cash provided by operating activities........      98,226
78,989       58,920
                                                           ---------
- --------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment............     (95,060)
(82,551)     (56,073)
  Payments for acquisitions, net of cash acquired.......          --
(147,187)    (122,017)
  Other investing activities............................      (2,898)
(1,296)          54
                                                           ---------
- --------    ---------
     Net cash used in investing activities..............     (97,958)
(231,034)    (178,036)
                                                           ---------
- --------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..........................     300,400
162,000      127,000
  Repayments of long-term debt..........................     (64,120)
(39,580)     (13,100)
  Payments of debt issuance costs.......................      (8,442)
(3,360)      (3,126)
  Repayments under notes payable........................    (230,994)
- --           --
  Capital contributions.................................          --
28,500           --
                                                           ---------
- --------    ---------
     Net cash provided by (used in) financing
       activities.......................................      (3,156)
147,560      110,774
                                                           ---------
- --------    ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS...............      (2,888)
(4,485)      (8,342)
CASH AND CASH EQUIVALENTS, beginning of period..........       4,501
8,986       17,328
                                                           ---------
- --------    ---------
CASH AND CASH EQUIVALENTS, end of period................   $   1,613      $
4,501    $   8,986
                                                           =========
========    =========
CASH PAID FOR INTEREST..................................   $ 179,781      $
49,687    $  51,434
                                                           =========
========    =========
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-50
   245

                                   CCA GROUP

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  ORGANIZATION AND BASIS OF PRESENTATION

     CCA Group consists of CCA Holdings Corp. (CCA Holdings), CCT Holdings Corp.
(CCT Holdings) and Charter Communications Long Beach, Inc. (CC-LB), all Delaware
corporations (collectively referred to as "CCA Group" or the "Company") and
their subsidiaries. The combined financial statements of each of these companies
have been combined by virtue of their common ownership and management. All
material intercompany transactions and balances have been eliminated.

     CCA Holdings commenced operations in January 1995 in connection with
consummation of the Crown Transaction (as defined below). The accompanying
financial statements include the accounts of CCA Holdings; its wholly-owned
subsidiary, CCA Acquisition Corp. (CAC); CAC's wholly-owned subsidiary, Cencom
Cable Entertainment, Inc. (CCE); and Charter Communications Entertainment I,
L.P. (CCE-I), which is controlled by CAC through its general partnership
interest. Through December 23, 1998, CCA Holdings was approximately 85% owned by
Kelso Investment Associates V, L.P., an investment fund, together with an
affiliate (collectively referred to as "Kelso" herein) and certain other
individuals and approximately 15% by Charter Communications, Inc. (Charter),
manager of CCE-I's cable television systems.

     CCT Holdings was formed on January 6, 1995. CCT Holdings commenced
operations in September 1995 in connection with consummation of the Gaylord
Transaction (as defined below). The accompanying financial statements include
the accounts of CCT Holdings and Charter Communications Entertainment II, L.P.
(CCE-II), which is controlled by CCT Holdings through its general partnership
interest. Through December 23, 1998, CCT Holdings was owned approximately 85% by
Kelso and certain other individuals and approximately 15% by Charter, manager of
CCE-II's cable television systems.

     In January 1995, CAC completed the acquisition of certain cable television
systems from Crown Media, Inc. (Crown), a subsidiary of Hallmark Cards,
Incorporated (Hallmark) (the "Crown Transaction"). On September 29, 1995, CAC
and CCT Holdings entered into an Asset Exchange Agreement whereby CAC exchanged
a 1% undivided interest in all of its assets for a 1.22% undivided interest in
certain assets to be acquired by CCT Holdings from an affiliate of Gaylord
Entertainment Company, Inc. (Gaylord). Effective September 30, 1995, CCT
Holdings acquired certain cable television systems from Gaylord (the "Gaylord
Transaction"). Upon execution of the Asset Purchase Agreement, CAC and CCT
Holdings entered into a series of agreements to contribute the assets acquired
under the Crown Transaction to CCE-I and certain assets acquired in the Gaylord
acquisition to CCE-II. Collectively, CCA Holdings and CCT Holdings own 100% of
CCE-I and CCE-II.

     CC-LB was acquired by Kelso and Charter in May 1997. The accompanying
financial statements include the accounts of CC-LB and its wholly owned
subsidiary, Long Beach Acquisition Corp. (LBAC) from the date of acquisition.
Through December 23, 1998, CC-LB was owned approximately 85% by Kelso and
certain other individuals and approximately 15% by Charter, manager of LBAC's
cable television systems.

     Effective December 23, 1998, Paul G. Allen acquired 94% of Charter through
a series of transactions. In conjunction with Mr. Allen's acquisition, Charter
acquired 100% of the outstanding stock of CCA Holdings, CCT Holdings and CC-LB
on December 23, 1998.

     In 1998, CCE-I provided cable television service to customers in
Connecticut, Illinois, Massachusetts, Missouri and New Hampshire, CCE-II
provided cable television service to customers in California and LBAC provided
cable television service to customers in Long Beach, California, and certain
surrounding areas.

                                      F-51
   246
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1997,
cash equivalents consist primarily of repurchase agreements. These investments
are carried at cost that approximates market value.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installation. The costs of disconnecting a residence are charged to expense in
the period incurred. Expenditures for repairs and maintenance are charged to
expense as incurred, and equipment replacement costs and betterments are
capitalized.

     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:

<Table>
                                                           
Cable distribution systems..................................  3-15 years
Buildings and leasehold improvements........................  5-15 years
Vehicles and equipment......................................   3-5 years
</Table>

In 1997, the Company shortened the estimated useful lives of certain property,
plant and equipment for depreciation purposes. As a result, additional
depreciation of $8,123 was recorded during 1997.

  FRANCHISES

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable television systems represent management's
estimate of fair value and are amortized using the straight-line method over 15
years.

  OTHER ASSETS

     Debt issuance costs are amortized to interest expense over the term of the
related debt. The interest rate cap costs are being amortized over the terms of
the agreement, which approximates three years.

  INCOME TAXES

     Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes."

  USE OF ESTIMATES

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

2.  ACQUISITIONS:

     In 1997, CC-LB acquired the stock of LBAC for an aggregate purchase price,
net of cash acquired, of $147,200. In connection with the completion of this
acquisition, LBAC recorded $55,900 of deferred income tax liabilities resulting
from differences between the financial reporting and tax basis of certain assets
acquired.

                                      F-52
   247
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The excess of the cost of properties acquired over the amounts assigned to net
tangible assets at the date of acquisition was $190,200 and is included in
franchises.

     In 1996, the Company acquired cable television systems in three separate
transactions for an aggregate purchase price, net of cash acquired, of $122,000.
The excess of the cost of properties acquired over the amounts assigned to net
tangible assets at the dates of acquisition was $100,200 and is included in
franchises.

     The above acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the dates of the acquisitions.

     Unaudited pro forma operating results for the 1997 acquisitions as though
the acquisitions had been made on January 1, 1997, with pro forma adjustments to
give effect to amortization of franchises, interest expense and certain other
adjustments as follows:

<Table>
<Caption>
                                                               YEAR ENDED
                                                              DECEMBER 31,
                                                                  1997
                                                               (UNAUDITED)
                                                              -------------
                                                           
Revenues....................................................    $303,797
Income from operations......................................      14,108
Net loss....................................................     (94,853)
</Table>

     The unaudited pro forma information has been presented for comparative
purposes and does not purport to be indicative of the results of operations had
these transactions been completed as of the assumed date or which may be
obtained in the future.

3.  RECEIVABLE FROM RELATED PARTY:

     In connection with the transfer of certain assets acquired in the Gaylord
Transaction to Charter Communications Properties, Inc. (CCP), Charter
Communications Properties Holding Corp. (CCP Holdings), the parent of CCP and a
wholly owned subsidiary of Charter, entered into a $9,447 promissory note with
CCT Holdings. The promissory note bears interest at the rates paid by CCT
Holdings on the Gaylord Seller Note. Principal and interest are due on September
29, 2005. Interest income has been accrued based on an average rate of interest
over the life of the Gaylord Seller Note, which approximates 15.4% and totaled
$1,899 for the period from January 1, 1998, through December 23, 1998, and
$1,806 and $1,547 for the years ended December 31, 1997 and 1996, respectively.
As of December 31, 1997, interest receivable totaled $3,643.

4.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consists of the following at December 31,
1997:

<Table>
                                                           
Cable distribution systems..................................  $ 426,241
Land, buildings and leasehold improvements..................     15,443
Vehicles and equipment......................................     24,375
                                                              ---------
                                                                466,059
Less -- Accumulated depreciation............................   (113,199)
                                                              ---------
                                                              $ 352,860
                                                              =========
</Table>

     Depreciation expense for the period from January 1, 1998, through December
23, 1998, and for the years ended December 31, 1997 and 1996, was $72,914,
$59,599 and $39,575, respectively.

                                      F-53
   248
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5.  OTHER ASSETS:

     Other assets consists of the following at December 31, 1997:

<Table>
                                                           
Debt issuance costs.........................................  $13,416
Note receivable.............................................    2,100
Other.......................................................    1,342
                                                              -------
                                                               16,858
Less -- Accumulated amortization............................   (3,127)
                                                              -------
                                                              $13,731
                                                              =======
</Table>

6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

     Accounts payable and accrued expenses consist of the following at December
31, 1997:

<Table>
                                                           
Accrued interest............................................  $ 8,389
Franchise fees..............................................    6,434
Programming expenses........................................    5,855
Accounts payable............................................    4,734
Public education and governmental costs.....................    4,059
Salaries and related benefits...............................    3,977
Capital expenditures........................................    3,629
Other.......................................................   11,477
                                                              -------
                                                              $48,554
                                                              =======
</Table>

7.  LONG-TERM DEBT:

     Long-term debt consists of the following at December 31, 1997:

<Table>
                                                           
CCE-I:
  Term loans................................................  $274,120
  Fund loans................................................    85,000
  Revolving credit facility.................................   103,800
                                                              --------
                                                               462,920
                                                              --------
CCE-II:
  Term loans................................................   105,000
  Revolving credit facility.................................   123,500
                                                              --------
                                                               228,500
                                                              --------
LBAC:
  Term loans................................................    85,000
  Revolving credit facility.................................     8,000
                                                              --------
                                                                93,000
                                                              --------
          Total debt........................................   784,420
Less -- Current maturities..................................   (25,625)
                                                              --------
          Total long-term debt..............................  $758,795
                                                              ========
</Table>

                                      F-54
   249
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  CCE-I CREDIT AGREEMENT

     CCE-I maintains a credit agreement (the "CCE-I Credit Agreement"), which
provides for a $280,000 term loan that matures on September 30, 2006, an $85,000
fund loan that matures on March 31, 2007, and a $175,000 revolving credit
facility with a maturity date of September 30, 2006. Amounts under the CCE-I
Credit Agreement bear interest at either the LIBOR Rate or Base Rate, as
defined, plus a margin of up to 2.75%. The variable interest rate ranged from
6.88% to 8.06% at December 23, 1998, and from 7.63% to 8.50% and 7.63% to 8.38%
at December 31, 1997 and 1996, respectively.

     Commencing June 30, 2002, and at the end of each calendar quarter
thereafter, available borrowings under the revolving credit facility and the
term loan shall be reduced on an annual basis by 12.0% in 2002 and 15.0% in
2003. Commencing June 30, 2002, and at the end of each calendar quarter
thereafter, the available borrowings for the fund loan shall be reduced on an
annual basis by 0.75% in 2002 and 1.0% in 2003. A quarterly commitment fee of
between 0.375% and 0.5% per annum is payable on the unborrowed balance of the
revolving credit facility.

  COMBINED CREDIT AGREEMENT

     CCE-II and LBAC maintain a credit agreement (the "Combined Credit
Agreement") which provides for two term loan facilities, one with the principal
amount of $100,000 that matures on March 31, 2005, and the other with the
principal amount of $90,000 that matures on March 31, 2006. The Combined Credit
Agreement also provides for a $185,000 revolving credit facility, with a
maturity date of March 31, 2005. Amounts under the Combined Credit Agreement
bear interest at either the LIBOR Rate or Base Rate, as defined, plus a margin
of up to 2.5%. The variable interest rate ranged from 6.56% to 7.59% at December
23, 1998, and from 7.50% to 8.38% at December 31, 1997, respectively.

     Commencing March 31, 2001, and at the end of each quarter thereafter,
available borrowings under the revolving credit facility and one term loan shall
be reduced on an annual basis by 5.0% in 2001, 15.0% in 2002 and 18.0% in 2003.
Commencing in December 31, 1999, and at the end of each quarter thereafter,
available borrowings under the other term loan shall be reduced on annual basis
by 0.5% in 1999, 0.8% in 2000, 1.0% in 2001, 1.0% in 2002 and 1.0% in 2003. A
quarterly commitment fee of between 0.25% and 0.375% per annum, based upon the
intercompany indebtedness of the Company, is payable on the unborrowed balance
of the revolving credit facility.

  CCE CREDIT AGREEMENT

     In October 1998, Charter Communications Entertainment, L.P. (CCE L.P.), a
98% direct and indirect owner of CCE-I and CCE-II and indirectly owned
subsidiary of the Company, entered into a credit agreement (the "CCE L.P. Credit
Agreement") which provides for a term loan facility with the principal amount of
$130,000 that matures on September 30, 2007. Amounts under the CCE L.P. Credit
Agreement bear interest at the LIBOR Rate or Base Rate, as defined, plus a
margin of up to 3.25%. The variable interest rate at December 23, 1998, was
8.62%.

     Commencing June 30, 2002, and the end of each calendar quarter thereafter,
the available borrowings for the term loan shall be reduced on an annual basis
by 0.75% in 2002 and 1.0% in 2003.

  CCE-II HOLDINGS CREDIT AGREEMENT

     CCE-II Holdings, LLC (CCE-II Holdings), a wholly owned subsidiary of CCE
L.P. and the parent of CCE-II, entered into a credit agreement (the "CCE-II
Holdings Credit Agreement") in November 1998, which provides for a term loan
facility with the principal amount of $95,000 that matures on September 30,
2006. Amounts under the CCE-II Holdings Credit Agreement bear interest at either
the LIBOR Rate or Base Rate, as defined, plus a margin of up to 3.25%. The
variable rate at December 23, 1998, was 8.56%.
                                      F-55
   250
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Commencing June 30, 2002, and at the end of each quarter thereafter,
available borrowings under the revolving credit facility and one term loan shall
be reduced on an annual basis by 0.5% in 2002 and 1.0% in 2003.

     The credit agreements require the Company to comply with various financial
and nonfinancial covenants, including the maintenance of annualized operating
cash flow to fixed charge ratio, as defined, not to exceed 1.0 to 1.0. These
debt instruments also contain substantial limitations on, or prohibitions of,
distributions, additional indebtedness, liens asset sales and certain other
items.

8.  NOTES PAYABLE:

     Notes payable consists of the following at December 31, 1997:

<Table>
                                                           
HC Crown Note...............................................  $ 82,000
Accrued interest on HC Crown Note...........................    36,919
Gaylord Seller Note.........................................   165,688
Accrued interest on Gaylord Seller Note.....................    63,595
                                                              --------
          Total.............................................  $348,202
                                                              ========
</Table>

     In connection with the Crown Transaction, the Company entered into an
$82,000 senior subordinated loan agreement with a subsidiary of Hallmark, HC
Crown Corp., and pursuant to such loan agreement issued a senior subordinated
note (the "HC Crown Note"). The HC Crown Note was an unsecured obligation. The
HC Crown Note was limited in aggregate principal amount to $82,000 and has a
stated maturity date of December 31, 1999 (the "Stated Maturity Date"). Interest
has been accrued at 13% per annum, compounded semiannually, payable upon
maturity. In October 1998, the Crown Note and accrued interest was paid in full.

     In connection with the Gaylord Transaction, CCT Holdings entered into a
$165,700 subordinated loan agreement with Gaylord (the "Gaylord Seller Note").
Interest expense has been accrued based on an average rate of interest over the
life of the Gaylord Seller Note, which approximated 15.4%.

     In connection with the Gaylord Transaction, CCT Holdings, CCE L.P. and
Gaylord entered into a contingent payment agreement (the "Contingent
Agreement"). The Contingent Agreement indicates CCE L.P. will pay Gaylord 15% of
any amount distributed to CCT Holdings in excess of the total of the Gaylord
Seller Note, Crown Seller Note and $450,000. In conjunction with the Paul G.
Allen acquisition of Charter and the Company, Gaylord was paid an additional
$132,000 pursuant to the Contingent Agreement and the Gaylord Seller Note was
paid in full.

                                      F-56
   251
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

9.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

     A summary of debt and the related interest rate hedge agreements at
December 31, 1997, is as follows:

<Table>
<Caption>
                                                                           1997

- --------------------------------
                                                             CARRYING
NOTIONAL      FAIR
                                                              VALUE       AMOUNT
     VALUE
                                                             --------
- --------     -----
                                                                   
    
DEBT
Debt under credit agreements...............................  $784,420    $
- --    $784,420
HC Crown Note (including accrued interest).................   118,919
- --     118,587
Gaylord Seller Note (including accrued interest)...........   229,283
- --     214,074
INTEREST RATE HEDGE AGREEMENTS
Swaps......................................................        --
405,000      (1,214)
Caps.......................................................        --
120,000          --
Collars....................................................        --
190,000        (437)
</Table>

     As the long-term debt under the credit agreements bear interest at current
market rates, their carrying amount approximates fair market value at December
31, 1997. Fair value of the HC Crown Note is based upon trading activity at
December 31, 1997. Fair value of the Gaylord Seller Note is based on current
redemption value.

     The weighted average interest pay rate for the Company's interest rate swap
agreements was 7.82% at December 31, 1997. The weighted average interest rate
for the Company's interest rate cap agreements was 8.49% at December 31, 1997.
The weighted average interest rates for the Company's interest rate collar
agreements were 9.04% and 7.57% for the cap and floor components, respectively,
at December 31, 1997.

     The notional amounts of interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of interest rate hedge agreements. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.

     The fair value of interest rate hedge agreements generally reflects the
estimated amounts that the Company would receive or pay (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Company's interest rate hedge agreements.

     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. In addition, some
of the interest rate hedge agreements are with certain of the participating
banks under the Company's Senior Credit Facility 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 results of
operations or the financial position of the Company.

                                      F-57
   252
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

10.  COMMON STOCK:

     The Company's common stock consist of the following at December 31, 1997:

<Table>
                                                             
CCA Holdings:
  Common stock -- Class A, voting, $.01 par value, 100,000
     shares authorized; 75,515 shares issued and
     outstanding............................................    $ 1
  Common stock -- Class B, voting, $.01 par value, 20,000
     shares authorized; 4,300 shares issued and
     outstanding............................................     --
  Common stock -- Class C, nonvoting, $.01 par value, 5,000
     shares authorized; 185 shares issued and outstanding...     --
                                                                ---
                                                                  1
                                                                ---
CCT Holdings:
  Common stock -- Class A, voting, $.01 par value, 20,000
     shares authorized; 16,726 shares issued and
     outstanding............................................     --
  Common stock -- Class B, voting, $.01 par value, 4,000
     shares authorized; 3,000 shares issued and
     outstanding............................................     --
  Common stock -- Class C, nonvoting, $.01 par value, 1,000
     shares authorized; 275 shares issued and outstanding...     --
                                                                ---
CC-LB:
  Common stock -- Class A, voting, $.01 par value, 31,000
     shares authorized, 27,850 shares issued and
     outstanding............................................     --
  Common stock -- Class B, voting, $.01 par value, 2,000
     shares authorized, 1,500 shares issued and
     outstanding............................................     --
  Common stock -- Class C, nonvoting, $.01 par value, 2,000
     shares authorized, 650 shares issued and outstanding...     --
                                                                ---
          Total common stock................................    $ 1
                                                                ===
</Table>

  CCA HOLDINGS

     The Class A Voting Common Stock (CCA Class A Common Stock) and Class C
Nonvoting Common Stock (CCA Class C Common Stock) have certain preferential
rights upon liquidation of CCA Holdings. In the event of liquidation,
dissolution or "winding up" of CCA Holdings, holders of CCA Class A and Class C
Common Stock are entitled to a preference of $1,000 per share. After such amount
is paid, holders of Class B Voting Common Stock (CCA Class B Common Stock) are
entitled to receive $1,000 per share. Thereafter, Class A and Class C
shareholders shall ratably receive the remaining proceeds.

     If upon liquidation, dissolution or "winding up" the assets of CCA Holdings
are insufficient to permit payment to Class A and Class C shareholders for their
full preferential amounts, all assets of CCA Holdings shall then be distributed
ratably to Class A and Class C shareholders. Furthermore, if the proceeds from
liquidation are inadequate to pay Class B shareholders their full preferential
amounts, the proceeds are to be distributed on a pro rata basis to Class B
shareholders.

     Upon the occurrence of any Conversion Event (as defined within the Amended
and Restated Certificate of Incorporation) Class C shareholders may convert any
or all of their outstanding shares into the same number of Class A shares.
Furthermore, CCA Holdings may automatically convert outstanding Class C shares
into the same number of Class A shares.

     CCA Holdings is restricted from making cash dividends on its common stock
until the balance outstanding under the HC Crown Note is repaid.

                                      F-58
   253
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Charter and Kelso entered into a Stockholders' Agreement providing for
certain restrictions on the transfer, sale or purchase of CCA Holdings' common
stock.

  CCT HOLDINGS

     The Class A Voting Common Stock (CCT Class A Common Stock) and Class C
Nonvoting Common Stock (CCT Class C Common Stock) have certain preferential
rights upon liquidation of CCT Holdings. In the event of liquidation,
dissolution or "winding up" of CCT Holdings, holders of CCT Class A Common Stock
and Class C Common Stock are entitled to a preference of $1,000 per share. After
such amount is paid, holders of Class B Voting Common Stock (CCT Class B Common
Stock) are entitled to receive $1,000 per share. Thereafter, Class A and Class C
shareholders shall ratably receive the remaining proceeds.

     If upon liquidation, dissolution or "winding up" the assets of CCT Holdings
are insufficient to permit payment to Class A Common Stock and Class C
shareholders for their full preferential amount, all assets of the Company shall
then be distributed ratably to Class A and Class C shareholders. Furthermore, if
the proceeds from liquidation are inadequate to pay Class B shareholders their
full preferential amount, the proceeds are to be distributed on a pro rata basis
to Class B shareholders.

     Upon the occurrence of any Conversion Event (as defined within the Amended
and Restated Certificate of Incorporation), Class C shareholders may convert any
or all of their outstanding shares into the same number of Class A shares.
Furthermore, CCT Holdings may automatically convert outstanding Class C shares
into the same number of Class A shares.

     CCT Holdings is restricted from making cash dividends on its common stock
until the balance outstanding under the note payable to seller is repaid.

     Charter and Kelso entered into a Stockholders' Agreement providing for
certain restrictions on the transfer, sale or purchase of CCT Holdings' common
stock.

  CC-LB

     The Class A Voting Common Stock (CC-LB Class A Common Stock) and Class C
Nonvoting Common Stock (CC-LB Class C Common Stock) have certain preferential
rights upon liquidation of CC-LB. In the event of liquidation, dissolution or
"winding up" of CC-LB, holders of CC-LB Class A Common Stock and Class C Common
Stock are entitled to a preference of $1,000 per share. After such amount is
paid, holders of Class B Voting Common Stock (CC-LB Class B Common Stock) are
entitled to receive $1,000 per share. Thereafter, Class A, Class B and Class C
shareholders shall ratably receive the remaining proceeds.

     If upon liquidation, dissolution or "winding up" the assets of CC-LB are
insufficient to permit payment to Class A and Class C shareholders for their
full preferential amount, all assets of the Company shall then be distributed
ratably to Class A and Class C shareholders. Furthermore, if the proceeds from
liquidation are inadequate to pay Class B shareholders their full preferential
amount, the proceeds are to be distributed on a pro rata basis to Class B
shareholders.

     CC-LB Class C Common Stock may be converted into CC-LB Class A Common Stock
upon the transfer of CC-LB Class C Common Stock to a person not affiliated with
the seller. Furthermore, CC-LB may automatically convert outstanding Class C
shares into the same number of Class A shares.

11.  RELATED PARTY TRANSACTIONS:

     Charter provides management services to the Company under the terms of a
contract which provides for annual base fees equal to $9,277 and $9,485 for the
period from January 1, 1998, through December 23, 1998, and for the year ended
December 31, 1997, respectively, plus an additional fee equal to 30% of the
excess, if any, of operating cash flow (as defined in the management agreement)
over the projected operating cash flow. Payment of the additional fee is
deferred due to restrictions provided within the Company's credit agreements.
Deferred management fees bear interest at 8.0% per annum. The additional fees
for the periods from
                                      F-59
   254
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

January 1, 1998, through December 23, 1998, and the years ended December 31,
1997 and 1996, totaled $2,160, $1,990 and $1,255, respectively. In addition, the
Company receives financial advisory services from an affiliate of Kelso, under
terms of a contract which provides for fees equal to $1,064 and $1,113 per annum
as of January 1, 1998, through December 23, 1998, and December 31, 1997,
respectively. Management and financial advisory service fees currently payable
of $2,281 are included in payables to manager of cable television
systems -- related party at December 31, 1997.

     The Company pays certain acquisition advisory fees to an affiliate of Kelso
and Charter, which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired. Total acquisition fees paid to the
affiliate of Kelso for the period from January 1, 1998, through December 23,
1998, were $-0-. Total acquisition fees paid to the affiliate of Kelso in 1997
and 1996 were $-0- and $1,400, respectively. Total acquisition fees paid to
Charter for the period from January 1, 1998, through December 23, 1998, were
$-0-. Total acquisition fees paid to Charter in 1997 and 1996 were $-0- and
$1,400, respectively.

     The Company and all entities managed by Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. Medical coverage provides for $2,435
aggregate stop loss protection and a loss limitation of $100 per person per
year. Workers' compensation coverage provides for $800 aggregate stop loss
protection and a loss limitation of $150 per person per year. Charges are
determined by independent actuaries at the present value of the actuarially
computed present and future liabilities for such benefits. The Company is
allocated its share of the charges monthly based upon its total number of
employees, historical claims and medical cost trend rates. Management considers
this allocation to be reasonable for the operations of the Company. For the
period from January 1, 1998, through December 23, 1998, the Company expensed
$1,950 relating to insurance allocations. During 1997 and 1996, the Company
expensed $1,689 and $2,065, respectively, relating to insurance allocations.

     Beginning in 1996, the Company and other entities managed by Charter
employed the services of Charter's National Data Center (the "National Data
Center"). The National Data Center performs certain customer billing services
and provides computer network, hardware and software support to the Company and
other affiliated entities. The cost of these services is allocated based on the
number of customers. Management considers this allocation to be reasonable for
the operations of the Company. For the period from January 1, 1998, through
December 23, 1998, the Company expensed $843 relating to these services. During
1997 and 1996, the Company expensed $723 and $466 relating to these services,
respectively.

     CCE-I maintains a regional office. The regional office performs certain
operational services on behalf of CCE-I and other affiliated entities. The cost
of these services is allocated to CCE-I and affiliated entities based on their
number of customers. Management considers this allocation to be reasonable for
the operations of CCE-I. From the period January 1, 1998, through December 23,
1998, the Company expensed $1,926 relating to these services. During 1997 and
1996, CCE-I expensed $861 and $799, respectively, relating to these services.

12.  COMMITMENTS AND CONTINGENCIES:

  LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Lease and rental costs charged to expense for the period from
January 1, 1998, through December 23, 1998, was $2,222. Rent expense incurred
under these leases during 1997 and 1996 was $1,956 and $1,704, respectively.

     The Company also rents utility poles in its operations. Generally, pole
rentals are cancelable on short notice, but the Company anticipates that such
rentals will recur. Rent expensed incurred for pole attachments for the period
from January 1, 1998, through December 23, 1998, was $2,430. Rent expense
incurred for pole attachments during 1997 and 1996 was $2,601 and $2,330,
respectively.

                                      F-60
   255
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  LITIGATION

     The Company is a party to lawsuits that arose in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.

13.  REGULATION IN THE CABLE TELEVISION INDUSTRY:

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 23,
1998, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation. The Company is subject to state regulation in
Connecticut.

                                      F-61
   256
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

14.  INCOME TAXES:

     Deferred tax assets and liabilities are recognized for the estimated future
tax consequence attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred income tax assets and liabilities are measured using the enacted
tax rates in effect for the year in which those temporary differences are
expected to be recovered or settled. Deferred income tax expense or benefit is
the result of changes in the liability or asset recorded for deferred taxes. A
valuation allowance must be established for any portion of a deferred tax asset
for which it is more likely than not that a tax benefit will not be realized.

     For the period from January 1, 1998, through December 23, 1998, and the
years ended December 31, 1997 and 1996, no current provision (benefit) for
income taxes was recorded. The effective income tax rate is less than the
federal rate of 35% primarily due to providing a valuation allowance on deferred
income tax assets.

     Deferred taxes are comprised of the following at December 31, 1997:

<Table>
                                                           
Deferred income tax assets:
  Accounts receivable.......................................  $     252
  Other assets..............................................      7,607
  Accrued expenses..........................................      4,740
  Deferred revenue..........................................        624
  Deferred management fees..................................      1,654
  Tax loss carryforwards....................................     80,681
  Tax credit carryforward...................................      1,360
  Valuation allowance.......................................    (40,795)
                                                              ---------
          Total deferred income tax assets..................     56,123
                                                              ---------
Deferred income tax liabilities:
  Property, plant and equipment.............................    (38,555)
  Franchise costs...........................................   (117,524)
  Other.....................................................    (11,407)
                                                              ---------
          Total deferred income tax liabilities.............   (167,486)
                                                              ---------
          Net deferred income tax liability.................  $(111,363)
                                                              =========
</Table>

     At December 31, 1997, the Company had net operating loss (NOL)
carryforwards for regular income tax purposes aggregating $204,400, which expire
in various years from 1999 through 2012. Utilization of the NOLs carryforwards
is subject to certain limitations.

15.  EMPLOYEE BENEFIT PLANS:

     The Company's employees may participate in the Charter Communications, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 15% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Company contributes an amount equal to 50% of the first 5% of contributions by
each employee. For the period from January 1, 1998, through December 23, 1998,
the Company contributed $585 to the 401(k) plan. During 1997 and 1996, the
Company contributed approximately $499 and $435 to the 401(k) Plan,
respectively.

     Certain employees of the Company are participants in the 1996 Charter
Communications/Kelso Group Appreciation Rights Plan (the "Plan"). The Plan
covers certain key employees and consultants within the

                                      F-62
   257
                                   CCA GROUP

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

group of companies and partnerships controlled by affiliates of Kelso and
managed by Charter. The Plan permits the granting of up to 1,000,000 units, of
which 705,000 were outstanding at December 31, 1997. Unless otherwise provided
in a particular instance, units vest at a rate of 20% per annum. The Plan
entitles participants to receive payment of the appreciated unit value for
vested units, upon the occurrence of certain events specified in the Plan (i.e.
change in control, employee termination) The units do not represent a right to
an equity interest to any entities within the CCA Group. Compensation expense is
based on the appreciated unit value and is amortized over the vesting period.

     As a result of the acquisition of Charter and the Company, the Plan was
terminated, all outstanding units became 100% vested and all amounts were paid
by Charter in 1999. For the period from January 1, 1998, through December 23,
1998, the Company recorded $5,684 of expense, included in management fees, and a
contribution from Charter related to the Appreciation Rights Plan.

16.  ACCOUNTING STANDARD NOT YET IMPLEMENTED:

     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS No.
133 is effective for fiscal years beginning after June 15, 1999. The Company has
not yet quantified the impacts of adopting SFAS No. 133 on its consolidated
financial statements nor has it determined the timing or method of its adoption
of SFAS No. 133. However, SFAS No. 133 could increase volatility in earnings
(loss).

17.  SUBSEQUENT EVENT:

     Subsequent to December 23, 1998, CCA Holdings, CCT Holdings and CC-LB
converted to limited liability companies and are now known as CCA Holdings LLC,
CCT Holdings LLC and Charter Communications Long Beach, LLC, respectively.

                                      F-63
   258

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To CharterComm Holdings, L.P.:

     We have audited the accompanying consolidated balance sheet of CharterComm
Holdings, L.P. and subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, partners' capital and cash flows for the
period from January 1, 1998, through December 23, 1998, and for the years ended
December 31, 1997 and 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CharterComm Holdings, L.P.
and subsidiaries as of December 31, 1997, and the results of their operations
and their cash flows for the period from January 1, 1998, through December 23,
1998, and for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  February 5, 1999

                                      F-64
   259

                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

                CONSOLIDATED BALANCE SHEET -- DECEMBER 31, 1997
                             (DOLLARS IN THOUSANDS)

                                     ASSETS

<Table>
                                                           
CURRENT ASSETS:
  Cash and cash equivalents.................................  $  2,742
  Accounts receivable, net of allowance for doubtful
     accounts of $330.......................................     3,158
  Prepaid expenses and other................................       342
                                                              --------
          Total current assets..............................     6,242
                                                              --------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment.............................   235,808
  Franchises, net of accumulated amortization of $119,968...   480,201
                                                              --------
                                                               716,009
                                                              --------
OTHER ASSETS................................................    16,176
                                                              --------
                                                              $738,427
                                                              ========
</Table>

                       LIABILITIES AND PARTNERS' CAPITAL

<Table>
                                                             
CURRENT LIABILITIES:
  Current maturities of long-term debt......................    $  5,375
  Accounts payable and accrued expenses.....................      30,507
  Payables to manager of cable television systems -- related
     party..................................................       1,120
                                                                --------
          Total current liabilities.........................      37,002
                                                                --------
DEFERRED REVENUE............................................       1,719
                                                                --------
LONG-TERM DEBT, less current maturities.....................     666,662
                                                                --------
DEFERRED MANAGEMENT FEES....................................       7,805
                                                                --------
DEFERRED INCOME TAXES.......................................       5,111
                                                                --------
REDEEMABLE PREFERRED LIMITED UNITS -- 577.81 units,
  issued and outstanding....................................      20,128
                                                                --------
PARTNERS' CAPITAL:
  General Partner...........................................          --
  Common Limited Partners -- 220.24 units issued and
     outstanding............................................          --
                                                                --------
          Total partners' capital...........................          --
                                                                --------
                                                                $738,427
                                                                ========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-65
   260

                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                           PERIOD FROM
                                                            JANUARY 1,
                                                              1998,
YEAR ENDED
                                                             THROUGH
DECEMBER 31
                                                           DECEMBER 23,
- --------------------
                                                               1998
1997        1996
                                                           ------------
- ----        ----
                                                                     
      
REVENUES.................................................    $196,801
$175,591    $120,280
                                                             --------
- --------    --------
OPERATING EXPENSES:
  Operating costs........................................      83,745
75,728      50,970
  General and administrative.............................      14,586
12,607       9,327
  Depreciation and amortization..........................      86,741
76,535      53,133
  Management fees -- related party.......................      14,780
8,779       6,014
                                                             --------
- --------    --------
                                                              199,852
173,649     119,444
                                                             --------
- --------    --------
     Income (loss) from operations.......................      (3,051)
1,942         836
                                                             --------
- --------    --------
OTHER INCOME (EXPENSE):
  Interest income........................................         211
182         233
  Interest expense.......................................     (66,121)
(61,498)    (41,021)
  Other, net.............................................      (1,895)
17        (468)
                                                             --------
- --------    --------
                                                              (67,805)
(61,299)    (41,256)
                                                             --------
- --------    --------
     Loss before extraordinary item......................     (70,856)
(59,357)    (40,420)
EXTRAORDINARY ITEM -- Loss on early retirement of debt...      (6,264)
- --          --
                                                             --------
- --------    --------
     Net loss............................................     (77,120)
(59,357)    (40,420)
REDEMPTION PREFERENCE ALLOCATION:
  Special Limited Partner units..........................          --
- --        (829)
  Redeemable Preferred Limited units.....................          --
- --      (4,081)
NET LOSS ALLOCATED TO REDEEMABLE PREFERRED LIMITED
  UNITS..................................................      20,128
2,553       4,063
                                                             --------
- --------    --------
     Net loss applicable to partners' capital accounts...    $(56,992)
$(56,804)   $(41,267)
                                                             ========
========    ========
NET LOSS ALLOCATION TO PARTNERS' CAPITAL ACCOUNTS:
  General Partner........................................    $(56,992)
$(21,708)   $(38,391)
  Common Limited Partners................................          --
(35,096)     (2,876)
                                                             --------
- --------    --------
                                                             $(56,992)
$(56,804)   $(41,267)
                                                             ========
========    ========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-66
   261

                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                          COMMON
                                                             GENERAL     LIMITED
                                                             PARTNER
PARTNERS     TOTAL
                                                             -------
- --------     -----
                                                                   
    
BALANCE, December 31, 1995.................................  $ 29,396    $
2,202    $ 31,598
  Capital contributions....................................    30,703
2,300      33,003
  Allocation of net loss...................................   (38,391)
(2,876)    (41,267)
                                                             --------
- --------    --------
BALANCE, December 31, 1996.................................    21,708
1,626      23,334
  Capital contributions....................................        --
33,470      33,470
  Allocation of net loss...................................   (21,708)
(35,096)    (56,804)
                                                             --------
- --------    --------
BALANCE, December 31, 1997.................................        --
- --          --
  Capital contributions....................................     4,920
- --       4,920
  Allocation of net loss...................................   (56,992)
- --     (56,992)
                                                             --------
- --------    --------
BALANCE, December 23, 1998.................................  $(52,072)   $
- --    $(52,072)
                                                             ========
========    ========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-67
   262

                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                             PERIOD FROM
                                                              JANUARY 1,
                                                                1998,
                                                               THROUGH      YEAR
ENDED DECEMBER 31,
                                                             DECEMBER 23,
- -----------------------
                                                                 1998
1997         1996
                                                             ------------
- ----         ----
                                                                      
        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss.................................................   $ (77,120)    $
(59,357)   $ (40,420)
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
     Extraordinary item -- Loss on early retirement of
       debt................................................       6,264
  --           --
     Depreciation and amortization.........................      86,741
76,535       53,133
     Amortization of debt issuance costs, debt discount and
       interest rate cap agreements........................      14,563
14,212        9,564
     Loss on disposal of property, plant and equipment.....       1,714
 203          367
     Changes in assets and liabilities, net of effects from
       acquisition --
       Accounts receivable, net............................       2,000
 369         (303)
       Prepaid expenses and other..........................        (203)
 943          245
       Accounts payable and accrued expenses...............      (1,970)
3,988        9,911
       Payables to manager of cable television systems,
          including deferred management fees...............       9,456
3,207        3,479
       Deferred revenue....................................         770
 (82)         452
       Other operating activities..........................       5,378
  --           --
                                                              ---------
- ---------    ---------
       Net cash provided by operating activities...........      47,593
40,018       36,428
                                                              ---------
- ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment...............     (85,044)
(72,178)     (48,324)
  Payments for acquisitions, net of cash acquired..........      (5,900)
(159,563)    (145,366)
  Other investing activities...............................       5,280
1,577       (2,089)
                                                              ---------
- ---------    ---------
     Net cash used in investing activities.................     (85,664)
(230,164)    (195,779)
                                                              ---------
- ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt.............................     547,400
231,250      260,576
  Repayments of long-term debt.............................    (505,300)
(67,930)     (34,401)
  Partners' capital contributions..........................          --
29,800           --
  Payment of debt issuance costs...........................      (3,651)
(3,593)     (11,732)
  Payment of Special Limited Partnership units.............          --
  --      (43,243)
  Repayments of note payable -- related party..............          --
  --      (15,000)
  Payments for interest rate cap agreements................          --
  --          (35)
                                                              ---------
- ---------    ---------
     Net cash provided by financing activities.............      38,449
189,527      156,165
                                                              ---------
- ---------    ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......         378
(619)      (3,186)
CASH AND CASH EQUIVALENTS, beginning of period.............       2,742
3,361        6,547
                                                              ---------
- ---------    ---------
CASH AND CASH EQUIVALENTS, end of period...................   $   3,120     $
2,742    $   3,361
                                                              =========
=========    =========
CASH PAID FOR INTEREST.....................................   $  61,559     $
42,538    $  28,860
                                                              =========
=========    =========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-68
   263

                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  ORGANIZATION AND BASIS OF PRESENTATION

     CharterComm Holdings, L.P. (CharterComm Holdings) was formed in March 1996
with the contributions of Charter Communications Southeast Holdings, L.P.
(Southeast Holdings), Charter Communications, L.P. (CC-I) and Charter
Communications II, L.P. (CC-II). This contribution was accounted for as a
reorganization under common control and, accordingly, the consolidated financial
statements and notes have been restated to include the results and financial
position of Southeast Holdings, CC-I and CC-II.

     Through December 23, 1998, CharterComm Holdings was owned 75.3% by
affiliates of Charterhouse Group International, Inc., a privately owned
investment firm (collectively referred to herein as "Charterhouse"), indirectly
owned 5.7% by Charter Communications, Inc. (Charter), manager of the
Partnership's (as defined below) cable television systems, and owned 19.0%
primarily by other institutional investors.

     Effective December 23, 1998, Paul G. Allen acquired 94% of Charter through
a series of transactions. In conjunction with Mr. Allen's acquisition, Charter
acquired 100% of the outstanding partnership interests in CharterComm Holdings
on December 23, 1998.

     The accompanying consolidated financial statements include the accounts of
CharterComm Holdings and its subsidiaries collectively referred to as the
"Partnership" herein. All significant intercompany balances and transactions
have been eliminated in consolidation.

     In 1998, the Partnership through its subsidiaries provided cable television
service to customers in Alabama, Georgia, Kentucky, Louisiana, North Carolina,
South Carolina and Tennessee.

  CASH EQUIVALENTS

     The Partnership considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1997,
cash equivalents consist primarily of repurchase agreements. These investments
are carried at cost that approximates market value.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installation. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for repairs and maintenance are charged to
expense as incurred, and equipment replacement and betterments are capitalized.

     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:

<Table>
                                                           
Cable distribution systems..................................  3-15 years
Buildings and leasehold improvements........................  5-15 years
Vehicles and equipment......................................   3-5 years
</Table>

     In 1997, the Partnership shortened the estimated useful lives of certain
property, plant and equipment for depreciation purposes. As a result, an
additional $4,775 of depreciation was recorded during 1997.

                                      F-69
   264
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  FRANCHISES

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable television systems represent management's
estimate of fair value and are generally amortized using the straight-line
method over a period of 15 years. In addition, approximately $100,000 of
franchise rights are being amortized over a period of 3 to 11 years.

  OTHER ASSETS

     Debt issuance costs are being amortized to interest expense over the term
of the related debt. The interest rate cap costs are being amortized over the
terms of the agreement, which approximates three years.

  IMPAIRMENT OF ASSETS

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted cash flows related
to the asset over its remaining life, the carrying value of such asset is
reduced to its estimated fair value.

  REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of December 31, 1997, no installation revenue has
been deferred, as direct selling costs exceeded installation revenue.

     Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts. Local governmental
authorities impose franchise fees on the Partnership ranging up to a federally
mandated maximum of 5.0% of gross revenues. On a monthly basis, such fees are
collected from the Partnership's customers and are periodically remitted to
local franchises. Franchise fees collected and paid are reported as revenue.

  INTEREST RATE HEDGE AGREEMENTS

     The Partnership manages fluctuations in interest rates by using interest
rate hedge agreements, as required by certain debt agreements. Interest rate
swaps, caps and collars are accounted for as hedges of debt obligations, and
accordingly, the net settlement amounts are recorded as adjustments to interest
expense in the period incurred. Premiums paid for interest rate caps are
deferred, included in other assets, and are amortized over the original term of
the interest rate agreement as an adjustment to interest expense.

     The Partnership's interest rate swap agreements require the Partnership to
pay a fixed rate and receive a floating rate thereby creating fixed rate debt.
Interest rate caps and collars are entered into by the Partnership to reduce the
impact of rising interest rates on floating rate debt.

     The Partnership's participation in interest rate hedging transactions
involves instruments that have a close correlation with its debt, thereby
managing its risk. Interest rate hedge agreements have been designed for hedging
purposes and are not held or issued for speculative purposes.

                                      F-70
   265
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  OTHER INCOME (EXPENSE)

     Other, net includes gain and loss on disposition of property, plant and
equipment, and other miscellaneous items, all of which are not directly related
to the Partnership's primary line of business. In 1996, the Partnership recorded
$367 of nonoperating losses for its portion of insurance deductibles pertaining
to damage caused by hurricanes to certain cable television systems.

  INCOME TAXES

     Income taxes are the responsibility of the partners and are not provided
for in the accompanying financial statements except for Peachtree Cable TV, Inc.
(Peachtree), an indirect wholly owned subsidiary, which is a C corporation and
for which taxes are presented in accordance with SFAS No. 109.

  USE OF ESTIMATES

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

2.  ACQUISITIONS:

     In 1998, the Partnership acquired cable television systems in one
transaction for a purchase price net of cash acquired, of $5,900. The excess
cost of properties acquired over the amounts assigned to net tangible assets at
the date of acquisition was $5,000 and is included in franchises.

     In 1997, the Partnership acquired cable television systems in three
separate transactions for an aggregate purchase price, net of cash acquired, of
$159,600. The excess of the cost of properties acquired over the amounts
assigned to net tangible assets at the date of acquisition was $126,400 and is
included in franchises.

     In 1996, the Partnership acquired cable television systems in three
separate transactions for an aggregate purchase price, net of cash acquired, of
$145,400. The excess of the cost of properties acquired over the amounts
assigned to net tangible assets at the date of acquisition was $118,200 and is
included in franchises.

     The above acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the dates of acquisition.

     Unaudited pro forma operating results for the 1997 acquisitions as though
the acquisitions had been made on January 1, 1997, with pro forma adjustments to
give effect to amortization of franchises, interest expense and certain other
adjustments are as follows.

<Table>
<Caption>
                                                               YEAR ENDED
                                                              DECEMBER 31,
                                                                  1997
                                                              ------------
                                                              (UNAUDITED)
                                                           
Revenues....................................................    $182,770
Income from operations......................................       2,608
Net loss....................................................     (61,389)
</Table>

     The unaudited pro forma information does not purport to be indicative of
the results of operations had these transactions been completed as of the
assumed date or which may be obtained in the future.

                                      F-71
   266
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3.  DISTRIBUTIONS AND ALLOCATIONS:

     For financial reporting purposes, redemption preference allocations,
profits and losses are allocated to partners in accordance with the liquidation
provision of the applicable partnership agreement.

     As stated in the Partnership Agreement, the Partnership may make
distributions to the partners out of all available funds at such times and in
such amounts as the General Partner may determine in its sole discretion.

4.  REDEEMABLE PREFERRED LIMITED UNITS:

     As of December 31, 1995, certain Redeemable Preferred Limited Partner units
of CC-I and CC-II were outstanding. During 1996, the Partnership issued certain
Redeemable Preferred Limited Partner units of CharterComm Holdings.

     The Preferred Limited Partners' preference return has been reflected as an
addition to the Redeemable Preferred Limited Partner units, and the decrease has
been allocated to the General Partner and Common Limited Partner consistent with
the liquidation and distribution provisions in the partnership agreements.

     At December 23, 1998, the balance related to the CharterComm Holdings
Preferred Limited Partner units was as follows:

<Table>
                                                           
Contribution, March 1996....................................  $ 20,052
  1996 redemption preference allocation.....................     2,629
  Allocation of net loss....................................        --
                                                              --------
Balance, December 31, 1996..................................    22,681
  1997 redemption preference allocation.....................        --
  Allocation of net loss....................................    (2,553)
                                                              --------
Balance, December 31, 1997..................................    20,128
  1998 redemption preference allocation.....................        --
  Allocation of net loss....................................   (20,128)
                                                              --------
Balance, December 23, 1998..................................  $     --
                                                              ========
</Table>

     The 1998 and 1997 redemption preference allocations of $4,617 and $4,020,
respectively, have not been reflected in the Preferred Limited Partners' capital
accounts since the General Partner and Common Limited Partners' capital accounts
have been reduced to $-0-.

5.  SPECIAL LIMITED PARTNER UNITS (CC-I):

     Prior to March 28, 1996, certain Special Limited Partner units of CC-I were
outstanding. CC-I's profits were allocated to the Special Limited Partners until
allocated profits equaled the unrecovered preference amount (preference amounts
range from 6% to 17.5% of the unrecovered initial cost of the partnership units
and unrecovered preference amounts per annum). When there was no profit to
allocate, the preference return was reflected as a decrease in Partners'
Capital.

     In accordance with a purchase agreement and through the use of a capital
contribution from Charter Communications Southeast, L.P. (Southeast), a wholly
owned subsidiary of Southeast Holdings, resulting from the proceeds of the Notes
(see Note 9), CC-I paid the Special Limited Partners $43,243 as full
consideration for their partnership interests on March 28, 1996.

                                      F-72
   267
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consists of the following at December 31,
1997:

<Table>
                                                           
Cable distribution systems..................................  $274,837
Land, buildings and leasehold improvements..................     5,439
Vehicles and equipment......................................    14,669
                                                              --------
                                                               294,945
Less -- Accumulated depreciation............................   (59,137)
                                                              --------
                                                              $235,808
                                                              ========
</Table>

     Depreciation expense for the period from January 1, 1998, through December
23, 1998, and for the years ended December 31, 1997 and 1996, was $44,307,
$33,634 and $16,997, respectively.

7.  OTHER ASSETS:

     Other assets consist of the following at December 31, 1997:

<Table>
                                                           
Debt issuance costs.........................................  $18,385
Other assets................................................    3,549
                                                              -------
                                                               21,934
Less -- Accumulated amortization............................   (5,758)
                                                              -------
                                                              $16,176
                                                              =======
</Table>

     As a result of the payment and termination of the CC-I Credit Agreement and
CC-II Credit Agreement (see Note 9), debt issuance costs of $6,264 were written
off as an extraordinary loss on early retirement of debt for the period from
January 1, 1998, through December 23, 1998.

8.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

     Accounts payable and accrued expenses consist of the following at December
31, 1997:

<Table>
                                                           
Accrued interest............................................  $ 9,804
Franchise fees..............................................    3,524
Programming costs...........................................    3,391
Accounts payable............................................    2,479
Capital expenditures........................................    2,099
Salaries and related benefits...............................    2,079
Other.......................................................    7,131
                                                              -------
                                                              $30,507
                                                              =======
</Table>

                                      F-73
   268
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9.  LONG-TERM DEBT:

     Long-term debt consists of the following at December 31, 1997:

<Table>
                                                           
Senior Secured Discount Debentures..........................  $146,820
11 1/4% Senior Notes........................................   125,000
Credit Agreements:
  CC-I......................................................   112,200
  CC-II.....................................................   339,500
                                                              --------
                                                               723,520
Less:
  Current maturities........................................    (5,375)
  Unamortized discount......................................   (51,483)
                                                              --------
                                                              $666,662
                                                              ========
</Table>

  SENIOR SECURED DISCOUNT DEBENTURES

     On March 28, 1996, Southeast Holdings and CharterComm Holdings Capital
Corporation (Holdings Capital), a wholly owned subsidiary of Southeast Holdings
(collectively the "Debentures Issuers"), issued $146,820 of Senior Secured
Discount Debentures (the "Debentures") for proceeds of $75,000. Proceeds from
the Debentures were used to pay fees and expenses related to the issuance of the
Debentures and the balance of $72,400 was a capital contribution to Southeast.
The Debentures are secured by all of Southeast Holdings' ownership interest in
Southeast and rank pari passu in right and priority of payment to all other
existing and future indebtedness of the Debentures Issuers. The Debentures are
effectively subordinated to the claims of creditors of Southeast Holdings'
subsidiaries, including the Combined Credit Agreement (as defined herein). The
Debentures are redeemable at the Debentures Issuers' option at amounts
decreasing from 107% to 100% of principal, plus accrued and unpaid interest to
the redemption date, beginning on March 15, 2001. The Debentures Issuers are
required to make an offer to purchase all of the Debentures, at a purchase price
equal to 101% of the principal amount, together with accrued and unpaid
interest, upon a Change in Control, as defined in the Debentures Indenture. No
interest is payable on the Debentures prior to March 15, 2001. Thereafter,
interest on the Debentures is payable semiannually in arrears beginning
September 15, 2001, until maturity on March 15, 2007. The discount on the
Debentures is being accreted using the effective interest method at an interest
rate of 14% from the date of issuance to March 15, 2001.

  11 1/4% SENIOR NOTES

     Southeast and CharterComm Capital Corporation (Southeast Capital), a wholly
owned subsidiary of Southeast (collectively the "Notes Issuers"), issued
$125,000 aggregate principal amount of 11 1/4% Senior Notes (the "Notes"). The
Notes are senior unsecured obligations of the Notes Issuers and rank pari passu
in right and priority of payment to all other existing and future indebtedness
of the Notes Issuers. The Notes are effectively subordinated to the claims of
creditors of Southeast's subsidiaries, including the lenders under the Combined
Credit Agreement. The Notes are redeemable at the Notes Issuers' option at
amounts decreasing from 105.625% to 100% of principal, plus accrued and unpaid
interest to the date of redemption, beginning on March 15, 2001. The Notes
Issuers are required to make an offer to purchase all of the Notes, at a
purchase price equal to 101% of the principal amount, together with accrued and
unpaid interest, upon a Change in Control, as defined in the Notes Indenture.
Interest is payable semiannually on March 15 and September 15 until maturity on
March 15, 2006.

     Southeast and Southeast Holdings are holding companies with no significant
assets other than their direct and indirect investments in CC-I and CC-II.
Southeast Capital and Holdings Capital were formed solely for

                                      F-74
   269
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the purpose of serving as co-issuers and have no operations. Accordingly, the
Notes Issuers and Debentures Issuers must rely upon distributions from CC-I and
CC-II to generate funds necessary to meet their obligations, including the
payment of principal and interest on the Notes and Debentures.

  COMBINED CREDIT AGREEMENT

     In June 1998, CC-I and CC-II (the "Borrowers") replaced their existing
credit agreements and entered into a combined credit agreement (the "Combined
Credit Agreement"), which provides for two term loan facilities, one with the
principal amount of $200,000 that matures on June 30, 2007, and the other with
the principal amount of $150,000 that matures on December 31, 2007. The Combined
Credit Agreement also provides for a $290,000 revolving credit facility, with a
maturity date of June 30, 2007. Amounts under the Combined Credit Agreement bear
interest at the LIBOR Rate or Base Rate, as defined, plus a margin of up to
2.0%. The variable interest rates ranged from 6.69% to 7.31% at December 23,
1998.

     Commencing March 31, 2002, and at the end of each calendar quarter
thereafter, the available borrowings for the revolving credit facility and the
$200,000 term loan shall be reduced on an annual basis by 11.0% in 2002 and
14.6% in 2003. Commencing March 31, 2002, and at the end of each calendar
quarter thereafter, the available borrowings for the $150,000 term loan shall be
reduced on an annual basis by 1.0% in 2002 and 1.0% in 2003. A quarterly
commitment fee of between 0.25% and 0.375% per annum is payable on the
unborrowed balance of the revolving credit facility.

     The Debentures, Notes and Combined Credit Agreement require the Partnership
to comply with various financial and nonfinancial covenants including the
maintenance of a ratio of debt to annualized operating cash flow, as defined,
not to exceed 5.25 to 1 at December 23, 1998. These debt instruments also
contain substantial limitations on, or prohibitions of, distributions,
additional indebtedness, liens, asset sales and certain other items.

  CC-I CREDIT AGREEMENT

     CC-I maintained a credit agreement (the "CC-I Credit Agreement") with a
consortium of banks for borrowings up to $127,200, consisting of a revolving
line of credit of $63,600 and a term loan of $63,600. Interest accrued, at
CC-I's option, at rates based upon the Base Rate, as defined in the CC-I Credit
Agreement, LIBOR, or prevailing bid rates of certificates of deposit plus the
applicable margin based upon CC-I's leverage ratio at the time of the
borrowings. The variable interest rates ranged from 7.75% to 8.00% and 7.44% to
7.50% at December 31, 1997 and 1996, respectively.

     In June 1998, the CC-I Credit Agreement was repaid and terminated in
conjunction with the establishment of the Combined Credit Agreement.

  CC-II CREDIT AGREEMENT

     CC-II maintained a credit agreement (the "CC-II Credit Agreement") with a
consortium of banks for borrowings up to $390,000, consisting of a revolving
credit facility of $215,000, and two term loans totaling $175,000. Interest
accrued, at CC-II's option, at rates based upon the Base Rate, as defined in the
CC-II Credit Agreement, LIBOR, or prevailing bid rates of certificates of
deposit plus the applicable margin based upon CC-II's leverage ratio at the time
of the borrowings. The variable interest rates ranged from 7.63% to 8.25% and
7.25% to 8.125% at December 31, 1997 and 1996, respectively.

     In June 1998, the CC-II Credit Agreement was repaid and terminated in
conjunction with the establishment of the Combined Credit Agreement.

                                      F-75
   270
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

     A summary of debt and the related interest rate hedge agreements at
December 31, 1997, is as follows:

<Table>
<Caption>
                                                     CARRYING    NOTIONAL
FAIR
                                                      VALUE       AMOUNT
VALUE
                                                     --------    --------
- -----
                                                                    
DEBT
Senior Secured Discount Debentures.................  $ 95,337    $     --
$115,254
11 1/4% Senior Notes...............................   125,000          --
136,875
CC-I Credit Agreement..............................   112,200          --
112,200
CC-II Credit Agreement.............................   339,500          --
339,500

INTEREST RATE HEDGE AGREEMENTS
CC-I:
  Swaps............................................        --     100,000
(797)
CC-II:
  Swaps............................................        --     170,000
(1,030)
  Caps.............................................        --      70,000
  --
  Collars..........................................        --      55,000
(166)
</Table>

     As the CC-I and CC-II Credit Agreements bear interest at current market
rates, their carrying amounts approximate fair market values at December 31,
1997. The fair value of the Notes and the Debentures is based on current
redemption value.

     The weighted average interest pay rate for CC-I interest rate swap
agreements was 8.07% at December 31, 1997.

     The weighted average interest pay rate for CC-II interest rate swap
agreements was 8.03% at December 31, 1997. The weighted average interest rate
for CC-II interest cap agreements was 8.48% at December 31, 1997. The weighted
average interest rates for CC-II interest rate collar agreements were 9.01% and
7.61% for the cap and floor components, respectively, at December 31, 1997.

     The notional amounts of interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the
Partnership's exposure through its use of interest rate hedge agreements. The
amounts exchanged are determined by reference to the notional amount and the
other terms of the contracts.

     The fair value of interest rate hedge agreements generally reflects the
estimated amounts that the Partnership would receive or pay (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Partnership's interest rate hedge agreements.

     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. In addition, some
of the interest rate hedge agreements are with certain of the participating
banks under the Partnership's credit facilities thereby reducing the exposure to
credit loss. The Partnership 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 results of
operations or the financial position of the Partnership.

                                      F-76
   271
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11.  INCOME TAXES:

     The book value of the Partnership's net assets (excluding Peachtree)
exceeds its tax reporting basis by $2,919 as of December 31, 1997.

     As of December 31, 1997, temporary differences and carryforwards that gave
rise to deferred income tax assets and liabilities for Peachtree are as follows:

<Table>
                                                           
Deferred income tax assets:
  Accounts receivable.......................................  $     4
  Accrued expenses..........................................       29
  Deferred management fees..................................      111
  Deferred revenue..........................................       24
  Tax loss carryforwards....................................      294
  Tax credit carryforwards..................................      361
                                                              -------
          Total deferred income tax assets..................      823
                                                              -------
Deferred income tax liabilities:
  Property, plant and equipment.............................   (1,372)
  Franchises and other assets...............................   (4,562)
                                                              -------
          Total deferred income tax liabilities.............   (5,934)
                                                              -------
          Net deferred income tax liability.................  $(5,111)
                                                              =======
</Table>

12.  RELATED PARTY TRANSACTIONS:

     Charter provides management services to the Partnership under the terms of
contracts which provide for fees equal to 5% of the Partnership's gross service
revenues. The debt agreements prohibit payment of a portion of such management
fees (40% for both CC-I and CC-II) until repayment in full of the outstanding
indebtedness. The remaining 60% of management fees, are paid quarterly through
December 31, 1998. Thereafter, the entire fee may be deferred if a multiple of
EBITDA, as defined, does not exceed outstanding indebtedness of CC-I and CC-II.
In addition, payments due on the Notes and Debentures shall be paid before any
deferred management fees are paid. Expenses recognized under the contracts for
the period from January 1, 1998, through December 23, 1998, were $9,860.
Expenses recognized under the contracts during 1997 and 1996 were $8,779 and
$6,014, respectively. Management fees currently payable of $1,432 are included
in payables to manager of cable television systems -- related party at December
31, 1997.

     The Partnership and all entities managed by Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims. Medical coverage provides for $2,435
aggregate stop loss protection and a loss limitation of $100 per person per
year. Workers' compensation coverage provides for $800 aggregate stop loss
protection and a loss limitation of $150 per person per year. Charges are
determined by independent actuaries at the present value of the actuarially
computed present and future liabilities for such benefits. The Partnership is
allocated its share of the charges monthly based upon its total number of
employees, historical claims and medical cost trend rates. Management considers
this allocation to be reasonable for the operations of the Partnership. For the
period from January 1, 1998, through December 23, 1998, the Partnership expensed
$1,831 relating to insurance allocations. During 1997 and 1996, the Partnership
expensed $1,524 and $1,136, respectively, relating to insurance allocations.

     The Partnership employs the services of Charter's National Data Center (the
"National Data Center"). The National Data Center performs certain customer
billing services and provides computer network,

                                      F-77
   272
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

hardware and software support for the Partnership and other entities managed by
Charter. The cost of these services is allocated based on the number of basic
customers. Management considers this allocation to be reasonable for the
operations of the Partnership. For the period from January 1, 1998, through
December 23, 1998, the Partnership expensed $685 relating to these services.
During 1997 and 1996, the Partnership expensed $606 and $345, respectively,
relating to these services.

     CC-I, CC-II and other entities managed by Charter maintain regional
offices. The regional offices perform certain operational services. The cost of
these services is allocated based on number of basic customers. Management
considers this allocation to be reasonable for the operations of the
Partnership. For the period from January 1, 1998, through December 23, 1998, the
Partnership expensed $3,009 relating to these services. During 1997 and 1996,
the Partnership expensed $1,992 and $1,294, respectively, relating to these
services.

     The Partnership pays certain acquisition advisory fees to Charter and
Charterhouse for cable television systems acquired. Total acquisition fees paid
to Charter for the period from January 1, 1998, through December 23, 1998, were
$-0-. Total acquisition fees paid to Charter in 1997 and 1996 were $982 and
$1,738, respectively. Total acquisition fees paid to Charterhouse for the period
from January 1, 1998, through December 23, 1998, were $-0-. Total acquisition
fees paid to Charterhouse in 1997 and 1996 were $982 and $1,738, respectively.

     During 1997, the ownership of CharterComm Holdings changed as a result of
CharterComm Holdings receiving a $25,000 cash contribution from an institutional
investor, a $3,000 cash contribution from Charterhouse and a $2,000 cash
contribution from Charter, as well as the transfer of assets and liabilities of
a cable television system through a series of transactions initiated by Charter
and Charterhouse. Costs of $200 were incurred in connection with the cash
contributions. These contributions were contributed to Southeast Holdings which,
in turn, contributed them to Southeast.

13.  COMMITMENTS AND CONTINGENCIES:

  LEASES

     The Partnership leases certain facilities and equipment under noncancelable
operating leases. Lease and rental costs charged to expense for the period from
January 1, 1998, through December 23, 1998, was $642. Rent expense incurred
under leases during 1997 and 1996 was $615 and $522, respectively.

     The Partnership also rents utility poles in its operations. Generally, pole
rentals are cancelable on short notice, but the Partnership anticipates that
such rentals will recur. Rent expense incurred for pole rental attachments for
the period from January 1, 1998, through December 23, 1998, was $3,261. Rent
expense incurred for pole attachments during 1997 and 1996 was $2,930 and
$2,092, respectively.

  LITIGATION

     The Partnership is a party to lawsuits that arose in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Partnership's consolidated financial position or results of
operations.

  REGULATION IN THE CABLE TELEVISION INDUSTRY

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communica-

                                      F-78
   273
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tions Commission (FCC) has principal responsibility for implementing the
policies of the Cable Acts. Many aspects of such regulation are currently the
subject of judicial proceedings and administrative or legislative proposals.
Legislation and regulations continue to change, and the Company cannot predict
the impact of future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 23,
1998, the amount returned by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

14.  EMPLOYEE BENEFIT PLANS:

     The Partnership's employees may participate in Charter Communications, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 15% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Partnership contributes an amount equal to 50% of the first 5% of contributions
by each employee. For the period from January 1, 1998, through December 23,
1998, the Partnership contributed $305. During 1997 and 1996, the Partnership
contributed $262 and $149, respectively.

     Certain Partnership employees participate in the 1996 Charter
Communications/Charterhouse Group Appreciation Rights Plan (the "Appreciation
Rights Plan"). The Appreciation Rights Plan covers certain key

                                      F-79
   274
                           CHARTERCOMM HOLDINGS, L.P.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employees and consultants within the group of companies and partnerships
controlled by Charterhouse and managed by Charter. The Plan permits the granting
of up to 1,000,000 units, of which 925,000 were outstanding at December 31,
1997. Unless otherwise provided in a particular instance, units vest at a rate
of 20% per annum. The Plan entitles participants to receive payment of the
appreciated unit value for vested units, upon the occurrence of certain events
specified in the Plan (i.e. change in control, employee termination). The units
do not represent a right to an equity interest in CharterComm Holdings.
Compensation expense is based on the appreciated unit value and is amortized
over the vesting period.

     As a result of the acquisition of Charter and the Partnership, the Plan was
terminated, all outstanding units became 100% vested and all amounts were paid
by Charter in 1999. For the period from January 1, 1998, through December 23,
1998, the Partnership recorded $4,920 of expense, included in management fees,
and a contribution from Charter related to the Appreciation Rights Plan.

15.  ACCOUNTING STANDARD NOT YET IMPLEMENTED:

     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS No.
133 is effective for fiscal years beginning after June 15, 1999. The Partnership
has not yet quantified the impacts of adopting SFAS No. 133 on its consolidated
financial statements nor has it determined the timing or method of its adoption
of SFAS No. 133. However, SFAS No. 133 could increase volatility in earnings
(loss).

16.  SUBSEQUENT EVENT:

     Subsequent to December 31, 1998, CharterComm Holdings, L.P. and all of its
subsidiaries converted to limited liability companies and are now known as
CharterComm Holdings LLC and subsidiaries.

                                      F-80
   275

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Marcus Cable Holdings, LLC:

     We have audited the accompanying consolidated statements of operations,
members' deficit and cash flows of Marcus Cable Holdings, LLC and subsidiaries
for the three months ended March 31, 1999. 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 audit.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations of Marcus
Cable Holdings, LLC and subsidiaries and their cash flows for the three months
ended March 31, 1999, in conformity with accounting principles generally
accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
March 6, 2000

                                      F-81
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                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                  THREE
                                                               MONTHS ENDED
                                                                MARCH 31,
                                                                   1999
                                                               ------------
                                                            
REVENUES....................................................    $ 125,180
                                                                ---------
OPERATING EXPENSES:
  Operating costs...........................................       45,309
  General and administrative................................       23,675
  Depreciation and amortization.............................       51,688
  Management fees -- related party..........................        4,381
                                                                ---------
                                                                  125,053
                                                                ---------
     Income from operations.................................          127
                                                                ---------
OTHER INCOME (EXPENSE):
  Interest Income...........................................          104
  Interest expense..........................................      (27,067)
  Other, net................................................         (158)
                                                                ---------
                                                                  (27,121)
                                                                ---------
Loss before extraordinary item..............................      (26,994)
EXTRAORDINARY ITEM -- Loss from early extinguishment of
debt........................................................     (107,978)
                                                                ---------
Net loss....................................................    $(134,972)
                                                                =========
</Table>

  The accompanying notes are an integral part of this consolidated statement.
                                      F-82
   277

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES
                   CONSOLIDATED STATEMENT OF MEMBERS' DEFICIT
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                           MARCUS CABLE
                                                           PROPERTIES,
VULCAN     MEMBERS'
                                                              L.L.C       CABLE,
INC    DEFICIT
                                                           ------------
- ----------   ---------
                                                                    
      
BALANCE, December 31, 1998..............................     $(21,355)    $
125,639    $ 104,284
Net loss -- January 1, 1999 to March 31, 1999...........       (5,129)
(129,843)    (134,972)
                                                             --------
- ---------    ---------
BALANCE, March 31, 1999.................................     $(26,484)    $
(4,204)   $ (30,688)
                                                             ========
=========    =========
</Table>

  The accompanying notes are an integral part of this consolidated statement.
                                      F-83
   278

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               THREE MONTHS
                                                                  ENDED
                                                                MARCH 31,
                                                                   1999
                                                               ------------
                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................   $  (134,972)
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
     Depreciation and amortization..........................        51,688
     Amortization of non-cash interest expense..............           868
     Accretion of notes payable.............................        14,522
     Extraordinary item -- loss from early extinguishment of
      long-term debt........................................       107,978
     Changes in assets and liabilities, net of effects from
      dispositions of cable television systems-
       Accounts receivable..................................         2,650
       Prepaid expenses and other...........................         2,882
       Accounts payable and accrued expenses................       (13,170)
       Other operating activities...........................         9,022
                                                               -----------
          Net cash provided by operating activities.........        41,468
                                                               -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................       (57,057)
                                                               -----------
          Net cash used in investing activities.............       (57,057)
                                                               -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..............................        24,246
  Repayments of long-term debt..............................    (1,680,142)
  Loan from Charter Holdings................................     1,680,142
                                                               -----------
          Net cash provided by financing activities.........        24,246
                                                               -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................         8,657
CASH AND CASH EQUIVALENTS, beginning of period..............           813
                                                               -----------
CASH AND CASH EQUIVALENTS, end of period....................   $     9,470
                                                               ===========
CASH PAID FOR INTEREST......................................   $    12,807
                                                               ===========
</Table>

  The accompanying notes are an integral part of this consolidated statement.
                                      F-84
   279

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             (DOLLARS IN THOUSANDS)

1.  ORGANIZATION AND BASIS OF PRESENTATION

     Marcus Cable Holdings, LLC (Marcus Holdings), a Delaware limited liability
company, was formed in February 1999 as parent of Marcus Cable Company, L.L.C.
(MCCLLC), formerly Marcus Cable Company, L.P. (MCCLP). MCCLP was formed as a
Delaware limited partnership and was converted to a Delaware limited liability
company on June 9, 1998. Marcus Holdings and its subsidiaries (collectively, the
"Company") derive their primary source of revenues by providing various levels
of cable television programming and services to residential and business
customers. The Company's operations are conducted through Charter Cable
Operating Company, LLC, formerly Marcus Cable Operating Company, L.L.C., a
wholly owned subsidiary of the Company. The Company operates cable television
systems primarily in Texas, Wisconsin, Indiana, California and Alabama.

     The accompanying consolidated financial statements include the accounts of
MCCLLC and its subsidiary limited liability companies and corporations,
representing the financial statements of the Company for the period presented.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

     On April 23, 1998, Vulcan Cable, Inc. and Paul G. Allen (collectively
referred to as "Vulcan") acquired all of the outstanding limited partnership
interest and substantially all of the general partner interest in MCCLP for cash
payments of $1,392,000 (the "Vulcan Acquisition"). Under the terms of the
purchase agreement, the owner of the remaining 0.6% general partner interest in
the Company (the "Minority Interest"), which represents 100% of the voting
control of the Company, could cause Vulcan to purchase the 0.6% general partner
interest under certain conditions, or Vulcan could cause the Minority Interest
to sell its interest to Vulcan under certain conditions at a fair value of not
less than $8,000. On March 31, 1999, Vulcan acquired voting control of the
Company by its acquisition of the Minority Interest for cash consideration.

     Effective December 23, 1998, through a series of transactions, Mr. Allen
acquired approximately 94% of Charter Communications, Inc. (Charter) (renamed
Charter Investment, Inc.). Beginning in October 1998, Charter began to manage
the operations of the Company.

     In March 1999, Charter transferred all of its cable television operating
subsidiaries to a subsidiary, Charter Communications Holdings, LLC (Charter
Holdings) in connection with the issuance of Senior Notes and Senior Discount
Notes totaling $3.6 billion. These operating subsidiaries were then transferred
to Charter Communications Operating, LLC (Charter Operating). On April 7, 1999,
the cable television operating subsidiaries of the Company were transferred to
Charter Operating subsequent to the purchase by Mr. Allen of the Minority
Interest.

     As a result of the Vulcan Acquisition, the Company recognized severance and
stay-on bonus compensation of $16,034 for the year ended December 31, 1998. As
of December 31, 1998, 35 employees and officers of the Company had been
terminated and $13,634 had been paid under severance and bonus arrangements. By
March 31, 1999, 50 additional employees were terminated and the remaining
balance of $2,400 was paid in April 1999.

2.  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.

                                      F-85
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                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installation. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for maintenance and repairs are charged to
expense as incurred and equipment replacements and betterments are capitalized.

     Depreciation is provided by the straight-line method over the estimated
useful lives of the related assets as follows:

<Table>
                                                           
Cable distribution systems..................................  3-10 years
Buildings and leasehold improvements........................  5-15 years
Vehicles and equipment......................................  3- 5 years
</Table>

     Depreciation expense for the three months ended March 31, 1999 was $33,696.

     FRANCHISES

     Costs incurred in obtaining and renewing cable television franchises are
deferred and amortized over the estimated lives of the franchises. Costs
relating to unsuccessful franchise applications are charged to expense when it
is determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent management's estimate of fair value and are amortized using the
straight-line method over a period of 15 years. The period of 15 years is
management's best estimate of the useful lives of the franchises and assumes
substantially all of those franchises that expire during the period will be
renewed by the Company. Amortization expense for the three months ended March
31, 1999 was $17,992.

     OTHER ASSETS

     Debt issuance costs are amortized to interest expense over the term of the
related debt.

     IMPAIRMENT OF ASSETS

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted cash flows related
to the asset over its remaining life, the carrying value of such asset is
reduced to its estimated fair value.

     REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of March 31, 1999, no installation revenue has been
deferred as direct selling costs exceeded installation revenue.

     INCOME TAXES

     Income taxes are the responsibility of the individual members and are not
provided for in the accompanying financial statements. The Company's subsidiary
corporations are subject to federal income tax but have had no operations since
inception and therefore, no taxable income.

                                      F-86
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                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

     USE OF ESTIMATES

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

3.  MEMBERS' EQUITY (DEFICIT)

     Upon completion of the Vulcan Acquisition, Vulcan owned 99.4% of MCCLP
through direct ownership of all LP Units and through 80% ownership of Marcus
Cable Properties, Inc. ("MCPI"), the general partner of Marcus Cable Properties,
L.P. ("MCPLP"), the general partner of MCCLP. The Minority Interest owned the
voting common stock, or the remaining 20% of MCPI.

     On June 9, 1998, MCCLP was converted into a Delaware limited liability
company with two members: Vulcan Cable, Inc., with 96.2% ownership, and Marcus
Cable Properties, L.L.C. ("MCPLLC") (formerly MCPLP), with 3.8% ownership.
Vulcan Cable, Inc. owns approximately 25.6% and MCPI owns approximately 74.4% of
MCPLLC, with Vulcan's interest in MCPI unchanged. As there was no change in
ownership interests, the historical partners' capital balances at June 9, 1998
were transferred to and became the initial equity of MCCLLC, and thus the
accompanying statement of members' equity has been presented as if the
conversion of MCCLP into MCCLLC occurred on April 23, 1998, the date of the
Vulcan Acquisition (see Note 1).

     As of March 31, 1999, MCCLLC has 100 issued and outstanding membership
units. Income and losses of MCCLLC are allocated to the members in accordance
with their ownership interests. Members are not personally liable for
obligations of MCCLLC.

4.  RELATED PARTY TRANSACTIONS

     The Company and Charter entered into a management agreement on October 6,
1998 whereby Charter began to manage the day-to-day operations of the Company.
In consideration for the management consulting services provided by Charter,
Marcus paid Charter an annual fee equal to 3% of the gross revenues of the cable
system operations plus reimbursement for out of pocket costs and expenses
incurred by Charter in performing services under the management agreement. For
the three months ended March 31, 1999, management fees under this agreement were
$4,381. In connection with the transfer of the Company's operating subsidiaries
to Charter Operating, the annual fee paid by Marcus to Charter increased to
3.5%.

5.  EMPLOYEE BENEFIT PLAN

     The Company sponsored a 401(k) plan for its employees whereby employees
that qualified for participation under the plan could contribute up to 15% of
their salary, on a before tax basis, subject to a maximum contribution limit as
determined by the Internal Revenue Service. The Company matched participant
contributions up to a maximum of 2% of a participant's salary. As a result of
the Vulcan Acquisition, participants became fully vested in Company matching
contributions.

     In connection with Vulcan's acquisition of Charter, the Marcus Plan's
assets were frozen as of December 23, 1998 and employees became fully vested in
company matching contributions after the Vulcan Acquisition. Effective January
1, 1999, the Company's employees with two months of service are eligible to
participate in the Charter Communications, Inc. 401(k) Plan (the "Charter
Plan"). Employees that qualify for participation in the Charter Plan can
contribute up to 15% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Company contributes an amount equal to 50% of the first 5% of contributions by
each employee. For the three months ended March 31, 1999, the Company made
contributions to the Charter Plan of $237.

                                      F-87
   282
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

6.  COMMITMENTS AND CONTINGENCIES

     LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Lease and rental costs charged to expense for the three months
ended March 31, 1999 were $584. The Company also rents utility poles in its
operations. Generally, pole rentals are cancelable on short notice, but the
Company anticipates that such rentals will recur. Rent expense for pole
attachments for the three months ended March 31, 1999 was $955.

     LITIGATION

     In Alabama, Indiana, Maryland, Texas and Wisconsin, customers have filed
putative class action lawsuits on behalf of all of the Company's customers
residing in those states who are or were customers, and who have been charged a
processing fee for delinquent payment of their cable bill. The plaintiffs
challenge the legality of the processing fee and seek declaratory judgment,
injunctive relief and unspecified damages. The Company is in the process of
finalizing a global settlement of these cases, which settlement must be approved
by a court. Unless a global settlement is consummated and approved, the Company
intends to vigorously defend the actions. At this stage, the Company is not able
to project the final costs of settlement, the expenses of defending the actions
or the potential outcome of the actions, including the impact on the
consolidated financial position or results of operations.

     The Company is also party to lawsuits, which are generally incidental to
its business. In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Company's consolidated financial position or results of operations.

     REGULATION IN THE CABLE TELEVISION INDUSTRY

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 31,
1998, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe

                                      F-88
   283
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

that the amount of any such refunds would have a material adverse effect on the
financial position or results of operations of the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

7.  LONG-TERM DEBT

     In March 1999, concurrent with the issuance of Senior Notes and Senior
Discount Notes (see Note 1), Charter and the Company extinguished all long-term
debt, excluding borrowings of Charter and the Company under their respective
credit agreements, and refinanced all existing credit agreements at various
subsidiaries of Charter and the Company with a new credit agreement entered into
by Charter Operating. The excess of the amount paid over the carrying value of
the Company's long-term debt, net of unamortized debt issuance costs, was
recorded as Extraordinary item -- loss on early extinguishment of debt in the
accompanying consolidated statement of operations.

8.  ACCOUNTING STANDARD NOT IMPLEMENTED

     In June 1998, the Financial Accounting Standards Boards adopted Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Financial Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value and that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. SFAS No. 133, as amended by SFAS No.
137, is effective for fiscal years beginning after June 15, 2000. The Company
has not yet quantified the impacts of adopting SFAS No. 133 on its consolidated
financial statements nor has it determined the timing or method of its adoption
of SFAS No. 133. However, SFAS No. 133 could increase volatility of earnings
(loss).

                                      F-89
   284

                          INDEPENDENT AUDITORS' REPORT

The Members
Marcus Cable Holdings, LLC:

     We have audited the accompanying consolidated balance sheets of Marcus
Cable Holdings, LLC and subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of operations, members' equity/partners' capital
and cash flows for each of the years in the three-year period ended December 31,
1998. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Marcus Cable
Holdings, LLC and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles.

                                          /s/ KPMG LLP

Dallas, Texas
February 19, 1999
  (except for the fourth and seventh paragraphs of Note 1
  which are as of August 25, 1999 and April 7, 1999, respectively)

                                      F-90
   285

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    DECEMBER 31,

- ------------------------
                                                                 1998
1997
                                                                 ----
- ----
                                                                      
ASSETS
- ------
Current assets:
  Cash and cash equivalents.................................  $      813    $
1,607
  Accounts receivable, net of allowance of $1,800 in 1998
     and $1,904 in 1997.....................................      16,055
23,935
  Prepaid expenses and other................................       6,094
2,105
                                                              ----------
- ----------
          Total current assets..............................      22,962
27,647
Investment in cable television systems:
  Property, plant and equipment.............................     741,021
706,626
  Franchises................................................     783,742
945,125
  Noncompetition agreements.................................       4,425
6,770
Other assets................................................      52,928
64,300
                                                              ----------
- ----------
                                                              $1,605,078
$1,750,468
                                                              ==========
==========
LIABILITIES AND MEMBERS' EQUITY/PARTNERS' CAPITAL
- -------------------------------------------------
Current liabilities:
  Current maturities of long-term debt......................  $   77,500    $
67,499
  Accrued liabilities.......................................      66,985
68,754
                                                              ----------
- ----------
          Total current liabilities.........................     144,485
136,253
Long-term debt..............................................   1,354,919
1,531,927
Other long-term liabilities.................................       1,390
2,261
Members' equity/partners' capital...........................     104,284
80,027
                                                              ----------
- ----------
                                                              $1,605,078
$1,750,468
                                                              ==========
==========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-91
   286

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                YEAR ENDED
DECEMBER 31,

- -----------------------------------
                                                            1998         1997
     1996
                                                          ---------    ---------
   ---------
                                                                 
   
Revenues:
  Cable services......................................    $ 499,265    $ 473,701
   $ 432,172
  Management fees -- related party....................          555        5,614
       2,335
                                                          ---------    ---------
   ---------
          Total revenues..............................      499,820      479,315
     434,507
                                                          ---------    ---------
   ---------
Operating expenses:
  Selling, service and system management..............      193,725      176,515
     157,197
  General and
     administrative...................................       77,913       72,351
      73,017
  Transaction and severance costs.....................      135,379           --
          --
  Management fees -- related party....................        3,341           --
          --
  Depreciation and amortization.......................      215,789      188,471
     166,429
                                                          ---------    ---------
   ---------
          Total operating expenses....................      626,147      437,337
     396,643
                                                          ---------    ---------
   ---------
          Operating income (loss).....................     (126,327)      41,978
      37,864
                                                          ---------    ---------
   ---------
Other (income) expense:
  Interest expense....................................      159,985      151,207
     144,376
  Gain on sale of assets..............................     (201,278)          --
      (6,442)
                                                          ---------    ---------
   ---------
          Total other (income) expense................      (41,293)     151,207
     137,934
                                                          ---------    ---------
   ---------
          Loss before extraordinary
            item......................................      (85,034)
(109,229)    (100,070)
Extraordinary item -- loss on early retirement of
  debt................................................       (9,059)          --
          --
                                                          ---------    ---------
   ---------
          Net loss....................................    $ (94,093)
$(109,229)   $(100,070)
                                                          =========    =========
   =========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-92
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                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY/PARTNERS' CAPITAL
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 MARCUS
                                                    CLASS B       CABLE
                                        GENERAL     LIMITED    PROPERTIES,
VULCAN
                                        PARTNERS   PARTNERS      L.L.C.
CABLE, INC.     TOTAL
                                        --------   --------    -----------
- -----------     -----
                                                                 
          
Balance at December 31, 1995..........  $(21,396)  $ 310,722          --
   --     $ 289,326
  Net loss............................      (200)    (99,870)         --
   --      (100,070)
                                        --------   ---------    --------
- --------     ---------
Balance at December 31, 1996..........   (21,596)    210,852          --
   --       189,256
  Net loss............................      (218)   (109,011)         --
   --      (109,229)
                                        --------   ---------    --------
- --------     ---------
Balance at December 31, 1997..........   (21,814)    101,841          --
   --        80,027
  Net loss -- January 1, 1998 to April
     22, 1998.........................      (224)   (111,838)         --
   --      (112,062)
  Capital contributions...............        --          --          --
118,350       118,350
  Reorganization of limited
     partnership to limited liability
     company..........................    22,038       9,997     (22,038)
(9,997)           --
  Net income -- April 23, 1998 to
     December 31, 1998................        --          --         683
17,286        17,969
                                        --------   ---------    --------
- --------     ---------
Balance at December 31, 1998..........  $     --   $      --    $(21,355)
$125,639     $ 104,284
                                        ========   =========    ========
========     =========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-93
   288

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    YEAR ENDED
DECEMBER 31,

- -----------------------------------
                                                                1998
1997         1996
                                                                ----
- ----         ----
                                                                     
       
Cash flows from operating activities:
  Net loss..................................................  $ (94,093)
$(109,229)   $(100,070)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Extraordinary item -- loss on early retirement of
     debt...................................................      9,059
 --           --
    Gain on sale of assets..................................   (201,278)
 --       (6,442)
    Depreciation and amortization...........................    215,789
188,471      166,429
    Non cash interest expense...............................     82,416
72,657       63,278
    Changes in assets and liabilities, net of working
     capital adjustments for acquisitions:
      Accounts receivable, net..............................      7,880
(6,439)         (70)
      Prepaid expenses and other............................     (4,017)
 95         (574)
      Other assets..........................................        413
(385)        (502)
      Accrued liabilities...................................     (1,769)
9,132       (3,063)
                                                              ---------
- ---------    ---------
         Net cash provided by operating activities:.........     14,400
154,302      118,986
                                                              ---------
- ---------    ---------
Cash flows from investing activities:
  Acquisition of cable systems..............................    (57,500)
(53,812)     (10,272)
  Proceeds from sale of assets, net of cash acquired and
    selling costs...........................................    401,432
 --       20,638
  Additions to property, plant and equipment................   (224,723)
(197,275)    (110,639)
  Other.....................................................       (689)
 --           --
                                                              ---------
- ---------    ---------
         Net cash provided by (used in) investing
           activities:......................................    118,520
(251,087)    (100,273)
                                                              ---------
- ---------    ---------
Cash flows from financing activities:
  Borrowings under Senior Credit Facility...................    217,750
226,000       65,000
  Repayments under Senior Credit Facility...................   (359,500)
(131,250)     (95,000)
  Repayments of notes and debentures........................   (109,344)
 --           --
  Payment of debt issuance costs............................        (99)
(1,725)          --
  Cash contributed by member................................    118,350
 --           --
  Payments on other long-term liabilities...................       (871)
(667)         (88)
                                                              ---------
- ---------    ---------
         Net cash provided by (used in) financing
           activities.......................................   (133,714)
92,358      (30,088)
                                                              ---------
- ---------    ---------
Net decrease in cash and cash equivalents...................       (794)
(4,427)     (11,375)
Cash and cash equivalents at the beginning of the period....      1,607
6,034       17,409
                                                              ---------
- ---------    ---------
Cash and cash equivalents at the end of the period..........  $     813    $
1,607    $   6,034
                                                              =========
=========    =========
Supplemental disclosure of cash flow information:
  Interest paid.............................................  $  81,765    $
81,155    $  83,473
                                                              =========
=========    =========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-94
   289

                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

     Marcus Cable Holdings, LLC ("MCHLLC"), a Delaware limited liability
company, was formed in February 1999 as parent of Marcus Cable Company, L.L.C.
("MCCLLC"), formerly Marcus Cable Company, L.P. ("MCCLP"). MCCLP was formed as a
Delaware limited partnership and was converted to a Delaware limited liability
company on June 9, 1998 (See Note 3). MCHLLC and its subsidiaries (collectively,
the "Company") derive their primary source of revenues by providing various
levels of cable television programming and services to residential and business
customers. The Company's operations are conducted through Marcus Cable Operating
Company, L.L.C. ("MCOC"), a wholly-owned subsidiary of the Company. The Company
operates its cable television systems primarily in Texas, Wisconsin, Indiana,
California and Alabama.

     The accompanying consolidated financial statements include the accounts of
MCHLLC, which is the predecessor of MCCLLC, and its subsidiary limited liability
companies and corporations. All significant intercompany accounts and
transactions have been eliminated in consolidation.

     On April 23, 1998, Vulcan Cable, Inc. and Paul G. Allen (collectively
referred to as "Vulcan") acquired all of the outstanding limited partnership
interests and substantially all of the general partner interest in MCCLP for
cash payments of $1,392,000 ("the Vulcan Acquisition"). Under the terms of the
purchase agreement, the owner of the remaining 0.6% general partner interest in
the Company (the "Minority Interest"), which represents 100% of the voting
control of the Company, could cause Vulcan to purchase the 0.6% general partner
interest under certain conditions, or Vulcan could cause the Minority Interest
to sell its interest to Vulcan under certain conditions, at a fair value of not
less than $8,000.

     The accompanying consolidated financial statements do not reflect the
application of purchase accounting for the Vulcan Acquisition because the
Securities and Exchange Commission staff challenged such accounting treatment
since, as of December 31, 1998, Vulcan had not acquired voting control of the
Company. On March 31, 1999, Vulcan acquired voting control of the Company by its
acquisition of the Minority Interest for cash consideration.

     In connection with the Vulcan Acquisition, the Company incurred transaction
costs of approximately $119,345, comprised primarily of $90,200 of compensation
paid to employees of the Company by Vulcan in settlement of specially designated
Class B units in MCCLP ("EUnit") granted in past periods by the general partner
of MCCLP, $24,000 of transaction fees paid to certain equity partners for
investment banking services and $5,200 of expenses for professional fees. These
transaction costs have been included in the accompanying consolidated statement
of operations for the year ended December 31, 1998.

     Effective December 23, 1998, through a series of transactions, Paul G.
Allen acquired approximately 94% of Charter Communications, Inc. ("Charter").
Beginning in October 1998, Charter managed the operations of the Company.

     In March 1999, Charter transferred all of its cable television operating
subsidiaries to a subsidiary, Charter Communications Holdings, LLC (Charter
Holdings) in connection with the issuance of Senior Notes and Senior Discount
Notes totaling $3.6 billion. These operating subsidiaries were then transferred
to Charter Communications Operating, LLC ("Charter Operating"). On April 7,
1999, the cable operations of the Company were transferred to Charter Operating
subsequent to the purchase by Paul G. Allen of the Minority Interest.

     As a result of the Vulcan Acquisition, the Company recognized severance and
stay-on bonus compensation of $16,034, which is included in Transaction and
Severance Costs in the accompanying statement of operations for the year ended
December 31, 1998. As of December 31, 1998, 35 employees and officers of the
Company had been terminated and $13,634 had been paid under severance and bonus
arrangements. By

                                      F-95
   290
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

March 31, 1999, an additional 50 employees will be terminated. The remaining
balance of $2,400 is to be paid by April 30, 1999 and an additional $400 in
stay-on bonuses will be recorded as compensation in 1999 as the related services
are provided.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a) CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1998
and 1997, cash equivalents consist of certificates of deposit and money market
funds. These investments are carried at cost which approximates market value.

  (b) PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installation. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for maintenance and repairs are charged to
expense as incurred and equipment replacements and betterments are capitalized.

     Depreciation is provided by the straight-line method over the estimated
useful lives of the related assets as follows:

<Table>
                                                
Cable distribution systems.......................  3-10 years
Buildings and leasehold improvements.............  5-15 years
Vehicles and equipment...........................   3-5 years
</Table>

  (c) FRANCHISES

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the estimated lives of the franchises. Costs relating to
unsuccessful franchise applications are charged to expense when it is determined
that the efforts to obtain the franchise will not be successful. Franchise
rights acquired through the purchase of cable television systems represent
management's estimate of fair value and are amortized using the straight-line
method over a period of 15 years. The period of 15 years is management's best
estimate of the useful lives of the franchises and assumes substantially all of
those franchises that expire during the period will be renewed by the Company.
Accumulated amortization was $317,335 and $264,600 at December 31, 1998 and
1997, respectively.

  (d) NONCOMPETITION AGREEMENTS

     Noncompetition agreements are amortized using the straight-line method over
the term of the respective agreements. Accumulated amortization was $20,267 and
$19,144 at December 31, 1998 and 1997, respectively.

  (e) OTHER ASSETS

     Debt issuance costs are amortized to interest expense over the term of the
related debt. Going concern value of acquired cable systems is amortized using
the straight-line method over a period up to 10 years.

  (f) IMPAIRMENT OF ASSETS

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted

                                      F-96
   291
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

cash flows related to the asset over its remaining life, the carrying value of
such asset is reduced to its estimated fair value.

  (g) REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of December 31, 1998 and 1997, no installation
revenue has been deferred, as direct selling costs exceeded installation
revenue.

     Management fee revenues are recognized concurrently with the recognition of
revenues by the managed cable television system, or as a specified monthly
amount as stipulated in the management agreement. Incentive management fee
revenue is recognized upon performance of specified actions as stipulated in the
management agreement.

  (h) INCOME TAXES

     Income taxes are the responsibility of the individual members and are not
provided for in the accompanying financial statements. The Company's subsidiary
corporations are subject to federal income tax but have had no operations and
therefore, no taxable income since inception.

  (i) INTEREST RATE HEDGE AGREEMENTS

     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain of its debt agreements. Interest rate
swaps and caps are accounted for as hedges of debt obligations, and accordingly,
the net settlement amounts are recorded as adjustments to interest expense in
the period incurred.

     The Company's interest rate swap agreements require the Company to pay a
fixed rate and receive a floating rate thereby creating thereby creating fixed
rate debt. Interest rate caps are entered into by the Company to reduce the
impact of rising interest rates on floating rate debt.

     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designed for hedging purposes and
are not held or issued for speculative purposes.

  (j) USE OF ESTIMATES

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

  (k) ACCOUNTING STANDARD NOT IMPLEMENTED

     In June 1998, the Financial Accounting Standards Boards adopted Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Financial Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value and that changes in the derivative's fair value be
                                      F-97
   292
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133, as
amended by SFAS No. 137, is effective for fiscal years beginning after June 15,
2000. The Company has not yet quantified the impacts of adopting SFAS No. 133 on
its consolidated financial statements nor has it determined the timing or method
of its adoption of SFAS No. 133. However, SFAS No. 133 could increase volatility
of earnings (loss).

(3) CAPITAL STRUCTURE

  PARTNERS' CAPITAL

  (a) CLASSES OF PARTNERSHIP INTERESTS

     The MCCLP partnership agreement (the "Partnership Agreement") provided for
Class B Units and Convertible Preference Units. Class B Units consisted of
General Partner Units ("GP Units") and Limited Partner Units ("LP Units"). To
the extent that GP Units had the right to vote, GP Units voted as Class B Units
together with Class B LP Units. Voting rights of Class B LP Units were limited
to items specified under the Partnership Agreement. Prior to the dissolution of
the Partnership on June 9, 1998, there were 18,848.19 GP Units and 294,937.67
Class B LP Units outstanding.

     The Partnership Agreement also provided for the issuance of a class of
Convertible Preference Units. These units were entitled to a general
distribution preference over the Class B LP Units and were convertible into
Class B LP Units. The Convertible Preference Units could vote together with
Class B Units as a single class, and the voting percentage of each Convertible
Preference Unit, at a given time, was based on the number of Class B LP Units
into which such Convertible Preference Unit is then convertible. MCCLP had
issued 7,500 Convertible Preference Units with a distribution preference and
conversion price of two thousand dollars per unit.

     The Partnership Agreement permitted the General Partner, at its sole
discretion, to issue up to 31,517 Employee Units (classified as Class B Units)
to key individuals providing services to the Company. Employee Units were not
entitled to distributions until such time as all units have received certain
distributions as calculated under provisions of the Partnership Agreement
("subordinated thresholds"). At December 31, 1997 28,033.20 Employee Units were
outstanding with a subordinated threshold ranging from $1,600 to $1,750 per unit
(per unit amounts in whole numbers). In connection with the Vulcan Acquisition,
the amount paid to EUnit holders of $90,200 was recognized as Transaction and
Severance Costs in the year ended December 31, 1998.

  (b) ALLOCATION OF INCOME AND LOSS TO PARTNERS

     MCCLP incurred losses from inception. Losses were allocated as follows:

     (1) First, among the partners whose capital accounts exceed their
unreturned capital contributions in proportion to such excesses until each such
partner's capital account equals its unreturned capital contribution; and

     (2) Next, to the holders of Class B Units in accordance with their
unreturned capital contribution percentages.

     The General Partner was allocated a minimum of 0.2% to 1% of income or loss
at all times, depending on the level of capital contributions made by the
partners.

                                      F-98
   293
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  MEMBERS' EQUITY

     Upon completion of the Vulcan Acquisition, Vulcan collectively owned 99.4%
of MCCLP through direct ownership of all LP Units and through 80% ownership of
Marcus Cable Properties, Inc. ("MCPI"), the general partner of Marcus Cable
Properties, L.P. ("MCPLP"), the general partner of MCCLP. The Minority Interest
owned the voting common stock, or the remaining 20% of MCPI. In July 1998,
Vulcan contributed $20,000 in cash to the Company relating to certain employee
severance arrangements.

     On June 9, 1998, MCCLP was converted into a Delaware limited liability
company with two members: Vulcan Cable, Inc., with 96.2% ownership, and Marcus
Cable Properties, L.L.C. ("MCPLLC") (formerly MCPLP), with 3.8% ownership.
Vulcan Cable, Inc. owns approximately 25.6% and MCPI owns approximately 74.4% of
MCPLLC, with Vulcan's interest in MCPI unchanged. As there was no change in
ownership interests, the historical partners' capital balances at June 9, 1998
were transferred to and became the initial equity of MCCLLC, and thus the
accompanying statement of members' equity has been presented as if the
conversion of MCCLP into MCCLLC occurred on April 23, 1998, the date of the
Vulcan Acquisition (see Note 1).

     As of December 31, 1998, MCCLLC has 100 issued and outstanding membership
units. Income and losses of MCCLLC are allocated to the members in accordance
with their ownership interests. Members are not personally liable for
obligations of MCCLLC.

(4) ACQUISITIONS AND DISPOSITIONS

     In 1998, the Company acquired cable television systems in the Birmingham,
Alabama area for a purchase price of $57,500. The excess of the cost of
properties acquired over the amounts assigned to net tangible assets and
noncompetition agreements as of the date of acquisition was approximately
$44,603 and is included in franchises.

     Additionally, in 1998, the Company completed the sale of certain cable
television systems for an aggregate net sales price of $401,432, resulting in a
total gain of $201,278.

     In 1997, the Company acquired cable television systems in the Dallas-Ft.
Worth, Texas area for a purchase price of $35,263. The excess of the cost of
properties acquired over the amounts assigned to net tangible assets as of the
date of acquisition was $15,098 and is included in franchises.

     Additionally, in July 1997, the Company completed an exchange of cable
television systems in Indiana and Wisconsin. According to the terms of the trade
agreement, in addition to the contribution of its systems, the Company paid
$18,549.

     In 1996, the Company acquired cable television systems in three separate
transactions for an aggregate purchase price of $10,272. The excess of the cost
of properties acquired over the amounts assigned to net tangible assets as of
the date of acquisition was $4,861 and is included in franchises.

     Additionally, in 1996, the Company completed the sale of cable television
systems in Washington, D.C. for a sale price of $20,638. The sale resulted in a
gain of $6,442.

     The above acquisitions were accounted for using the purchase method of
accounting and, accordingly, results of operations of the acquired assets have
been included in the accompanying consolidated financial statements from the
dates of acquisition. The purchase prices were allocated to tangible and
intangible assets based on estimated fair market values at the dates of
acquisition. The cable system trade discussed above was accounted for as a
nonmonetary exchange and, accordingly, the additional cash contribution was
allocated to tangible and intangible assets based on recorded amounts of the
nonmonetary assets relinquished.

                                      F-99
   294
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Unaudited pro forma operating results as though 1998 and 1997 acquisitions
and divestitures discussed above had occurred on January 1, 1997, with
adjustments to give effect to amortization of franchises, interest expense and
certain other adjustments are as follows for the years ended December 31, 1998
and 1997:

<Table>
<Caption>
                                                         1998         1997
                                                         ----         ----
                                                            (UNAUDITED)
                                                              
Revenues.............................................  $ 457,929    $ 421,665
Operating income (loss)..............................   (148,472)       9,064
Net loss.............................................   (150,841)    (142,143)
</Table>

(5) PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consists of the following at December 31:

<Table>
<Caption>
                                                         1998         1997
                                                         ----         ----
                                                              
Cable distribution systems..........................  $  996,804    $ 878,721
Vehicles and other..................................      40,243       37,943
Land and buildings..................................      18,861       17,271
                                                      ----------    ---------
                                                       1,055,908      933,935
Accumulated depreciation............................    (314,887)    (227,309)
                                                      ----------    ---------
                                                      $  741,021    $ 706,626
                                                      ==========    =========
</Table>

     Depreciation expense for the years ended December 31, 1998, 1997 and 1996
was $129,663, $96,220, and $72,281, respectively.

(6) OTHER ASSETS

     Other assets consist of the following at December 31, 1998 and 1997:

<Table>
<Caption>
                                                           1998        1997
                                                         --------    --------
                                                               
Debt issuance costs....................................  $ 41,079    $ 45,225
Going concern value....................................    37,274      37,274
Other..................................................       677       1,090
                                                         --------    --------
                                                           79,030      83,589
Accumulated amortization...............................   (26,102)    (19,289)
                                                         --------    --------
                                                         $ 52,928    $ 64,300
                                                         ========    ========
</Table>

(7) ACCRUED LIABILITIES

     Accrued liabilities consist of the following at December 31, 1998 and 1997:

<Table>
<Caption>
                                                            1998       1997
                                                           -------    -------
                                                                
Accrued operating liabilities............................  $26,334    $27,923
Accrued programming costs................................    9,539      9,704
Accrued franchise fees...................................    8,907     10,131
Accrued property taxes...................................    4,586      5,125
Accrued interest.........................................    3,752      7,949
Other accrued liabilities................................   13,867      7,922
                                                           -------    -------
                                                           $66,985    $68,754
                                                           =======    =======
</Table>

                                      F-100
   295
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(8) LONG-TERM DEBT

     The Company has outstanding the following borrowings on long-term debt
arrangements at December 31, 1998 and 1997:

<Table>
<Caption>
                                                         1998          1997
                                                      ----------    ----------
                                                              
Senior Credit Facility..............................  $  808,000    $  949,750
13 1/2% Senior Subordinated Discount Notes..........     383,236       336,304
14 1/4% Senior Discount Notes.......................     241,183       213,372
11 7/8% Senior Debentures...........................          --       100,000
                                                      ----------    ----------
                                                       1,432,419     1,599,426
Less current maturities.............................      77,500        67,499
                                                      ----------    ----------
                                                      $1,354,919    $1,531,927
                                                      ==========    ==========
</Table>

     The Company, through MCOC, maintains a senior credit facility ("Senior
Credit Facility"), which provides for two term loan facilities, one with a
principal amount of $490,000 that matures on December 31, 2002 ("Tranche A") and
the other with a principal amount of $300,000 million that matures on April 30,
2004 ("Tranche B"). The Senior Credit Facility provides for scheduled
amortization of the two term loan facilities which began in September 1997. The
Senior Credit Facility also provides for a $360,000 revolving credit facility
("Revolving Credit Facility"), with a maturity date of December 31, 2002.
Amounts outstanding under the Senior Credit Facility bear interest at either
the: i) Eurodollar rate, ii) prime rate, or iii) CD base rate or Federal Funds
rate, plus a margin of up to 2.25%, which is subject to certain quarterly
adjustments based on the ratio of MCOC's total debt to annualized operating cash
flow, as defined. The variable interest rates ranged from 6.23% to 7.75% and
5.97% to 8.00% at December 23, 1998, and December 31, 1997, respectively. A
quarterly commitment fee ranging from 0.250% to 0.375% per annum is payable on
the unused commitment under the Senior Credit Facility.

     On October 16, 1998, the Company entered into an agreement to amend its
Senior Credit Facility. The amendment provides for, among other items, a
reduction in the permitted leverage and cash flow ratios, a reduction in the
interest rate charge under the Senior Credit Facility and a change in the
restriction related to the use of cash proceeds from asset sales to allow such
proceeds to be used to redeem the 11 7/8% Senior Debentures.

     In 1995, the Company issued $299,228 of 14 1/4% Senior Discount Notes due
December 15, 2005 (the "14 1/4% Notes") for net proceeds of $150,003. The
14 1/4% Notes are unsecured and rank pari passu to the 11 7/8% Debentures
(defined below). The 14 1/4% Notes are redeemable at the option of MCHLLC at
amounts decreasing from 107% to 100% of par beginning on June 15, 2000. No
interest is payable until December 15, 2000. Thereafter interest is payable
semi-annually until maturity. The discount on the 14 1/4% Notes is being
accreted using the effective interest method. The unamortized discount was
$85,856 at December 31, 1997.

     In 1994, the Company, through MCOC, issued $413,461 face amount of 13 1/2%
Senior Subordinated Discount Notes due August 1, 2004 (the "13 1/2% Notes") for
net proceeds of $215,000. The 13 1/2% Notes are unsecured, are guaranteed by
MCHLLC and are redeemable, at the option of MCOC, at amounts decreasing from
105% to 100% of par beginning on August 1, 1999. No interest is payable on the
13 1/2% Notes until February 1, 2000. Thereafter, interest is payable
semi-annually until maturity. The discount on the 13 1/2% Notes is being
accreted using the effective interest method. The unamortized discount was
$77,157 at December 31, 1997.

     In 1993, the Company issued $100,000 principal amount of 11 7/8% Senior
Debentures due October 1, 2005 (the "11 7/8% Debentures"). The 11 7/8%
Debentures were unsecured and were redeemable at the option of the Company on or
after October 1, 1998 at amounts decreasing from 105.9% to 100% of par at
October 1, 2002, plus accrued interest, to the date of redemption. Interest on
the 11 7/8% Debentures was payable semi-annually each April 1 and October 1
until maturity.

                                      F-101
   296
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On July 1, 1998, $4,500 face amount of the 14 1/4% Notes and $500 face
amount of the 11 7/8% Notes were tendered for gross tender payments of $3,472
and $520 respectively. The payments resulted in a gain on the retirement of the
debt of $753. On December 11, 1998, the 11 7/8% Notes were redeemed for a gross
payment of $107,668, including accrued interest. The redemption resulted in a
loss on the retirement of the debt of $9,059.

     The 14 1/4% Notes, 13 1/2% Notes, 11 7/8% Debentures and Senior Credit
Facility are all unsecured and require the Company and/or its subsidiaries to
comply with various financial and other covenants, including the maintenance of
certain operating and financial ratios. These debt instruments also contain
substantial limitations on, or prohibitions of, distributions, additional
indebtedness, liens, asset sales and certain other items.

(9) FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying and fair values of the Company's significant financial
instruments as of December 31, 1998 and 1997 are as follows:

<Table>
<Caption>
                                                            1998
 1997
                                                     -------------------
- -------------------
                                                     CARRYING     FAIR
CARRYING     FAIR
                                                      VALUE      VALUE
VALUE      VALUE
                                                     --------    -----
- --------    -----
                                                                  
     
Senior Credit Facility.............................  $808,000   $808,000
$949,750   $949,750
13 1/2% Notes......................................   383,236    418,629
336,304    381,418
14 1/4% Notes......................................   241,183    279,992
213,372    258,084
11 7/8% Debentures.................................        --         --
100,000    108,500
</Table>

     The carrying amount of the Senior Credit Facility approximates fair value
as the outstanding borrowings bear interest at market rates. The fair values of
the 14 1/4% Notes, 13 1/2% Notes, and 11 7/8% Debentures, are based on quoted
market prices. The Company had interest rate swap agreements covering a notional
amount of $500,000 at December 31, 1998 and 1997. The fair value of such swap
agreements was ($5,761) at December 31, 1998.

     The weighted average interest pay rate for the interest rate swap
agreements was 5.7% at December 31, 1998, and 1997. Certain of these agreements
allow for optional extension by the counterparty or for automatic extension in
the event that one month LIBOR exceeds a stipulated rate on any monthly reset
date. Approximately $100,000 notional amount included in the $500,000 notional
amount described above is also modified by an interest rate cap agreement which
resets monthly.

     The notional amounts of the interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of interest rate hedge agreements. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.

     The fair values of the interest rate hedge agreements generally reflect the
estimated amounts that the Company would receive or (pay) (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Company's interest rate hedge agreements.

     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. In addition, some
of the interest rate hedge agreements are with certain of the participating
banks under the Company's Senior Credit Facility thereby reducing the exposure
to credit loss. The Company has policies regarding the financial stability and
credit standing of the major counterparties. Nonperformance by the
counterparties is not anticipated nor would it have a material adverse effect on
the Company's consolidated financial position or results of operations.

                                      F-102
   297
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(10) RELATED PARTY TRANSACTIONS

     The Company and Charter entered into a management agreement on October 6,
1998 whereby Charter began to manage the day-to-day operations of the Company.
In consideration for the management consulting services provided by Charter,
Marcus pays Charter an annual fee equal to 3% of the gross revenues of the cable
system operations, plus expenses. From October 6, 1998 to December 31, 1998,
management fees under this agreement were $3,341.

     Prior to the consummation of the Vulcan Acquisition, affiliates of Goldman
Sachs owned limited partnership interests in MCCLP. Maryland Cable Partners,
L.P. ("Maryland Cable"), which was controlled by an affiliate of Goldman Sachs,
owned the Maryland Cable systems. MCOC managed the Maryland Cable systems under
the Maryland Cable Agreement. Pursuant to such agreement, MCOC earned a
management fee equal to 4.7% of the revenues of Maryland Cable.

     Effective January 31, 1997, Maryland Cable was sold to a third party.
Pursuant to the Maryland Cable Agreement, MCOC recognized incentive management
fees of $5,069 during the twelve months ended December 31, 1997 in conjunction
with the sale. Although MCOC is no longer involved in the active management of
the Maryland Cable systems, MCOC has entered into an agreement with Maryland
Cable to oversee the activities, if any, of Maryland Cable through the
liquidation of the partnership. Pursuant to such agreement, MCOC earns a nominal
monthly fee. During the year ended December 31, 1998, MCOC earned total
management fees of $555. Including the incentive management fees noted above,
during the years ended December 31, 1997 and 1996, MCOC earned total management
fees of $5,614 and $2,335, respectively.

(11) EMPLOYEE BENEFIT PLAN

     The Company sponsors a 401(k) plan for its employees whereby employees that
qualify for participation under the plan can contribute up to 15% of their
salary, on a before tax basis, subject to a maximum contribution limit as
determined by the Internal Revenue Service. The Company matches participant
contributions up to a maximum of 2% of a participant's salary. For the years
ended December 31, 1998, 1997 and 1996, the Company made contributions to the
plan of $765, $761 and $480, respectively.

(12) COMMITMENTS AND CONTINGENCIES

  LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Lease and rental costs charged to expense for the years ended
December 31, 1998, 1997 and 1996 were $3,394, $3,230, and $2,767, respectively.
The Company also rents utility poles in its operations. Generally, pole rentals
are cancelable on short notice, but the Company anticipates that such rentals
will recur. Rent expense for pole attachments for the years ended December 31,
1998, 1997 and 1996 were $4,081, $4,314, and $4,008, respectively.

  REGULATION IN THE CABLE TELEVISION INDUSTRY

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

                                      F-103
   298
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 23,
1998, the amount returned by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

  LITIGATION

     In Alabama, Indiana, Texas and Wisconsin, customers have filed punitive
class action lawsuits on behalf of all person residing in those respective
states who are or were potential customers of the Company's cable television
service, and who have been charged a processing fee for delinquent payment of
their cable bill. The actions challenge the legality of the processing fee and
seek declaratory judgment, injunctive relief and unspecified damages. In Alabama
and Wisconsin, the Company has entered into joint speculation and case
management orders with attorneys for plaintiffs. A Motion to Dismiss is pending
in Indiana. The Company intends to vigorously defend the actions. At this stage
of the actions, the Company is not able to project the expenses of defending the
actions or the potential outcome of the actions, including the impact on the
consolidated financial position or results of operations.

     The Company is also party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel, the
outcome of these lawsuits will not have a material adverse effect on the
Company's consolidated financial position or results of operations.

                                      F-104
   299
                  MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(13) SUBSEQUENT EVENT (UNAUDITED)

     In March 1999, concurrent with the issuance of Senior Notes and Senior
Discount Notes, the combined company (Charter and the Company, see note 1)
extinguished all long-term debt, excluding borrowings of Charter and the Company
under their respective credit agreements, and refinanced all existing credit
agreements at various subsidiaries of the Company and Charter with a new credit
agreement entered into by a wholly owned subsidiary of the combined company.

                                      F-105
   300

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
  Renaissance Media Group LLC

     We have audited the accompanying consolidated balance sheet of Renaissance
Media Group LLC (the "Company") as of April 30, 1999 and the related
consolidated statements of operations, changes in members' equity, and cash
flows for the four months ended April 30, 1999. 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 audit.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company at April 30, 1999, and the consolidated results of its operations
and its cash flows for the four months then ended in conformity with generally
accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

New York, New York
June 4, 1999
except for Note 11, as to which the date is
June 29, 1999

                                      F-106
   301

                          RENAISSANCE MEDIA GROUP LLC

                           CONSOLIDATED BALANCE SHEET

                                 (IN THOUSANDS)

<Table>
<Caption>
                                                              APRIL 30, 1999
                                                              --------------
                                                           
ASSETS
Cash and cash equivalents...................................     $  5,400
Accounts receivable -- trade (less allowance for doubtful
  accounts of $86)..........................................          520
Accounts receivable -- other................................          492
Prepaid expenses and other assets...........................          416
Investment in cable television systems:
  Property, plant and equipment.............................       76,250
  Less: accumulated depreciation............................      (10,706)
                                                                 --------
                                                                   65,544
                                                                 --------
  Cable television franchises...............................      238,429
  Less: accumulated amortization............................      (16,754)
                                                                 --------
                                                                  221,675
                                                                 --------
  Intangible assets.........................................       17,544
  Less: accumulated amortization............................       (1,525)
                                                                 --------
                                                                   16,019
                                                                 --------
  Net investment in cable television systems................      303,238
                                                                 --------
Total assets................................................     $310,066
                                                                 ========
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................     $    546
Accrued expenses............................................        3,222
Subscriber advance payments and deposits....................          657
Deferred marketing credits..................................          650
Debt........................................................      213,402
                                                                 --------
Total liabilities...........................................      218,477
                                                                 --------
Members' equity:
  Paid-in capital...........................................      108,600
  Accumulated deficit.......................................      (17,011)
                                                                 --------
Total members' equity.......................................       91,589
                                                                 --------
Total liabilities and members' equity.......................     $310,066
                                                                 ========
</Table>

See accompanying notes to consolidated financial statements.

                                      F-107
   302

                          RENAISSANCE MEDIA GROUP LLC
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                               FOUR MONTHS
                                                                  ENDED
                                                              APRIL 30, 1999
                                                              --------------
                                                           
Revenues....................................................     $20,396
Costs and expenses:
  Service costs.............................................       6,325
  Selling, general and administrative.......................       3,057
  Depreciation and amortization.............................       8,912
                                                                 -------
Operating income............................................       2,102
Interest income.............................................         122
Interest (expense)..........................................      (6,321)
                                                                 -------
(Loss) before credit for taxes..............................      (4,097)
Credit for taxes............................................          65
                                                                 -------
Net (loss)..................................................     $(4,032)
                                                                 =======
</Table>

See accompanying notes to consolidated financial statements.

                                      F-108
   303

                          RENAISSANCE MEDIA GROUP LLC
              CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' EQUITY
                                 (IN THOUSANDS)

<Table>
<Caption>

        TOTAL
                                                             PAID-IN
ACCUMULATED    MEMBERS'
                                                             CAPITAL
DEFICIT       EQUITY
                                                             --------
- -----------    --------
                                                                   
       
Balance December 31, 1998..................................  $108,600
$(12,979)     $95,621
Net (loss).................................................        --
(4,032)      (4,032)
                                                             --------
- --------      -------
Balance April 30, 1999.....................................  $108,600
$(17,011)     $91,589
                                                             ========
========      =======
</Table>

See accompanying notes to consolidated financial statements.

                                      F-109
   304

                          RENAISSANCE MEDIA GROUP LLC

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                 (IN THOUSANDS)

<Table>
<Caption>
                                                               FOUR MONTHS
                                                                  ENDED
                                                              APRIL 30, 1999
                                                              --------------
                                                           
OPERATING ACTIVITIES
Net (loss)..................................................     $(4,032)
Adjustments to non-cash and non-operating items:
  Depreciation and amortization.............................       8,912
  Accretion on Senior Discount Notes........................       3,528
  Other non-cash charges....................................         322
  Changes in operating assets and liabilities:
     Accounts receivable -- trade, net......................         206
     Accounts receivable -- other...........................          92
     Prepaid expenses and other assets......................         (75)
     Accounts payable.......................................      (1,496)
     Accrued expenses.......................................      (3,449)
     Subscriber advance payments and deposits...............          49
     Deferred marketing support.............................        (150)
                                                                 -------
Net cash provided by operating activities...................       3,907
                                                                 -------
INVESTING ACTIVITIES
Purchased cable television systems:
  Property, plant and equipment.............................        (830)
  Cable television franchises...............................      (1,940)
Escrow deposit..............................................         150
Capital expenditures........................................      (4,250)
Other intangible assets.....................................          16
                                                                 -------
Net cash used in investing activities.......................      (6,854)
                                                                 -------
FINANCING ACTIVITIES
Repayment of advances from Holdings.........................        (135)
                                                                 -------
Net cash used in financing activities.......................        (135)
                                                                 -------
Net decrease in cash and cash equivalents...................      (3,082)
Cash and cash equivalents at December 31, 1998..............       8,482
                                                                 =======
Cash and cash equivalents at April 30, 1999.................     $ 5,400
                                                                 =======
SUPPLEMENTAL DISCLOSURES
Interest paid...............................................     $ 4,210
                                                                 =======
</Table>

See accompanying notes to consolidated financial statements

                                      F-110
   305

                          RENAISSANCE MEDIA GROUP LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

1.  ORGANIZATION AND BASIS OF PRESENTATION

     Renaissance Media Group LLC ("Group") a wholly owned subsidiary of
Renaissance Media Holdings LLC ("Holdings"), was formed in March 1998 to own and
operate cable television systems in small and medium sized markets, which
provide programming, and other related services, to subscribers through its
hybrid coaxial and fiber optic distribution plant for a monthly fee. Group and
its wholly owned subsidiaries, Renaissance Media (Louisiana) LLC ("Louisiana"),
Renaissance Media (Tennessee) LLC ("Tennessee"), and Renaissance Media LLC
("Media") are collectively referred to as the "Company". On April 9, 1998, the
Company acquired six cable television systems (the "Acquisition") from TWI
Cable, Inc., a subsidiary of Time Warner Inc. ("Time Warner"). Prior to the
Acquisition, the Company had no operations other than start-up related
activities.

     On February 23, 1999, Holdings, Charter Communications, Inc. ("Charter"),
now known as Charter Investment, Inc. and Charter Communications, LLC ("Buyer"
or "CC LLC") executed a purchase agreement (the "Charter Purchase Agreement"),
providing for Holdings to sell and Buyer to purchase, all of the outstanding
limited liability company membership interests in Group held by Holdings (the
"Charter Transaction") subject to certain covenants and restrictions pending
satisfaction of certain conditions prior to closing. The purchase price was
$459,000, consisting of $348,000 in cash and $111,000 in assumed debt. On April
30, 1999, the Charter Transaction was consummated.

     These financial statements have been prepared as of and for the four months
ended April 30, 1999 immediately prior to the consummation of the Charter
Transaction.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NEW ACCOUNTING STANDARDS

     During 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an asset
or liability measured at its fair value and that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FASB Statement No. 133 -- An Amendment of FASB
Statement No. 133" has delayed the effective date of SFAS No. 133 to fiscal
years beginning after June 15, 2000. The adoption of SFAS No. 133 is not
expected to have a material impact on the consolidated financial statements.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements of the Company include the accounts
of the Company and its wholly owned subsidiaries. Significant inter-company
accounts and transactions have been eliminated.

CONCENTRATION OF CREDIT RISK

     A significant portion of the customer base is concentrated within the local
geographical area of each of the individual cable television systems. The
Company generally extends credit to customers and the ultimate collection of
accounts receivable could be affected by the local economy. Management performs
continuous credit evaluations of its customers and may require cash in advance
or other special arrangements from certain
                                      F-111
   306
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

customers. Management does not believe that there is any significant credit risk
which could have a material effect on the Company's financial condition.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include cash and investments in short-term,
highly liquid securities, which have maturities when purchased of three months
or less.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at purchased and capitalized
cost. Capitalized internal costs principally consist of employee costs and
interest on funds borrowed during construction. Capitalized labor, materials and
associated overhead amounted to approximately $721 for the four months ended
April 30, 1999. Replacements, renewals and improvements to installed cable plant
are capitalized. Maintenance and repairs are charged to expense as incurred.
Depreciation expense for the four months ended April 30, 1999 amounted to
$3,434.

     Property, plant and equipment is depreciated using the straight-line method
over the following estimated service lives:

<Table>
                                                           
Buildings and leasehold improvements........................  5-30 years
Cable systems, equipment and subscriber devices.............  5-30 years
Transportation equipment....................................   3-5 years
Furniture, fixtures and office equipment....................  5-10 years
</Table>

     Property, plant and equipment at April 30, 1999 consisted of:

<Table>
                                                           
Land........................................................  $   436
Buildings and leasehold improvements........................    1,445
Cable systems, equipment and subscriber devices.............   64,658
Transportation equipment....................................    2,301
Furniture, fixtures and office equipment....................      923
Construction in progress....................................    6,487
                                                              -------
                                                               76,250
Less: accumulated depreciation..............................  (10,706)
                                                              -------
Total.......................................................  $65,544
                                                              =======
</Table>

CABLE TELEVISION FRANCHISES AND INTANGIBLE ASSETS

     Cable television franchise costs include the assigned fair value, at the
date of acquisition, of the franchises from purchased cable television systems.
Intangible assets include goodwill, deferred financing and other intangible
assets. Cable television franchises and intangible assets are amortized using
the straight-line method over the following estimated useful lives:

<Table>
                                                           
Cable television franchises.................................    15 years
Goodwill....................................................    25 years
Deferred financing and other intangible assets..............  2-10 years
</Table>

                                      F-112
   307
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     Intangible assets at April 30, 1999 consisted of:

<Table>
                                                           
Goodwill....................................................  $ 8,608
Deferred financing costs....................................    8,307
Other intangible assets.....................................      629
                                                              -------
                                                               17,544
Less: accumulated amortization..............................   (1,525)
                                                              -------
Total.......................................................  $16,019
                                                              =======
</Table>

     The Company reviews the carrying value of its long-lived assets, including
property, plant and equipment, cable television franchises and intangible
assets, whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. To the extent the estimated future cash inflows
attributable to the asset, less estimated future cash outflows, is less than the
carrying amount, an impairment loss is recognized to the extent that the
carrying value of such asset is greater than its fair value.

REVENUES AND COSTS

     Subscriber fees are recorded as revenue in the period the related services
are provided and advertising revenues are recognized in the period the related
advertisements are exhibited. Rights to exhibit programming are purchased from
various cable networks. The costs of such rights are generally expensed as the
related services are made available to subscribers.

ADVERTISING COSTS

     Advertising costs are expensed upon the first exhibition of the related
advertisements and are recorded net of marketing credits earned from launch
incentive and cooperative advertising programs.

     During the four months ended April 30, 1999 the company earned marketing
credits in excess of advertising expense incurred. Advertising expense and
marketing credits amounted to $263 and $306, respectively, for the four months
ended April 30, 1999.

ESTIMATES USED IN FINANCIAL STATEMENT PRESENTATION

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

3.  ACQUISITIONS

BAYOU VISION, INC.

     On February 3, 1999, Media acquired the cable television assets of Bayou
Vision, Inc. and Gulf South Cable, Inc. serving approximately 1,950 subscribers
in the Villages of Estherwood, Morse and Mermentau and Acadia and Livingston
Parish, Louisiana. The cash purchase price was approximately $2,700 and was paid
out of available Company funds.

                                      F-113
   308
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

4.  DEBT

     As of April 30, 1999, debt consisted of:

<Table>
                                                           
10% Senior Discount Notes at accreted value (a).............  $110,902
Credit Agreement (b)........................................   102,500
                                                              --------
                                                              $213,402
                                                              ========
</Table>

- ---------------
(a) On April 9, 1998, the Company issued $163,175 principal amount at maturity,
    $100,012 initial accreted value, of 10% senior discount notes due 2008 (the
    "Notes"). The Notes pay no cash interest until April 15, 2003. From and
    after April 15, 2003 the Notes will bear interest, payable semi-annually in
    cash, at a rate of 10% per annum on April 15 and October 15 of each year,
    commencing October 15, 2003. The Notes are due on April 15, 2008. The fair
    market value of the Notes at April 30, 1999 was $116,262. See Note 11
    regarding the offer to repurchase the Notes.

(b) On April 9, 1998, Media entered into a credit agreement among Morgan Stanley
    & Co. Incorporated as Placement Agent, Morgan Stanley Senior Funding Inc.,
    as Syndication Agent, the Lenders, CIBC Inc., as Documentation Agent and
    Bankers Trust Company as Administrative Agent (the "Credit Agreement"). The
    aggregate commitments under the Credit Agreement total $150,000, consisting
    of a $40,000 revolver (the "Revolver"), $60,000 Tranche A Term Loans and
    $50,000 Tranche B Term Loans (collectively the "Term Loans"). The Revolver
    and Term Loans are collateralized by a first lien position on all present
    and future assets and the member's interest of Media, Louisiana and
    Tennessee. The Credit Agreement provides for interest at varying rates based
    upon various borrowing options and the attainment of certain financial
    ratios and for commitment fees of 1/2% on the unused portion of the
    revolver. Management believes the terms are comparable to those that could
    be obtained from third parties. The effective interest rate, including
    commitment fees and amortization of related deferred financing costs and the
    interest-rate cap, for the four months ended April 30, 1999 was 7.58%. See
    Note 11 regarding the repayment of amounts outstanding under the Credit
    Agreement upon consummation of the Charter Transaction. The Credit Agreement
    and the indenture pursuant to which the Notes were issued contain
    restrictive covenants on the Company regarding additional indebtedness,
    investment guarantees, loans, acquisitions, dividends and merger or sale of
    the subsidiaries and require the maintenance of certain financial ratios.

5.  INTEREST RATE CAP AGREEMENT

     The Company purchases interest rate cap agreements that are designed to
limit its exposure to increasing interest rates and are designated to its
floating rate debt. The strike price of these agreements exceeds the current
market levels at the time they are entered into. The interest rate indices
specified by the agreements have been and are expected to be highly correlated
with the interest rates the Company incurs on its floating rate debt. Payments
to be received as a result of the specified interest rate index exceeding the
strike price are accrued in other assets and are recognized as a reduction of
interest expense (the accrual accounting method). The cost of these agreements
is included in other assets and amortized to interest expense ratably during the
life of the agreement. Upon termination of interest rate cap agreements, any
gain is deferred in other liabilities and amortized over the remaining term of
the original contractual life of the agreement as a reduction of interest
expense.

     The Company purchased an interest rate cap agreement from Morgan Stanley
Capital Services Inc. The carrying value as of April 30, 1999 was $34. The fair
value of the interest rate cap was $0 as of April 30, 1999.

                                      F-114
   309
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     The following table summarizes the interest rate cap agreement:

<Table>
<Caption>
NOTIONAL                                       INITIAL    FIXED RATE
PRINCIPAL            EFFECTIVE   TERMINATION   CONTRACT      (PAY
AMOUNT      TERM       DATE         DATE         COST       RATE)
- ---------  -------   ---------   -----------   --------   ----------
                                           
$100,000   2 Years    12/1/97      12/1/99       $100       7.25%
</Table>

6.  TAXES

     For the four months ended April 30, 1999, the credit for taxes has been
calculated on a separate company basis. The components of the credit for taxes
are as follows:

<Table>
<Caption>
                                                               FOUR MONTHS
                                                                  ENDED
                                                              APRIL 30, 1999
                                                              --------------
                                                           
Federal:
  Current...................................................       $ --
  Deferred..................................................         --
State:......................................................         --
  Current...................................................        (65)
  Deferred..................................................         --
                                                                   ----
(Credit) for taxes..........................................       $(65)
                                                                   ====
</Table>

     The Company's current state tax credit results from overpayment in 1998 of
franchise tax in Tennessee and Mississippi and tax on capital in New York.

     The Company has a net operating loss ("NOL") carry-forward for income tax
purposes which is available to offset future taxable income. This NOL totals
approximately $22,324 and will expire in the year 2018 and 2019 at $14,900 and
$7,424 respectively. The Company has established a valuation allowance to offset
the entire potential future tax benefit of the NOL carry-forward and, therefore,
has recognized no deferred tax asset with respect to the NOL.

     Louisiana and Tennessee have elected to be treated as corporations for
federal income tax purposes and have not recorded any tax benefit for their
losses as the realization of these losses by reducing future taxable income in
the carry forward period is uncertain at this time.

7.  RELATED PARTY TRANSACTIONS

(A)  Transactions with Morgan Stanley entities

     In connection with the Acquisition, Media entered into the Credit Agreement
with Morgan Stanley Senior Funding Inc. and Morgan Stanley & Co. Incorporated
(collectively the "Morgan Stanley Entities") acted as the Placement Agent for
the Notes. In connection with these services the Morgan Stanley Entities
received customary fees and expense reimbursement comparable to that of a third
party exchange.

(B)  Transactions with Time Warner and related parties

     In connection with the Acquisition, Media entered into an agreement with
Time Warner (the "Time Warner Agreement"), pursuant to which Time Warner managed
the Company's programming in exchange for providing the Company access to
certain Time Warner programming arrangements (the "Programming Arrangements").
Management believes that programming rates made available to the Company through
its

                                      F-115
   310
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

relationship with Time Warner are lower than rates that the Company could obtain
separately. Such volume rates will not continue to be available after the
Charter Transaction.

     For the four months ended April 30, 1999, the Company incurred
approximately $2,716 in costs under the Programming Arrangements. In addition,
the Company has incurred programming costs of approximately $958 for programming
services owned directly or indirectly by Time Warner entities for the four
months ended April 30, 1999.

(C)  Transactions with board member

     The Company has utilized the law firm of one of its board members for legal
services for the Acquisition, financing agreements and various ongoing legal
matters. These fees totaled approximately $154 for the four months ended April
30, 1999.

8.  ACCRUED EXPENSES

     Accrued expenses as of April 30, 1999 consist of the following:

<Table>
                                                           
Accrued franchise fees......................................  $  830
Accrued programming costs...................................     644
Accrued salaries, wages and benefits........................     516
Accrued interest............................................     340
Accrued property and sales tax..............................     231
Accrued legal and professional fees.........................      43
Other accrued expenses......................................     618
                                                              ------
                                                              $3,222
                                                              ======
</Table>

9.  EMPLOYEE BENEFIT PLAN

     The Company sponsors a defined contribution plan which covers substantially
all employees (the "Plan"). The Plan provides for contributions from eligible
employees up to 15% of their compensation subject to Internal Revenue Code
limitations. The Company's contribution to the Plan is limited to 50% of each
eligible employee's contribution up to 10% of his or her compensation. The
Company has the right in any year to set the amount of the Company's
contribution percentage. Company matching contributions to the Plan for the four
months ended April 30, 1999 were approximately $54. All participant
contributions and earnings are fully vested upon contribution and Company
contributions and earnings vest 20% per year of employment with the Company,
becoming fully vested after five years.

     In connection with the Charter Transaction, the Plan's assets were frozen
as of April 30, 1999, and employees became fully vested. Effective July 1, 1999,
the Company's employees with two months of service are eligible to participate
in the Charter Communications, Inc. 401(k) Plan.

10.  COMMITMENTS AND CONTINGENCIES

(A)  Leases

     The Company had rental expense under various lease and rental agreements
primarily for offices, tower sites and warehouses of approximately $59 for the
four months ended April 30, 1999. In addition, the Company rents utility poles
in its operations generally under short term arrangements, but the Company
expects these arrangements to recur. Total rent expense for utility poles was
approximately $272 for the four months ended April 30, 1999.

                                      F-116
   311
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     Future minimum annual rental payments under noncancellable leases are as
follows:

<Table>
                                                           
1999........................................................  $ 29
2000........................................................    38
2001........................................................    24
2002........................................................    21
2003 and thereafter.........................................    70
                                                              ----
Total.......................................................  $182
                                                              ====
</Table>

(B)  Employment Agreements

     Media entered into employment agreements with six senior executives, who
are also investors in Holdings, for the payment of salaries and bonuses. In
connection with the Charter Transaction, the employment agreements with the six
senior executives were terminated with no liability to the Company.

(C)  Other Agreements

     In exchange for certain flexibility in establishing cable rate pricing
structures for regulated services that went into effect on January 1, 1996, Time
Warner agreed with the Federal Communications Commission ("FCC") to invest in
certain upgrades to its cable infrastructure (consisting primarily of materials
and labor in connection with the plant upgrades up to 750 MHz) by November 30,
2000. This agreement with the FCC (the "FCC Agreement") has been assumed by the
Company as part of the Acquisition and did not terminate as a result of the
Charter Transaction. The Company has agreed to invest approximately $25,100 in
upgrades to its cable infrastructure in accordance with the FCC Agreement.

     The Company has spent approximately $3,650 on such upgrades as of April 30,
1999.

11.  SUBSEQUENT EVENTS

     The Charter Transaction was consummated at the close of business on April
30, 1999. In connection with the closing of the Charter Transaction, all amounts
outstanding under the Credit Agreement, including accrued interest and unpaid
fees, were paid in full and the Credit Agreement was terminated. The effects of
the debt repayment and the CC LLC capital contribution will be reflected in the
consolidated financial statements of the Company for periods subsequent to April
30, 1999.

     In connection with the closing of the Charter Transaction, the Time Warner
Agreement was terminated on April 30, 1999 and Media paid Time Warner $650 for
deferred marketing credits owed to program providers under the Programming
Arrangements. See Note 7 (Transactions with Time Warner and related parties).

     On May 28, 1999, as a result of the Charter Transaction (i.e., change of
control) and in accordance with the terms and conditions of the indenture
governing the Notes, the Company made an offer (the "Tender Offer") to purchase
any and all of the Notes at 101% of their accreted value, plus accrued and
unpaid interest, if any, through June 28, 1999. The Tender Offer expired on June
23, 1999, whereby 48,762 notes ($1,000 face amount at maturity) were validly
tendered and accepted for purchase. On June 28, 1999, Charter Communications
Operating, LLC, the indirect parent of Group, paid a sum of $34,223 for all of
the Notes validly tendered. Accordingly, the Company recorded this payment for
the extinguishment of debt as a capital contribution.

                                      F-117
   312
                          RENAISSANCE MEDIA GROUP LLC

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

12.  MANAGEMENT AGREEMENT (UNAUDITED)

     Effective May 1, 1999, the Company is charged a management fee equal to
3.5% of revenues, as stipulated in the previous management agreement between
Charter and Charter Communications Operating, LLC ("CCO"), the indirect parent
of Group. To the extent that management fees charged to the Company are
greater/(less) than the proportionate share (based on basic subscribers) of
corporate expenses incurred by Charter on behalf of the Company, Group will
record distributions to/(capital contributions from) Charter. On November 12,
1999, Charter and CCO entered into a revised management agreement eliminating
the 3.5% management fee and entitling Charter to reimbursement from CCO of all
of its costs incurred in connection with the performance of its services under
the revised management agreement.

                                      F-118
   313

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
  Renaissance Media Group LLC

     We have audited the accompanying consolidated balance sheet of Renaissance
Media Group LLC as of December 31, 1998 and the related consolidated statements
of operations, changes in members' equity, and cash flows for the year ended
December 31, 1998. These 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 audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Renaissance
Media Group LLC at December 31, 1998, and the consolidated results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

New York, New York
February 22, 1999
except for Note 11, as to which
the date is February 24, 1999

                                      F-119
   314

                          RENAISSANCE MEDIA GROUP LLC
                           CONSOLIDATED BALANCE SHEET
                            AS OF DECEMBER 31, 1998
                                 (IN THOUSANDS)

<Table>
                                                             
                                 ASSETS

Cash and cash equivalents...................................    $  8,482
Accounts receivable -- trade (less allowance for doubtful
  accounts of $92)..........................................         726
Accounts receivable -- other................................         584
Prepaid expenses and other assets...........................         340
Escrow deposit..............................................         150
Investment in cable television systems:
  Property, plant and equipment.............................      71,246
  Less: Accumulated depreciation............................      (7,294)
                                                                --------
                                                                  63,952
                                                                --------
  Cable television franchises...............................     236,489
  Less: Accumulated amortization............................     (11,473)
                                                                --------
                                                                 225,016
                                                                --------
  Intangible assets.........................................      17,559
  Less: Accumulated amortization............................      (1,059)
                                                                --------
                                                                  16,500
                                                                --------
       Total investment in cable television systems.........     305,468
                                                                --------
          Total assets......................................    $315,750
                                                                ========

                    LIABILITIES AND MEMBERS' EQUITY

Accounts payable............................................    $  2,042
Accrued expenses(a).........................................       6,670
Subscriber advance payments and deposits....................         608
Deferred marketing support..................................         800
Advances from Holdings......................................         135
Debt........................................................     209,874
                                                                --------
          Total Liabilities.................................     220,129
                                                                --------

Members' Equity:
Paid in capital.............................................     108,600
Accumulated deficit.........................................     (12,979)
                                                                --------
       Total members' equity................................      95,621
                                                                --------
          Total liabilities and members' equity.............    $315,750
                                                                ========
</Table>

- ---------------
(a) includes accrued costs from transactions with affiliated companies of $921.

                See accompanying notes to financial statements.
                                      F-120
   315

                          RENAISSANCE MEDIA GROUP LLC
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (IN THOUSANDS)

<Table>
                                                             
REVENUES....................................................    $ 41,524
                                                                --------
COSTS & EXPENSES
  Service Costs(a)..........................................      13,326
  Selling, General & Administrative.........................       7,711
  Depreciation & Amortization...............................      19,107
                                                                --------
     Operating Income.......................................       1,380
     Interest Income........................................         158
     Interest (Expense) (b).................................     (14,358)
                                                                --------
     (Loss) Before Provision for Taxes......................     (12,820)
     Provision for Taxes....................................         135
                                                                --------
     Net (Loss).............................................    $(12,955)
                                                                ========
</Table>

- ---------------
(a) includes costs from transactions with affiliated companies of $7,523.

(b) includes $676 of amortization of deferred financing costs.

                See accompanying notes to financial statements.
                                      F-121
   316

                          RENAISSANCE MEDIA GROUP LLC
              CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' EQUITY
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                               PAID
        TOTAL
                                                                IN
ACCUMULATED    MEMBER'S
                                                             CAPITAL
(DEFICIT)      EQUITY
                                                             -------
- -----------    --------
                                                                   
       
Contributed Members' Equity -- Renaissance Media Holdings
  LLC and Renaissance Media LLC............................  $ 15,000     $
(24)     $14,976
Additional capital contributions...........................    93,600
- --       93,600
Net (Loss).................................................        --
(12,955)     (12,955)
                                                             --------
- --------      -------
Balance December 31, 1998..................................  $108,600
$(12,979)     $95,621
                                                             ========
========      =======
</Table>

                See accompanying notes to financial statements.
                                      F-122
   317

                          RENAISSANCE MEDIA GROUP LLC
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (IN THOUSANDS)

<Table>
                                                             
OPERATING ACTIVITIES:
Net (loss)..................................................    $(12,955)
Adjustments to non-cash and non-operating items:
  Depreciation and amortization.............................      19,107
  Accretion on Senior Discount Notes........................       7,363
  Other non-cash charges....................................         730
  Changes in operating assets and liabilities:
     Accounts receivable -- trade, net......................        (726)
     Accounts receivable -- other...........................        (584)
     Prepaid expenses and other assets......................        (338)
     Accounts payable.......................................       2,031
     Accrued expenses.......................................       6,660
     Subscriber advance payments and deposits...............         608
     Deferred marketing support.............................         800
                                                                --------
Net cash provided by operating activities...................      22,696
                                                                --------
INVESTING ACTIVITIES:
  Purchased cable television systems:
     Property, plant and equipment..........................     (65,580)
     Cable television franchises............................    (235,412)
     Cash paid in excess of identifiable assets.............      (8,608)
  Escrow deposit............................................        (150)
  Capital expenditures......................................      (5,683)
  Cable television franchises...............................      (1,077)
  Other intangible assets...................................        (526)
                                                                --------
Net cash (used in) investing activities.....................    (317,036)
                                                                --------
FINANCING ACTIVITIES:
  Debt acquisition costs....................................      (8,323)
  Principal repayments on bank debt.........................      (7,500)
  Advances from Holdings....................................          33
  Proceeds from bank debt...................................     110,000
  Proceeds from 10% Senior Discount Notes...................     100,012
  Capital contributions.....................................     108,600
                                                                --------
Net cash provided by financing activities...................     302,822
                                                                --------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................       8,482
CASH AND CASH EQUIVALENTS AT DECEMBER 31, 1997..............          --
                                                                --------
CASH AND CASH EQUIVALENTS AT DECEMBER 31, 1998..............    $  8,482
                                                                ========
SUPPLEMENTAL DISCLOSURES:
  INTEREST PAID.............................................    $  4,639
                                                                ========
</Table>

                See accompanying notes to financial statements.
                                      F-123
   318

                          RENAISSANCE MEDIA GROUP LLC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

1.  ORGANIZATION AND BASIS OF PRESENTATION

     Renaissance Media Group LLC ("Group") was formed on March 13, 1998 by
Renaissance Media Holdings LLC ("Holdings"). Holdings is owned by Morgan Stanley
Capital Partners III, L.P. ("MSCP III"), Morgan Stanley Capital Investors, L.P.
("MSCI"), MSCP III 892 Investors, L.P. ("MSCP Investors" and, collectively, with
its affiliates, MSCP III and MSCI and their respective affiliates, the "Morgan
Stanley Entities"), Time Warner and the Management Investors. On March 20, 1998,
Holdings contributed to Group its membership interests in two wholly-owned
subsidiaries; Renaissance Media (Louisiana) LLC ("Louisiana") and Renaissance
Media (Tennessee) LLC ("Tennessee"), which were formed on January 7, 1998.
Louisiana and Tennessee acquired a 76% interest and 24% interest, respectively,
in Renaissance Media LLC ("Media") from Morgan Stanley Capital Partners III,
Inc. ("MSCP"), on February 13, 1998 through an acquisition of entities under
common control accounted for as if it were a pooling of interests. As a result,
Media became a subsidiary of Group and Holdings. Group and its aforementioned
subsidiaries are collectively referred to as the "Company". On April 9, 1998,
the Company acquired (the "Acquisition") six cable television systems (the
"Systems") from TWI Cable, Inc. ("TWI Cable"), a subsidiary of Time Warner Inc.
("Time Warner"). See Note 3. Prior to this Acquisition, the Company had no
operations other than start-up related activities.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NEW ACCOUNTING STANDARDS

     During fiscal 1998, the Financial Accounting Standards Board ("FASB")
issued Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133").

     FAS 133 provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. The Company
will adopt FAS 133 as of January 1, 2000. The impact of the adoption on the
Company's consolidated financial statements is not expected to be material.

     PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements of the Company include the accounts
of the Company and its wholly owned subsidiaries. Significant intercompany
accounts and transactions have been eliminated.

     CONCENTRATION OF CREDIT RISK

     A significant portion of the customer base is concentrated within the local
geographical area of each of the individual cable television systems. The
Company generally extends credit to customers and the ultimate collection of
accounts receivable could be affected by the local economy. Management performs
continuous credit evaluations of its customers and may require cash in advance
or other special arrangements from certain customers. Management does not
believe that there is any significant credit risk which could have a material
effect on the Company's financial condition.

     REVENUE AND COSTS

     Subscriber fees are recorded as revenue in the period the related services
are provided and advertising revenues are recognized in the period the related
advertisements are exhibited. Rights to exhibit programming are purchased from
various cable networks. The costs of such rights are generally expensed as the
related services are made available to subscribers.

                                      F-124
   319
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     ADVERTISING COSTS

     Advertising costs are expensed upon the first exhibition of the related
advertisements. Advertising expense amounted to $491 in 1998.

     CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include cash and investments in short-term,
highly liquid securities, which have maturities when purchased of three months
or less.

     PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at purchased and capitalized
cost. Capitalized internal costs principally, consist of employee costs and
interest on funds borrowed during construction. Capitalized labor, materials and
associated overhead amounted to approximately $1,429 in 1998. Replacements,
renewals and improvements to installed cable plant are capitalized. Maintenance
and repairs are charged to expense as incurred. Depreciation expense for the
year ended December 31, 1998 amounted to $7,314. Property, plant and equipment
is depreciated using the straight-line method over the following estimated
service lives:

<Table>
                                                             
Buildings and leasehold improvements........................    5 - 30 years
Cable systems, equipment and subscriber devices.............    5 - 30 years
Transportation equipment....................................    3 -  5 years
Furniture, fixtures and office equipment....................    5 - 10 years
</Table>

     Property, plant and equipment at December 31, 1998 consisted of:

<Table>
                                                             
  Land......................................................    $   432
  Buildings and leasehold improvements......................      1,347
  Cable systems, equipment and subscriber devices...........     62,740
  Transportation equipment..................................      2,181
  Furniture, Fixtures and office equipment..................        904
  Construction in progress..................................      3,642
                                                                -------
                                                                 71,246
Less: accumulated depreciation..............................     (7,294)
                                                                -------
          Total.............................................    $63,952
                                                                =======
</Table>

     CABLE TELEVISION FRANCHISES AND INTANGIBLE ASSETS

     Cable television franchise costs include the assigned fair value, at the
date of acquisition, of the franchises from purchased cable television systems.
Intangible assets include goodwill, deferred financing and other intangible
assets. Cable television franchises and intangible assets are amortized using
the straight-line method over the following estimated useful lives:

<Table>
                                                             
Cable television franchises.................................        15 years
Goodwill....................................................        25 years
Deferred financing and other intangible assets..............    2 - 10 years
</Table>

                                      F-125
   320
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     Intangible assets at December 31, 1998 consisted of:

<Table>
                                                             
Goodwill....................................................    $ 8,608
Deferred Financing Costs....................................      8,323
Other intangible assets.....................................        628
                                                                -------
                                                                 17,559
Less: accumulated amortization..............................     (1,059)
                                                                -------
          Total.............................................    $16,500
                                                                =======
</Table>

     The Company periodically reviews the carrying value of its long-lived
assets, including property, plant and equipment, cable television franchises and
intangible assets, whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. To the extent the estimated future cash
inflows attributable to the asset, less estimated future cash outflows, is less
than the carrying amount, an impairment loss is recognized to the extent that
the carrying value of such asset is greater than its fair value.

     ESTIMATES USED IN FINANCIAL STATEMENT PRESENTATION

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

3.  ACQUISITIONS

     TWI CABLE

     On April 9, 1998, the Company acquired six cable television systems from
TWI Cable. The systems are clustered in southern Louisiana, western Mississippi
and western Tennessee. This Acquisition represented the first acquisition by the
Company. The purchase price for the systems was $309,500 which was paid as
follows: TWI Cable received $300,000 in cash, inclusive of an escrow deposit of
$15,000, and a $9,500 (9,500 units) equity interest in Renaissance Media
Holdings LLC, the parent company of Group. In addition to the purchase price,
the Company incurred approximately $1,385 in transaction costs, exclusive of
financing costs.

     The Acquisition was accounted for using the purchase method and,
accordingly, results of operations are reported from the date of the Acquisition
(April 9, 1998). The excess of the purchase price over the estimated fair value
of the tangible assets acquired has been allocated to cable television
franchises and goodwill in the amount of $235,387 and $8,608, respectively.

     DEFFNER CABLE

     On August 31, 1998, the Company acquired the assets of Deffner Cable, a
cable television company located in Gadsden, Tennessee. The purchase price was
$100 and was accounted for using the purchase method. The allocation of the
purchase price is subject to change, although management does not believe that
any material adjustment to such allocation is expected.

     BAYOU VISION, INC.

     On February 3, 1999, Media acquired the cable television assets of Bayou
Vision, Inc. and Gulf South Cable, Inc. serving approximately 1,950 subscribers
in the Villages of Estherwood, Morse and Mermentau and Acadia and Livingston
Parish, Louisiana. The cash purchase price was approximately $2,700 and was paid
out of available Company funds.

                                      F-126
   321
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     Unaudited Pro Forma summarized results of operations for the Company for
the year ended December 31, 1998 and 1997, assuming the Acquisition, Notes (as
hereinafter defined) offering and Credit Agreement (as hereinafter defined) had
been consummated on January 1, 1998 and 1997, are as follows:

<Table>
<Caption>
                                                              YEAR ENDED
DECEMBER 31

- ----------------------
                                                                1997
1998
                                                                ----
- ----
                                                                     
Revenues....................................................  $ 50,987     $
56,745
Expenses....................................................    53,022
55,210
                                                              --------
- --------
Operating (loss) income.....................................    (2,035)
1,535
Interest expense and other expenses.........................   (19,740)
(19,699)
                                                              --------
- --------
Net (Loss)..................................................  $(21,775)
$(18,164)
                                                              ========
========
</Table>

4.  DEBT

     As of December 31, 1998, debt consisted of:

<Table>
                                                             
10.00% Senior Discount Notes at Accreted Value(a)...........    $107,374
Credit Agreement(b).........................................     102,500
                                                                --------
                                                                $209,874
                                                                ========
</Table>

     (a) On April 9, 1998, in connection with the Acquisition described in Note
3, the Company issued $163,175 principal amount at maturity, $100,012 initial
accreted value, of 10.00% senior discount notes due 2008 ("Notes"). The Notes
pay no interest until April 15, 2003. From and after April 15, 2003 the Notes
will bear interest, payable semi-annually in cash, at a rate of 10% per annum on
April 15 and October 15 of each year, commencing October 15, 2003. The Notes are
due on April 15, 2008.

     (b) On April 9, 1998, Renaissance Media entered into a credit agreement
among Morgan Stanley & Co. Incorporated as Placement Agent, Morgan Stanley
Senior Funding Inc., as Syndication Agent, the Lenders, CIBC Inc., as
Documentation Agent and Bankers Trust Company as Administrative Agent (the
"Credit Agreement"). The aggregate commitments under the Credit Agreement total
$150,000, consisting of a $40,000 revolver, $60,000 Tranche A Term Loans and
$50,000 Tranche B Term Loans (collectively the "Term Loans"). The revolving
credit and term loans are collateralized by a first lien position on all present
and future assets and the member's interest of Media, Louisiana and Tennessee.
The Credit Agreement provides for interest at varying rates based upon various
borrowing options and the attainment of certain financial ratios and for
commitment fees of  1/2% on the unused portion of the revolver. The effective
interest rate, including commitment fees and amortization of related deferred
financing costs and the interest-rate cap, for the year ended December 31, 1998
was 8.82%.

     On April 9, 1998, $110,000 was borrowed under the Credit Agreement's
Tranche A and B Term Loans. On June 23, 1998, $7,500 was repaid resulting in
$102,500 of outstanding Tranche A and B Term Loans as of December 31, 1998.

     As of December 31, 1998, the Company had unrestricted use of the $40,000
revolver. No borrowings had been made by the Company under the revolver through
that date.

                                      F-127
   322
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     Annual maturities of borrowings under the Credit Agreement for the years
ending December 31 are as follows:

<Table>
                                                             
1999........................................................    $    776
2000........................................................       1,035
2001........................................................       2,701
2002........................................................       9,506
2003........................................................      11,590
2004........................................................      11,590
Thereafter..................................................      65,302
                                                                --------
                                                                 102,500
Less: Current portion.......................................        (776)
                                                                --------
                                                                $101,724
                                                                ========
</Table>

     The Credit Agreement and the Indenture pursuant to which the Notes were
issued contain restrictive covenants on the Company and subsidiaries regarding
additional indebtedness, investment guarantees, loans, acquisitions, dividends
and merger or sale of the subsidiaries and require the maintenance of certain
financial ratios.

     Total interest cost incurred for the year ended December 31, 1998,
including commitment fees and amortization of deferred financing and
interest-rate cap costs was $14,358, net of capitalized interest of $42.

5.  INTEREST RATE-CAP AGREEMENT

     The Company purchases interest-rate cap agreements that are designed to
limit its exposure to increasing interest rates and are designated to its
floating rate debt. The strike price of these agreements exceeds the current
market levels at the time they are entered into. The interest rate indices
specified by the agreements have been and are expected to be highly correlated
with the interest rates the Company incurs on its floating rate debt. Payments
to be received as a result of the specified interest rate index exceeding the
strike price are accrued in other assets and are recognized as a reduction of
interest expense (the accrual accounting method). The cost of these agreements
is included in other assets and amortized to interest expense ratably during the
life of the agreement. Upon termination of an interest-rate cap agreement, any
gain is deferred in other liabilities and amortized over the remaining term of
the original contractual life of the agreement as a reduction of interest
expense.

     On December 1, 1997, the Company purchased an interest-rate cap agreement
from Morgan Stanley Capital Services Inc. The carrying value as of December 31,
1998 was $47. The fair value of the interest-rate cap, which is based upon the
estimated amount that the Company would receive or pay to terminate the cap
agreement as of December 31, 1998, taking into consideration current interest
rates and the credit worthiness of the counterparties, approximates its carrying
value.

     The following table summarizes the interest-rate cap agreement:

<Table>
<Caption>
NOTIONAL                                        INITIAL
PRINCIPAL             EFFECTIVE   TERMINATION   CONTRACT   FIXED RATE
 AMOUNT      TERM       DATE         DATE         COST     (PAY RATE)
- ---------    ----     ---------   -----------   --------   ----------
                                            
$100,000    2 years    12/1/97      12/1/99       $100        7.25%
</Table>

                                      F-128
   323
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

6.  TAXES

     For the year ended December 31, 1998, the provision for income taxes has
been calculated on a separate company basis. The components of the provision for
income taxes are as follows:

<Table>
<Caption>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 1998
                                                              -----------------
                                                           
Federal:
  Current...................................................        $ --
  Deferred..................................................          --
State:
  Current...................................................         135
  Deferred..................................................          --
                                                                    ----
     Provision for income taxes.............................        $135
                                                                    ====
</Table>

     The Company's current state tax liability results from its obligation to
pay franchise tax in Tennessee and Mississippi and tax on capital in New York.

     The Company has a net operating loss ("NOL") carryforward for income tax
purposes which is available to offset future taxable income. This NOL totals
approximately $14,900 and expires in the year 2018. The Company has established
a valuation allowance to offset the entire potential future tax benefit of the
NOL carryforward and, therefore, has recognized no deferred tax asset with
respect to the NOL.

     Louisiana and Tennessee have elected to be treated as corporations for
federal income tax purposes and have not recorded any tax benefit for their
losses as the realization of theses losses by reducing future taxable income in
the carry forward period is uncertain at this time.

7.  RELATED PARTY TRANSACTIONS

     (a) TRANSACTIONS WITH MORGAN STANLEY ENTITIES

     In connection with the Acquisition, Media entered into the Credit Agreement
with Morgan Stanley Senior Funding Inc. and Morgan Stanley & Co. Incorporated
acted as the Placement Agent for the Notes. In connection with these services
the Morgan Stanley Entities received customary fees and expense reimbursement.

     (b) TRANSACTIONS WITH TIME WARNER AND RELATED PARTIES

     In connection with the Acquisition, Media entered into an agreement with
Time Warner, pursuant to which Time Warner manages the Company's programming in
exchange for providing the Company access to certain Time Warner programming
arrangements.

     (c) Transactions with Management

     Prior to the consummation of the Acquisition described in Note 3, Media
paid fees in 1998 to six senior executives of the Company who are investors in
the Company (the "Management Investors") for services rendered prior to their
employment by Media relating to the Acquisition and the Credit Agreement. These
fees totaled $287 and were recorded as transaction and financing costs.

                                      F-129
   324
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

     (d) DUE TO MANAGEMENT INVESTORS

     Prior to the formation of the Company, the Management Investors advanced
$1,000 to Holdings, which was used primarily for working capital purposes. Upon
formation of the Company, Holdings contributed certain assets and liabilities to
Group and the $1,000 advance from the Management Investors was recorded as paid
in capital.

     (e) TRANSACTIONS WITH BOARD MEMBER

     The Company has utilized the law firm of one of its board members for legal
services for the Acquisition, financing agreements and various ongoing legal
matters. These fees totaled approximately $1,348 for the year ended December 31,
1998.

8.  ACCRUED EXPENSES

     Accrued expenses as of December 31, 1998 consist of the following:

<Table>
                                                             
Accrued programming costs...................................    $1,986
Accrued interest............................................     1,671
Accrued franchise fees......................................     1,022
Accrued legal and professional fees,........................       254
Accrued salaries, wages and benefits........................       570
Accrued property and sales tax..............................       637
Other accrued expenses......................................       530
                                                                ------
                                                                $6,670
                                                                ======
</Table>

9.  EMPLOYEE BENEFIT PLAN

     Effective April 9, 1998, the Company began sponsoring a defined
contribution plan which covers substantially all employees (the "Plan"). The
Plan provides for contributions from eligible employees up to 15% of their
compensation. The Company's contribution to the Plan is limited to 50% of each
eligible employee's contribution up to 10% of his or her compensation. The
Company has the right in any year to set the amount of the Company's
contribution percentage. Company matching contributions to the Plan for the year
ended December 31, 1998 were approximately $97. All participant contributions
and earnings are fully vested upon contribution and company contributions and
earnings vest 20% per year of employment with the Company, becoming fully vested
after five years.

10.  COMMITMENTS AND CONTINGENCIES

     (a) LEASES

     The Company had rental expense under various lease and rental agreements
primarily for offices, tower sites and warehouses of approximately $125 in 1998.
In addition, the Company rents utility poles in its operations generally under
short term arrangements, but the Company expects these arrangements to recur.

                                      F-130
   325
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

Total rent expense for utility poles was approximately $620 in 1998. Future
minimum annual rental payments under noncancellable leases are as follows:

<Table>
                                                     
1999................................................    $162
2000................................................      38
2001................................................      24
2002................................................      20
2003 and thereafter.................................      66
                                                        ----
     Total..........................................    $310
                                                        ====
</Table>

     (b) EMPLOYMENT AGREEMENTS

     Media has entered into employment agreements with six senior executives who
are also investors in Holdings. Under the conditions of five of the agreements
the employment term is five years, expiring in April 2003 and requires Media to
continue salary payments (including any bonus) through the term if the
executive's employment is terminated by Media without cause, as defined in the
employment agreement. Media's obligations under the employment agreements may be
reduced in certain situations based on actual operating performance relative to
the business plan, death or disability or by actions of the other senior
executives.

     The employment agreement for one senior executive has a term of one year
and may be renewed annually. This agreement has been renewed through April 8,
2000.

     (c) OTHER AGREEMENTS

     In exchange for certain flexibility in establishing cable rate pricing
structures for regulated services that went into effect on January 1, 1996, Time
Warner agreed with the Federal Communications Commission ("FCC") to invest in
certain upgrades to its cable infrastructure (consisting primarily of materials
and labor in connection with the plant upgrades up to 750 megahertz) by 1999
(approximately $23 million). This agreement with the FCC has been assumed by the
Company as part of the Acquisition.

11.  SUBSEQUENT EVENT

     On February 23, 1999, Holdings entered into an agreement with Charter
Communications, LLC and Charter Communications, Inc., to sell 100% of its
members' equity in the Company for approximately $459,000, subject to certain
closing conditions. This transaction is expected to close during the third
quarter of 1999.

12.  YEAR 2000 ISSUES (UNAUDITED)

     The Company relies on computer systems, related software applications and
other control devices in operating and monitoring all major aspects of its
business, including, but not limited to, its financial systems (such as general
ledger, accounts payable, payroll and fixed asset modules), subscriber billing
systems, internal networks and telecommunications equipment. The Company also
relies, directly and indirectly, on the external systems of various independent
business enterprises, such as its suppliers and financial organizations, for the
accurate exchange of data.

     The Company continues to assess the likely impact of Year 2000 issues on
its business operations, including its material information technology ("IT")
and non-IT applications. These material applications

                                      F-131
   326
                          RENAISSANCE MEDIA GROUP LLC
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1998
                       (ALL DOLLAR AMOUNTS IN THOUSANDS)

include all billing and subscriber information systems, general ledger software,
payroll systems, accounting software, phone switches and certain headend
applications, all of which are third party supported.

     The Company believes it has identified all systems that may be affected by
Year 2000 Issues. Concurrent with the identification phase, the Company is
securing compliance determinations relative to all identified systems. For those
systems that the Company believes are material, compliance programs have been
received or such systems have been certified by independent parities as Year
2000 compliant. For those material systems that are subject to compliance
programs, the Company expects to receive Year 2000 certifications from
independent parties by the second quarter 1999. Determinations of Year 2000
compliance requirements for less mission critical systems are in progress and
are expected to be completed in the second quarter of 1999.

     With respect to third parties with which the Company has a material
relationship, the Company believes its most significant relationships are with
financial institutions, who receive subscriber monthly payments and maintain
Company bank accounts, and subscriber billing and management systems providers.
We have received compliance programs which if executed as planned should provide
a high degree of assurance that all Year 2000 issues will be addressed by mid
1999.

     The Company has not incurred any material Year 2000 costs to date, and
excluding the need for contingency plans, does not expect to incur any material
Year 2000 costs in the future because most of its applications are maintained by
third parties who have borne Year 2000 compliance costs.

     The Company cannot be certain that it or third parties supporting its
systems have resolved or will resolve all Year 2000 issues in a timely manner.
Failure by the Company or any such third party to successfully address the
relevant Year 2000 issues could result in disruptions of the Company's business
and the incurrence of significant expenses by the Company. Additionally, the
Company could be affected by any disruption to third parties with which the
Company does business if such third parties have not successfully addressed
their Year 2000 issues.

     Failure to resolve Year 2000 issues could result in improper billing to the
Company's subscribers which could have a major impact on the recording of
revenue and the collection of cash as well as create significant customer
dissatisfaction. In addition, failure on the part of the financial institutions
with which the Company relies on for its cash collection and management services
could also have a significant impact on collections, results of operations and
the liquidity of the Company.

     The Company has not yet finalized contingency plans necessary to handle the
most likely worst case scenarios. Before concluding as to possible contingency
plans, the Company must determine whether the material service providers
contemplate having such plans in place. In the event that contingency plans from
material service providers are not in place or are deemed inadequate, management
expects to have such plans in place by the third quarter of 1999.

                                      F-132
   327

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
  TWI Cable, Inc.

     We have audited the accompanying combined balance sheet of the Picayune MS,
Lafourche LA, St. Tammany LA, St. Landry LA, Pointe Coupee LA, and Jackson TN
cable television systems, (collectively, the "Combined Systems") included in TWI
Cable, Inc. ("TWI Cable"), as of April 8, 1998, and the related combined
statements of operations, changes in net assets and cash flows for the period
from January 1, 1998 through April 8, 1998. These combined financial statements
are the responsibility of the Combined Systems' management. Our responsibility
is to express an opinion on these combined financial statements based on our
audit.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Combined Systems, included in TWI Cable, at April 8, 1998, and the combined
results of their operations and their cash flows for the period from January 1,
1998 through April 8, 1998, in conformity with generally accepted accounting
principles.

                                          /s/ ERNST & YOUNG LLP

New York, New York
February 22, 1999

                                      F-133
   328

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                             COMBINED BALANCE SHEET
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                APRIL 8, 1998
                                                                -------------
                                                             
                           ASSETS
Cash and cash equivalents...................................      $      7
Receivables, less allowance of $116.........................           576
Prepaid expenses and other assets...........................           438
Property, plant and equipment, net..........................        35,992
Cable television franchises, net............................       195,907
Goodwill and other intangibles, net.........................        50,023
                                                                  --------
          Total assets......................................      $282,943
                                                                  ========
                 LIABILITIES AND NET ASSETS
Accounts payable............................................      $     63
Accrued programming expenses................................           978
Accrued franchise fees......................................           616
Subscriber advance payments and deposits....................           593
Deferred income taxes.......................................        61,792
Other liabilities...........................................           747
                                                                  --------
          Total liabilities.................................        64,789
          Total net assets..................................       218,154
                                                                  --------
          Total liabilities and net assets..................      $282,943
                                                                  ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-134
   329

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                        COMBINED STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                  FOR THE
                                                                PERIOD FROM
                                                              JANUARY 1, 1998
                                                                  THROUGH
                                                               APRIL 8, 1998
                                                              ---------------
                                                           
REVENUES....................................................      $15,221
COSTS AND EXPENSES:
Operating and programming...................................        3,603
Selling, general and administrative.........................        4,134
Depreciation and amortization...............................        5,031
(Gain) on disposal of fixed assets..........................          (96)
                                                                  -------
          Total costs and expenses..........................       12,672
                                                                  -------
Operating income............................................        2,549
Provision for income taxes..................................        1,191
                                                                  -------
Net income..................................................      $ 1,358
                                                                  =======
</Table>

            See accompanying notes to combined financial statements.
                                      F-135
   330

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                  COMBINED STATEMENT OF CHANGES IN NET ASSETS
                                 (IN THOUSANDS)

<Table>
                                                             
Balance at December 31, 1997................................    $224,546
  Repayment of advances from Parent.........................     (17,408)
  Advances from Parent......................................       9,658
  Net income................................................       1,358
                                                                --------
Balance at April 8, 1998....................................    $218,154
                                                                ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-136
   331

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                        COMBINED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                  FOR THE
                                                                PERIOD FROM
                                                              JANUARY 1, 1998
                                                                  THROUGH
                                                               APRIL 8, 1998
                                                              ---------------
                                                           
OPERATING ACTIVITIES:
Net income..................................................      $ 1,358
Adjustments for noncash and nonoperating items:
  Income tax expense........................................        1,191
  Depreciation and amortization.............................        5,031
  (Gain) on disposal of fixed assets........................          (96)
  Changes in operating assets and liabilities:
     Receivables, prepaids and other assets.................          289
     Accounts payable, accrued expenses and other
      liabilities...........................................         (770)
     Other balance sheet changes............................           (4)
                                                                  -------
Net cash provided by operations.............................        6,999
                                                                  -------
INVESTING ACTIVITIES:
Capital expenditures........................................         (613)
                                                                  -------
Net cash used in investing activities.......................         (613)
                                                                  -------
FINANCING ACTIVITIES:
Net repayment of advances from Parent.......................       (7,750)
                                                                  -------
Net cash (used in) financing activities.....................       (7,750)
INCREASE IN CASH AND CASH EQUIVALENTS.......................       (1,364)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............        1,371
                                                                  -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................      $     7
                                                                  =======
</Table>

            See accompanying notes to combined financial statements.
                                      F-137
   332

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                     NOTES TO COMBINED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  DESCRIPTION OF BUSINESS

     The cable television systems operating in the metropolitan areas of
Picayune, Mississippi; Lafourche, Louisiana; St. Tammany, Louisiana; St. Landry,
Louisiana; Pointe Coupee, Louisiana; and Jackson, Tennessee (the "Combined
Systems") are principally engaged in the cable television business under non-
exclusive franchise agreements, which expire at various times beginning in 1999.
The Combined Systems' operations consist primarily of selling video programming
which is distributed to subscribers for a monthly fee through a network of
coaxial and fiber-optic cables.

     Prior to January 4, 1996, the Combined Systems were included in certain
subsidiaries of Cablevision Industries Corporation ("CVI"). On January 4, 1996,
CVI merged into a wholly owned subsidiary of Time Warner Inc. (the "CVI
Merger"). On October 1, 1996, Time Warner Inc. ("Time Warner") completed a
reorganization amongst certain of its wholly owned cable television subsidiaries
whereby CVI was renamed TWI Cable Inc. ("TWI Cable").

  BASIS OF PRESENTATION

     TWI Cable has sold the Combined Systems to Renaissance Media Holdings LLC
("Renaissance") pursuant to an Asset Purchase Agreement with Renaissance, dated
November 14, 1997 (see Note 8). Accordingly, the accompanying combined financial
statements of the Combined Systems reflect the "carved out" historical financial
position, results of operations, cash flows and changes in net assets of the
operations of the Combined Systems as if they had been operating as a separate
company. Effective as of January 1, 1996, the Combined Systems' financial
statements reflect the new basis of accounting arising from Time Warner's merger
with CVI. Based on Time Warner's allocation of the purchase price, the assets
and liabilities of the Combined Systems were revalued resulting in goodwill
allocated to the Combined Systems of approximately $52,971,000, which is being
amortized over its estimated life of 40 years. In addition, approximately
$220,981,000 was allocated to cable television franchises and other intangible
assets, which is being amortized over periods up to 20 years.

     The combined statements have been adjusted to include the allocation of
certain corporate expenses incurred by Time Warner Cable and/or TWI Cable on the
Combined Systems' behalf, based upon the number of Combined System subscribers
managed by Time Warner Cable and the ratio of Combined System subscribers to
total TWI Cable subscribers, respectively. These allocations reflect all costs
of doing business that the Combined Systems would have incurred on a stand alone
basis as disclosed in Note 3. Management believes that these allocations are
reasonable.

  BASIS OF COMBINATION

     The combined financial statements include the assets, liabilities,
revenues, expenses, income, loss and cash flows of the Combined Systems, as if
the Combined Systems were a single company. Significant intercompany accounts
and transactions between the Combined Systems have been eliminated. Significant
accounts and transactions with Time Warner and its affiliates are disclosed as
related party transactions (see Note 3).

  USE OF ESTIMATES

     The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and footnotes thereto. Actual results could differ from those
estimates.

                                      F-138
   333
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  CONCENTRATION OF CREDIT RISK

     A significant portion of the customer base is concentrated within the local
geographical area of each of the individual cable television systems. The
Combined Systems generally extend credit to customers and the ultimate
collection of accounts receivable could be affected by the local economy.
Management performs continuous credit evaluations of its customers and may
require cash in advance or other special arrangements from certain customers.
Management does not believe that there is any significant credit risk which
could have a material effect on the financial condition of the Combined Systems.

  REVENUE AND COSTS

     Subscriber fees are recorded as revenue in the period the related services
are provided and advertising revenues are recognized in the period the related
advertisements are exhibited. Rights to exhibit programming are purchased from
various cable networks. The costs of such rights are generally expensed as the
related services are made available to subscribers.

  FRANCHISE FEES

     Local governmental authorities impose franchise fees on the cable
television systems owned by the Combined Systems ranging up to a federally
mandated maximum of 5.0% of gross revenues. On a monthly basis, such fees are
collected from the Combined Systems' customers and such fees are not included as
revenue or as a franchise fee expense.

  ADVERTISING COSTS

     Advertising costs are expensed upon the first exhibition of the related
advertisements. Advertising expense amounted to $105,000 for the period from
January 1, 1998 through April 8, 1998.

  STATEMENT OF CASH FLOWS

     The Combined Systems participate in a cash management system with
affiliates whereby cash receipts are transferred to a centralized bank account
from which centralized payments to various suppliers and creditors are made on
behalf of the Combined Systems. The excess of such cash receipts over payments
is included in net assets. Amounts shown as cash represent the Combined Systems'
net cash receipts not transferred to the centralized account as of December 31,
1996 and 1997. The average net intercompany payable balances was $166,522,000
for the period from January 1, 1998 through April 8, 1998.

     For purposes of this statement, cash and cash equivalents includes all
highly liquid investments purchased with original maturities of three months or
less.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Additions to property,
plant and equipment generally include material, labor, overhead and interest.
Depreciation is provided on the straight-line method over estimated useful lives
as follows:

<Table>
                                                             
Buildings and improvements..................................    5-20 years
Cable television equipment..................................    5-15 years
Furniture, fixtures and other equipment.....................    3-10 years
</Table>

                                      F-139
   334
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Property, plant and equipment consist of:

<Table>
<Caption>
                                                                APRIL 8, 1998
                                                                -------------
                                                                (IN THOUSANDS)
                                                             
Land and buildings..........................................       $  2,255
Cable television equipment..................................         40,276
Furniture, fixtures and other equipment.....................          2,308
Construction in progress....................................          1,183
                                                                   --------
                                                                     46,022
Less accumulated depreciation...............................        (10,030)
                                                                   --------
          Total.............................................       $ 35,992
                                                                   ========
</Table>

  INTANGIBLE ASSETS

     The Combined Systems amortized goodwill over periods up to 40 years and
cable television franchises over periods up to 20 years, both using the
straight-line method. For the period from January 1, 1998 through April 8, 1998
amortization of goodwill amounted to $360,000 and amortization of cable
television franchises amounted to $3,008,000. Accumulated amortization of
intangible assets amounted to $28,114,000 at April 8, 1998.

  IMPAIRMENT

     Management separately reviews the carrying value of acquired long-lived
assets for each acquired entity on a quarterly basis to determine whether an
impairment may exist. Management considers relevant cash flow and profitability
information, including estimated future operating results, trends and other
available information, in assessing whether the carrying value of long-lived
assets can be recovered. Upon a determination that the carrying value of
long-lived assets will not be recovered from the undiscounted future cash flows
of the acquired business, the carrying value of such long-lived assets would be
considered impaired and would be reduced by a charge to operations in the amount
of the impairment. An impairment charge is measured as a deficiency in estimated
discounted future cash flows of the acquired business to recover the carrying
value related to the long-lived assets.

  INCOME TAXES

     Income taxes have been provided using the liability method prescribed by
FASB Statement No. 109, "Accounting for Income Taxes." Under the liability
method, deferred income taxes reflect tax carryforwards and the net tax effects
of temporary differences between the carrying amount of assets and liabilities
for financial statements and income tax purposes, as determined under enacted
tax laws and rates.

2.  EMPLOYEE BENEFIT PLANS

     Following the CVI Merger, the Combined Systems began participation in the
Time Warner Cable Pension Plan (the "Pension Plan"), a non-contributory defined
benefit pension plan, and the Time Warner Cable Employee Savings Plan (the
"Savings Plan") which are administered by a committee appointed by the Board of
Representatives of Time Warner Entertainment Company, L.P. ("TWE"), an affiliate
of Time Warner, and which cover substantially all employees.

     Benefits under the Pension Plan are determined based on formulas which
reflect an employee's years of service and compensation levels during the
employment period. Pension expense for the period from January 1, 1998 through
April 8, 1998 totaled $61,000.

                                      F-140
   335
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The Combined Systems' contributions to the Savings Plan are limited to
6.67% of an employee's eligible compensation during the plan year. The Board of
Representatives of TWE has the right in any year to set the maximum amount of
the Combined Systems' contribution. Defined contribution plan expense for the
period from January 1, 1998 through April 8, 1998 totaled $38,000.

     The Combined Systems have no material obligations for other post retirement
benefits.

3.  RELATED PARTIES

     In the normal course of conducting business, the Combined Systems had
various transactions with Time Warner and its affiliates, generally on terms
resulting from a negotiation between the affected units that in management's
view resulted in reasonable allocations.

  PROGRAMMING

     Included in the Combined Systems' operating expenses are charges for
programming and promotional services provided by Home Box Office, Turner
Broadcasting System, Inc. and other affiliates of Time Warner. These charges are
based on customary rates and are in the ordinary course of business. These
charges totaled $1,164,000 for the period from January 1, 1998 through April 8,
1998. Accrued related party expenses for these programming and promotional
services included in accrued programming expenses approximated $409,000 for the
period from January 1, 1998 through April 8, 1998.

  MANAGEMENT FEES

     TWI Cable entered into a management service arrangement with Time Warner
Cable ("TWC"), pursuant to which TWC is responsible for the management and
operation of TWI Cable, which includes the Combined Systems. The management fees
paid to TWC by TWI Cable are based on an allocation of the corporate expenses of
TWC's cable division in proportion to the respective number of subscribers of
all cable systems managed by TWC's cable division. The allocation of the TWI
Cable management fee to the Combined Systems approximated $486,000 for the
period from January 1, 1998 through April 8, 1998.

     Other divisional expenses allocated to the Combined Systems approximated
$299,000 for the period from January 1, 1998 through April 8, 1998.

4.  INTEREST EXPENSE

     Prior to the CVI Merger, the Jackson, Tennessee system was included in
Cablevision Industries Limited Partnership and Combined Entities ("CILP"). The
Jackson system was charged interest expense in connection with CILP's (a) senior
and subordinated bank credit agreements; and (b) senior unsecured subordinated
Series A and Series B notes payable to CVI. The remaining five systems
comprising the Combined Systems were included in Cablevision Industries of the
Southeast, Inc. and Combined Entities ("CIOS"). These systems were charged
interest expense in connection with CIOS's (a) bank revolving credit agreement;
and (b) junior and senior subordinated debt to CVI.

5.  INCOME TAXES

     Effective January 4, 1996, the Combined Systems are included in the
consolidated federal income tax return of Time Warner. Prior to January 4, 1996,
the Combined Systems were included in the consolidated

                                      F-141
   336
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

federal income tax return of CVI. The provision for income taxes has been
calculated on a separate company basis. The components of the provision for
income taxes are as follows:

<Table>
<Caption>
                                                                FOR THE PERIOD
                                                             FROM JANUARY 1,
1998
                                                                   THROUGH
                                                                APRIL 8, 1998

- --------------------
                                                                (IN THOUSANDS)
                                                          
Federal:
  Current..................................................         $   --
  Deferred.................................................            962
State:
  Current..................................................             --
  Deferred.................................................            229
                                                                    ------
     Net provision for income taxes........................         $1,191
                                                                    ======
</Table>

     The Combined Systems did not, and will not, have a tax sharing agreement
with either Time Warner, TWI Cable or CVI. Therefore, the Combined Systems have
not and will not be compensated for the utilization of the Combined Systems' tax
losses, by Time Warner, TWI Cable or CVI. In addition, the Combined Systems have
not and will not be required to make payments to either Time Warner or TWI Cable
for the current tax provision of the Combined Systems.

     The differences between the income tax provision expected at the U.S.
federal statutory income tax rate and the total income tax provision are due to
nondeductible goodwill amortization and state taxes.

     Significant components of the Combined Systems' deferred tax assets and
liabilities, as calculated on a separate company basis, are as follows:

<Table>
<Caption>
                                                                 APRIL 8, 1998
                                                                 -------------
                                                                (IN THOUSANDS)
                                                             
Deferred tax liabilities:
  Amortization..............................................        $57,817
  Depreciation..............................................          4,181
                                                                    -------
          Total gross deferred tax liabilities..............         61,998
                                                                    -------
Deferred tax assets:
  Tax loss carryforwards....................................            160
  Allowance for doubtful accounts...........................             46
                                                                    -------
          Total deferred tax assets.........................            206
                                                                    -------
          Net deferred tax liability........................        $61,792
                                                                    =======
</Table>

     On a separate company basis, the Combined Systems have tax loss
carryforwards of approximately $400,000 at April 8, 1998. However, if the
Combined Systems are acquired in an asset purchase, the tax loss carryforwards,
and net deferred tax liabilities relating to temporary differences will not
carry over to Renaissance (see Note 8).

                                      F-142
   337
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6.  COMMITMENTS AND CONTINGENCIES

     The Combined Systems had rental expense of approximately $244,000 for the
period from January 1, 1998 through April 8, 1998 under various lease and rental
agreements for offices, utility poles, warehouses and computer equipment. Future
minimum annual rental payments under noncancellable leases will approximate
$1,000,000 annually over the next five years.

     In exchange for certain flexibility in establishing cable rate pricing
structures for regulated services that went into effect on January 1, 1996, TWC
has agreed with the Federal Communications Commission ("FCC") to invest in
certain upgrades to its cable infrastructure (consisting primarily of materials
and labor in connection with the plant upgrades up to 750 megahertz) over the
next three years (approximately $25 million at December 31, 1997). This
agreement with the FCC, which extends to the Combined Systems, will be assumed
by Renaissance as it relates to the Combined Systems in accordance with the
Asset Purchase Agreement.

7.  OTHER LIABILITIES

     Other liabilities consist of:

<Table>
<Caption>
                                                                APRIL 8, 1998
                                                                -------------
                                                                (IN THOUSANDS)
                                                             
Compensation................................................         $279
Data Processing Costs.......................................          161
Sales and other taxes.......................................          146
Copyright Fees..............................................           35
Pole Rent...................................................           93
Other.......................................................           33
                                                                     ----
          Total.............................................         $747
                                                                     ====
</Table>

8.  SUBSEQUENT EVENT

     The sale of the Combined Systems, in connection with the Asset Purchase
Agreement with Renaissance, closed on April 9, 1998 at the purchase price of
$309,500,000.

                                      F-143
   338

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
     TWI Cable Inc.

     We have audited the accompanying combined balance sheets of the Picayune
MS, Lafourche LA, St. Tammany LA, St. Landry LA, Pointe Coupee LA, and Jackson
TN cable television systems, (collectively, the "Combined Systems") included in
TWI Cable, Inc. ("TWI Cable"), as of December 31, 1996 and 1997, the related
combined statements of operations, changes in net assets and cash flows for the
years then ended. In addition, we have audited the combined statement of
operations and cash flows for the year ended December 31, 1995 of the
Predecessor Combined Systems. These combined financial statements are the
responsibility of the Combined Systems' or the Predecessor's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Combined
Systems, included in TWI Cable or the Predecessor, at December 31, 1996 and
1997, and the combined results of their operations and their cash flows for the
years ended December 31, 1995, 1996 and 1997, in conformity with generally
accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

New York, New York
March 16, 1998

                                      F-144
   339

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                            COMBINED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                  DECEMBER 31,

- --------------------
                                                                1996        1997
                                                                ----        ----
                                                                    
                                      ASSETS
Cash and cash equivalents...................................  $    570    $
1,371
Receivables, less allowance of $71 and $116 for the years
  ended December 31, 1996 and 1997, respectively............       794
1,120
Prepaid expenses and other assets...........................        45
183
Property, plant and equipment, net..........................    36,966
36,944
Cable television franchises, net............................   209,952
198,913
Goodwill and other intangibles, net.........................    51,722
50,383
                                                              --------
- --------
          Total assets......................................  $300,049
$288,914
                                                              ========
========
                            LIABILITIES AND NET ASSETS
Accounts payable............................................  $  1,640    $
652
Accrued programming expenses................................       847
904
Accrued franchise fees......................................       736
835
Subscriber advance payments and deposits....................        66
407
Deferred income taxes.......................................    58,340
60,601
Other liabilities...........................................       945
969
                                                              --------
- --------
          Total liabilities.................................    62,574
64,368
          Total net assets..................................   237,475
224,546
                                                              --------
- --------
          Total liabilities and net assets..................  $300,049
$288,914
                                                              ========
========
</Table>

            See accompanying notes to combined financial statements.
                                      F-145
   340

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS

                       COMBINED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    YEAR ENDED
DECEMBER 31,

- ---------------------------------------------
                                                             1995
1996              1997
                                                             ----
- ----              ----
                                                         (PREDECESSOR)
(INCLUDED IN TWI CABLE INC.)
                                                                    
           
REVENUES...............................................     $43,549
$47,327           $50,987
COSTS AND EXPENSES:
Operating and programming..............................      13,010
12,413            12,101
Selling, general and administrative....................       9,977
12,946            13,823
Depreciation and amortization..........................      17,610
18,360            18,697
(Gain) loss on disposal of fixed assets................          --
(244)              620
                                                            -------
- -------           -------
          Total costs and expenses.....................      40,597
43,475            45,241
                                                            -------
- -------           -------
Operating income.......................................       2,952
3,852             5,746
Interest expense.......................................      11,871
- --                --
                                                            -------
- -------           -------
(Loss) income before income tax (benefit) expense......      (8,919)
3,852             5,746
Income tax (benefit) expense...........................      (3,567)
1,502             2,262
                                                            -------
- -------           -------
Net (loss) income......................................     $(5,352)       $
2,350           $ 3,484
                                                            =======
=======           =======
</Table>

            See accompanying notes to combined financial statements.
                                      F-146
   341

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                  COMBINED STATEMENTS OF CHANGES IN NET ASSETS
                                 (IN THOUSANDS)

<Table>
                                                             
Contribution by Parent......................................    $250,039
  Repayment of advances from Parent.........................     (47,895)
  Advances from Parent......................................      32,981
  Net income................................................       2,350
                                                                --------
Balance at December 31, 1996................................     237,475
  Repayment of advances from Parent.........................     (50,661)
  Advances from Parent......................................      34,248
  Net income................................................       3,484
                                                                --------
Balance at December 31, 1997................................    $224,546
                                                                ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-147
   342

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS

                       COMBINED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                     YEAR ENDED
DECEMBER 31,

- ----------------------------------------------
                                                              1995
1996             1997
                                                              ----
- ----             ----
                                                          (PREDECESSOR)
(INCLUDED IN TWI CABLE INC.)
                                                                     
           
OPERATING ACTIVITIES:
Net (loss) income.......................................     $(5,352)        $
2,350        $  3,484
     Adjustments for noncash and nonoperating items:
     Income tax (benefit) expense.......................      (3,567)
1,502           2,262
     Depreciation and amortization......................      17,610
18,360          18,697
     (Gain) loss on disposal of fixed assets............          --
 (244)            620
     Changes in operating assets and liabilities:
       Receivables, prepaids and other assets...........        (196)
  944            (464)
       Accounts payable, accrued expenses and other
          liabilities...................................        (972)
  176            (466)
       Other balance sheet changes......................          --
   --            (529)
                                                             -------
- ---------        --------
Net cash provided by operations.........................       7,523
23,088          23,604
INVESTING ACTIVITIES:
Purchase of Predecessor cable systems, net of cash
  acquired..............................................          --
(249,473)             --
Capital expenditures....................................      (7,376)
(8,170)         (6,390)
                                                             -------
- ---------        --------
Net cash used in investing activities...................      (7,376)
(257,643)         (6,390)
FINANCING ACTIVITIES:
Advance from Parent for purchase of Predecessor.........          --
250,039              --
Net repayment of advances from Parent...................          --
(14,914)        (16,413)
                                                             -------
- ---------        --------
Net cash provided by (used in) financing activities.....          --
235,125         (16,413)
INCREASE IN CASH AND CASH EQUIVALENTS...................         147
  570             801
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........         419
    0             570
                                                             -------
- ---------        --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..............     $   566         $
  570        $  1,371
                                                             =======
=========        ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-148
   343

           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

                     NOTES TO COMBINED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  DESCRIPTION OF BUSINESS

     The cable television systems operating in the metropolitan areas of
Picayune, Mississippi; Lafourche, Louisiana; St. Tammany, Louisiana; St. Landry,
Louisiana; Pointe Coupee, Louisiana; and Jackson, Tennessee (the "Combined
Systems") are principally engaged in the cable television business under non-
exclusive franchise agreements, which expire at various times beginning in 1999.
The Combined Systems' operations consist primarily of selling video programming
which is distributed to subscribers for a monthly fee through a network of
coaxial and fiber-optic cables.

     Prior to January 4, 1996, the Combined Systems were included in certain
subsidiaries of Cablevision Industries Corporation ("CVI"). On January 4, 1996,
CVI merged into a wholly owned subsidiary of Time Warner Inc. (the "CVI
Merger"). On October 1, 1996, Time Warner Inc. ("Time Warner") completed a
reorganization amongst certain of its wholly owned cable television subsidiaries
whereby CVI was renamed TWI Cable Inc. ("TWI Cable").

  BASIS OF PRESENTATION

     TWI Cable has committed to sell the Combined Systems to Renaissance Media
Holdings LLC ("Renaissance") pursuant to an Asset Purchase Agreement with
Renaissance, dated November 14, 1997. Accordingly, the accompanying combined
financial statements of the Combined Systems reflect the "carved out" historical
financial position, results of operations, cash flows and changes in net assets
of the operations of the Combined Systems as if they had been operating as a
separate company. Effective as of January 1, 1996, the Combined Systems'
financial statements reflect the new basis of accounting arising from Time
Warner's merger with CVI. Based on Time Warner's allocation of the purchase
price, the assets and liabilities of the Combined Systems were revalued
resulting in goodwill allocated to the Combined Systems of approximately
$52,971,000, which is being amortized over its estimated life of 40 years. In
addition, approximately $220,981,000 was allocated to cable television
franchises and other intangible assets, which is being amortized over periods up
to 20 years. The Combined Systems' financial statements through December 31,
1995 reflect the historical cost of their assets and liabilities and results of
their operations.

     The combined statements have been adjusted to include the allocation of
certain corporate expenses incurred by Time Warner Cable and/or TWI Cable on the
Combined Systems' behalf, based upon the number of Combined System subscribers
managed by Time Warner Cable and the ratio of Combined System subscribers to
total TWI Cable subscribers, respectively. These allocations reflect all costs
of doing business that the Combined Systems would have incurred on a stand alone
basis as disclosed in Note 3. Management believes that these allocations are
reasonable.

  BASIS OF COMBINATION

     The combined financial statements include the assets, liabilities,
revenues, expenses, income, loss and cash flows of the Combined Systems, as if
the Combined Systems were a single company. Significant intercompany accounts
and transactions between the Combined Systems have been eliminated. Significant
accounts and transactions with Time Warner and its affiliates are disclosed as
related party transactions (see Note 3).

                                      F-149
   344
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  USE OF ESTIMATES

     The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and footnotes thereto. Actual results could differ from those
estimates.

  CONCENTRATION OF CREDIT RISK

     A significant portion of the customer base is concentrated within the local
geographical area of each of the individual cable television systems. The
Combined Systems generally extend credit to customers and the ultimate
collection of accounts receivable could be affected by the local economy.
Management performs continuous credit evaluations of its customers and may
require cash in advance or other special arrangements from certain customers.
Management does not believe that there is any significant credit risk which
could have a material effect on the financial condition of the Combined Systems.

  REVENUE AND COSTS

     Subscriber fees are recorded as revenue in the period the related services
are provided and advertising revenues are recognized in the period the related
advertisements are exhibited. Rights to exhibit programming are purchased from
various cable networks. The costs of such rights are generally expensed as the
related services are made available to subscribers.

  FRANCHISE FEES

     Local governmental authorities impose franchise fees on the cable
television systems owned by the Combined Systems ranging up to a federally
mandated maximum of 5.0% of gross revenues. On a monthly basis, such fees are
collected from the Combined Systems' customers. Prior to January 1997, franchise
fees were not separately itemized on customers' bills. Such fees were considered
part of the monthly charge for basic services and equipment, and therefore were
reported as revenue and expense in the Combined Systems' financial results.
Management began the process of itemizing such fees on all customers' bills
beginning in January 1997. In conjunction with itemizing these charges, the
Combined Systems began separately collecting the franchise fee on all revenues
subject to franchise fees. As a result, such fees are no longer included as
revenue or as franchise fee expense. The net effect of this change is a
reduction in 1997 revenue and franchise fee expense of approximately $1,500,000
versus the comparable period in 1996.

  ADVERTISING COSTS

     Advertising costs are expensed upon the first exhibition of the related
advertisements. Advertising expense amounted to $308,000, $632,000 and $510,000
for the years ended 1995, 1996 and 1997, respectively.

  STATEMENT OF CASH FLOWS

     The Combined Systems participate in a cash management system with
affiliates whereby cash receipts are transferred to a centralized bank account
from which centralized payments to various suppliers and creditors are made on
behalf of the Combined Systems. The excess of such cash receipts over payments
is included in net assets. Amounts shown as cash represent the Combined Systems'
net cash receipts not transferred to the centralized account as of December 31,
1996 and 1997. The average net intercompany payable balances were $173,348,000
and $170,438,000 for the years ended December 31, 1996 and 1997, respectively.

                                      F-150
   345
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     For purposes of this statement, cash and cash equivalents includes all
highly liquid investments purchased with original maturities of three months or
less.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Additions to property,
plant and equipment generally include material, labor, overhead and interest.
Depreciation is provided on the straight-line method over estimated useful lives
as follows:

<Table>
                                                           
Buildings and improvements..................................  5-20 years
Cable television equipment..................................  5-15 years
Furniture, fixtures and other equipment.....................  3-10 years
</Table>

Property, plant and equipment consist of:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              ------------------
                                                               1996       1997
                                                               ----       ----
                                                                   
Land and buildings..........................................  $ 2,003    $ 2,265
Cable television equipment..................................   32,324     39,589
Furniture, fixtures and other equipment.....................    1,455      2,341
Construction in progress....................................    5,657      1,028
                                                              -------    -------
                                                               41,439     45,223
Less accumulated depreciation...............................   (4,473)
(8,279)
                                                              -------    -------
          Total.............................................  $36,966    $36,944
                                                              =======    =======
</Table>

  INTANGIBLE ASSETS

     During 1996 and 1997, the Combined Systems amortized goodwill over periods
up to 40 years and cable television franchises over periods up to 20 years, both
using the straight-line method. Prior to the CVI Merger, goodwill and cable
television franchises were amortized over 15 years using the straight-line
method. For the years ended 1995, 1996, and 1997, amortization of goodwill
amounted to $8,199,000, $1,325,000, and $1,325,000, respectively, and
amortization of cable television franchises amounted to $1,284,000, $11,048,000,
and $11,048,000, respectively. Accumulated amortization of intangible assets at
December 31, 1996 and 1997 amounted to $12,373,000 and $24,746,000,
respectively.

  IMPAIRMENT

     Management separately reviews the carrying value of acquired long-lived
assets for each acquired entity on a quarterly basis to determine whether an
impairment may exist. Management considers relevant cash flow and profitability
information, including estimated future operating results, trends and other
available information, in assessing whether the carrying value of long-lived
assets can be recovered. Upon a determination that the carrying value of
long-lived assets will not be recovered from the undiscounted future cash flows
of the acquired business, the carrying value of such long-lived assets would be
considered impaired and would be reduced by a charge to operations in the amount
of the impairment. An impairment charge is measured as a deficiency in estimated
discounted future cash flows of the acquired business to recover the carrying
value related to the long-lived assets.

                                      F-151
   346
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

  INCOME TAXES

     Income taxes have been provided using the liability method prescribed by
FASB Statement No. 109, "Accounting for Income Taxes." Under the liability
method, deferred income taxes reflect tax carryforwards and the net tax effects
of temporary differences between the carrying amount of assets and liabilities
for financial statements and income tax purposes, as determined under enacted
tax laws and rates.

2. EMPLOYEE BENEFIT PLANS

     Following the CVI Merger, the Combined Systems began participation in the
Time Warner Cable Pension Plan (the "Pension Plan"), a non-contributory defined
benefit pension plan, and the Time Warner Cable Employee Savings Plan (the
"Savings Plan") which are administered by a committee appointed by the Board of
Representatives of Time Warner Entertainment Company, L.P. ("TWE"), an affiliate
of Time Warner, and which cover substantially all employees.

     Benefits under the Pension Plan are determined based on formulas which
reflect an employee's years of service and compensation levels during the
employment period. Pension expense for the years ended December 31, 1996 and
1997 totaled $184,000 and $192,000, respectively.

     The Combined Systems' contributions to the Savings Plan are limited to
6.67% of an employee's eligible compensation during the plan year. The Board of
Representatives of TWE has the right in any year to set the maximum amount of
the Combined Systems' contribution. Defined contribution plan expense for the
years ended December 31, 1996 and 1997 totaled $107,000 and $117,000,
respectively.

     Prior to the CVI Merger, substantially all employees were eligible to
participate in a profit sharing plan or a defined contribution plan. The profit
sharing plan provided that the Combined Systems may contribute, at the
discretion of their board of directors, an amount up to 15% of compensation for
all eligible participants out of its accumulated earnings and profits, as
defined. Profit sharing expense amounted to approximately $31,000 for the year
ended December 31, 1995.

     The defined contribution plan contained a qualified cash or deferred
arrangement pursuant to Internal Revenue Code Section 401(k). This plan provided
that eligible employees may contribute from 2% to 10% of their compensation to
the plan. The Combined Systems matched contributions of up to 4% of the
employees' compensation. The expense for this plan amounted to approximately
$96,000 for the year ended December 31, 1995.

     The Combined Systems have no material obligations for other post retirement
benefits.

3. RELATED PARTIES

     In the normal course of conducting business, the Combined Systems had
various transactions with Time Warner and its affiliates, generally on terms
resulting from a negotiation between the affected units that in management's
view resulted in reasonable allocations.

  PROGRAMMING

     Included in the Combined Systems' 1996 and 1997 operating expenses are
charges for programming and promotional services provided by Home Box Office,
Turner Broadcasting System, Inc. and other affiliates of Time Warner. These
charges are based on customary rates and are in the ordinary course of business.
For the year ended December 31, 1996 and 1997, these charges totaled $3,260,000
and $3,458,000, respectively. Accrued related party expenses for these
programming and promotional services included in accrued

                                      F-152
   347
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

programming expenses approximated $327,000 and $291,000 for the years ended
December 31, 1996 and 1997, respectively. There were no such programming and
promotional service related party transactions in 1995.

  MANAGEMENT FEES

     TWI Cable entered into a management service arrangement with Time Warner
Cable ("TWC"), pursuant to which TWC is responsible for the management and
operation of TWI Cable, which includes the Combined Systems. The management fees
paid to TWC by TWI Cable are based on an allocation of the corporate expenses of
TWC's cable division in proportion to the respective number of subscribers of
all cable systems managed by TWC's cable division. The allocation of the TWI
Cable management fee to the Combined Systems approximated $1,432,000 and
$1,715,000 for the years ended December 31, 1996 and 1997, respectively.

     Other divisional expenses allocated to the Combined Systems approximated
$1,301,000 and $1,067,000 for the years ended December 31, 1996 and 1997,
respectively.

4. INTEREST EXPENSE

     Prior to the CVI Merger, the Jackson, Tennessee system was included in
Cablevision Industries Limited Partnership and Combined Entities ("CILP"). The
Jackson system was charged interest expense in connection with CILP's (a) senior
and subordinated bank credit agreements; and (b) senior unsecured subordinated
Series A and Series B notes payable to CVI. The remaining five systems
comprising the Combined Systems were included in Cablevision Industries of the
Southeast, Inc. and Combined Entities ("CIOS"). These systems were charged
interest expense in connection with CIOS's (a) bank revolving credit agreement;
and (b) junior and senior subordinated debt to CVI.

5. INCOME TAXES

     Effective January 4, 1996, the Combined Systems are included in the
consolidated federal income tax return of Time Warner. Prior to January 4, 1996,
the Combined Systems were included in the consolidated federal income tax return
of CVI. The provision (benefit) for income taxes has been calculated on a
separate company basis. The components of the provision (benefit) for income
taxes are as follows:

<Table>
<Caption>
                                            YEAR ENDED DECEMBER 31,
                                          ---------------------------
                                           1995       1996      1997
                                           ----       ----      ----
                                                (IN THOUSANDS)
                                                      
FEDERAL:
  Current...............................  $    --    $   --    $   --
  Deferred..............................   (2,881)    1,213     1,826
STATE:
  Current...............................       --        --        --
  Deferred..............................     (686)      289       436
                                          -------    ------    ------
  Net provision (benefit) for income
     taxes..............................  $(3,567)   $1,502    $2,262
                                          =======    ======    ======
</Table>

     The Combined Systems did not, and will not, have a tax sharing agreement
with either Time Warner, TWI Cable or CVI. Therefore, the Combined Systems have
not and will not be compensated for the utilization of the Combined Systems' tax
losses, by Time Warner, TWI Cable or CVI. In addition, the

                                      F-153
   348
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Combined Systems have not and will not be required to make payments to either
Time Warner or TWI Cable for the current tax provision of the Combined Systems.

     The differences between the income tax provision (benefit) expected at the
U.S. federal statutory income tax rate and the total income tax provision
(benefit) are due to nondeductible goodwill amortization and state taxes.

     Significant components of the Combined Systems' deferred tax assets and
liabilities, as calculated on a separate company basis, are as follows:

<Table>
<Caption>
                                                 YEAR ENDED DECEMBER 31,
                                                 ------------------------
                                                   1996           1997
                                                   ----           ----
                                                      (IN THOUSANDS)
                                                          
DEFERRED TAX LIABILITIES:
  Amortization.................................   $61,266        $58,507
  Depreciation.................................     3,576          4,060
                                                  -------        -------
          Total gross deferred tax
            liabilities........................    64,842         62,567
                                                  -------        -------
DEFERRED TAX ASSETS:
  Tax loss carryforwards.......................     6,474          1,920
  Allowance for doubtful accounts..............        28             46
                                                  -------        -------
          Total deferred tax assets............     6,502          1,966
                                                  -------        -------
  Net deferred tax liability...................   $58,340        $60,601
                                                  =======        =======
</Table>

     On a separate company basis, the Combined Systems have tax loss
carryforwards of approximately $4.8 million at December 31, 1997. However, if
the Combined Systems are acquired in an asset purchase, the tax loss
carryforwards, and net deferred tax liabilities relating to temporary
differences will not carry over to Renaissance (see Note 8).

6. COMMITMENTS AND CONTINGENCIES

     The Combined Systems had rental expense of approximately $642,000,
$824,000, and $843,000 for the years ended December 31, 1995, 1996 and 1997,
respectively, under various lease and rental agreements for offices, utility
poles, warehouses and computer equipment. Future minimum annual rental payments
under noncancellable leases will approximate $1,000,000 annually over the next
five years.

     In exchange for certain flexibility in establishing cable rate pricing
structures for regulated services that went into effect on January 1, 1996, TWC
has agreed with the Federal Communications Commission ("FCC") to invest in
certain upgrades to its cable infrastructure (consisting primarily of materials
and labor in connection with the plant upgrades up to 750 megahertz) over the
next three years (approximately $22 million). This agreement with the FCC, which
extends to the Combined Systems, will be assumed by Renaissance as it relates to
the Combined Systems in accordance with the Asset Purchase Agreement.

                                      F-154
   349
           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                          (INCLUDED IN TWI CABLE INC.)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. OTHER LIABILITIES

     Other liabilities consist of:

<Table>
<Caption>
                                                               DECEMBER 31,
                                                               ------------
                                                              1996     1997
                                                              ----     ----
                                                              (IN THOUSANDS)
                                                                 
Compensation................................................  $217     $250
Data Processing Costs.......................................   100       90
Sales and other taxes.......................................   101       90
Copyright Fees..............................................    85       83
Pole Rent...................................................    66       63
Other.......................................................   376      393
                                                              ----     ----
     Total..................................................  $945     $969
                                                              ====     ====
</Table>

8. SUBSEQUENT EVENT (UNAUDITED)

     The sale of the Combined Systems, in connection with the Asset Purchase
Agreement with Renaissance, closed on April 9, 1998 at the purchase price of
$309,500,000.

                                      F-155
   350

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Greater Media, Inc.:

     We have audited the accompanying combined statements of income, changes in
net assets and cash flows of Greater Media Cablevision Systems (see Note 1)
(collectively, the "Combined Systems") included in Greater Media, Inc., for the
nine months ended June 30, 1999. These combined financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these combined financial statements based on our audit.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations of the Combined
Systems and their cash flows for the nine months ended June 30, 1999, in
conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
March 6, 2000

                                      F-156
   351

                       GREATER MEDIA CABLEVISION SYSTEMS

                          COMBINED STATEMENT OF INCOME
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                NINE MONTHS
                                                                   ENDED
                                                                 JUNE 30,
                                                                   1999
                                                                -----------
                                                             
REVENUES....................................................      $62,469
                                                                  -------
OPERATING EXPENSES:
  Operating.................................................       26,248
  General and administrative................................        9,150
  Corporate charges- related party..........................        3,175
  Depreciation and amortization.............................        7,398
                                                                  -------
                                                                   45,971
                                                                  -------
     Income from operations.................................       16,498
                                                                  -------
OTHER EXPENSE:
  Interest expense, net.....................................         (705)
  Other.....................................................         (365)
                                                                  -------
INCOME BEFORE PROVISION IN LIEU OF INCOME TAXES.............       15,428
PROVISION IN LIEU OF INCOME TAXES...........................        6,646
                                                                  -------
NET INCOME..................................................      $ 8,782
                                                                  =======
</Table>

The accompanying notes are an integral part of these combined statements.
                                      F-157
   352

                       GREATER MEDIA CABLEVISION SYSTEMS

                  COMBINED STATEMENT OF CHANGES IN NET ASSETS
                                 (IN THOUSANDS)

<Table>
                                                             
BALANCE, September 30, 1998.................................    $54,131
  Net income................................................      8,782
  Provision in lieu of income taxes.........................      6,646
  Net payments to affiliates................................        (34)
                                                                -------
BALANCE, June 30, 1999......................................    $69,525
                                                                =======
</Table>

The accompanying notes are an integral part of these combined statements.
                                      F-158
   353

                       GREATER MEDIA CABLEVISION SYSTEMS

                        COMBINED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                NINE MONTHS
                                                                   ENDED
                                                                 JUNE 30,
                                                                   1999
                                                                -----------
                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................     $  8,782
  Adjustments to reconcile net income to net cash provided
     by operating activities --
     Depreciation and amortization..........................        7,398
     Provision in lieu of income taxes......................        6,646
     Loss on sale of fixed assets...........................          465
     Changes in assets and liabilities --
       Accounts receivable, prepaid expenses and other
        current assets......................................       (1,431)
       Other assets.........................................           10
       Accounts payable and accrued expenses................         (178)
       Customers' prepayments and deferred installation
        revenue.............................................          218
                                                                 --------
          Net cash provided by operating activities.........       21,910
                                                                 --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures......................................      (13,797)
     Other..................................................         (512)
                                                                 --------
          Net cash used in investing activities.............      (14,309)
                                                                 --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments to affiliates................................          (34)
                                                                 --------
          Net cash used in financing activities.............          (34)
                                                                 --------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................        7,567
CASH AND CASH EQUIVALENTS, beginning of period..............        4,080
                                                                 --------
CASH AND CASH EQUIVALENTS, end of period....................     $ 11,647
                                                                 ========
CASH PAID FOR NON-AFFILIATE INTEREST........................     $    264
                                                                 ========
</Table>

The accompanying notes are an integral part of these combined statements.
                                      F-159
   354

                       GREATER MEDIA CABLEVISION SYSTEMS
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization, Basis of Presentation and Operations

     Greater Media Cablevision Systems is comprised of the following
Massachusetts-based cable television systems: Auburn, Boylston, Chicopee,
Dudley, East Longmeadow, Easthampton, Grafton, Hampden, Holden, Leicester,
Ludlow, Millbury, Northborough, Northbridge, Oxford, Paxton, Southampton,
Southborough, Southbridge, Spencer, Sturbridge, Upton, Webster, West Boylston,
West Brookfield, Westborough, Wilbraham and Worcester (the "Combined Systems").
The Combined Systems are wholly-owned by Greater Media Cablevision, Inc. (the
"Company"). The combined financial statements do not include the accounts of
Greater Philadelphia Cablevision, Inc. or Greater Philadelphia Cablevision
Limited Partnership, which are also wholly-owned by the Company. The Company is
a wholly-owned subsidiary of Greater Media, Inc. (the "Parent"). On June 30,
1999, Charter Communications Entertainment I, LLC, an indirect subsidiary of
Charter Communications Holdings Company, LLC purchased the Combined Systems for
an aggregate purchase price of $500 million plus a working capital adjustment
(the "Charter Sale"). Effective with this change of ownership, the Combined
Systems will be managed by Charter Investment, Inc.

     Significant intercompany accounts and transactions between the Combined
Systems have been eliminated in the combined financial statements.

     The Combined Systems primarily provide cable television services to
subscribers in central and western Massachusetts.

Cash Equivalents

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Property, Plant and Equipment

     Maintenance and repair costs are expensed when incurred. For financial
reporting purposes, depreciation is provided on the straight-line method based
on the following estimated useful lives:

<Table>
                                                             
Land improvements...........................................       20 years
Furniture, fixtures and equipment...........................     3-15 years
Buildings...................................................    15-40 years
Trunk and distribution systems..............................     7-12 years
</Table>

     Depreciation expense for the nine months ended June 30, 1999, was $7,343.

Intangible Assets

     Intangible assets consist primarily of goodwill, which is amortized over
forty years, and costs incurred in obtaining and renewing cable franchises,
which are amortized over the life of the respective franchise agreements.
Amortization expense for the nine months ended June 30, 1999, was $55.

Revenues

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

                                      F-160
   355
                       GREATER MEDIA CABLEVISION SYSTEMS

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

Segments

     Segments have been identified based upon management responsibility. The
Company operates in one segment, cable services.

Use of Estimates

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

2. INCOME TAXES

     The Combined Systems are included in the consolidated federal income tax
return of the Parent. The Parent is responsible for tax payments applicable to
the Combined Systems. The combined financial statements reflect a provision in
lieu of income taxes as if the Combined Systems were filing on a separate
company basis. Accordingly, the Combined Systems have included the provision in
lieu of income taxes as a component of net assets.

     The provision in lieu of income taxes approximates the amount of tax
computed using U.S. statutory rates, after reflecting state income tax expense.

3. RELATED PARTY TRANSACTIONS

     The Company and each of its subsidiaries are guarantors of the Parent's
debt.

     The combined statements include charges for certain corporate expenses
incurred by the Parent on behalf of the Combined Systems. Such charges amounted
to $3,175 for the nine months ended June 30, 1999. Management believes that this
cost is reasonable and reflects costs of doing business that the Combined
Systems would have incurred on a stand-alone basis.

4. EMPLOYEE BENEFIT PLANS

401(k) Plan

     The Combined Systems' employees participate in the Greater Media, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 12% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Combined Systems' contribute an amount equal to 50% of the participant's
contribution, limited to the lessor of 3% of the participant's compensation or
$1 per year. In connection with the Charter Sale, all employees became fully
vested. Following the Charter Sale, the Company's 401(k) plan was merged into
Charter Communication, Inc.'s.

     The Combined Systems expense relating to the 401(k) Plan for the nine
months ended June 30, 1999, was $123.

PENSION

     Certain employees of the Combined Systems participate in a pension plan
sponsored by the Parent. The Combined Systems allocable share of the pension
expense amounted to $57 for the nine months ended June 30, 1999. As a result of
the Charter Sale, the Combined Systems' employees became fully vested with
respect to their plan benefits. No additional benefits will accrue to such
employees in the future. In addition,

                                      F-161
   356
                       GREATER MEDIA CABLEVISION SYSTEMS

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

the Parent is responsible for the allocable pension liability and will continue
to administer the plan on behalf of the Combined Systems' employees.

5. COMMITMENTS AND CONTINGENCIES

Leases

     The Combined Systems lease certain facilities and equipment under
noncancelable operating leases. Rent expense incurred for the nine months ended
June 30, 1999, was $249.

     The Company also rents utility poles 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
nine months ended June 30, 1999, was $479.

Litigation

     The Combined Systems are a party to lawsuits that arise in the ordinary
course of conducting its business. In the opinion of management, after
consulting with legal counsel, the outcome of these lawsuits will not have a
material adverse effect on the Combined Systems' combined financial position or
results of operations.

Regulation in the Cable Television Industry

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Combined Systems cannot predict the
impact of future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. The Combined Systems
may be required to refund additional amounts in the future.

     The Combined Systems believe that it has complied in all material respects
with the provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Combined Systems are unable to justify its basic rates. The
Combined Systems are unable to estimate at this time the amount of refunds, if
any, that may be payable by the Combined Systems in the event certain of its
rates are successfully challenged by franchising authorities or found to be
unreasonable by the FCC. The Combined Systems do not believe that the amount of
any such refunds would have a material adverse effect on the financial position
or results of operations of the Combined Systems.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulated rates on the cable
programming service tier (CPST). The FCC has taken the position that it will
still adjudicate pending CPST complaints but will strictly limit its review, and
possible refund orders, to the time period predating the sunset date, March 31,
1999. The Combined Systems do not believe any adjudications regarding their
pre-sunset complaints will have a material adverse effect on the Combined
Systems' financial position or results of operations.
                                      F-162
   357
                       GREATER MEDIA CABLEVISION SYSTEMS

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

                                      F-163
   358

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Greater Media, Inc.:

     We have audited the accompanying combined balance sheets of Greater Media
Cablevision Systems (see Note 1) (collectively, the "Combined Systems") included
in Greater Media, Inc., as of September 30, 1998 and 1997, and the related
combined statements of income, changes in net assets, and cash flows for each of
the three years in the period ended September 30, 1998. These combined financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Combined Systems, as of September 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1998, in conformity with generally accepted accounting principles.

/s/  ARTHUR ANDERSEN LLP

Roseland, New Jersey
March 2, 1999

                                      F-164
   359

                 GREATER MEDIA CABLEVISION SYSTEMS (SEE NOTE 1)

                            COMBINED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                SEPTEMBER 30,
                                                              ------------------
                                                               1998       1997
                                                               ----       ----
                                                                   
Current assets:
  Cash and cash equivalents.................................  $ 4,080    $ 3,680
  Accounts receivable (less allowance for doubtful accounts
     of $308 (unaudited), $244 and $337)....................    2,755      2,739
  Prepaid expenses and other current assets.................    2,746      1,949
                                                              -------    -------
          Total current assets..............................    9,581      8,368
Property and equipment, net.................................   54,468     41,971
Intangible assets, net......................................    2,690      1,647
Other assets................................................       77        103
                                                              -------    -------
          Total assets......................................  $66,816    $52,089
                                                              =======    =======

Current liabilities:
  Accounts payable and accrued expenses.....................  $ 7,125    $ 5,299
  Customers' prepayments and deferred installation
     revenue................................................    1,910      1,815
                                                              -------    -------
          Total current liabilities.........................    9,035      7,114
Other long-term liabilities.................................    3,650      3,920
Net assets..................................................   54,131     41,055
                                                              -------    -------
          Total liabilities and net assets..................  $66,816    $52,089
                                                              =======    =======
</Table>

     The accompanying notes are an integral part of these combined balance
sheets.
                                      F-165
   360

                 GREATER MEDIA CABLEVISION SYSTEMS (SEE NOTE 1)

                         COMBINED STATEMENTS OF INCOME
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                  YEAR ENDED
SEPTEMBER 30,

- -----------------------------
                                                                 1998       1997
      1996
                                                                 ----       ----
      ----
                                                                     
     
NET REVENUES................................................    $77,127
$73,436    $66,816
                                                                -------
- -------    -------
OPERATING EXPENSES:
  Operating expenses........................................     32,665
31,115     29,460
  General and administrative................................     10,869
11,211     10,321
  Corporate charges.........................................      3,888
3,696      3,365
  Depreciation and amortization.............................      8,183
7,368      7,353
                                                                -------
- -------    -------
                                                                 55,605
53,390     50,499
                                                                -------
- -------    -------
     Income from operations.................................     21,522
20,046     16,317
OTHER INCOME (EXPENSES):
Interest expense, net.......................................       (504)
(307)      (764)
Other.......................................................       (532)
(957)      (366)
                                                                -------
- -------    -------
INCOME BEFORE PROVISION IN LIEU OF INCOME TAXES.............     20,486
18,782     15,187
Provision in lieu of income taxes (Note 6)..................      8,008
7,964      5,987
                                                                -------
- -------    -------
Net income..................................................    $12,478
$10,818    $ 9,200
                                                                =======
=======    =======
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-166
   361

                 GREATER MEDIA CABLEVISION SYSTEMS (SEE NOTE 1)

                  COMBINED STATEMENTS OF CHANGES IN NET ASSETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                               TOTAL
                                                               -----
                                                           
Balance, September 30, 1995.................................  $ 42,185
  Net income................................................     9,200
  Provision in lieu of income taxes.........................     5,987
  Net payments to affiliates................................   (17,038)
                                                              --------
Balance, September 30, 1996.................................    40,334
  Net income................................................    10,818
  Provision in lieu of income taxes.........................     7,964
  Net payments to affiliates................................   (18,061)
                                                              --------
Balance, September 30, 1997.................................    41,055
  Net income................................................    12,478
  Provision in lieu of income taxes.........................     8,008
  Net payments to affiliates................................    (7,410)
                                                              --------
Balance, September 30, 1998.................................  $ 54,131
                                                              ========
</Table>

     The accompanying notes are an integral part of these combined statements.
                                      F-167
   362

                 GREATER MEDIA CABLEVISION SYSTEMS (SEE NOTE 1)

                       COMBINED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 YEAR ENDED
SEPTEMBER 30,

- ------------------------------
                                                               1998       1997
     1996
                                                               ----       ----
     ----
                                                                   
   
Net income..................................................  $12,478    $10,818
   $  9,200
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Provision in lieu of income taxes.........................    8,008      7,964
      5,987
  Depreciation and amortization.............................    8,183      7,368
      7,353
  (Gain) loss on sale of fixed assets.......................      300        715
        274
Changes in assets and liabilities:
  Accounts receivable, prepaid expenses and other assets....     (813)
(1,115)       (498)
  Other assets..............................................       24
(30)        (11)
  Accounts payable and accrued expenses.....................    1,825
(440)     (1,900)
  Customers' prepayments and deferred
     installation revenue...................................       96        367
         94
  Customers' deposits and deferred revenue..................     (270)
(69)        466
                                                              -------    -------
   --------

Net cash provided by operating activities...................   29,831     25,578
     20,965
                                                              -------    -------
   --------
Cash flow from investing activities:
Capital expenditures........................................  (21,049)
(7,587)     (5,122)
Proceeds from disposition of property and equipment.........       72         --
        128
Purchase of licenses........................................   (1,044)
(99)         --
                                                              -------    -------
   --------
Net cash used in investing activities.......................  (22,021)
(7,686)     (4,994)
                                                              -------    -------
   --------
Cash flow from financing activities:

Net payments to affiliates..................................   (7,410)
(18,061)    (17,038)
                                                              -------    -------
   --------
Net increase (decrease) in cash and cash equivalents........      400
(169)     (1,067)
Cash and cash equivalents, beginning of year................    3,680      3,849
      4,916
                                                              -------    -------
   --------
Cash and cash equivalents, end of year......................  $ 4,080    $ 3,680
   $  3,849
                                                              =======    =======
   ========
Supplemental disclosure of cash flow information:
  Non-affiliate interest paid during the year...............  $   296    $   155
   $    447
                                                              =======    =======
   ========
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-168
   363

                       GREATER MEDIA CABLEVISION SYSTEMS

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  ORGANIZATION, BASIS OF PRESENTATION AND OPERATIONS

     Greater Media Cablevision Systems is the owner and operator of the
following Massachusetts-based cable television systems: Auburn, Boylston,
Chicopee, Dudley, East Longmeadow, Easthampton, Grafton, Hampden, Holden,
Leicester, Ludlow, Millbury, Northborough, Northbridge, Oxford, Paxton,
Southampton, Southborough, Southbridge, Spencer, Sturbridge, Upton, Webster,
West Boylston, West Brookfield, Westborough, Wilbraham and Worcester ("the
Combined Systems"). The Combined Systems are wholly-owned by Greater Media
Cablevision, Inc. ("the Company"). The combined financial statements do not
include the accounts of Greater Philadelphia Cablevision, Inc. or Greater
Philadelphia Cablevision Limited Partnership (the "Philadelphia System"), which
are also wholly-owned by the Company. The Company is a wholly-owned subsidiary
of Greater Media, Inc. ("the Parent"). In February 1999, the Parent and the
Company entered into an agreement ("Sales Agreement") to sell the net assets of
the Company including the Combined Systems but excluding the Philadelphia
Systems to Charter Communications Holdings, LLC.

     Significant intercompany accounts and transactions between the Combined
Systems have been eliminated in the combined financial statements. Significant
accounts and transactions with the Parent and other affiliates are disclosed as
related party transactions (See Note 7).

     The Combined Systems primarily provide cable television services to
subscribers in central and western Massachusetts.

  CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

  PROPERTY AND EQUIPMENT

     Maintenance and repair costs are expensed when incurred. For financial
reporting purposes, depreciation is provided on the straight-line method based
on the following estimated useful lives:

<Table>
<Caption>
                       CLASSIFICATION                           YEARS
                       --------------                           -----
                                                             
Land improvements...........................................       20
Buildings...................................................    15-40
Furniture, fixtures and equipment...........................     3-15
Trunk and distribution systems..............................     7-12
</Table>

  INTANGIBLE ASSETS

     Intangible assets consist primarily of goodwill amortized over forty years
and costs incurred in obtaining and renewing cable franchises which are
amortized over the life of the respective franchise agreements.

  REVENUES

     Cable revenues from basic and premium services are recognized when the
related services are provided.

  USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and

                                      F-169
   364
                       GREATER MEDIA CABLEVISION SYSTEMS

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.

  QUARTERLY RESULTS

     The financial statements included herein as of December 31, 1998 and for
the three months ended December 31, 1998 and 1997 have been prepared by the
Company without audit. In the opinion of management, all adjustments have been
made which are of a normal recurring nature necessary to present fairly the
Combined Systems' financial position as of December 31, 1998 and the results of
operations, changes in net assets and cash flows for the three months ended
December 31, 1998 and 1997. Certain information and footnote disclosures have
been condensed or omitted for these periods. The results for interim periods are
not necessarily indicative of results for the entire year.

2.  PREPAID EXPENSES AND OTHER CURRENT ASSETS

     Prepaid and other current assets consist of the following at September 30:

<Table>
<Caption>
                                                              1998      1997
                                                              ----      ----
                                                                 
Franchise grant............................................  $1,445    $  604
Corporate business tax.....................................   1,015       882
Other......................................................     286       463
                                                             ------    ------
Prepaid expenses and other current assets..................  $2,746    $1,949
                                                             ======    ======
</Table>

3.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at September 30:

<Table>
<Caption>
                                                           1998        1997
                                                           ----        ----
                                                               
Land and land improvements.............................  $  1,229    $  1,134
Buildings..............................................     4,521       4,521
Furniture, fixtures and equipment......................     5,503       4,822
Trunk and distribution systems.........................   109,253      97,042
Construction in progress...............................     9,026       4,450
                                                         --------    --------
                                                          129,532     111,969
Accumulated depreciation...............................   (75,064)    (69,998)
                                                         --------    --------
Property and equipment, net............................  $ 54,468    $ 41,971
                                                         ========    ========
</Table>

     Depreciation expense for the years ended September 30, 1998, 1997 and 1996
was $8,081, $7,337, and $7,314, respectively. Construction in progress results
primarily from costs to upgrade the systems to fiber optic technologies in the
areas served by the Combined Systems.

                                      F-170
   365
                       GREATER MEDIA CABLEVISION SYSTEMS

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4.  INTANGIBLE ASSETS

     Intangible assets consist of the following at September 30:

<Table>
<Caption>
                                                              1998      1997
                                                              ----      ----
                                                                 
Franchise agreements.......................................  $3,230    $2,883
Customer lists.............................................   1,751     1,751
Organization expenses......................................     146       146
Goodwill...................................................   2,260     1,510
Covenant not to compete....................................      40        40
                                                             ------    ------
                                                              7,427     6,330
Accumulated amortization...................................   4,737     4,683
                                                             ------    ------
Intangible assets, net.....................................  $2,690    $1,647
                                                             ======    ======
</Table>

     Amortization expense for the years ended September 30, 1998, 1997 and 1996
was $102, $31 and $39, respectively.

5.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses consist of the following at September
30:

<Table>
<Caption>
                                                              1998      1997
                                                              ----      ----
                                                                 
Accounts payable...........................................  $4,733    $3,544
Rate refund liability......................................     923       481
Programming expenses.......................................     586       557
Other......................................................     883       717
                                                             ------    ------
                                                             $7,125    $5,299
                                                             ======    ======
</Table>

6.  INCOME TAXES

     The Combined Systems are included in the consolidated federal income tax
return of the Parent. However, the Parent is responsible for tax payments
applicable to the Combined Systems. The combined financial statements reflect a
provision in lieu of income taxes as if the combined systems were filing on a
separate company basis. Accordingly, the Combined Systems have included the
provision in lieu of income taxes as a component of net assets for all periods
presented.

     The provision in lieu of income taxes approximates the amount of tax
computed using U.S. statutory rates, after reflecting state income tax expense
of $2,053, $1,924 and $1,486, for 1998, 1997 and 1996, respectively.

     As the Sales Agreement represents a sale of assets, Charter Communications
Holdings, LLC will have new tax basis in the Combined Systems' assets and
liabilities acquired.

7.  RELATED PARTY TRANSACTIONS

     The Company and each of its subsidiaries are guarantors of the Parent
Company's debt.

     The combined statements include the charge for certain corporate expenses
incurred by the Parent on behalf of the Combined Systems. Such charges amounted
to $3,888, $3,696, and $3,365 for the three years

                                      F-171
   366
                       GREATER MEDIA CABLEVISION SYSTEMS

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

ended September 30, 1998, 1997 and 1996. Management believes that these costs
are reasonable and reflect costs of doing business that the Combined Systems
would have incurred on a stand-alone basis.

     The Combined Systems charge an affiliate interest on certain balances,
aggregating $15,000 per year, at an annual rate of 12%. Interest income on such
balances amounted to $1,800 for each of the three years in the period ended
September 30, 1998. In addition, the Combined Systems are required to pay the
Parent interest on certain balances, at an annual rate of 12%. Interest expense
on such balances amounted to $2,340 for each of these years in the period ended
September 30, 1998, all which were due during the periods presented. The amounts
described above and certain non-interest bearing amounts due affiliates are
included in Net Assets in the Combined Systems balance sheet. As a result of the
Sales Agreement, such amounts will be assumed by the Parent. The interest income
and expense have been netted in the accompanying statement of operations.

8.  EMPLOYEE BENEFIT PLAN

  401(k) PLAN

     The Combined Systems' employees participate in the Greater Media, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 12% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Parent contributes an amount equal to 50% of the participant's contribution,
limited to the lessor of 3% of the participant's compensation or $1 per year.

     The Combined Systems expense relating to the 401(k) Plan was $140, $127,
and $96 in 1998, 1997, and 1996, respectively.

  PENSION

     Employees of the Combined Systems participate in a pension plan sponsored
by the Parent. The Combined Systems allocable share of the pension expense
amounted to $105, $204 and $217 during the years ended September 30, 1998, 1997
and 1996, respectively. As a result of the Sales Agreement, the Combined
Systems' employees will be fully vested with respect to their plan benefits,
although no additional benefits will accrue to such employees in the future. In
addition, the Parent will be responsible for the allocable pension liability
($838 at September 30, 1998) and will continue to administer the plan on behalf
of the Combined Systems' employees after the sale is consummated.

9.  COMMITMENTS AND CONTINGENCIES

  LEASES

     The Company leases certain facilities and equipment under noncancellable
operating leases. Leases and rental costs charged to expense for the years ended
September 30, 1998, 1997 and 1996, was $2,124, $2,133 and $1,636, respectively.
Rent expense incurred under leases for the years ended September 30, 1998, 1997
and 1996, was $678, $665 and $660, respectively. Future minimum lease payments
are as follows:

<Table>
                                                      
1999.................................................    $  690
2000.................................................       618
2001.................................................       524
2002.................................................       402
2003.................................................       396
Thereafter...........................................     3,267
</Table>

                                      F-172
   367
                       GREATER MEDIA CABLEVISION SYSTEMS

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company also rents utility poles 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 September 30, 1998, 1997 and 1996, was $1,008, $840 and $578,
respectively.

  LITIGATION

     The Company is party to lawsuits that arise in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's combined financial position or results of operations.

  REGULATION IN THE CABLE TELEVISION INDUSTRY

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. The Company may be
required to refund additional amounts in the future.

     The Combined Systems believe that they have complied in all material
respects with the provisions of the 1992 Cable Act, including the rate setting
provisions promulgated by the FCC. However, in jurisdictions that have chosen
not to certify, refunds covering the previous twelve-month period may be ordered
upon certification if a company is unable to justify its basic rates. The
Combined Systems are unable to estimate at this time the amount of refunds, if
any, that may be payable by the Combined Systems in the event certain of its
rates are successfully challenged by franchising authorities or found to be
unreasonable by the FCC. The Combined Systems do not believe that the amount of
any such refunds would have a material adverse effect on their financial
position or results of operations.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Combined Systems cannot predict the ultimate effect of the 1996 Telecom
Act on their financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Combined Systems.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental

                                      F-173
   368
                       GREATER MEDIA CABLEVISION SYSTEMS

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

agencies are required to follow FCC rules when prescribing rate regulation, and
thus, state regulation of cable television rates is not allowed to be more
restrictive than the federal or local regulation. The Combined Systems are
subject to state regulation in Massachusetts.

10.  SUBSEQUENT EVENT (UNAUDITED)

     On June 30, 1999, Charter Communications Entertainment I, LLC, an indirect
subsidiary of Charter Communications Holdings Company, LLC purchased the
Combined Systems for an aggregate purchase price of $500 million plus a working
capital adjustment. Effective with this change of ownership, the Combined
Systems will be managed by Charter Investment, Inc.

                                      F-174
   369

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Helicon Partners I, L.P.:

     We have audited the accompanying combined statements of operations, changes
in net assets and cash flows of Helicon Partners I, L.P. and affiliates for the
seven months ended July 30, 1999. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations of Helicon Partners
I, L.P. and affiliates and their cash flows for the seven months ended July 30,
1999 in conformity with accounting principles generally accepted in the United
States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
March 6, 2000

                                      F-175
   370

                    HELICON PARTNERS I, L.P. AND AFFILIATES
                        COMBINED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                SEVEN MONTHS
                                                                   ENDED
                                                                  JULY 30,
                                                                    1999
                                                                ------------
                                                             
REVENUES....................................................    $ 49,564,581
                                                                ------------
OPERATING EXPENSES:
  Operating expenses........................................      16,358,995
  General and administrative expenses.......................      13,877,357
  Marketing expenses........................................       1,327,669
  Depreciation and amortization.............................      16,616,529
  Management fee charged by affiliate.......................       2,511,416
                                                                ------------
       Total operating expenses.............................      50,691,966
                                                                ------------
          Operating income..................................      (1,127,385)
                                                                ------------
INTEREST INCOME (EXPENSE):
  Interest expense..........................................     (20,681,592)
  Interest income...........................................         124,486
                                                                ------------
NET LOSS....................................................    $(21,684,491)
                                                                ============
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-176
   371

                    HELICON PARTNERS I, L.P. AND AFFILIATES
               COMBINED STATEMENT OF CHANGES IN PARTNERS' DEFICIT

<Table>
<Caption>
                         PREFERRED                     CLASS A       CLASS B
  CAPITAL
                          LIMITED       GENERAL        LIMITED       LIMITED
CONTRIBUTION     PARTNERS'
                          PARTNERS      PARTNER       PARTNERS       PARTNER
 RECEIVABLE       DEFICIT
                         ---------      -------       --------       -------
- ------------     ---------
                                                        
            
Balance at December 31,
  1998.................  $8,567,467   $  (989,962)  $(134,807,570)          --
  $(1,000)     $(127,231,065)
Distribution of
  additional preferred
  partnership
  interests............     609,621        (6,097)       (603,524)          --
       --                 --
Accretion of redeemable
  partnership
  interests............          --      (269,961)    (26,726,132)          --
       --        (26,996,093)
Capital contribution...          --            --              --    3,628,250
       --          3,628,250
Net loss...............          --      (216,845)    (21,467,646)          --
       --        (21,684,491)
                         ----------   -----------   -------------   ----------
  -------      -------------
Balance at July 30,
  1999.................  $9,177,088   $(1,482,865)  $(183,604,872)  $3,628,250
  $(1,000)     $(172,283,399)
                         ==========   ===========   =============   ==========
  =======      =============
</Table>

The accompanying notes are an integral part of these combined statements.
                                      F-177
   372

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                        COMBINED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                SEVEN MONTHS
                                                                   ENDED
                                                                  JULY 30,
                                                                    1999
                                                                ------------
                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $(21,684,491)
  Adjustments to reconcile net loss to net cash provided by
     operating activities-
     Depreciation and amortization..........................      16,616,529
     Amortization of debt discount and deferred financing
      costs.................................................       2,801,895
     Gain on sale of equipment..............................         (22,536)
     Interest on 12% subordinated notes paid through the
      issuance of additional notes..........................       2,706,044
     Changes in operating assets and liabilities-
       Receivables from subscribers.........................      (1,544,469)
       Prepaid expenses and other assets....................       2,773,825
       Accounts payable and accrued expenses................      (2,937,602)
       Subscriptions received in advance....................         803,151
       Accrued interest.....................................       2,557,212
                                                                ------------
          Net cash provided by operating activities.........       2,069,558
                                                                ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................      (6,332,987)
     Proceeds from sale of equipment........................          32,288
  Cash paid for net assets of cable television systems, net
     of cash acquired.......................................      (6,217,143)
  Increase in intangible assets.............................        (487,595)
                                                                ------------
          Net cash used in investing activities.............     (13,005,437)
                                                                ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from bank loans..................................      13,000,000
  Repayments of bank loans and other notes..................        (483,178)
  Capital contribution......................................       3,628,250
  Advances to affiliates, net...............................        (247,043)
  Payment of financing costs................................        (240,000)
                                                                ------------
          Net cash provided by financing activities.........      15,658,029
                                                                ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................       4,722,150
CASH AND CASH EQUIVALENTS, beginning of period..............       5,130,561
                                                                ------------
CASH AND CASH EQUIVALENTS, end of period....................    $  9,852,711
                                                                ============
CASH PAID FOR INTEREST......................................    $ 12,582,725
                                                                ============
ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT THROUGH THE
  ISSUANCE OF OTHER NOTES PAYABLE...........................    $    389,223
                                                                ============
</Table>

   The accompanying notes are an integral part of these combined statements.
                                      F-178
   373

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS

     Helicon Partners I, L.P. ("the Partnership") was organized as a limited
partnership under the laws of the State of Delaware. The Partnership owns all of
the limited partnership interests in THGLP, representing a 99% ownership, and
Baum Investment, Inc. ("Baum"), the general partner of THGLP, owns the 1%
general partnership interest in THGLP. The Partnership also owns a 99% interest
and THGLP owns a 1% interest in HPI Acquisition Co., LLC ("HPIAC"). The
Partnership also owns an 89% limited partnership interest and Baum a 1% general
partnership interest in Helicon OnLine, L.P. ("HOL"). The Partnership, THGLP,
HPIAC and HOL are referred to collectively herein as the Company.

     The Company operates in one business segment offering cable television
services in the states of Pennsylvania, West Virginia, North Carolina, South
Carolina, Louisiana, Vermont, New Hampshire, Georgia and Tennessee. The Company
also offers to customers advanced services, such as paging and private data
network systems, including dial up access and a broad range of Internet access
services in Pennsylvania and Vermont, dedicated high speed access, high speed
cable modem access, world wide web design, and hosting services.

     On July 30, 1999, Charter-Helicon, LLC ("Charter-Helicon"), acquired a 1%
interest in THGLP previously owned by Baum and became the General Partner of
THGLP. Concurrently, Charter-Helicon and Charter Communications, LLC ("CC-LLC"),
parent of Charter-Helicon, acquired all of the partnership interests of the
Partnership. These transactions are collectively referred to as the
"Helicon/Charter Deal" herein. In connection with the Helicon/Charter Deal,
$228,985,000 of cash was paid to the equity holders; Baum retained a $25,000,000
limited liability company membership interest in Charter-Helicon; debt of
$197,447,000 was repaid; debt of $115,000,000 was assumed; and other costs
totaling $4,285,000 were incurred by CC-LLC.

     The post-closing process associated with the Helicon/Charter Deal has not
been finished. Accordingly, the accompanying combined financial statements may
not give effect to all adjustments arising from the change of ownership of the
Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Combination

     The accompanying financial statements include the accounts of the
Partnership, THGLP, HPIAC and HOL, which have been combined because of common
ownership and control. They also reflect the accounts of THGLP's subsidiary,
Helicon Capital Corp., which has nominal assets and no operations since its
incorporation. All intercompany accounts and transactions have been eliminated
in combination.

Partnership Profits, Losses and Distributions

     Under the terms of the partnership agreements of the Partnership and THGLP,
profits, losses and distributions will be made to the general and Class A
Limited Partners pro-rata based on their respective partnership interest.
Holders of Preferred Limited Partnership Interests are entitled to an aggregate
preference on liquidation of $6,250,000 plus cumulative in-kind distributions of
additional Preferred Limited Partnership interests at an annual rate of 12%.

Cash and Cash Equivalents

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

                                      F-179
   374
                    HELICON PARTNERS I, L.P. AND AFFILIATES

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

Revenue Recognition

     Revenue is recognized as services are provided to subscribers. Subscription
revenues billed in advance for services are deferred and recorded as income in
the period in which services are rendered.

Property, Plant and Equipment

     Property, plant and equipment are carried at cost and are depreciated using
the straight-line method over the estimated useful lives of the respective
assets.

Intangible Assets and Deferred Costs

     Intangible assets and deferred costs are carried at cost and are amortized
using the straight-line method over the estimated useful lives of the respective
assets. When changes in events or circumstances warrant, the Company reviews the
amortization periods of their intangible assets and deferred costs. The Company
evaluates whether there has been a permanent impairment in the value of these
assets by considering such factors including the projected undiscounted cash
flows, current market conditions and changes in the cable television industry
that would impact the recoverability of such assets.

Income Taxes

     No provision for Federal or state income taxes has been made in the
accompanying combined financial statements since any liability for such income
taxes is that of the partners and not of the Company.

Use of Estimates

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

3. ACQUISITIONS

     On January 7, 1999, THGLP acquired cable television systems serving
subscribers in the North Carolina counties of Carter, Johnson and Unicol. The
aggregate purchase price was $5,228,097 and was allocated to the net assets
acquired, which included property, plant and equipment and intangible assets,
based on their estimated fair values.

     On March 1, 1999, HPIAC acquired a cable television system serving
subscribers in the communities of Abbeville, Donalds and Due West, South
Carolina. The aggregate purchase price was $723,356 and was allocated to the net
assets acquired, which included property, plant and equipment, and intangible
assets, based on their estimated fair value.

     The operating results relating to the above acquisitions are included in
the accompanying combined financial statements from the acquisition dates
forward. Pro forma operating results for 1999 as though the acquisitions had
occurred on January 1, 1999, would not be materially different than historical
operating results.

4. TRANSACTIONS WITH AFFILIATES

     Amounts due from/to affiliates result from management fees, expense
allocations and temporary non-interest bearing loans. The affiliates are related
to the Company through common ownership. Effective upon

                                      F-180
   375
                    HELICON PARTNERS I, L.P. AND AFFILIATES

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

the execution of the Charter/Helicon Deal, Charter Investment, Inc. is the
manager of the Company's operations.

     The Partnership was managed by Helicon Corp., an affiliated management
company. During the seven months ended July 30, 1999, the Partnership was
charged a management fee of $2,511,416. Management fees are calculated based on
the gross revenues of the systems.

5. SENIOR SECURED NOTES

     THGLP and HCC (the "Issuers"), through a private placement offering, issued
$115,000,000 aggregate principal amount of 11% Senior Secured Notes due 2003
(the "Senior Secured Notes"), secured by substantially all the assets of THGLP.
Interest is payable on a semi-annual basis in arrears on November 1 and May 1.
The discount on the Senior Secured Notes is being amortized over the term of the
Senior Secured Notes so as to result in an effective interest rate of 11% per
annum.

6. LOANS PAYABLE TO BANKS

     On January 5, 1999, THGLP entered into a $12,000,000 Senior Subordinated
Loan Agreement with Paribas Capital Funding, LLC (the "1999 Credit Facility").
Initial borrowings of $7,000,000 under the 1999 Credit Facility financed the
acquisition of certain cable television systems in North Carolina. On February
19, 1999, the Company borrowed the remaining $5,000,000 available under the 1999
Credit Facility. Interest on the 1999 Credit Facility is payable at 11.5% per
annum. On July 30, 1999, the amounts outstanding were repaid and the 1999 Credit
Facility was terminated in connection with the Helicon/Charter Deal.

7. REDEEMABLE PARTNERSHIP INTERESTS

     In April 1996, the Partnership sold to unrelated investors, $34,000,000
aggregate principal amount of 12% Subordinated Notes (the "Subordinated Notes")
and warrants (the "Warrants") to purchase 2,419.1 units of Class B Limited
Partnership Interests (the "Units").

     The Subordinated Notes are subordinated to the senior indebtedness of the
Partnership and are due April 1, 2004. Interest is payable semi-annually on each
October 1 and April 1 in cash or through the issuance of additional Subordinated
Notes, at the option of the Partnership. In the past, the Partnership has
elected to satisfy interest due through the issuance of additional Subordinated
Notes. The Partnership issued $2,706,044 of additional Subordinated Notes to pay
interest due in April 1999.

     Holders of the Warrants had the right to acquire the Units at any time for
a price of $1,500 per Unit. The Partnership estimated the Net Equity Value of
the Warrants to be approximately $43,250,000 at December 31, 1998. The Net
Equity Value, pursuant to the terms of the agreement, is the estimated amount of
cash that would be available for distribution to the Partnership interests upon
a sale of all the assets of the Partnership and its subsequent dissolution and
liquidation. Such estimate as of December 31, 1998 reflects the amount that the
holders of the Warrants have agreed to accept for their interests assuming a
proposed sale of all of the interests of the Partnership is consummated. The
increase in the Net Equity Value over the original carrying value of the
Warrants is being accreted evenly over the period beginning with the date of the
increase through September 2001. Such accretion is being reflected in the
accompanying financial statements as an increase in the carrying value of the
Warrants and the corresponding reduction in the carrying value of the capital
accounts of the General and Class A Limited Partners.

     Immediately prior to the closing of the Helicon/Charter Deal. Baum
contributed $3,628, 250 to exercise the Warrants and received 2,419.1 Units.
This transaction triggered the acceleration of the accretion of the Units to
their estimated Net Equity Value. Upon the close of the Charter/Helicon Deal,
the holders received $43,250,000 in exchange for the Units.

                                      F-181
   376
                    HELICON PARTNERS I, L.P. AND AFFILIATES

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

8. COMMITMENTS AND CONTINGENCIES

Leases

     The Company leases telephone and utility poles on an annual basis. The
leases are self-renewing. Pole rental expenses for the seven months ended July
30, 1999 was $687.

     The Company utilizes certain office space under operating lease agreements,
which expire at various dates through August 2013 and contain renewal options.
Office rent expense was $192 for the seven months ended July 30, 1999.

Litigation

     The Company is a party to lawsuits that arise in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's combined financial position or results of operations.

Regulation in the Cable Television Industry

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. The Company may be
required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulated rates on the cable
programming service tier (CPST). The FCC has taken the position that it will
still adjudicate pending CPST complaints but will strictly limit its review, and
possible refund orders, to the time period predating the sunset date, March 31,
1999. The Company does not believe any adjudications regarding their pre-sunset
complaints will have a material adverse effect on the Company's financial
position or results of operations.
                                      F-182
   377
                    HELICON PARTNERS I, L.P. AND AFFILIATES

              NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

                                      F-183
   378

                          INDEPENDENT AUDITORS' REPORT

The Partners
Helicon Partners I, L.P.:

We have audited the accompanying combined balance sheets of Helicon Partners I,
L.P. and affiliates as of December 31, 1997 and 1998, and the related combined
statements of operations, changes in partners' deficit, and cash flows for each
of the years in the three-year period ended December 31, 1998. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Helicon Partners I,
L.P. and affiliates as of December 31, 1997 and 1998 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

                                          /s/ KPMG LLP

New York, New York
March 26, 1999

                                      F-184
   379

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                            COMBINED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1998

<Table>
<Caption>
                                                               1997
1998
                                                           -------------
- -------------
                                                                      
ASSETS (NOTES 8 AND 9)
Cash and cash equivalents (note 2).......................  $   4,372,281    $
5,130,561
Receivables from subscribers.............................      1,439,720
1,631,931
Prepaid expenses and other assets........................      2,205,794
3,469,228
Property, plant and equipment, net (notes 3, 4, and
  11)....................................................     80,104,377
86,737,580
Intangible assets and deferred costs, net (notes 3 and
  5).....................................................     85,066,665
94,876,847
                                                           -------------
- -------------
          Total assets...................................  $ 173,188,837    $
191,846,147
                                                           =============
=============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
  Accounts payable.......................................  $   7,416,901    $
8,037,193
  Accrued expenses.......................................      1,539,116
1,589,240
  Subscriptions received in advance......................      1,018,310
 819,564
  Accrued interest.......................................      3,760,360
3,742,456
  Due to principal owner (note 7)........................      5,000,000
5,000,000
  Senior secured notes (note 8)..........................    115,000,000
115,000,000
  Loans payable to banks (note 9)........................     85,776,641
120,266,922
  12% subordinated notes, net of unamortized discount of
     $2,889,541 in 1997 and $2,543,869 in 1998 (note
     10).................................................     37,249,948
42,672,085
  Redeemable partnership interests (note 10).............      6,437,142
16,253,906
  Other notes payable (note 11)..........................      5,747,076
5,448,804
  Due to affiliates, net (note 6)........................         71,474
 247,042
                                                           -------------
- -------------
          Total liabilities..............................    269,016,968
319,077,212
                                                           -------------
- -------------
Commitments (notes 8, 9, 10, 11 and 13)
Partners' deficit (note 12):
  Preferred limited partners.............................      7,649,988
8,567,467
  Accumulated partners' deficit..........................   (103,477,119)
(135,797,532)
  Less capital contribution receivable...................         (1,000)
  (1,000)
                                                           -------------
- -------------
          Total partners' deficit........................    (95,828,131)
(127,231,065)
                                                           -------------
- -------------
          Total liabilities and partners' deficit........  $ 173,188,837    $
191,846,147
                                                           =============
=============
</Table>

See accompanying notes to combined financial statements.

                                      F-185
   380

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                       COMBINED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

<Table>
<Caption>
                                                      1996           1997
   1998
                                                  ------------   ------------
- ------------
                                                           

Revenues........................................  $ 42,061,537   $ 59,957,434
$ 75,576,810
                                                  ------------   ------------
- ------------
Operating expenses:
  Operating expenses (note 13)..................    11,395,509     17,408,265
 22,687,850
  General and administrative expenses (notes 6
     and 13)....................................     7,244,663      9,762,931
 13,365,824
  Marketing expenses............................     1,235,553      2,266,627
  3,521,893
  Depreciation and amortization.................    12,556,023     19,411,813
 24,290,088
  Management fee charged by affiliate (note
     6).........................................     2,103,077      2,997,872
  3,496,271
  Corporate and other expenses..................       426,672        549,222
    602,987
                                                  ------------   ------------
- ------------
          Total operating expenses..............    34,961,497     52,396,730
 67,964,913
                                                  ------------   ------------
- ------------
  Operating income..............................     7,100,040      7,560,704
  7,611,897
                                                  ------------   ------------
- ------------
Interest expense (note 7).......................   (17,418,266)   (23,586,227)
(27,633,714)
Interest income.................................       563,362        154,037
     92,967
                                                  ------------   ------------
- ------------
                                                   (16,854,904)   (23,432,190)
(27,540,747)
                                                  ------------   ------------
- ------------
  Loss before extraordinary item................    (9,754,864)   (15,871,486)
(19,928,850)
                                                  ------------   ------------
- ------------
Extraordinary item -- write-off of deferred
  financing costs (note 9)......................            --             --
 (1,657,320)
                                                  ------------   ------------
- ------------
  Net loss......................................  $ (9,754,864)  $(15,871,486)
$(21,586,170)
                                                  ============   ============
============
</Table>

See accompanying notes to combined financial statements.

                                      F-186
   381

                    HELICON PARTNERS I, L.P. AND AFFILIATES

              COMBINED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

<Table>
<Caption>
                                                        PARTNERS' DEFICIT
                                                    -------------------------
                                       PREFERRED                   CLASS A
 CAPITAL
                                        LIMITED      GENERAL       LIMITED
CONTRIBUTION
                                        PARTNERS     PARTNER      PARTNERS
RECEIVABLE        TOTAL
                                       ----------   ---------   -------------
- ------------   -------------
                                                       
            
Balance at December 31, 1995.........  $       --   $(307,994)  $ (67,144,287)
 $(1,000)     $ (67,453,281)
Issuance of preferred limited
  partnership interests (note 10)....   6,250,000     (62,500)     (6,187,500)
      --                 --
Partner capital contributions (note
  10)................................          --       1,500              --
      --              1,500
Distribution of additional preferred
  partnership interests (note 10)....     558,430      (5,584)       (552,846)
      --                 --
Net loss.............................          --     (97,549)     (9,657,315)
      --         (9,754,864)
                                       ----------   ---------   -------------
 -------      -------------
Balance at December 31, 1996.........   6,808,430    (472,127)    (83,541,948)
  (1,000)       (77,206,645)
Distribution of additional preferred
  partnership interests (note 10)....     841,558      (8,416)       (833,142)
      --                 --
Accretion of redeemable partnership
  interests (note 10)................          --     (27,500)     (2,722,500)
      --         (2,750,000)
Net loss.............................          --    (158,715)    (15,712,771)
      --        (15,871,486)
                                       ----------   ---------   -------------
 -------      -------------
Balance at December 31, 1997.........   7,649,988    (666,758)   (102,810,361)
  (1,000)       (95,828,131)
Distribution of additional preferred
  partnership interests (note 10)....     917,479      (9,175)       (908,304)
      --                 --
Accretion of redeemable partnership
  interests (note 10)................          --     (98,168)     (9,718,596)
      --         (9,816,764)
Net loss.............................          --    (215,861)    (21,370,309)
      --        (21,586,170)
                                       ----------   ---------   -------------
 -------      -------------
Balance at December 31, 1998.........  $8,567,467   $(989,962)  $(134,807,570)
 $(1,000)     $(127,231,065)
                                       ==========   =========   =============
 =======      =============
</Table>

See accompanying notes to combined financial statements.

                                      F-187
   382

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                       COMBINED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

<Table>
<Caption>
                                                                  1996
 1997            1998
                                                              ------------
- ------------    ------------
                                                           
             
Cash flows from operating activities:
  Net loss..................................................  $ (9,754,864)
$(15,871,486)   $(21,586,170)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Extraordinary item......................................            --
       --       1,657,320
    Depreciation and amortization...........................    12,556,023
19,411,813      24,290,088
    Gain on sale of equipment...............................       (20,375)
   (1,069)        (29,323)
    Interest on 12% subordinated notes paid through the
      issuance of additional notes..........................     1,945,667
4,193,819       4,961,241
    Interest on other notes payable added to principal......       168,328
  185,160              --
    Amortization of debt discount and deferred financing
      costs.................................................     2,115,392
  849,826         919,439
    Change in operating assets and liabilities, net of
      acquisitions:
      Decrease (increase) in receivables from subscribers...       176,432
 (496,146)        (79,535)
      Increase in prepaid expenses and other assets.........      (269,156)
 (976,491)     (1,255,018)
      Increase in financing costs incurred..................    (4,525,331)
 (434,000)     (2,200,000)
      Increase in accounts payable and accrued expenses.....     2,182,762
2,957,524         681,037
      Increase (decrease) in subscriptions received in
         advance............................................       119,277
  325,815        (208,803)
      Increase (decrease) in accrued interest...............     1,613,630
  376,158         (17,904)
                                                              ------------
- ------------    ------------
         Total adjustments..................................    16,062,649
26,392,409      28,718,542
                                                              ------------
- ------------    ------------
         Net cash provided by operating activities..........     6,307,785
10,520,923       7,132,372
                                                              ------------
- ------------    ------------
Cash flows from investing activities:
  Purchases of property, plant and equipment................    (8,987,766)
(15,824,306)    (13,538,978)
  Proceeds from sale of equipment...........................        21,947
   23,270         118,953
  Cash paid for net assets of cable television systems
    acquired................................................   (35,829,389)
(70,275,153)    (26,063,284)
  Cash paid for net assets of internet businesses
    acquired................................................       (40,000)
 (993,760)             --
  Increase in intangible assets and deferred costs..........      (127,673)
 (308,759)       (183,018)
                                                              ------------
- ------------    ------------
         Net cash used in investing activities..............   (44,962,881)
(87,378,708)    (39,666,327)
                                                              ------------
- ------------    ------------
Cash flows from financing activities:
  Capital contributions.....................................         1,500
       --              --
  Decrease in restricted cash...............................            --
1,000,000              --
  Proceeds from issuance of 12% subordinated notes and
    redeemable partnership interests........................    34,000,000
       --              --
  Proceeds from bank loans..................................     8,900,000
77,285,000     104,000,000
  Repayment of bank loans...................................      (952,777)
(1,505,581)    (69,509,719)
  Repayment of other notes payable..........................      (527,514)
(1,145,989)     (1,362,995)
  Advances to affiliates....................................    (3,207,996)
(3,412,411)     (8,856,491)
  Repayments of advances to affiliates......................     3,479,336
2,986,778       9,021,440
                                                              ------------
- ------------    ------------
         Net cash provided by financing activities..........    41,692,549
75,207,797      33,292,235
                                                              ------------
- ------------    ------------
         Net increase (decrease) in cash and cash
           equivalents......................................     3,037,453
(1,649,988)        758,280
Cash and cash equivalents at beginning of year..............     2,984,816
6,022,269       4,372,281
                                                              ------------
- ------------    ------------
Cash and cash equivalents at end of year....................  $  6,022,269    $
4,372,281    $  5,130,561
                                                              ============
============    ============
Supplemental cash flow information:
  Interest paid.............................................  $ 11,575,250    $
17,981,264    $ 21,770,938
                                                              ============
============    ============
  Other non-cash items:
    Acquisition of property, plant and equipment through
      issuance of other notes payable.......................  $  1,222,000    $
  917,815    $  1,025,319
                                                              ============
============    ============
    Issuance of notes payable in connection with the
      acquisition of cable television and internet systems,
      net of imputed interest...............................  $    569,500    $
1,914,479              --
                                                              ============
============    ============
</Table>

See accompanying notes to combined financial statements.

                                      F-188
   383

                    HELICON PARTNERS I, L.P. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1997 AND 1998

1.  ORGANIZATION AND NATURE OF BUSINESS

     Helicon Partners I, L.P. ("the Partnership") was organized as a limited
partnership on November 30, 1994 under the laws of the State of Delaware. On
April 8, 1996, Baum Investments, Inc. acquired a 1% general partnership interest
in the Partnership through an initial capital contribution of $1,500 and the
existing limited partners of The Helicon Group, L.P. ("THGLP"), formed in 1993,
exchanged their limited partnership interests in THGLP for all Class A Common
Limited Partnership Interests and Preferred Limited Partnership Interests in the
Partnership. As a result of this exchange, THGLP became 99% owned by the
Partnership. The Partnership now owns all of the limited partnership interests
in THGLP and Baum Investments, Inc. continues to be the general partner of THGLP
and to own a 1% general partnership interest in THGLP. The Partnership also owns
a 99% interest and THGLP a 1% interest in HPI Acquisition Co., LLC ("HPIAC"), a
Delaware limited liability company formed on February 7, 1996. The Partnership
also owned an 89% limited partnership interest and Baum Investments, Inc. a 1%
general partnership interest in Helicon OnLine, L. P. ("HOL"), a Delaware
limited partnership formed May 31, 1997. On June 29, 1998, the net assets of HOL
were transferred to THGLP in settlement of the inter-company loans THGLP had
made to HOL. The Partnership, THGLP, HPIAC and HOL are referred to collectively
herein as the Company.

     On March 22, 1999, Helicon Partners I, L. P. (HPI), Baum Investments, Inc.
and all the holders of partnership interests in HPI entered into a purchase
agreement by and among Charter Communications, Inc, Charter Communications, LLC
and Charter Helicon, LLC (collectively the "Charter Entities") providing for the
sale of all such partnership interests and Helicon Corp.'s interest in the
management agreements with THGLP and HPIAC to the Charter Entities. The sale
price is $550 million which amount will be reduced by any outstanding
indebtedness assumed by the Charter Entities.

     The Company operates cable television systems located in Pennsylvania, West
Virginia, North Carolina, South Carolina, Louisiana, Vermont, New Hampshire,
Georgia and Tennessee. The Company also offers a broad range of Internet access
service, including dial-up access, dedicated high speed access, both two-way and
asymmetrical ("Hybrid"), high speed cable modem access, World Wide Web design
and hosting services and other value added services such as paging and private
network systems within the Company's cable service and contiguous areas.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) PRINCIPLES OF COMBINATION

     The accompanying financial statements include the accounts of the
Partnership, THGLP and HPIAC and HOL which have been combined because of common
ownership and control. They also reflect the accounts of THGLP's subsidiary,
Helicon Capital Corp. ("HCC"), which has nominal assets and no operations since
its incorporation. All intercompany accounts and transactions have been
eliminated in combination.

b) PARTNERSHIP PROFITS, LOSSES AND DISTRIBUTIONS

     Under the terms of the partnership agreements of the Partnership and THGLP,
profits, losses and distributions will be made to the general and Class A
Limited Partners pro-rata based on their respective partnership interest.

     Holders of Preferred Limited Partnership Interests are entitled to an
aggregate preference on liquidation of $6,250,000 plus cumulative in-kind
distributions of additional Preferred Limited Partnership interests at an annual
rate of 12%.

                                      F-189
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                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

c) REVENUE RECOGNITION

     Revenue is recognized as services are provided to subscribers. Subscription
revenues billed in advance for services are deferred and recorded as income in
the period in which services are rendered.

d) Property, Plant and Equipment

     Property, plant and equipment are carried at cost and are depreciated using
the straight-line method over the estimated useful lives of the respective
assets.

e) INTANGIBLE ASSETS AND DEFERRED COSTS

     Intangible assets and deferred costs are carried at cost and are amortized
using the straight-line method over the estimated useful lives of the respective
assets. The Company periodically reviews the amortization periods of their
intangible assets and deferred costs. The Company evaluates whether there has
been a permanent impairment in the value of these assets by considering such
factors including projected undiscounted cash flows, current market conditions
and changes in the cable television industry that would impact the
recoverability of such assets, among other things.

f) INCOME TAXES

     No provision for Federal or state income taxes has been made in the
accompanying combined financial statements since any liability for such income
taxes is that of the partners and not of the Partnership or its affiliates.
Certain assets have a basis for income tax purposes that differs from the
carrying value for financial reporting purposes, primarily due to differences in
depreciation methods. As a result of these differences, at December 31, 1997 and
1998 the net carrying value of these assets for financial reporting purposes
exceeded the net basis for income tax purposes by approximately $22 million and
$27 million respectively.

g) CASH AND CASH EQUIVALENTS

     Cash and cash equivalents, consisting of amounts on deposit in money market
accounts, checking accounts and certificates of deposit, were $4,372,281 and
$5,130,561 at December 31, 1997 and 1998, respectively.

h) USE OF ESTIMATES

     Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenues, expenses and the
disclosure of contingent assets and liabilities to prepare these combined
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.

i) INTEREST RATE CAP AGREEMENTS

     The cost paid is amortized over the life of the agreements.

j) DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and Cash Equivalents, Receivables, Accounts Payable and Accrued Expenses

     The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, current receivables, notes receivable, accounts payable,
and accrued expenses approximate fair values.

                                      F-190
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                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Senior Secured Notes and Long-term Debt

     For the Senior Secured Notes, fair values are based on quoted market
prices. The fair market value at December 31, 1997 and 1998 was approximately
$123,000,000 and $120,000,000, respectively. For long-term debt, their values
approximate carrying value due to the short-term maturity of the debt and/or
fluctuating interest.

Comprehensive Income

     On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income consists of net income and net
unrealized gains (losses) on securities and is presented in the consolidated
statements of stockholder's equity and comprehensive income. The Statement
requires only additional disclosures in the consolidated financial statements;
it does not affect the Company's financial position or results of operations.
The Company has no items that qualify as comprehensive income.

3.  ACQUISITIONS

Cable Acquisitions

     On January 31, 1995, THGLP acquired a cable television system, serving
approximately 1,100 (unaudited) subscribers in the Vermont communities of
Bradford, South Royalton and Chelsea. The aggregate purchase price was
approximately $350,000 and was allocated to the net assets acquired which
included property and equipment and intangible assets.

     In June and July, 1996, HPIAC completed the acquisitions of all the
operating assets of the cable television systems, serving approximately 26,000
(unaudited) subscribers, in the areas of Jasper and Skyline, Tennessee and
Summerville, Trenton, Menlo, Decatur and Chatsworth, Georgia (collectively
referred to as the Tennessee cluster).

     The aggregate purchase price of $36,398,889, including acquisition costs of
$742,837, was allocated to the net assets acquired based on their estimated fair
value. Such allocation is summarized as follows:

<Table>
                                                          
Land.....................................................    $    25,000
Cable television system..................................     17,876,244
Other property, plant and equipment......................        185,000
Subscriber lists.........................................     17,474,762
Noncompete agreement.....................................          1,000
Other intangible assets..................................        742,837
Other net operating items................................         94,046
                                                             -----------
Total aggregate purchase price...........................    $36,398,889
                                                             ===========
</Table>

     A portion of the purchase price was paid through the issuance of notes to
the sellers of one of the systems totaling $750,000. Such notes were reported
net of imputed interest of $180,500 computed at 9% per annum (see note 11).

     On January 16, 1997, HPIAC acquired an adjacent cable television system
serving approximately 2,256 (unaudited) subscribers in the communities of Ten
Mile and Hamilton, Tennessee. The aggregate purchase price was approximately
$2,960,294 and was allocated to the net assets acquired which included property,
equipment and intangible assets, based on their estimated fair value.

                                      F-191
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                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     On January 31, 1997, THGLP acquired a cable television system, serving
approximately 823 (unaudited) subscribers in the West Virginia counties of Wirt
and Wood. The aggregate purchase price was approximately $1,053,457, and was
allocated to the net assets acquired which included property, equipment and
intangible assets, based on their estimated fair value.

     On April 18, 1997, HPIAC acquired a cable television system serving
approximately 839 (unaudited) subscribers in the communities of Charleston and
Calhoun, Tennessee. The aggregate purchase price was approximately $1,055,693
and was allocated to the net assets acquired which included property and
equipment and intangible assets, based on their estimated fair value.

     On June 26, 1997, HPIAC acquired the net assets of cable television systems
serving approximately 21,500 (unaudited) subscribers primarily in the North
Carolina communities of Avery County and surrounding areas and in the South
Carolina community of Anderson County. The aggregate purchase price was
approximately $45,258,279, including acquisition costs of $547,235, and was
allocated to the net assets acquired which included property, plant, equipment
and intangible assets, based on their estimated fair value.

     On June 26, 1997, THGLP acquired the net assets of a cable television
system serving approximately 11,000 (unaudited) subscribers in the North
Carolina communities of Watauga County, Blowing Rock, Beech Mountain and the
town of Boone. The aggregate purchase price was $19,947,430 and was allocated to
the net assets acquired which included, property, plant, equipment and
intangible assets, based on their estimated fair value.

     The aggregate purchase price of the 1997 cable acquisitions was $70,275,153
and was allocated to the net assets acquired based on their estimated fair
market value as follows:

<Table>
                                                          
Land.......................................................  $   158,500
Cable television system....................................   21,320,900
Vehicles...................................................    1,473,600
Computer equipment.........................................      240,000
Subscriber lists...........................................   46,925,173
Organization and other costs...............................      688,816
Other net operating items..................................     (531,836)
                                                             -----------
Total aggregate purchase price.............................  $70,275,153
                                                             ===========
</Table>

     On December 31, 1998, HPIAC acquired the net assets of cable television
systems serving approximately 11,225 (unaudited) subscribers primarily in the
North Carolina community of Roanoke Rapids. The aggregate purchase price was
$26,063,284 including acquisition costs of $535,875 and was allocated to the net
assets acquired, which included, property, equipment and intangible assets,
based on their estimated fair value.

<Table>
                                                          
Land.......................................................  $   250,000
Cable television system....................................    4,258,000
Other property, plant and equipment........................    1,103,375
Subscriber lists...........................................   19,805,000
Organization and other costs...............................      535,875
Other net operating items..................................      111,034
                                                             -----------
Total aggregate purchase price.............................  $26,063,284
                                                             ===========
</Table>

                                      F-192
   387
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Internet Acquisitions

     On March 22, 1996, THGLP acquired the net assets of a telephone dial-up
internet access provider ("ISP") serving approximately 350 (unaudited) customers
in and around the area of Uniontown, Pennsylvania. The aggregate purchase price
was approximately $40,000.

     On April 1, 1997, the Partnership acquired the net assets of a telephone
dial-up ISP serving approximately 2,500 (unaudited) customers in and around the
area of Uniontown, Pennsylvania. The aggregate purchase price was $757,029.

     On May 31, 1997, the Partnership acquired the net assets of a telephone
dial-up ISP serving approximately 1,800 (unaudited) customers in and around the
area of Uniontown, Pennsylvania. The aggregate purchase price was $213,629.

     On November 14, 1997, HOL acquired the net assets of a telephone dial-up
ISP serving approximately 1,744 (unaudited) customers in and around the area of
Johnstown, Pennsylvania. The aggregate purchase price was $348,927.

     On December 17, 1997, HOL acquired the net assets of a telephone dial-up
ISP serving 1,571 (unaudited) customers in and around the area of Plainfield,
Vermont. The aggregate purchase price was $497,307.

     On December 17, 1997, HOL acquired the net assets of a telephone dial-up
ISP serving approximately 2,110 (unaudited) customers in and around the area of
Wells River, Vermont. The aggregate purchase price was $673,170.

     The aggregate purchase price of the 1997 ISP acquisitions was $2,490,062
and was allocated to the net assets acquired, based on their estimated fair
value. Such allocation is summarized as follows:

<Table>
                                                           
Internet service equipment..................................  $  237,064
Customer lists..............................................   1,409,768
Non-compete Agreement.......................................     883,097
Other intangible assets.....................................      35,000
Other net operating items...................................     (74,867)
                                                              ----------
Total aggregate purchase price..............................  $2,490,062
                                                              ==========
</Table>

     A portion of the purchase price was paid through the issuance of notes to
the Sellers totaling $1,801,000. Such notes were reported net of imputed
interest of $304,698 computed at 9% per annum (see Note 11).

     The operating results relating to the above acquisitions, effective with
their acquisition dates, are included in the accompanying combined financial
statements.

                                      F-193
   388
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4.  PROPERTY, PLANT AND EQUIPMENT, NET

     Property, plant and equipment, net is summarized as follows at December 31:

<Table>
<Caption>
                                                                     ESTIMATED
USEFUL
                                         1997            1998         LIFE IN
YEARS
                                     ------------    ------------
- ----------------
                                                            
Land...............................  $    121,689    $    320,689         --
Cable television system............   124,684,403     140,441,324      5 to 20
Internet service equipment.........     1,281,362       2,483,602       2 to 3
Office furniture and fixtures......       677,672         728,253      5 and 10
Vehicles...........................     3,536,358       4,570,990      3 and 5
Building...........................       805,525       1,585,384      5 and 10
Building and leasehold
  Improvements.....................       398,843         445,820       1 to 5
Computers..........................     3,232,355       4,159,506       3 to 5
                                     ------------    ------------
                                      134,738,207     154,735,568
Less accumulated depreciation......   (54,633,830)    (67,997,988)
                                     ------------    ------------
                                     $ 80,104,377    $ 86,737,580
                                     ============    ============
</Table>

5.  INTANGIBLE ASSETS AND DEFERRED COSTS

     Intangible assets and deferred costs are summarized as follows at December
31:

<Table>
<Caption>
                                                                     ESTIMATED
USEFUL
                                           1997           1998        LIFE IN
YEARS
                                       ------------   ------------
- ----------------
                                                            
Covenants not-to-compete.............  $ 14,270,120   $ 14,270,120        5
Franchise agreements.................    19,650,889     19,650,889     9 to 17
Goodwill.............................     1,703,760      1,703,760       20
Subscriber lists.....................    82,292,573    102,097,574     6 to 10
Financing costs......................     9,414,809      9,291,640     8 to 10
Organization and other costs.........     3,631,650      4,306,777     5 to 10
                                       ------------   ------------
                                        130,963,801    151,320,760
Less accumulated amortization........   (45,897,136)   (56,443,913)
                                       ------------   ------------
                                       $ 85,066,665   $ 94,876,847
                                       ============   ============
</Table>

6.  TRANSACTIONS WITH AFFILIATES

     Amounts due from/to affiliates result from management fees, expense
allocations and temporary non-interest bearing loans. The affiliates are related
to the Company through common-ownership.

     The Partnership is managed by Helicon Corp., an affiliated management
company. During 1996, 1997 and 1998, the Partnership was charged management fees
of $2,103,077, $2,997,872, and $3,496,271, respectively. In 1997 and 1998,
$2,685,172 and $3,231,362 of the management fees were paid and $312,700 and
$172,476 were deferred, in accordance with the terms of the Partnership's credit
agreements, respectively. Management fees are calculated based on the gross
revenues of the systems. Additionally, during 1996, 1997

                                      F-194
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                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

and 1998, THGLP was also charged $980,000, $713,906, and $1,315,315,
respectively, for certain costs incurred by this related party on their behalf.

     In May 1997, immediately after the formation of HOL, HPI sold 10% of its
limited partner interest in HOL to certain employees of Helicon Corp. Such
interests were sold at HPI's proportionate carrying value of HOL of $83,631 in
exchange for notes receivable from these individuals. These notes are due upon
the liquidation of HOL or the sale of all or substantially all of its assets.

     On June 26, 1998, the notes were cancelled in consideration of the return
by the Helicon employees of their 10% limited partnership interests.

7.  DUE TO PRINCIPAL OWNER

     Mr. Theodore Baum, directly or indirectly, is the principal owner of 96.17%
of the general and limited partnership interests of the Partnership (the
"Principal Owner"). Due to Principal Owner consists of $5,000,000 at December
31, 1997 and 1998 payable by THGLP. Beginning on November 3, 1993, interest on
the $5,000,000 due to the Principal Owner did not accrue and in accordance with
the provisions of the Senior Secured Notes was not paid for twenty four months.
Interest resumed on November 3, 1995 (see Note 8). The principal may only be
repaid thereafter subject to the passage of certain limiting tests under the
covenants of the Senior Secured Notes. Prior to the issuance of the Senior
Secured Notes, amounts due to Principal Owner bore interest at varying rates per
annum based on the prime rate and were due on demand. Interest expense includes
$521,701 in 1996 and $530,082 in 1997 and $524,880 in 1998 related to this debt.

8.  SENIOR SECURED NOTES

     On November 3, 1993, THGLP and HCC (the "Issuers"), through a private
placement offering, issued $115,000,000 aggregate principal amount of 11% Senior
Secured Notes due 2003 (the "Senior Secured Notes"), secured by substantially
all the assets of THGLP. The Senior Secured Notes were issued at a substantial
discount from their principal amount and generated net proceeds to the Issuers
of approximately $105,699,000. Interest is payable on a semi-annual basis in
arrears on November 1 and May 1, beginning on May 1, 1994. Until November 1,
1996 the Senior Secured Notes bore interest at the rate of 9% per annum. After
November 1, 1996, the Senior Secured Notes bear interest at the rate of 11% per
annum. The discount on the Senior Secured Notes has been amortized over the term
of the Senior Secured Notes so as to result in an effective interest rate of 11%
per annum.

     The Senior Secured Notes may be redeemed at the option of the Issuers in
whole or in part at any time on or after November 1, 1997 at the redemption
price of 108% reducing ratably to 100% of the principal amount, in each case
together with accrued interest to the redemption date. The Issuers are required
to redeem $25,000,000 principal amount of the Senior Secured Notes on each of
November 1, 2001 and November 1, 2002. The indenture under which the Senior
Secured Notes were issued contains various restrictive covenants, the more
significant of which are, limitations on distributions to partners, the
incurrence or guarantee of indebtedness, the payment of management fees, other
transactions with officers, directors and affiliates, and the issuance of
certain types of equity interests or distributions relating thereto.

9.  LOANS PAYABLE TO BANKS

     On July 12, 1996, HPIAC entered into $85,000,000 of senior secured credit
facilities ("Facilities") with a group of banks and The First National Bank of
Chicago, as agent. The Facilities were comprised of a $55,000,000 senior secured
two and one-half year revolving credit facility, converting on December 31, 1998
to a five and one-half year amortizing term loan due June 30, 2004 ("Facility
A"); and, a $30,000,000 senior secured, amortizing, multiple draw nine year term
loan facility due June 30, 2005 ("Facility B"). The Facilities financed certain
permitted acquisitions, transaction expenses and general corporate purposes.

                                      F-195
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                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Interest on outstanding borrowings was payable at specified margins over either
LIBOR or the higher of the corporate base rate of The First National Bank of
Chicago or the rates on overnight Federal funds transactions with members of the
Federal Reserve System. The margins varied based on the Company's total leverage
ratio, as defined, at the time of an advance. As of December 31, 1997, the
amounts outstanding were $30,000,000 under Facility B and $35,500,000
outstanding under Facility A. Interest was payable at LIBOR plus 3.50% for
Facility B and LIBOR plus 3.00% for Facility A. In addition, HPIAC paid a
commitment fee of .5% of the unused balance of the Facilities.

     On December 15, 1998, the Facilities were repaid in full together with
accrued interest thereon from the proceeds of the new credit agreements (see
below).

     In connection with the early retirement of the aforementioned bank debt,
HPIAC wrote off related unamortized deferred financing costs totaling
$1,657,320. Such amount has been classified as an extraordinary item in the
accompanying 1998 combined statement of operations.

     In connection with the aforementioned Facilities, HPIAC entered into an
interest rate cap agreement to reduce its exposure to interest rate risk.
Interest rate cap transactions generally involve the exchange of fixed and
floating rate interest payment obligations and provide for a ceiling on interest
to be paid, respectively, without the exchange of the underlying notional
principal amount. These types of transactions involve risk of counterpart
nonperformance under the terms of the contract. At December 31, 1997, HPIAC had
cap agreements with aggregate notional amounts of $42,500,000 expiring through
March 29, 2000. On December 15, 1998, in connection with the early retirement of
the related bank debt, the cap agreements were terminated and HPIAC wrote off
the unamortized costs of these cap agreements.

     On December 15, 1998, HPIAC entered into credit agreements with a group of
banks and Paribas, as agent, providing maximum borrowings of $110,000,000 (the
1998 Credit Facilities). The agreements include (i) a senior secured Credit
Agreement consisting of a $35,000,000 A Term Loan, maturing on December 31,
2005, $45,000,000 B Term Loan, maturing on December 31, 2006 and a $10,000,000
Revolving Commitment, maturing on December 31, 2005 and (ii) a Loan Agreement
consisting of a $20,000,000 Hybrid Facility, maturing on December 31, 2007.

     As of December 31, 1998, the A Term Loan, B Term Loan and Hybrid Facility
were fully drawn down and there was nothing outstanding under the Revolving
Commitment. The principal cash payments required under the Company's credit
agreements for the fiscal years ended December 31, 1999, 2000, 2001, 2002 and
2003 are estimated to aggregate $0, $812,500, $3,950,000, $5,700,000 and
$7,450,000, respectively.

     Interest is payable at LIBOR plus an applicable margin, which is based on a
ratio of loans outstanding to annualized EBITDAM, as defined in the agreement
and can not exceed 3.00% for A Term Loan and Revolving Commitments, 3.25% for B
Term Loan and 4.50% for the Hybrid Facility. In addition, the Company pays a
commitment fee of .50% of the unused balance of the Revolving Commitment.

     The 1998 Credit Facilities are secured by a first perfected security
interest in all of the assets of HPIAC and a pledge of all equity interests of
HPIAC. The credit agreement contains various restrictive covenants that include
the achievement of certain financial ratios relating to interest, fixed charges,
leverage, limitations on capital expenditures, incurrence or guarantee of
indebtedness, other transactions with affiliates and distributions to members.
In addition, management fees in the aggregate cannot exceed 5% of gross revenues
of HPIAC.

     On June 26, 1997, THGLP entered into a $20,000,000 senior secured credit
facility with Banque Paribas, as Agent (the 1997 Credit Facility). On January 5,
1999, the 1997 Credit Facility was restated and amended. The facility is
non-amortizing and is due November 1, 2000. Borrowings under the facility
financed the acquisition of certain cable television assets in North Carolina
(see note 3). Interest on the $20,000,000 outstanding is payable at specified
margins over either LIBOR or the rate of interest publicly announced in New York
City by The Chase Manhattan Bank from time to time as its prime commercial
lending rate. The

                                      F-196
   391
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

margins vary based on the THGLP's total leverage ratio, as defined, at the time
of an advance. Currently interest is payable at LIBOR plus 2.75%.

     The 1997 Credit Facility is secured by a first perfected security interest
in all of the assets of the Partnership and a pledge of all equity interests of
the THGLP. The credit agreement contains various restrictive covenants that
include the achievement of certain financial ratios relating to interest, fixed
charges, leverage, limitations on capital expenditures, incurrence or guarantee
of indebtedness, transactions with affiliates, distributions to members and
management fees which accrue at 5% of gross revenues.

     Also included in loans payable to banks is a mortgage note of $266,922
payable to a bank that is secured by THGLP's office building in Vermont. The
interest is payable at Prime plus 1% and the mortgage note is due March 1, 2012.

     Principal payments on the mortgage note are summarized as follows at
December 31, 1998:

<Table>
<Caption>
YEAR ENDING DECEMBER 31                                        AMOUNT
- -----------------------                                       --------
                                                           
1999........................................................  $ 10,581
2000........................................................    11,631
2001........................................................    12,786
2002........................................................    14,055
2003 and thereafter.........................................   217,869
                                                              --------
                                                              $266,922
                                                              ========
</Table>

10.  SUBORDINATED NOTES AND REDEEMABLE PARTNERSHIP INTERESTS

     In April 1996 the Partnership sold to unrelated investors, $34,000,000
aggregate principal amount of its 12% Subordinated Notes (the "Subordinated
Notes") and warrants to purchase 2,419.1 units (the "Units") of Class B Common
Limited Partnership Interests representing in the aggregate 24.191% of the
outstanding limited partner interests of the Partnership on a fully diluted
basis (the "Warrants"). Of the $34,000,000 of gross proceeds, $3,687,142 was
determined to be the value of the Warrants, and $30,312,858 was allocated to the
Subordinated Notes. The discount on the Subordinated Notes is being amortized
over the term of these Notes.

     The Subordinated Notes are subordinated to the senior indebtedness of the
Partnership and are due April 1, 2004. Interest is payable semi-annually on each
October 1 and April 1 in cash or through the issuance of additional Subordinated
Notes, at the option of the Partnership. In October 1996, April 1997, October
1997, April 1998 and October 1998, the Partnership elected to satisfy interest
due through the issuance of $1,945,667, $2,156,740, $2,037,079, $2,408,370 and
$2,552,871, respectively, additional Subordinated Notes. After September 2001, a
holder or holders of no less than 33 1/3% of the aggregate principal amount of
the Subordinated Notes can require the Partnership to repurchase their
Subordinated Notes at a price equal to the principal amount thereof plus accrued
interest. The Partnership has an option to redeem the Subordinated Notes at 102%
of the aggregate principal amount after the fifth anniversary of their issuance,
at 101% of the aggregate principal amount after the sixth anniversary of
issuance and at 100% of the aggregate principal amount after the seventh
anniversary of issuance.

     Holders of the Warrants have the right to acquire the Units at any time for
a price of $1,500 per Unit. After September 2001, a holder or holders of at
least 33 1/3% of the Warrants can require the Partnership to either purchase
their Warrants at their interest in the Net Equity Value of the Partnership or
seek a purchaser for all of the assets or equity interests of the Partnership.
Net Equity Value pursuant to the terms of the

                                      F-197
   392
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

underlying agreements is the estimated amount of cash that would be available
for distribution to the Partnership interests upon a sale of all of the assets
of the Partnership and its subsequent dissolution and liquidation. The Net
Equity Value is the amount agreed to by the Partnership and 66 2/3% of the
holders of the Subordinated Notes and Warrants or, absent such agreement,
determined through a specified appraisal process.

     The Partnership estimated the Net Equity Value of the Warrants to be
approximately $43,250,000 at December 31, 1998 and $16,750,000 at December 31,
1997. Such estimate as of December 31, 1998 reflects the amount that the holders
of the warrants have agreed to accept for their interests assuming the proposed
sale of all of the interests of the partnership is consummated (see note 14).
The increase in the estimated Net Equity Value over the original carrying value
of the Warrants is being accreted evenly over the period beginning with the date
of the increase and September 2001. Such accretion is being reflected in the
accompanying financial statements as an increase in the carrying value of the
Warrants and a corresponding reduction in the carrying value of the capital
accounts of the General and Class A Limited Partners.

     The agreements underlying the Subordinated Notes and the Warrants contain
various restrictive covenants that include limitations on incurrence or
guarantee of indebtedness, transactions with affiliates, and distributions to
partners. In addition, management fees in the aggregate cannot exceed 5% of
gross revenues of the Partnership.

11.  OTHER NOTES PAYABLE

     Other Notes payable consists of the following at December 31:

<Table>
<Caption>
                                                                 1997
1998
                                                              ----------
- ----------
                                                                      
Promissory note in consideration for acquisition of a cable
  television system, accruing interest at 10% per annum on
  principal and accrued interest which is added to principal
  on certain specified dates; interest becomes payable on
  January 1, 1998 and the principal is payable in full on
  August 20, 2000                                             $2,036,765
$2,036,765
Non-interest bearing promissory notes issued in connection
  with the acquisition of a cable television system.
  Principal payments begin on July 16, 1997, in the amount
  of $70,000 and four installments in the amount of $170,000
  on each July 16 thereafter. Such notes are reported net of
  imputed interest of $141,116 and $101,732 in 1997 and
  1998, respectively, computed at 9% per annum                   538,884
408,268
Non-interest bearing promissory notes issued in connection
  with the acquisitions of the internet businesses.
  Principal payments are due in January, February, and March
  of each year and continue quarterly thereafter through
  June, 2001. Such notes are reported net of imputed
  interest of $180,727 and $146,441 in the 1997 and 1998,
  respectively, computed at 9% per annum                       1,398,478
1,021,474
Installment notes, collateralized by vehicles and other
  equipment and payable in monthly installments, at interest
  rates between 5.5% to 14.25% per annum, through January,
  2003                                                         1,772,949
1,982,297
                                                              ----------
- ----------
                                                              $5,747,076
$5,448,804
                                                              ==========
==========
</Table>

                                      F-198
   393
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Principal payments due on the above notes payable are summarized as follows
at December 31, 1998:

<Table>
<Caption>
YEAR ENDING DECEMBER 31                                         AMOUNT
- -----------------------                                       ----------
                                                           
1999......................................................    $1,337,476
2000......................................................     3,276,529
2001......................................................       678,349
2002......................................................       140,944
2003......................................................        15,506
                                                              ----------
                                                              $5,448,804
                                                              ==========
</Table>

12.  PARTNERS' DEFICIT

     During 1993, the Principal Owner contributed a $6,500,000 unsecured,
non-interest bearing personal promissory note due on demand to the general
partner of THGLP. Additionally, the Principal Owner contributed to THGLP an
unsecured, non-interest bearing personal promissory note in the aggregate
principal amount of $24,000,000 (together with the $6,500,000 note, the "Baum
Notes"). The Baum Notes have been issued for the purpose of THGLP's credit
enhancement. Although the Baum Notes are unconditional, they do not become
payable except (i) in increasing amounts presently up to $19,500,000 and in
installments thereafter to a maximum of $30,500,000 on December 16, 1996 and
(ii) at such time after such dates as THGLP's creditors shall have exhausted all
claims against THGLP's assets.

13.  COMMITMENTS

     The Partnership and affiliates leases telephone and utility poles on an
annual basis. The leases are self renewing. Pole rental expense for the years
ended December 31, 1996, 1997 and 1998 was $609,075, $873,264 and $982,306,
respectively.

     In connection with certain lease and franchise agreements, the Partnership,
from time to time, issues security bonds.

     The Partnership and affiliates utilizes certain office space under
operating lease agreements which expire at various dates through August 2013 and
contain renewal options. At December 31, 1998 the future minimum rental
commitments under such leases were as follows:

<Table>
<Caption>
YEAR ENDING DECEMBER 31
- -----------------------
                                                           
1999......................................................    $  166,825
2000......................................................       142,136
2001......................................................       141,727
2002......................................................       147,912
2003......................................................       151,412
Thereafter................................................     1,418,017
                                                              ----------
                                                              $2,168,029
                                                              ==========
</Table>

     Office rent expense was $102,801 in 1996, $203,506 in 1997 and $254,955 in
1998.

                                      F-199
   394
                    HELICON PARTNERS I, L.P. AND AFFILIATES

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

14.  SUBSEQUENT EVENTS

     On March 22, 1999, Helicon Partners I, L. P. (HPI), Baum Investments, Inc.
and all the holders of partnership interests in HPI entered into a purchase
agreement by and among Charter Communications, Inc, Charter Communications, LLC
and Charter Helicon, LLC (collectively the "Charter Entities") providing for the
sale of all such partnership interests and Helicon Corp.'s interest in the
management agreements with THGLP and HPIAC to the Charter Entities. The sale
price is $550 million which amount will be reduced by any outstanding
indebtedness assumed by the Charter Entities.

                                      F-200
   395

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Rifkin Cable Income Partners L.P.

     In our opinion, the accompanying balance sheet and the related statements
of operations, of equity and of cash flows present fairly, in all material
respects, the financial position of Rifkin Cable Income Partners L.P. (the
"Partnership") at September 13, 1999, and the results of its operations and its
cash flows for the period January 1, 1999 to September 13, 1999, in conformity
with accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

     On September 13, 1999, all of the Partnership's interest were sold to
Charter Communications, LLC. These financial statements represent the
Partnership just prior to that transaction and do not reflect any adjustments
related thereto.

/s/ PRICEWATERHOUSECOOPERS LLP

Denver, Colorado
February 15, 2000

                                      F-201
   396

                       RIFKIN CABLE INCOME PARTNERS, L.P.

                                 BALANCE SHEET

<Table>
<Caption>
                                                              SEPTEMBER 13, 1999
                                                              ------------------
                                                           
ASSETS
  Cash......................................................     $   145,036
  Customer accounts receivable, net of allowance for
     doubtful accounts of $2,349............................         109,874
  Accounts receivable, related party........................           7,328
  Accounts receivable, interpartnership.....................      13,638,312
  Other receivables.........................................          96,318
  Prepaid expenses and deposits.............................          20,920
  Property, plant and equipment, at cost:
     Transmission and distribution systems and related
      equipment.............................................      11,038,202
     Vehicles, office furniture and fixtures................         426,977
     Land, buildings and leasehold improvements.............         125,000
     Construction in process and spare parts inventory......          66,122
                                                                 -----------
                                                                  11,656,301
Less accumulated depreciation...............................        (831,684)
                                                                 -----------
     Property, plant and equipment, net.....................      10,824,617
Franchise costs, net of accumulated amortization of
  $792,708..................................................      12,706,195
                                                                 -----------
     Total assets...........................................     $37,548,600
                                                                 ===========
LIABILITIES AND EQUITY
Liabilities:
  Accrued liabilities.......................................     $   161,084
  Customer deposits and prepayments.........................         321,419
  Interpartnership debt.....................................      15,621,000
                                                                 -----------
     Total liabilities......................................      16,103,503
Commitments and contingencies (Notes 4 and 7)
  Divisional equity.........................................      21,445,097
                                                                 -----------
     Total equity...........................................      21,445,097
                                                                 -----------
       Total liabilities and equity.........................     $37,548,600
                                                                 ===========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-202
   397

                       RIFKIN CABLE INCOME PARTNERS, L.P.

                            STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                     PERIOD
                                                                 JANUARY 1, 1999
                                                                TO SEPTEMBER 13,
                                                                      1999

- ---------------------
                                                           
REVENUE
  Service...................................................       $3,533,718
  Installation and other....................................          273,757
                                                                   ----------
     Total revenue..........................................        3,807,475
COSTS AND EXPENSES
  Operating expense.........................................          455,528
  Programming expense.......................................          862,317
  Selling, general and administrative expense...............          472,088
  Depreciation..............................................          836,050
  Amortization..............................................          792,708
  Management fees...........................................          190,374
  Loss on disposal of assets................................           52,885
                                                                   ----------
     Total costs and expenses...............................        3,661,950
                                                                   ----------
  Operating income..........................................          145,525
  Interest expense..........................................          536,877
                                                                   ----------
     Net loss...............................................       $ (391,352)
                                                                   ==========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-203
   398

                       RIFKIN CABLE INCOME PARTNERS, L.P.

                              STATEMENT OF EQUITY

<Table>
<Caption>
                                                                  PERIOD JANUARY
1, 1999 TO
                                                                     SEPTEMBER
13, 1999

- -------------------------------------
                                                               DIVISIONAL
                                                                 EQUITY
     TOTAL
                                                            -----------------
- -----------------
                                                         

Equity contribution.......................................     $21,836,449
  $21,836,449
  Net loss................................................        (391,352)
     (391,352)
                                                               -----------
  -----------
Equity, September 13, 1999................................     $21,445,097
  $21,445,097
                                                               ===========
  ===========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-204
   399

                       RIFKIN CABLE INCOME PARTNERS, L.P.

                            STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                              PERIOD JANUARY 1,
1999 TO
                                                                 SEPTEMBER 13,
1999

- -------------------------
                                                           
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................        $
(391,352)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation and amortization.............................           1,628,758
  Loss on disposal of fixed assets..........................              52,885
  Increase in customer accounts receivable..................
(58,351)
  Increase in accounts receivable, related party............
(7,328)
  Increase in accounts receivable, interpartnership.........
(13,638,312)
  Decrease in other receivables.............................              36,960
  Decrease in prepaid expenses and deposits.................              49,755
  Decrease in accrued liabilities...........................
(235,521)
  Increase in customer deposits and prepayments.............             195,207
                                                                    ------------
     Net cash used in operating activities..................
(12,367,299)
                                                                    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Initial cash acquisition cost, net of cash acquired.......
(21,771,547)
  Additions to property, plant and equipment................
(289,533)
  Additions to franchise costs..............................
(20,108)
  Net proceeds from sale of assets..........................               1,500
                                                                    ------------
     Net cash used in investing activities..................
(22,079,688)
                                                                    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Capital contributions.....................................          21,836,449
  Proceeds from interpartnership debt.......................          13,119,981
  Payments on interpartnership debt.........................
(364,407)
                                                                    ------------
     Net cash provided by financing activities..............          34,592,023
                                                                    ------------
  Increase in cash..........................................             145,036
  Cash, beginning of period.................................                  --
                                                                    ------------
  Cash, end of period.......................................        $    145,036
                                                                    ============
SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid.............................................        $    536,877
                                                                    ============
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-205
   400

                       RIFKIN CABLE INCOME PARTNERS, L.P.

                         NOTES TO FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Rifkin Cable Income Partners L.P. (the "Partnership") was originally formed
in 1986 as a limited partnership under the laws of the State of Delaware. The
Partnership owns, operates and develops cable television systems in Missouri and
New Mexico.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP AND BASIS OF PRESENTATION

     Effective December 31, 1998, Interlink Communications Partners, LLLP
("ICP") acquired all of the Partnership's limited partner interest, and agreed
to purchase all of the Partnership's interest for $21.7 million. This
transaction was accounted for as a purchase; as such, assets and liabilities
were written up to their fair value, resulting in an increase to property, plant
and equipment and franchise costs of $6.4 million and $11.7 million,
respectively.

     Effective April 1, 1999, ICP completed the purchase of the remaining
general partner interest in the Partnership and the Partnership was merged into
ICP and ceased to exist as a separate legal entity. The Partnership's financial
statements subsequent to that date represent a divisional carve-out from ICP.
These financial statements include all the direct costs of operating its
business; however, certain assets, liabilities and costs not specifically
related to the Partnership's activities were allocated and reflected in the
financial position as of September 13, 1999, and the results of its operations
and its cash flows for the period January 1, 1999 to September 13, 1999.
Allocations from ICP include amounts for debt, interest expense and management
expense. Both debt and interest expense were allocated pro rata based on the
Partnership's percentage of subscribers to total ICP subscribers. Management
expense was allocated in accordance with the management agreement (Note 2). In
addition, receivables and payables to ICP are presented in the accompanying
financial statements net as amounts due to/from interpartnership. Management
believes these allocations were made on a reasonable basis. Nonetheless, the
financial information included herein may not necessarily reflect what the
financial position and results of operations of the Partnership would have been
as a stand-alone entity.

ACQUISITION BY CHARTER COMMUNICATIONS HOLDINGS, LLC

     On February 12, 1999, ICP signed a letter of intent to sell all of ICP's
partnership interest to Charter Communications Holdings, LLC ("Charter"). On
April 26, 1999, ICP signed a definitive Purchase and Sales Agreement with
Charter for the sale of the individual partner's interest. The sales transaction
closed on September 13, 1999. These financial statements represent the
Partnership just prior to the transaction and do not reflect any related
adjustments.

PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed includes amounts for material, labor, overhead
and capitalized interest, if applicable. Upon sale or retirement of an asset,
the related costs and accumulated depreciation were removed from the accounts
and any gain or loss is recognized.

     Depreciation expense is calculated using the straight-line method over the
estimated useful lives of the assets as follows:

<Table>
                                                             
Transmission and distribution systems and related
  equipment.................................................    1-15 years
Vehicles, office furniture and fixtures.....................     1-5 years
Land, buildings and leasehold improvements..................    1-30 years
</Table>

                                      F-206
   401
                       RIFKIN CABLE INCOME PARTNERS, L.P.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from 1 to 18 years. The carrying value is assessed for recoverability by
management based on an analysis of undiscounted expected future cash flows. The
Partnership's management believes that there has been no impairment thereof as
of September 13, 1999.

INCOME TAXES

     No provision for federal or state income taxes is necessary in the
financial statements of the Partnership, because as a partnership, it is not
subject to federal or state income tax as the tax effect of its activities
accrues to the partners.

REVENUE RECOGNITION

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the period shown.

USE OF ESTIMATES

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

2.  MANAGEMENT AGREEMENT

     The Partnership has a management agreement with R & A Management, LLC
("RML"). The management agreement provides that RML shall act as manager of the
Partnership's CATV systems, and shall be entitled to annual compensation of 5%
of the Partnership's CATV revenues, net of certain CATV programming costs. The
result of this transaction included the conveyance of the Rifkin management
agreement ("Rifkin Agreement") to RML ("RML Agreement"). Expenses incurred
pursuant to this agreement and the RML Agreement are disclosed in total on the
Statement of Operations.

3.  DEBT

     The Partnership has an interpartnership debt with ICP. Borrowings,
including both principal and interest, at September 13, 1999 were $15,621,000
and had an effective interest rate of 8.68%.

     ICP has a term loan and revolving loan agreement with a bank. The amount of
the term loan is $150,000,000, and requires varying quarterly payments plus
interest commencing September 30, 2001 and continuing through March 31, 2007. On
February 1, 1999, the term loan agreement was amended to increase the loan
amount to $250,000,000. On July 16, 1999, the term loan agreement was amended
again to increase the loan amount to $290,000,000. The interest rate on the term
loan is generally the bank's prime rate plus 0% to 1.50%. The weighted average
effective rate at September 13, 1999 was 8.74%.

     The revolving loan agreement provided for borrowing up to $100,000,000 at
the Company's discretion. At September 13, 1999, $91,000,000 had been drawn
against the $100,000,000 commitment. The revolving credit agreement expires on
March 31, 2007. The revolver bears an interest rate at the bank's prime rate
plus 0% to
                                      F-207
   402
                       RIFKIN CABLE INCOME PARTNERS, L.P.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1.50% or LIBOR plus 1.25% to 2.75%. The specific rate is dependent upon the
leverage ratio of ICP, which is recalculated quarterly. The weighted average
effective interest rate at September 13, 1999 was 8.5%.

     The term loan and revolving loan agreement are collateralized by
substantially all assets of ICP and its consolidated entities, including the
Partnership.

4.  LEASE COMMITMENTS

     The Partnership leases certain real and personal property under
noncancelable operating leases. Future minimum lease payments under these
arrangements at September 13, 1999, were as follows:

<Table>
                                                           
1999........................................................  $ 60,870
2000........................................................    30,825
2001........................................................    30,000
2002........................................................     8,750
                                                              --------
                                                              $130,445
                                                              ========
</Table>

     Total rent expense for the period January 1, 1999 to September 13, 1999 was
$60,870, including $38,239 relating to cancelable pole rental agreements.

5.  RETIREMENT BENEFITS

     The Partnership has a 401(k) plan for its employees that have been employed
by the Partnership for at least one year. Employees of the Partnership can
contribute up to 15% of their salary, on a before-tax basis, with a maximum 1999
contribution of $10,000 (as set by the Internal Revenue Service). The
Partnership matches participant contributions up to a maximum of 50% of the
first 3% of a participant's salary contributed. All participant contributions
and earnings are fully vested upon contribution and Partnership contributions
and earnings vest 20% per year of employment with the Partnership, becoming
fully vested after five years. The Partnership's matching contributions for the
period January 1, 1999 to September 13, 1999 were $3,850.

6.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Partnership has a number of financial instruments, none of which are
held for trading purposes. The following method and assumptions were used by the
Partnership to estimate the fair values of financial instruments as disclosed
herein:

     Cash, customer accounts receivable, other receivables, accounts payable and
accrued liabilities and customer deposits and prepayments: The carrying value
amount approximates fair value because of the short period to maturity.

     The interest rate on debt is adjusted at least quarterly; therefore, the
carrying value of debt approximates its fair value.

7.  LITIGATION

     The Partnership could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Partnership will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Partnership's financial position or results of operations.

                                      F-208
   403

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Rifkin Cable Income Partners L.P.

In our opinion, the accompanying balance sheet and the related statements of
operations, of partners' equity (deficit) and of cash flows present fairly, in
all material respects, the financial position of Rifkin Cable Income Partners
L.P. (the "Partnership") at December 31, 1997 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PRICEWATERHOUSECOOPERS LLP

Denver, Colorado
March 19, 1999

                                      F-209
   404

                       RIFKIN CABLE INCOME PARTNERS L. P.

                                 BALANCE SHEET

<Table>
<Caption>
                                                               12/31/97
12/31/98
                                                              -----------
- -----------
                                                                       
ASSETS
Cash and cash equivalents...................................  $   381,378    $
 65,699
Customer accounts receivable, net of allowance for doubtful
  accounts of $12,455 in 1997 and $18,278 in 1998...........       49,585
 51,523
Other receivables...........................................      123,828
133,278
Prepaid expenses and deposits...............................       81,114
 70,675
Property, plant and equipment, at cost:
  Cable television transmission and distribution systems and
     related equipment......................................    8,536,060
8,758,525
  Land, buildings, vehicles and furniture and fixtures......      618,671
623,281
                                                              -----------
- -----------
                                                                9,154,731
9,381,806
  Less accumulated depreciation.............................   (3,847,679)
(4,354,685)
                                                              -----------
- -----------
     Net property, plant and equipment......................    5,307,052
5,027,121
Franchise costs and other intangible assets, net of
  accumulated amortization of $1,819,324 in 1997 and
  $2,033,405 in 1998........................................    2,005,342
1,772,345
                                                              -----------
- -----------
          Total assets......................................  $ 7,948,299    $
7,120,641
                                                              ===========
===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued liabilities....................  $   365,392    $
396,605
Customer deposits and prepayments...........................      177,307
126,212
Interest payable............................................       58,093
     --
Long-term debt..............................................    4,914,000
     --
Interpartnership debt.......................................           --
2,865,426
                                                              -----------
- -----------
          Total liabilities.................................    5,514,792
3,388,243
Commitments and contingencies (Notes 4 and 8)
Partners' equity:
  General partner...........................................      263,171
822,837
  Limited partners..........................................    2,170,336
2,909,561
                                                              -----------
- -----------
          Total partner's equity............................    2,433,507
3,732,398
                                                              -----------
- -----------
          Total liabilities and partners' equity............  $ 7,948,299    $
7,120,641
                                                              ===========
===========
</Table>

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

                                      F-210
   405

                       RIFKIN CABLE INCOME PARTNERS L.P.

                            STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                    YEARS ENDED

- ------------------------------------
                                                         12/31/96     12/31/97
  12/31/98
                                                        ----------   ----------
 ----------
                                                               
 
REVENUE:
Service...............................................  $4,104,841   $4,491,983
 $4,790,052
Installation and other................................     206,044      239,402
    345,484
                                                        ----------   ----------
 ----------
          Total revenue...............................   4,310,885    4,731,385
  5,135,536
COSTS AND EXPENSES:
Operating expense.....................................     643,950      691,700
    671,968
Programming expense...................................     787,124      879,939
  1,077,540
Selling, general and administrative expense...........     683,571      663,903
    622,774
Depreciation..........................................     535,559      602,863
    628,515
Amortization..........................................     377,749      332,770
    199,854
Management fees.......................................     215,544      236,569
    256,777
Loss (gain) on disposal of assets.....................       1,530        2,980
     (2,138)
                                                        ----------   ----------
 ----------
          Total costs and expenses....................   3,245,027    3,410,724
  3,455,290
                                                        ----------   ----------
 ----------
Operating income......................................   1,065,858    1,320,661
  1,680,246
Interest expense......................................     533,294      448,530
    362,439
                                                        ----------   ----------
 ----------
Net income before extraordinary item..................     532,564      872,131
  1,317,807
Extraordinary item -- Loss on early retirement of debt
  (Note 1)............................................          --           --
     18,916
                                                        ----------   ----------
 ----------
Net income............................................  $  532,564   $  872,131
 $1,298,891
                                                        ==========   ==========
 ==========
</Table>

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

                                      F-211
   406

                       RIFKIN CABLE INCOME PARTNERS L.P.

                    STATEMENT OF PARTNERS' EQUITY (DEFICIT)

<Table>
<Caption>
                                                      GENERAL      LIMITED
                                                      PARTNER      PARTNERS
 TOTAL
                                                     ---------    ----------
- ----------
                                                            

Partners' equity (deficit), December 31, 1995......  $(299,131)   $1,427,630
$1,128,499
Net income.........................................    229,471       303,093
  532,564
Equity distribution................................    (42,953)      (56,734)
  (99,687)
                                                     ---------    ----------
- ----------
Partners' equity (deficit), December 31, 1996......   (112,613)    1,673,989
1,561,376
Net income.........................................    375,784       496,347
  872,131
                                                     ---------    ----------
- ----------
Partners' equity, December 31, 1997................    263,171     2,170,336
2,433,507
Net income.........................................    559,666       739,225
1,298,891
                                                     ---------    ----------
- ----------
Partners' equity December 31, 1998.................  $ 822,837    $2,909,561
$3,732,398
                                                     =========    ==========
==========
</Table>

     The partners' capital accounts for financial reporting purposes vary from
the tax capital accounts.

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

                                      F-212
   407

                       RIFKIN CABLE INCOME PARTNERS L.P.

                            STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                   YEARS ENDED

- -------------------------------------
                                                       12/31/96     12/31/97
12/31/98
                                                      ----------   ----------
- -----------
                                                             

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income........................................  $  532,564   $  872,131
$ 1,298,891
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization..................     913,308      935,633
   828,369
     Amortization of deferred loan cost.............      18,970       18,970
    14,228
     Loss on early retirement of debt...............          --           --
    18,916
     Loss (gain) on disposal of fixed assets........       1,530        2,980
    (2,138)
     Decrease (increase) in customer accounts
       receivables..................................         521       (5,729)
    (1,938)
     Increase in other receivables..................     (45,274)     (56,059)
    (9,450)
     Decrease in prepaid expense and other..........      40,737       13,230
    10,439
     Increase (decrease) in accounts payable and
       accrued liabilities..........................    (207,035)      61,625
    31,213
     Increase (decrease) in customer deposits and
       prepayment...................................         673      (63,524)
   (51,095)
     Increase (decrease) in interest payable........      35,638       (3,145)
   (58,093)
                                                      ----------   ----------
- -----------
       Net cash provided by operating activities....   1,291,632    1,776,112
 2,079,342
                                                      ----------   ----------
- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment........    (824,359)    (679,394)
  (415,534)
  Additions to other intangible assets, net of
     refranchises...................................          --         (112)
        --
  Net proceeds from the sale of assets..............      18,255       57,113
    69,087
  Sales tax related to Florida assets sold in
     1994...........................................     (14,694)          --
        --
                                                      ----------   ----------
- -----------
       Net cash used in investing activities........    (820,798)    (622,393)
  (346,447)
                                                      ----------   ----------
- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from interpartnership debt...............          --           --
 4,265,426
  Payments of long-term debt........................    (715,000)    (871,000)
(4,914,000)
  Payments of interpartnership debt.................          --           --
(1,400,000)
  Partners' capital distributions...................     (99,687)          --
        --
                                                      ----------   ----------
- -----------
       Net cash used in financing activities........    (814,687)    (871,000)
(2,048,574)
                                                      ----------   ----------
- -----------
Net increase (decrease) in cash and cash
  equivalents.......................................    (343,853)     282,719
  (315,679)
Cash and cash equivalents at beginning of period....     442,512       98,659
   381,378
                                                      ----------   ----------
- -----------
Cash and cash equivalents at end of period..........  $   98,659   $  381,378
$    65,699
                                                      ==========   ==========
===========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid.....................................  $  455,124   $  431,722
$   406,304
                                                      ==========   ==========
===========
</Table>

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

                                      F-213
   408

                       RIFKIN CABLE INCOME PARTNERS L.P.

                         NOTES TO FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Rifkin Cable Income Partners L.P. (the "Partnership") was formed in 1986 as
a limited partnership under the laws of the State of Delaware. The Partnership
owns, operates and develops cable television systems in Missouri and New Mexico.
Rifkin Cable Management Partners L.P., an affiliate of Rifkin & Associates, Inc.
(Note 3), is the general partner of the Partnership.

     The Partnership Agreement (the "Agreement") establishes the respective
rights, obligations and interests of the partners. The Agreement provides that
net income or loss, certain capital events, and cash distributions (all as
defined in the Agreement) are generally allocated 43% to the general partner and
57% to the limited partners.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP

     During 1998, Interlink Communications Partners, LLLP ("ICP") agreed to
purchase all of the interests of the Partnership. ICP acquired the limited
partner interests, effective December 31, 1998, and is currently in the process
of obtaining the necessary consents to transfer all of the Partnership's
franchises to ICP. Once obtained, ICP will then purchase the general partner
interest in the Partnership, and the Partnership will, by operation of law, be
consolidated into ICP.

REVENUE RECOGNITION

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the periods shown.

PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed includes amounts for material, labor, overhead
and capitalized interest, if applicable. Upon sale or retirement of an asset,
the related costs and accumulated depreciation are removed from the accounts and
any gain or loss is recognized.

     Depreciation expense is calculated using the straight-line method over the
estimated useful lives of the assets as follows:

<Table>
                                                           
Buildings...................................................  21-30 years
Cable television transmission and distribution systems and
  related equipment.........................................   3-15 years
Vehicles and furniture and fixtures.........................    3-5 years
</Table>

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from eight to twenty-five years. The carrying value of intangibles is assessed
for recoverability by management based on an analysis of undiscounted expected
future cash flows. The Partnership's management believes that there has been no
impairment thereof as of December 31, 1998.

                                      F-214
   409
                       RIFKIN CABLE INCOME PARTNERS L.P.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

OTHER INTANGIBLE ASSETS

     Loan costs of the Partnership have been deferred and have been amortized to
interest expense utilizing the straight-line method over the term of the related
debt. Use of the straight-line method approximates the results of the
application of the interest method. The net amount remaining at December 31,
1997 was $37,886.

     On December 30, 1998, the loan with a financial institution was paid in
full (Note 2). The related deferred loan costs and associated accumulated
amortization were written off and an extraordinary loss of $18,916 was recorded.

CASH AND CASH EQUIVALENTS

     All highly liquid debt instruments purchased with an original maturity of
three months or less are considered to be cash equivalents.

INCOME TAXES

     No provision for Federal or State income taxes is necessary in the
financial statements of the Partnership, because as a partnership, it is not
subject to Federal or State income tax as the tax effect of its activities
accrues to the partners.

USE OF ESTIMATES

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

NEW ACCOUNTING PRONOUNCEMENT

     In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-Up
Activities," which requires the Partnership to expense all start up costs
related to opening a new facility, introduction of anew product or service, or
conducting business with a new class of customer or in a new territory. This
standard is effective for the Partnership's 1999 fiscal year. Management
believes that SOP 98-5 will have no material effect on its financial position or
the results of operations.

RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION

     Certain reclassifications have been made to the 1996 and 1997 financial
statements to conform with the 1998 financial statement presentation.

2.  DEBT

     The Partnership had a term loan with a financial institution which required
varying quarterly payments. At December 31, 1997, the term loan had a balance of
$4,914,000. At December 30, 1998, the term loan had a balance of $4,216,875; at
that date, the total balance and accrued interest were paid in full.

     On that same date, the Partnership obtained a new interpartnership loan
with ICP (Note 1). Borrowing under the interpartnership loan, as well as
interest and principle payments are due at the discretion of the management of
ICP, resulting in no minimum required annual principle payments. The balance of
the interpartnership loan at December 31, 1998 was $2,865,426. The effective
interest rate at December 31, 1998 was 8.5%.

                                      F-215
   410
                       RIFKIN CABLE INCOME PARTNERS L.P.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3.  MANAGEMENT AGREEMENT

     The Partnership has entered into a management agreement with Rifkin and
Associates, Inc. (Rifkin). The management agreement provides that Rifkin shall
act as manager of the Partnership's CATV systems, and shall be entitled to
annual compensation of 5% of the Partnership's CATV revenues, net of certain
CATV programming costs. Effective September 1, 1998, Rifkin conveyed its CATV
management business to R & A Management, LLC (RML). The result of this
transaction included the conveyance of the Rifkin management agreement (Rifkin
Agreement) to RML (RML Agreement). Expenses incurred pursuant to the Rifkin
Agreement and the RML Agreement are disclosed in total on the Statement of
Operations.

4.  COMMITMENTS AND RENTAL EXPENSE

     The Partnership leases certain real and personal property under
noncancelable operating leases expiring through the year 2001. Future minimum
lease payments under such noncancelable leases as of December 31, 1998 are:
$30,000 for each year 1999, 2000 and 2001, totaling $90,000.

     Total rental expense for the years ended December 31, 1996, 1997 and 1998
was $60,323, $68,593 and $68,776, respectively, including $27,442, $36,822 and
$36,716, respectively, relating to cancelable pole rental agreements.

5.  RETIREMENT BENEFITS

     The Partnership has a 401(k) plan for its employees that have been employed
by the Partnership for at least one year. Employees of the Partnership can
contribute up to 15% of their salary, on a before-tax basis, with a maximum 1998
contribution of $10,000 (as set by the Internal Revenue Service). The
Partnership matches participant contributions up to a maximum of 50% of the
first 3% of a participant's salary contributed. All participant contributions
and earnings are fully vested upon contribution and Partnership contributions
and earnings vest 20% per year of employment with the Partnership, becoming
fully vested after five years. The Partnership's matching contributions for the
years ended December 31, 1996, 1997 and 1998 were $2,693, $3,653 and $2,680,
respectively.

6.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Partnership has a number of financial instruments, none of which are
held for trading purposes. The following method and assumptions were used by the
Partnership to estimate the fair values of financial instruments as disclosed
herein:

     Cash and Cash Equivalents, Customer Accounts Receivable, Other Receivables,
Accounts Payable and Accrued Liabilities and Customer Deposits and Prepayments:
The carrying value amount approximates fair value because of the short period to
maturity.

     Debt: The carrying value amount approximates the fair value because the
Partnership's interpartnership debt was obtained on December 30, 1998.

7.  CABLE REREGULATION

     Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the Cable Act) and has amended it at various times since.

     The total effects of the present law are, at this time, still unknown.
However, one provision of the present law further redefines a small cable
system, and exempts these systems from rate regulation on the upper tiers of
cable service. The Partnership is awaiting an FCC rulemaking implementing the
present law to determine whether its systems qualify as small cable systems.

                                      F-216
   411
                       RIFKIN CABLE INCOME PARTNERS L.P.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8.  LITIGATION

     The Partnership could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Partnership will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Partnership's financial position or results of operations.

                                      F-217
   412

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Rifkin Acquisition Partners, L.L.L.P.

     In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, partners' capital and cash flows present
fairly, in all material respects, the financial position of Rifkin Acquisition
Partners, L.L.L.P. and its subsidiaries (the "Company") at September 13, 1999,
and the results of their operations and their cash flows for the period from
January 1, 1999 through September 13, 1999, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

     As discussed in Note 1 to the financial statements, the Partnership has
changed its method of accounting for start up costs in fiscal 1999.

     On September 13, 1999, all of the Partnership's interest were sold to
Charter Communications, LLC. These financial statements represent the
Partnership just prior to that transaction and do not reflect any adjustments
related thereto.

/s/ PRICEWATERHOUSECOOPERS LLP

Denver, Colorado
February 15, 2000

                                      F-218
   413

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                              SEPTEMBER 13, 1999
                                                              ------------------
                                                           
ASSETS
Cash........................................................     $  4,475,108
Customer accounts receivable, net of allowance for doubtful
  accounts of $292,183......................................        1,258,522
Other receivables...........................................        3,384,472
Prepaid expenses and other..................................        1,616,219
Property, plant and equipment, at cost:
  Cable television transmission and distribution system and
     related equipment......................................      171,842,780
  Land, buildings, vehicles and furniture and fixtures......        8,946,860
                                                                 ------------
                                                                  180,789,640
Less accumulated depreciation...............................      (45,505,661)
                                                                 ------------
     Net property, plant and equipment......................      135,283,979
Franchise costs and other intangible assets, net of
  accumulated amortization of $80,047,118...................      164,685,102
                                                                 ------------
       Total assets.........................................     $310,703,402
                                                                 ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
  Accounts payable and accrued liabilities..................     $ 21,110,015
  Customer deposits and prepayments.........................        1,514,732
  Payables to affiliates....................................          303,047
  Interest payable..........................................        3,234,019
  Deferred tax liability, net...............................        5,967,000
  Notes payable.............................................      236,075,000
                                                                 ------------
       Total liabilities....................................      268,203,813
Commitments and contingencies (Notes 5 and 9)
Redeemable partners' interests..............................       16,128,800
Partners' capital (deficit):
  General partner...........................................       (2,951,394)
  Limited partners..........................................       29,029,520
  Preferred equity interest.................................          292,663
                                                                 ------------
       Total partners' capital..............................       26,370,789
                                                                 ------------
          Total liabilities and partners' capital...........     $310,703,402
                                                                 ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-219
   414

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                               PERIOD FROM
                                                               JANUARY 1,
                                                              1999 THROUGH
                                                              SEPTEMBER 13,
                                                                  1999
                                                              -------------
                                                           
REVENUE
Service.....................................................  $ 62,252,012
Installation and other......................................     6,577,154
                                                              ------------
  Total revenue.............................................    68,829,166
COSTS AND EXPENSES
Operating expense...........................................    10,060,135
Programming expense.........................................    15,312,179
Selling, general and administrative expense.................    17,566,230
Depreciation................................................    11,760,429
Amortization................................................    17,681,246
Management fees.............................................     2,406,596
Loss on disposal of assets..................................       996,459
                                                              ------------
  Total costs and expenses..................................    75,783,274
                                                              ------------
Operating loss..............................................    (6,954,108)
Interest expense............................................    16,591,877
                                                              ------------
Loss before income taxes....................................   (23,545,985)
Income tax benefit..........................................    (1,975,000)
                                                              ------------
Loss before cumulative effect of accounting change..........   (21,570,985)
Cumulative effect of accounting change for organizational
  costs.....................................................      (111,607)
                                                              ------------
  Net loss..................................................  $(21,682,592)
                                                              ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-220
   415

                      RIFKIN ACQUISITION PARTNERS, L.L.L.P
                  CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL

<Table>
<Caption>
                                             PREFERRED
                                              EQUITY       GENERAL       LIMITED
                                             INTEREST     PARTNERS
PARTNERS        TOTAL
                                             ---------   -----------
- ------------   ------------
                                                              
     
Partners' capital (deficit), December 31,
  1998.....................................  $ 422,758   $(1,991,018)  $
55,570,041   $ 54,001,781
  Accretion of redeemable partners'
     interest..............................         --      (743,550)
(5,204,850)    (5,948,400)
  Net loss.................................   (130,095)     (216,826)
(21,335,671)   (21,682,592)
                                             ---------   -----------
- ------------   ------------
Partners' capital (deficit), September 13,
  1999.....................................  $ 292,663   $(2,951,394)  $
29,029,520   $ 26,370,789
                                             =========   ===========
============   ============
</Table>

     The partners' capital accounts for financial reporting purposes vary from
the tax capital accounts.

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-221
   416

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                               PERIOD FROM
                                                               JANUARY 1,
                                                              1999 THROUGH
                                                              SEPTEMBER 13,
                                                                  1999
                                                              -------------
                                                           
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................  $(21,682,592)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation and amortization.............................    29,441,675
  Amortization of deferred loan costs.......................       684,095
  Loss on disposal of fixed assets..........................       996,459
  Deferred tax benefit......................................    (1,975,000)
  Changes in accounting for organizational costs............       111,607
  Decrease in customer accounts receivables.................       673,618
  Decrease in other receivables.............................     2,253,299
  Decrease in prepaid expenses and other....................       782,309
  Increase in accounts payable and accrued liabilities......     9,425,421
  Decrease in customer deposits and prepayments.............      (162,168)
  Decrease in interest payable..............................    (4,008,935)
  Increase in payable to affiliates.........................       303,047
                                                              ------------
     Net cash provided by operating activities..............    16,842,835
                                                              ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment..................   (26,692,423)
Proceeds from purchase price adjustment for Tennessee
  trade.....................................................       276,147
Net proceeds from the sale of other assets..................       223,657
                                                              ------------
     Net cash used in investing activities..................   (26,192,619)
                                                              ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term bank debt...........................    11,500,000
                                                              ------------
     Net cash provided by financing activities..............    11,500,000
                                                              ------------
Net increase in cash........................................     2,150,216
Cash, beginning of period...................................     2,324,892
                                                              ------------
Cash, end of period.........................................  $  4,475,108
                                                              ============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid...............................................  $ 13,357,858
                                                              ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-222
   417

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL INFORMATION

     Rifkin Acquisition Partners, L.L.L.P. ("the Partnership") was formed
pursuant to the laws of the State of Colorado. The Partnership and its
subsidiaries are hereinafter referred to on a consolidated basis as the
"Company." The Company owns, operates, and develops cable television systems in
Georgia, Tennessee and Illinois. Rifkin Acquisition Management, L.P., an
affiliate of R & A Management LLC (Note 4), is the general partner of the
Partnership ("General Partner").

     The Partnership operates under a limited liability limited partnership
agreement (the "Partnership Agreement") which establishes contribution
requirements, enumerates the rights and responsibilities of the partners and
advisory committee, provides for allocations of income, losses and distributions
and defines certain items relating thereto. The Partnership Agreement provides
that net income or loss, certain defined capital events and cash distributions,
all as defined in the Partnership Agreement, are generally allocated 99% to the
limited partners and 1% to the General Partner.

ACQUISITION BY CHARTER COMMUNICATIONS, LLC

     On February 12, 1999, the Company signed a letter of intent for the
partners to sell all of their partnership interests to Charter Communications,
LLC ("Charter"). On April 26, 1999, the Company signed a definitive Purchase and
Sale Agreement with Charter for the sale of the individual partners' interest.
The sales transaction closed on September 13, 1999. These statements represent
the Company just prior to the transaction and do not reflect any adjustment
related thereto.

BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of the following
entities:

<Table>
                                            
     Rifkin Acquisition Partners, L.L.L.P.     Cable Equities of Colorado
("CEC")
     Cable Equities of Colorado, Ltd.          Cable Equities, Inc. ("CEI")
       Management Corp. ("CEM")                Rifkin Acquisition Capital Corp.
("RACC")
</Table>

     All significant intercompany accounts and transactions have been
eliminated.

     REVENUE AND PROGRAMMING

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

     ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the period shown.

     PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed, includes amounts for material, labor, overhead
and interest, if applicable. Upon sale or retirement of an asset, the related
costs and accumulated depreciation are removed from the accounts and any gain or
loss is recognized. Capitalized interest was not significant for the period
shown.

                                      F-223
   418
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation expense is calculated using the straight-line method over the
estimated useful lives of the assets as follows:

<Table>
                                                             
Buildings...................................................     27-30years
Cable television transmission and distribution systems and
  related equipment.........................................      3-15years
Vehicles and furniture and fixtures.........................       3-5years
</Table>

     Expenditures for maintenance and repairs are expensed as incurred.

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from one to twenty years. The carrying value of franchise costs is assessed for
recoverability by management based on an analysis of undiscounted future
expected cash flows from the underlying operations of the Company. Management
believes that there has been no impairment thereof as of September 13, 1999.

OTHER INTANGIBLE ASSETS

     Certain loan costs have been deferred and are amortized to interest expense
utilizing the straight-line method over the remaining term of the related debt.
Use of the straight-line method approximates the results of the application of
the interest method. The net amounts remaining at September 13, 1999 were
$5,481,111.

REDEEMABLE PARTNERS' INTERESTS

     The Partnership Agreement provides that if a certain partner dies or
becomes disabled, that partner (or his personal representative) shall have the
option, exercisable by notice given to the partners at any time within 270 days
after his death or disability (except that if that partner dies or becomes
disabled prior to August 31, 2000, the option may not be exercised until August
31, 2000 and then by notice by that partner or his personal representative given
to the partners within 270 days after August 31, 2000) to sell, and require the
General Partner and certain trusts controlled by that partner to sell, and the
Partnership to purchase, up to 50% of the partnership interests owned by any of
such partners and certain current and former members of management of R&A
Management LLC that requests to sell their interest, for a purchase price equal
to the fair market value of those interests determined by appraisal in
accordance with the Partnership Agreement. Accordingly, the current fair value
of such partnership interests have been reclassified outside of partners'
capital.

USE OF ESTIMATES

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

NEW ACCOUNTING PRONOUNCEMENT

     Effective January 1, 1999, the Company adopted, the Accounting Standards
Executive Committee's Statement of Position 98-5 ("SOP 98-5") Reporting on the
Costs of Start-Up Activities, which requires the Company to expense all start up
costs related to organizing a new business. During the first quarter of 1999,
the Company wrote off the net book value of organization costs capitalized in
prior years resulting in the recognition of a cumulative effect of accounting
change of $111,607.

                                      F-224
   419
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.  INCOME TAXES

     Although the Partnership is not a taxable entity, two corporations (the
"Subsidiaries") are included in the consolidated financial statements. These
subsidiaries are required to pay taxes on their taxable income, if any.

     The following represents a reconciliation of pre-tax losses as reported in
accordance with accounting principles generally accepted in the United States
and the losses attributable to the partners and included in their individual
income tax returns for the period from January 1, 1999 through September 13,
1999:

<Table>
                                                             
Pre-tax loss as reported, including cumulative effect of
  change in accounting principle............................    $ (23,657,592)
(Increase) decrease due to:
  Separately taxed book results of corporate subsidiaries...        5,274,000
  Effect of different depreciation and amortization methods
     for tax and book purposes..............................          672,000
Other.......................................................          (68,408)
                                                                -------------
Tax loss attributed to the partners.........................    $ (17,780,000)
                                                                =============
</Table>

     The Company accounts for income taxes under the liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

     As a result of a change in control in 1995, the book value of the Company's
net assets was increased to reflect their fair market value. In connection with
this revaluation, a deferred income tax liability in the amount of $22,801,000
was established to provide for future taxes payable on the revised valuation of
the net assets. A deferred tax benefit of $1,975,000 was recognized for the
period from January 1, 1999 through September 13, 1999, reducing the liability
to $5,967,000.

     Deferred tax asset (liability) was comprised of the following at September
13, 1999:

<Table>
                                                             
Deferred tax assets resulting from loss carryforwards.......    $  13,006,000
Deferred tax liabilities resulting from depreciation and
  amortization..............................................      (18,973,000)
                                                                -------------
Net deferred tax liability..................................    $  (5,967,000)
                                                                =============
</Table>

     As of September 13, 1999, the Subsidiaries have net operating loss
carryforwards ("NOLs") for income tax purposes of $34,589,000 substantially all
of which are limited. The NOLs will expire at various times between the years
2000 and 2018. It is the opinion of management that the NOLs will be released
from this limitation prior to their expiration dates and, as such, have not been
limited in their calculation of deferred taxes. As the result of the sale of the
Partnership's interest to Charter, a change in control, as defined in Section
382 of the Internal Revenue Code, has occurred which may limit Charter's ability
to utilize these NOLs.

                                      F-225
   420
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The benefit for taxes differs from the amount which would be computed by
applying the statutory federal income tax rate of 35% to the Company's pre-tax
loss before cumulative effect of change in accounting principle as a result of
the following for the period January 1, 1999 through September 13, 1999:

<Table>
                                                             
Tax benefit computed at statutory rate......................    $(8,241,095)
Increase (decrease) due to:
  Tax benefit for non-corporate loss........................      6,395,195
  Permanent differences between financial statement income
     and taxable income.....................................        (36,200)
State income tax............................................       (139,800)
Other.......................................................         46,900
                                                                -----------
Income tax benefit..........................................    $(1,975,000)
                                                                ===========
</Table>

3.  NOTES PAYABLE

     Debt consisted of the following at September 13, 1999:

<Table>
                                                             
Senior Subordinated Notes...................................    $125,000,000
Tranche A Term Loan.........................................      21,575,000
Tranche B Term Loan.........................................      40,000,000
Reducing Revolving Loan.....................................      46,500,000
Senior Subordinated Debt....................................       3,000,000
                                                                ------------
                                                                $236,075,000
                                                                ============
</Table>

     The notes and loans are collateralized by substantially all of the assets
of the Company.

     On January 26, 1996, the Company and its wholly owned subsidiary, RACC (the
"Issuers"), co-issued $125,000,000 of 11 1/8% Senior Subordinated Notes (the
"Notes") to institutional investors. These notes were subsequently exchanged on
June 18, 1996 for publicly registered notes with identical terms. Interest on
the Notes is payable semi-annually on January 15 and July 15 of each year. The
Notes, which mature on January 15, 2006, can be redeemed in whole or in part, at
the Issuers' option, at any time on or after January 15, 2001, at redeemable
prices contained in the Notes plus accrued interest. At September 13, 1999, all
of the Notes were outstanding (see also Note 8).

     The Company has a $25,000,000 Tranche A term loan with a financial
institution. This loan requires quarterly payments of $1,875,000 plus interest
commencing on March 31, 2000. Any unpaid balance is due March 31, 2003. The
agreement requires what it defines as excess proceeds from the sale of a cable
system to be used to retire Tranche A term debt. As a result of the Company
selling its assets in the State of Michigan in a prior year, there was
$3,425,000 in excess proceeds which were used to pay principal. The interest
rate on the Tranche A term loan is either the bank's prime rate plus .25% to
1.75% or LIBOR plus 1.5% to 2.75%.

     The specific rate is dependent upon the senior funded debt ratio which is
recalculated quarterly. The weighted average effective interest rate at
September 13, 1999 was 7.23%.

     In addition, the Company has a $40,000,000 Tranche B term loan, which
requires principal payments of $2,000,000 on March 31, 2002, $18,000,000 on
March 31, 2003, and $20,000,000 on March 31, 2004. The Tranche B term loan bears
an interest rate of 9.75% and is payable quarterly.

     The Company also has a reducing revolving loan providing for borrowing up
to $20,000,000 at the Company's discretion, subject to certain restrictions, and
an additional $60,000,000 available to finance acquisitions subject to certain
restrictions. The additional financing amount available at September 13, 1999
was $40,000,000. At September 13, 1999, the full $20,000,000 available had been
borrowed, and $26,500,000

                                      F-226
   421
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

had been drawn against the $40,000,000 commitment. The amount available for
borrowing will decrease annually during its term with changes over the three
years following September 13, 1999 as follows: 1999 -- $2,500,000 reduction per
quarter and 2000 through 2002 -- $3,625,000 reduction per quarter. Any unpaid
balance is due on March 31, 2003. The revolving loan bears an interest rate of
either the bank's prime rate plus .25% to 1.75% or LIBOR plus 1.5% to 2.75%. The
specific rate is dependent upon the senior funded debt ratio which is
recalculated quarterly. The weighted average effective interest rates at
September 13, 1999 was 8.92%. The reducing revolving loan includes a commitment
fee of 1/2% per annum on the unborrowed balance.

     Certain mandatory prepayments may also be required on the Tranche A term
loan, the Tranche B term loan, and the reducing revolving credit based on the
Company's cash flow calculations, proceeds from the sale of a cable system or
equity contributions. Optional prepayments are allowed, subject to certain
restrictions. The related loan agreement contains covenants limiting additional
indebtedness, dispositions of assets, investments in securities, distribution to
partners, management fees and capital expenditures. In addition, the Company
must maintain certain financial levels and ratios. At September 13, 1999, the
Company was in compliance with these covenants.

     The Company also has $3,000,000 of senior subordinated debt payable to a
Rifkin Partner. The debt has a scheduled maturity, interest rate and interest
payment schedule identical to that of the Notes, as discussed above.

     Based on the outstanding debt as of September 13, 1999, the minimum
aggregate maturities for the four years following 1999 are: $13,500,000 in 2000,
$22,000,000 in 2001, $23,075,000 in 2002, $29,500,000 in 2003 and $20,000,000 in
2004.

     Subsequent to September 13, 1999, $124.1 million of the $125 million in
notes outstanding were purchased by Charter Communication and will be reflected
as intercompany payable between Charter and RAP. The remaining $900,000 of
outstanding notes were delisted and are no longer public.

4.  RELATED PARTY TRANSACTIONS

     The Company has a management agreement with R & A Management LLC ("RML").
The management agreement provides that RML shall manage the Company's CATV
systems and shall be entitled to annual compensation of 3.5% of the Company's
revenue. Expenses incurred pursuant to this agreement are disclosed in total in
the Consolidated Statement of Operations.

     Certain Partnership expenses were paid by Charter and are reflected as
Payables to affiliates in the accompanying financial statements.

5.  COMMITMENTS AND RENTAL EXPENSE

     The Company leases certain real and personal property under noncancelable
operating leases expiring through the year 2007. Future minimum lease payments
under such noncancelable leases as of September 13, 1999 are:

<Table>
                                                             
2000........................................................    $  339,320
2001........................................................       269,326
2002........................................................       252,042
2003........................................................       192,027
2004 and thereafter.........................................       393,479
                                                                ----------
                                                                $1,446,194
                                                                ==========
</Table>

                                      F-227
   422
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Total rental expense and the amount included therein which pertains to
cancelable pole rental agreements were as follows for the period indicated:

<Table>
<Caption>
                                                              TOTAL RENTAL
CANCELABLE
                           PERIOD                               EXPENSE
POLE RENTAL
                           ------                             ------------
- -----------
                                                                       
For the period January 1, 1999 through September 13, 1999...   $1,105,840
$767,270
</Table>

6.  COMPENSATION PLANS AND RETIREMENT PLANS

EQUITY INCENTIVE PLAN

     The Company maintains an Equity Incentive Plan (the "Plan") in which
certain Rifkin executive officers and key employees, and certain key employees
of the Company are eligible to participate. Plan participants in the aggregate,
have the right to receive (i) cash payments of up to 2.0% of the aggregate value
of all partnership interests of the Company (the "Maximum Incentive
Percentage"), based upon the achievement of certain annual Operating Cash Flow
(as defined in the Plan) targets for the Company for each of the calendar years
1996 through 2000, and (ii) an additional cash payment equal to up to 0.5% of
the aggregate value of all partnership interests of the Company (the "Additional
Incentive Percentage"), based upon the achievement of certain cumulative
Operating Cash Flow targets for the Company for the five-year period ended
December 31, 2000. Subject to the achievement of such annual targets and the
satisfaction of certain other criteria based on the Company's operating
performance, up to 20% of the Maximum Incentive Percentage will vest in each
such year; provided, that in certain events vesting may accelerate. Payments
under the Plan are subject to certain restrictive covenants contained in the
Notes.

     No amounts are payable under the Plan except upon (i) the sale of
substantially all of the assets or partnership interests of the Company or (ii)
termination of a Plan participant's employment with Rifkin or the Company, as
applicable, due to (a) the decision of the Advisory Committee to terminate such
participant's employment due to disability, (b) the retirement of such
participant with the Advisory Committee's approval or (c) the death of such
Participant. The value of amounts payable pursuant to clause (i) above will be
based upon the aggregate net proceeds received by the holders of all of the
partnership interests in the Company, as determined by the Advisory Committee,
and the amounts payable pursuant to clause (ii) above will be based upon the
Enterprise Value determined at the time of such payment. For purposes of the
Plan, Enterprise Value generally is defined as Operating Cash Flow for the
immediately preceding calendar year times a specified multiple and adjusted
based on the Company's working capital.

     The amount expensed for the period January 1, 1999 through September 13,
1999 relating to this plan was $7,440,964. The incentive accrual is recorded in
accounts payable and accrued liabilities in the accompanying financial
statements.

RETIREMENT BENEFITS

     The Company has a 401(k) plan for employees that have been employed by the
Company for at least one year. Employees of the Company can contribute up to 15%
of their salary, on a before-tax basis, with a maximum 1999 contribution of
$10,000 (as set by the Internal Revenue Service). The Company matches
participant contributions up to a maximum of 50% of the first 3% of a
participant's salary contributed. All participant contributions and earnings are
fully vested upon contribution and Company contributions and earnings vest 20%
per year of employment with the Company, becoming fully vested after five years.
The Company's matching contribution for the period from January 1, 1999 through
September 13, 1999 was $61,178.

                                      F-228
   423
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company has a number of financial instruments, none of which are held
for trading purposes. The following method and assumptions were used by the
Company to estimate the fair values of financial instruments as disclosed
herein:

     Cash, customer accounts receivable, other receivables, accounts payable and
accrued liabilities and customer deposits and prepayments: The carrying value
amount approximates fair value because of the short period to maturity.

     Debt: The fair value of bank debt is estimated based on interest rates for
the same or similar debt offered to the Company having the same or similar
remaining maturities and collateral requirements. The fair value of public
Senior Subordinated Notes is based on the market quoted trading value. The fair
value of the Company's debt is estimated at $247,637,500 and is carried on the
balance sheet at $236,075,000.

8.  SUMMARIZED FINANCIAL INFORMATION

     CEM, CEI and CEC (collectively, the "Guarantors") are all wholly owned
subsidiaries of the Company and, together with RACC, constitute all of the
Partnership's direct and indirect subsidiaries. Each of the Guarantors provides
a full, unconditional, joint and several guaranty of the obligations under the
Notes discussed in Note 6. Separate financial statements of the Guarantors are
not presented because management has determined that they would not be material
to investors.

     The following present summarized financial information of the Guarantors on
a combined basis as of September 13, 1999 and for the period January 1, 1999
through September 13, 1999.

BALANCE SHEET

<Table>
<Caption>
                                                                SEPTEMBER 13,
                                                                    1999
                                                                -------------
                                                             
Cash........................................................    $     569,544
Accounts and other receivables, net.........................        2,907,837
Prepaid expenses............................................          620,284
Property, plant and equipment, net..........................       52,383,861
Franchise costs and other intangible assets, net............       51,397,528
Accounts payable and accrued liabilities....................       30,186,658
Other liabilities...........................................          669,223
Deferred taxes payable......................................        5,967,000
Notes payable...............................................      140,846,262
Equity (deficit)............................................      (69,790,089)
</Table>

                                      F-229
   424
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                 JANUARY 1,
                                                                1999 THROUGH
                                                                SEPTEMBER 13,
                                                                    1999
                                                                -------------
                                                             
Total revenue...............................................     $24,183,281
Total costs and expenses....................................      23,313,494
Interest expense............................................       9,920,062
Income tax benefit..........................................      (1,975,000)
                                                                 -----------
Net loss....................................................     $(7,075,275)
                                                                 ===========
</Table>

9.  LITIGATION

     The Company could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Company will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Company's financial position or results of operations.

                                      F-230
   425

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Rifkin Acquisition Partners, L.L.L.P.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, partners' capital (deficit) and cash
flows present fairly, in all material respects, the financial position of Rifkin
Acquisition Partners, L.L.L.P. and its subsidiaries (the "Company") at December
31, 1998 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

Denver, Colorado
March 19, 1999

                                      F-231
   426

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                               12/31/98
12/31/97
                                                             ------------
- ------------
                                                                       
ASSETS
Cash and cash equivalents..................................  $  2,324,892    $
1,902,555
Customer accounts receivable, net of allowance for doubtful
  accounts of $444,839 in 1998 and $425,843 in 1997........     1,932,140
1,371,050
Other receivables..........................................     5,637,771
4,615,089
Prepaid expenses and other.................................     2,398,528
1,753,257
Property, plant and equipment at cost:
  Cable television transmission and distribution systems
     and related equipment.................................   149,376,914
131,806,310
  Land, buildings, vehicles and furniture and fixtures.....     7,421,960
7,123,429
                                                             ------------
- ------------
                                                              156,798,874
138,929,739
  Less accumulated depreciation............................   (35,226,773)
(26,591,458)
                                                             ------------
- ------------
          Net property, plant and equipment................   121,572,101
112,338,281
Franchise costs and other intangible assets, net of
  accumulated amortization of $67,857,545 in 1998 and
  $53,449,637 in 1997......................................   183,438,197
180,059,655
                                                             ------------
- ------------
          Total assets.....................................  $317,303,629
$302,039,887
                                                             ============
============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities...................  $ 11,684,594    $
11,690,894
Customer deposits and prepayments..........................     1,676,900
1,503,449
Interest payable...........................................     7,242,954
7,384,509
Deferred tax liability, net................................     7,942,000
12,138,000
Notes payable..............................................   224,575,000
229,500,000
                                                             ------------
- ------------
          Total liabilities................................   253,121,448
262,216,852
Commitments and contingencies (Notes 8 and 14)
Redeemable partners' interests.............................    10,180,400
7,387,360
Partners' capital (deficit):
  General partner..........................................    (1,991,018)
(1,885,480)
  Limited partners.........................................    55,570,041
34,044,912
  Preferred equity interest................................       422,758
 276,243
                                                             ------------
- ------------
Total partners' capital....................................    54,001,781
32,435,675
                                                             ------------
- ------------
          Total liabilities and partners' capital..........  $317,303,629
$302,039,887
                                                             ============
============
</Table>

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

                                      F-232
   427

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                 YEARS ENDED

- ------------------------------------------
                                                    12/31/98       12/31/97
 12/31/96
                                                  ------------   ------------
- ------------
                                                           

REVENUE:
Service.........................................  $ 82,498,638   $ 78,588,503
$ 66,433,321
Installation and other..........................     7,422,675      5,736,412
  4,852,124
                                                  ------------   ------------
- ------------
          Total revenue.........................    89,921,313     84,324,915
 71,285,445
COSTS AND EXPENSES:
Operating expense...............................    13,305,376     14,147,031
 10,362,671
Programming expense.............................    18,020,812     15,678,977
 14,109,527
Selling, general and administrative expense.....    13,757,090     12,695,176
 11,352,870
Depreciation....................................    15,109,327     14,422,631
 11,725,246
Amortization....................................    22,104,249     24,208,169
 23,572,457
Management fees.................................     3,147,246      2,951,372
  2,475,381
Loss on disposal of assets......................     3,436,739      7,834,968
  1,357,180
                                                  ------------   ------------
- ------------
          Total costs and expenses..............    88,880,839     91,938,324
 74,955,332
                                                  ------------   ------------
- ------------
Operating income (loss).........................     1,040,474     (7,613,409)
 (3,669,887)
Gain from the sale of assets (Note 4)...........   (42,863,060)            --
         --
Interest expense................................    23,662,248     23,765,239
 21,607,174
                                                  ------------   ------------
- ------------
Income (loss) before income taxes...............    20,241,286    (31,378,648)
(25,277,061)
Income tax benefit..............................    (4,177,925)    (5,335,000)
 (3,645,719)
                                                  ------------   ------------
- ------------
Net income (loss)...............................  $ 24,419,211   $(26,043,648)
$(21,631,342)
                                                  ============   ============
============
</Table>

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

                                      F-233
   428

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                          YEARS
ENDED

- ------------------------------------------
                                                             12/31/98
12/31/97       12/31/96
                                                           ------------
- ------------   ------------
                                                                    
        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)......................................  $ 24,419,211
$(26,043,648)  $(21,631,342)
  Adjustments to reconcile net loss to net cash provided
     by operating activities:
     Depreciation and amortization.......................    37,213,576
38,630,800     35,297,703
     Amortization of deferred loan costs.................       989,760
989,760        970,753
     Gain on sale of assets (Note 4).....................   (42,863,060)
   --             --
     Loss on disposal of fixed assets....................     3,436,739
7,834,968      1,357,180
     Deferred tax benefit................................    (4,196,000)
(5,335,000)    (3,654,000)
     Increase in customer accounts receivables...........      (300,823)
(186,976)      (117,278)
     Increase in other receivables.......................      (474,599)
(1,992,714)      (994,681)
     (Increase) decrease in prepaid expenses and other...      (684,643)
23,015       (494,252)
     Increase in accounts payable and accrued
       liabilities.......................................        34,073
1,753,656      3,245,736
     Increase (decrease) in customer deposits and
       prepayments.......................................       (86,648)
231,170        164,824
     Increase (decrease) in interest payable.............      (141,555)
600,248      6,692,988
                                                           ------------
- ------------   ------------
          Net cash provided by operating activities......    17,346,031
16,505,279     20,837,631
                                                           ------------
- ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of cable systems, net (Note 3).............    (2,212,958)
(19,359,755)   (71,797,038)
  Additions to property, plant and equipment.............   (26,354,756)
(28,009,253)   (16,896,582)
  Additions to cable television franchises, net of
     retirements.........................................      (151,695)
72,162     (1,182,311)
  Net proceeds from the sale of cable systems (Note 4)...    16,533,564
   --             --
  Net proceeds from the other sales of assets............       247,216
306,890        197,523
                                                           ------------
- ------------   ------------
          Net cash used in investing activities..........   (11,938,629)
(46,989,956)   (89,678,408)
                                                           ------------
- ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from isssuance of senior subordinated notes...            --
   --    125,000,000
  Proceeds from long-term bank debt......................    22,500,000
38,000,000     18,000,000
  Deferred loan costs....................................            --
   --     (6,090,011)
  Payments of long-term bank debt........................   (27,425,000)
(7,000,000)   (82,000,000)
  Partners' capital contributions........................            --
   --     15,000,000
  Equity distributions to partners.......................       (60,065)
   --             --
                                                           ------------
- ------------   ------------
          Net cash provided by (used in) financing
            activities...................................    (4,985,065)
31,000,000     69,909,989
                                                           ------------
- ------------   ------------
Net increase in cash.....................................       422,337
515,323      1,069,212
Cash and cash equivalents at beginning of period.........     1,902,555
1,387,232        318,020
                                                           ------------
- ------------   ------------
Cash and cash equivalents at end of period...............  $  2,324,892   $
1,902,555   $  1,387,232
                                                           ============
============   ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid..........................................  $ 22,737,443   $
22,098,732   $ 13,866,995
                                                           ============
============   ============
  Noncash investing activities:
     Proceeds from the sale of Michigan assets held in
       escrow............................................  $    500,000   $
   --   $         --
                                                           ============
============   ============
     Trade value related to the trade sale of Tennessee
       assets............................................  $ 46,668,000   $
   --   $         --
                                                           ============
============   ============
     Trade value related to trade acquisition of
       Tennessee assets..................................  $(46,668,000)  $
   --   $         --
                                                           ============
============   ============
</Table>

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

                                      F-234
   429

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

             CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)

<Table>
<Caption>
                                         PREFERRED        GENERAL       LIMITED
                                      EQUITY INTEREST     PARTNER       PARTNERS
       TOTAL
                                      ---------------   -----------
- ------------   ------------
                                                             
    
Partners' capital (deficit) at
  December 31, 1995.................     $ 562,293      $(1,085,311)  $
69,421,043   $ 68,898,025
Partners' capital contributions.....            --          150,000
14,850,000     15,000,000
Accretion of redeemable partners'
  interest..........................            --         (157,730)
(1,104,110)    (1,261,840)
Net loss............................      (129,788)        (216,313)
(21,285,241)   (21,631,342)
                                         ---------      -----------
- ------------   ------------
Partners' capital (deficit) at
  December 31, 1996.................       432,505       (1,309,354)
61,881,692     61,004,843
Accretion of redeemable partners'
  interest..........................            --         (315,690)
(2,209,830)    (2,525,520)
Net loss............................      (156,262)        (260,436)
(25,626,950)   (26,043,648)
                                         ---------      -----------
- ------------   ------------
Partners' capital (deficit) at
  December 31, 1997.................       276,243       (1,885,480)
34,044,912     32,435,675
Accretion of redeemable partners'
  interest..........................            --         (349,130)
(2,443,910)    (2,793,040)
Net income..........................       146,515          244,192
24,028,504     24,419,211
Partners' equity distribution.......            --             (600)
(59,465)       (60,065)
                                         ---------      -----------
- ------------   ------------
Partners' capital (deficit) at
  December 31, 1998.................     $ 422,758      $(1,991,018)  $
55,570,041   $ 54,001,781
                                         =========      ===========
============   ============
</Table>

     The Partners' capital accounts for financial reporting purposes vary from
the tax capital accounts.

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

                                      F-235
   430

                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL INFORMATION

     Rifkin Acquisition Partners, L.L.L.P. ("the Partnership") was formed
pursuant to the laws of the State of Colorado. The Partnership and its
subsidiaries are hereinafter referred to on a consolidated basis as the
"Company." The Company owns, operates, and develops cable television systems in
Georgia, Tennessee, and Illinois. Rifkin Acquisition Management, L.P., an
affiliate of Rifkin & Associates, Inc. (Note 7), is the general partner of the
Partnership ("General Partner").

     The Partnership operates under a limited liability limited partnership
agreement (the "Partnership Agreement") which establishes contribution
requirements, enumerates the rights and responsibilities of the partners and
advisory committee, provides for allocations of income, losses and
distributions, and defines certain items relating thereto. The Partnership
Agreement provides that net income or loss, certain defined capital events, and
cash distributions, all as defined in the Partnership Agreement, are generally
allocated 99% to the limited partners and 1% to the general partner.

BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of the following
entities:

<Table>
                                          
- - Rifkin Acquisition Partners, L.L.L.P.      - Cable Equities of Colorado, Ltd.
(CEC)
- - Cable Equities of Colorado                 - Cable Equities, Inc. (CEI)
  Management Corp. (CEM)                     - Rifkin Acquisition Capital Corp.
(RACC)
</Table>

     The financial statements for 1997 and 1996 also included the following
entities:

<Table>
                                          
- - Rifkin/Tennessee, Ltd. (RTL)               - FNI Management Corp. (FNI)
</Table>

     Effective January 1, 1998, both the RTL and FNI entities were dissolved and
the assets were transferred to the Partnership.

     All significant intercompany accounts and transactions have been
eliminated.

REVENUE AND PROGRAMMING

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the periods shown.

PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed, includes amounts for material, labor, overhead
and interest, if applicable. Upon sale or retirement of an asset, the related
costs and accumulated depreciation are removed from the accounts and any gain or
loss is recognized. Capitalized interest was not significant for the periods
shown.

                                      F-236
   431
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation expense is calculated using the straight-line method over the
estimated useful lives of the assets as follows:

<Table>
                                                           
Buildings...................................................  27-30 years
Cable television transmission and distribution systems and
  related equipment.........................................   3-15 years
Vehicles and furniture and fixtures.........................    3-5 years
</Table>

     Expenditures for maintenance and repairs are expensed as incurred.

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from one to twenty years. The carrying value of franchise costs is assessed for
recoverability by management based on an analysis of undiscounted future
expected cash flows from the underlying operations of the Company. Management
believes that there has been no impairment thereof as of December 31, 1998.

OTHER INTANGIBLE ASSETS

     Certain loan costs have been deferred and are amortized to interest expense
utilizing the straight-line method over the remaining term of the related debt.
Use of the straight-line method approximates the results of the application of
the interest method. The net amounts remaining at December 31, 1998 and 1997
were $6,176,690 and $7,166,450, respectively.

CASH AND CASH EQUIVALENTS

     All highly liquid debt instruments purchased with an original maturity of
three months or less are considered to be cash equivalents.

REDEEMABLE PARTNERS' INTERESTS

     The Partnership Agreement provides that if a certain partner dies or
becomes disabled, that partner (or his personal representative) shall have the
option, exercisable by notice given to the partners at any time within 270 days
after his death or disability (except that if that partner dies or becomes
disabled prior to August 31, 2000, the option may not be exercised until August
31, 2000 and then by notice by that partner or his personal representative given
to the partners within 270 days after August 31, 2000) to sell, and require the
General Partner and certain trusts controlled by that partner to sell, and the
Partnership to purchase, up to 50% of the partnership interests owned by any of
such partners and certain current and former members of management of Rifkin &
Associates, Inc. that requests to sell their interest, for a purchase price
equal to the fair market value of those interests determined by appraisal in
accordance with the Partnership Agreement. Accordingly, the current fair value
of such partnership interests have been reclassified outside of partners'
capital.

USE OF ESTIMATES

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

                                      F-237
   432
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENT

     In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-Up
Activities," which requires the Partnership to expense all start up costs
related to organizing a new business. This new standard also includes one-time
activities related to opening a new facility, introduction of a new product or
service, or conducting business with a new class of customer or in a new
territory. This standard is effective for the Partnership's 1999 fiscal year.
Management believes that SOP 98-5 will have no material effect on its financial
position or the results of operations.

RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION

     Certain reclassifications have been made to the 1997 and 1996 financial
statements to conform with the 1998 financial statement presentation. Such
reclassification had no effect on the net loss as previously stated.

2.  SUBSEQUENT EVENT

     On February 12, 1999, the Company signed a letter of intent for the
partners to sell all of their partnership interests to Charter Communications
("Charter"). The Company and Charter are expected to sign a purchase agreement
and complete the sale during the third quarter of 1999.

3.  ACQUISITION OF CABLE PROPERTIES

1998 ACQUISITIONS

     At various times during the second half of 1998, the Company completed
three separate acquisitions of cable operating assets. Two of the acquisitions
serve communities in Gwinnett County, Georgia (the "Georgia Systems"). These
acquisitions were accounted for using the purchase method of accounting.

     The third acquisition resulted from a trade of the Company's systems
serving the communities of Paris and Piney Flats, Tennessee for the operating
assets of another cable operator serving primarily the communities of Lewisburg
and Crossville, Tennessee (the "Tennessee Trade"). The trade was for cable
systems that are similar in size and was accounted for based on fair market
value. Fair market value was established at $3,000 per customer relinquished,
which was based on recent sales transactions of similar cable systems. The
transaction included the payment of approximately $719,000, net, of additional
cash (Note 4).

                                      F-238
   433
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The combined purchase price was allocated based on estimated fair values
from an independent appraisal to property, plant and equipment and franchise
cost as follows (dollars in thousands):

<Table>
<Caption>
                                                            GEORGIA    TENNESSEE
                                                            SYSTEMS      TRADE
    TOTAL
                                                            -------    ---------
   -------
                                                                 
   
Fair value of assets relinquished (Note 4)................  $   --      $46,668
   $46,668
Cash paid.................................................   1,392          719
     2,111
Acquisition Costs (appraisal, transfer fees and direct
  costs)..................................................      26           76
       102
                                                            ------      -------
   -------
Total acquisition cost....................................  $1,418      $47,463
   $48,881
                                                            ======      =======
   =======
Allocation:
Current assets............................................  $   (2)     $   447
   $   445
Current liabilities.......................................      (1)        (397)
      (398)
Property, plant and equipment.............................     333       11,811
    12,144
Franchise Cost............................................   1,088       35,602
    36,690
                                                            ------      -------
   -------
Total cost allocated......................................  $1,418      $47,463
   $48,881
                                                            ======      =======
   =======
</Table>

     The fair value of assets relinquished from the Tennessee Trade was treated
as a noncash transaction on the Consolidated Statement of Cash Flows. The cash
acquisition costs were funded by proceeds from the Company's reducing revolving
loan with a financial institution.

     The following combined pro forma information presents a summary of
consolidated results of operations for the Company as if the Tennessee Trade
acquisitions had occurred at the beginning of 1997, with pro forma adjustments
to show the effect on depreciation and amortization for the acquired assets,
management fees on additional revenues and interest expense on additional debt
(dollars in thousands):

<Table>
<Caption>
                                                         YEARS ENDED
                                                   -----------------------
                                                   12/31/98     12/31/97
                                                   --------    -----------
                                                               (UNAUDITED)
                                                         
Total revenues...................................  $89,921      $ 84,325
Net income (loss)................................   19,447       (29,631)
</Table>

     The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the Tennessee Trade actually been
acquired on January 1, 1997.

1997 ACQUISITIONS

     On April 1, 1997, the Company acquired the cable operating assets of two
cable systems serving the Tennessee communities of Shelbyville and Manchester
(the "Manchester Systems"), for an aggregate purchase price of approximately
$19.7 million of which $495,000 was paid as escrow in 1996. The acquisition was
accounted for using the purchase method of accounting, and was funded by
proceeds from the Company's reducing revolving loan with a financial
institution. No pro forma information giving the effect of the acquisitions is
shown due to the results being immaterial.

1996 ACQUISITIONS

     On March 1, 1996, the Company acquired certain cable operating assets
("Mid-Tennessee Systems") from Mid-Tennessee CATV, L.P., and on April 1, 1996
acquired the cable operating assets ("RCT
                                      F-239
   434
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Systems") from Rifkin Cablevision of Tennessee, Ltd. Both Mid-Tennessee CATV,
L.P. and Rifkin Cablevision of Tennessee, Ltd. were affiliates of the General
Partner. The acquisition costs were funded by $15 million of additional partner
contributions and the remainder from a portion of the proceeds received from the
issuance of $125 million of 11 1/8% Senior Subordinated Notes due 2006 (see Note
6).

     The acquisitions were recorded using the purchase method of accounting. The
results of operations of the Mid-Tennessee Systems have been included in the
consolidated financial statements since March 1, 1996, and the results of the
RCT Systems have been included in the consolidated financial statements since
April 1, 1996. The combined purchase price was allocated based on estimated fair
values from an independent appraisal to property, plant and equipment and
franchise cost as follows (dollars in thousands):

<Table>
                                                           
Cash paid, net of acquired cash.............................  $71,582
Acquisition costs (appraisal, transfer fees, and direct
  costs)....................................................      215
                                                              -------
Total acquisition cost......................................  $71,797
                                                              =======
Allocation:
Current assets..............................................  $   624
Current liabilities.........................................     (969)
Property, plant and equipment...............................   24,033
Franchise cost and other intangible assets..................   48,109
                                                              -------
Total cost allocated........................................  $71,797
                                                              =======
</Table>

     The following combined pro forma information presents a summary of
consolidated results of operations for the Company as if the Mid-Tennessee
Systems and the RCT Systems acquisitions had occurred at the beginning of 1996,
with pro forma adjustments to show the effect on depreciation and amortization
for the acquired assets, management fees on additional revenues and interest
expense on additional debt (dollars in thousands):

<Table>
<Caption>
                                                              YEAR ENDED
                                                               12/31/96
                                                              -----------
                                                              (UNAUDITED)
                                                           
Total revenues..............................................   $ 74,346
Net loss....................................................    (22,558)
</Table>

     The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the Mid-Tennessee Systems and the
RCT Systems actually been acquired on January 1, 1996.

4.  SALE OF ASSETS

     On February 4, 1998, the Company sold all of its operating assets in the
state of Michigan (the "Michigan Sale") to another cable operator for cash. In
addition, on December 31, 1998, the Company traded

                                      F-240
   435
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certain cable systems in Tennessee (the "Tennessee Trade") for similar-sized
cable systems (Note 3). Both sales resulted in a gain recognized by the Company
as follows (dollars in thousands):

<Table>
<Caption>
                                                   MICHIGAN    TENNESSEE
                                                     SALE        TRADE
TOTAL
                                                   --------    ---------
- -------
                                                                   
Fair value of assets relinquished................  $    --      $46,668
$46,668
Original cash proceeds...........................   16,931           --
16,931
Adjustments for value of assets and liabilities
  assumed........................................      120          (17)
103
                                                   -------      -------
- -------
Net proceeds.....................................   17,051       46,651
63,702
Net book value of assets sold....................   11,061        9,778
20,839
                                                   -------      -------
- -------
Net gain from sale...............................  $ 5,990      $36,873
$42,863
                                                   =======      =======
=======
</Table>

     The Michigan Sale proceeds amount includes $500,000 that is currently being
held in escrow. This amount and the fair value of assets relinquished, related
to the Tennessee Trade, were both treated as noncash transactions on the
Consolidated Statement of Cash Flows.

     The cash proceeds from the Michigan Sale were used by the Company to reduce
its revolving and term loans with a financial institution.

5.  INCOME TAXES

     Although the Partnership is not a taxable entity, two corporations (the
"subsidiaries") are included in the consolidated financial statements. These
subsidiaries are required to pay taxes on their taxable income, if any.

     The following represents a reconciliation of pre-tax losses as reported in
accordance with generally accepted accounting principles and the losses
attributable to the partners and included in their individual income tax
returns:

<Table>
<Caption>
                                               YEAR ENDED      YEAR ENDED
YEAR ENDED
                                                12/31/98        12/31/97
12/31/96
                                              ------------    ------------
- ------------
                                                        

Pre-tax income (loss) as reported...........  $ 20,241,286    $(31,378,648)
$(25,277,061)
(Increase) decrease due to:
  Separately taxed book results of corporate
     subsidiaries...........................     9,397,000      15,512,000
9,716,000
  Effect of different depreciation and
     amortization methods for tax and book
     purposes...............................    (1,360,000)     (2,973,000)
(3,833,000)
Additional tax gain from the sale of
  Michigan(Note 4)..........................     2,068,000              --
       --
Book gain from trade sale of Tennessee
  assets(Note 4)............................   (36,873,000)             --
       --
Additional tax loss from dissolution of FNI
  stock.....................................    (7,235,000)             --
       --
Other.......................................        81,714         (45,052)
  (22,539)
                                              ------------    ------------
- ------------
Tax loss attributed to the partners.........  $(13,680,000)   $(18,884,700)
$(19,416,600)
                                              ============    ============
============
</Table>

                                      F-241
   436
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company accounts for income taxes under the liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

     As a result of a change in control in 1995, the book value of the Company's
net assets was increased to reflect their fair market value. In connection with
this revaluation, a deferred income tax liability in the amount of $22,801,000
was established to provide for future taxes payable on the revised valuation of
the net assets. A deferred tax benefit of $4,196,000, $5,335,000 and $3,654,000
was recognized for the years ended December 31, 1998, 1997 and 1996,
respectively, reducing the liability to $7,942,000.

     Deferred tax assets (liabilities) were comprised of the following at
December 31, 1998 and 1997:

<Table>
<Caption>
                                               12/31/98        12/31/97
                                             ------------    ------------
                                                       
Deferred tax assets resulting from loss
  carryforwards............................  $ 11,458,000    $  9,499,000
Deferred tax liabilities resulting from
  depreciation and amortization............   (19,400,000)    (21,637,000)
                                             ------------    ------------
Net deferred tax liability.................  $ (7,942,000)   $(12,138,000)
                                             ============    ============
</Table>

     As of December 31, 1998 and 1997, the subsidiaries have net operating loss
carryforwards ("NOLs") for income tax purposes of $30,317,000 and $25,264,000,
respectively, substantially all of which are limited. The NOLs will expire at
various times between the years 2000 and 2013.

     In 1998, one of the corporate entities was dissolved. The existing NOL's
were used to offset taxable income down to $87,751, resulting in a current tax
for 1998 of $18,075.

     Under the Internal Revenue Code of 1986, as amended (the "Code"), the
subsidiaries generally would be entitled to reduce their future federal income
tax liabilities by carrying the unused NOLs forward for a period of 15 years to
offset their future income taxes. The subsidiaries' ability to utilize any NOLs
in future years may be restricted, however, in the event the subsidiaries
undergo an "ownership change" as defined in Section 382 of the Code. In the
event of an ownership change, the amount of NOLs attributable to the period
prior to the ownership change that may be used to offset taxable income in any
year thereafter generally may not exceed the fair market value of the subsidiary
immediately before the ownership change (subject to certain adjustments)
multiplied by the applicable long-term, tax exempt rate published by the
Internal Revenue Service for the date of the ownership change. Two of the
subsidiaries underwent an ownership change on September 1, 1995 pursuant to
Section 382 of the Code. As such, the NOLs of the subsidiaries are subject to
limitation from that date forward. It is the opinion of management that the NOLs
will be released from this limitation prior to their expiration dates and, as
such, have not been limited in their calculation of deferred taxes.

                                      F-242
   437
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The provision for income tax expense (benefit) differs from the amount
which would be computed by applying the statutory federal income tax rate of 35%
to pre-tax income before extraordinary loss as a result of the following:

<Table>
<Caption>
                                                                YEARS ENDED

- -----------------------------------------
                                                   12/31/98       12/31/97
12/31/96
                                                 ------------   ------------
- -----------
                                                          

Tax expense (benefit) computed at statutory
  rate.........................................  $  7,084,450   $(10,982,527)
$(8,846,971)
  Increase (decrease) due to:
  Tax benefit (expense) for non-corporate
     loss......................................   (10,373,252)     5,900,546
5,446,721
  Permanent differences between financial
     statement income and taxable income.......       (36,200)        84,500
   48,270
  State income tax.............................      (247,000)      (377,500)
 (252,590)
  Tax benefit from dissolved corporation.......      (148,925)            --
       --
  Other........................................      (456,998)        39,981
  (41,149)
                                                 ------------   ------------
- -----------
  Income Tax Benefit...........................  $ (4,177,925)  $ (5,335,000)
$(3,645,719)
                                                 ============   ============
===========
</Table>

6.  NOTES PAYABLE

     Debt consisted of the following:

<Table>
<Caption>
                                             DECEMBER 31,    DECEMBER 31,
                                                 1998            1997
                                             ------------    ------------
                                                       
Senior Subordinated Notes..................  $125,000,000    $125,000,000
Tranche A Term Loan........................    21,575,000      25,000,000
Tranche B Term Loan........................    40,000,000      40,000,000
Reducing Revolving Loan....................    35,000,000      36,500,000
Senior Subordinated Debt...................     3,000,000       3,000,000
                                             ------------    ------------
                                             $224,575,000    $229,500,000
                                             ============    ============
</Table>

     The Notes and loans are collateralized by substantially all of the assets
of the Company.

     On January 26, 1996, the Company and its wholly-owned subsidiary, RACC (the
"Issuers"), co-issued $125,000,000 of 11 1/8% Senior Subordinated Notes (the
"Notes") to institutional investors. These notes were subsequently exchanged on
June 18, 1996 for publicly registered notes with identical terms. Interest on
the Notes is payable semi-annually on January 15 and July 15 of each year. The
Notes, which mature on January 15, 2006, can be redeemed in whole or in part, at
the Issuers' option, at any time on or after January 15, 2001, at redeemable
prices contained in the Notes plus accrued interest. In addition, at any time on
or prior to January 15, 1999, the Issuers, at their option, may redeem up to 25%
of the principle amount of the Notes issued to institutional investors of not
less than $25,000,000. At December 31, 1998 and 1997, all of the Notes were
outstanding (see also Note 10).

     The Company has a $25,000,000 Tranche A term loan with a financial
institution. This loan requires quarterly payments of $1,875,000 plus interest
commencing on March 31, 2000. Any unpaid balance is due

                                      F-243
   438
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

March 31, 2003. The agreement requires that what it defines as excess proceeds
from the sale of a cable system be used to retire Tranche A term debt. As a
result of the Michigan sale (Note 4), there was $3,425,000 of excess proceeds
used to pay principal in 1998. The interest rate on the Tranche A term loan is
either the bank's prime rate plus .25% to 1.75% or LIBOR plus 1.5% to 2.75%.

     The specific rate is dependent upon the senior funded debt ratio which is
recalculated quarterly. The weighted average effective interest rate at December
31, 1998 and 1997 was 7.59% and 8.24%, respectively.

     In addition, the Company has a $40,000,000 Tranche B term loan, which
requires principal payments of $2,000,000 on March 31, 2002, $18,000,000 on
March 31, 2003, and $20,000,000 on March 31, 2004. The Tranche B term loan bears
an interest rate of 9.75% and is payable quarterly.

     The Company also has a reducing revolving loan providing for borrowing up
to $20,000,000 at the Company's discretion, subject to certain restrictions, and
an additional $60,000,000 available to finance acquisitions subject to certain
restrictions. On March 4, 1998, the reducing revolving loan agreement was
amended to revise the scheduled reduction in revolving commitments. The
additional financing amounts available at December 31, 1998 and 1997 were
$45,000,000 and $52,500,000, respectively. At December 31, 1998, the full
$20,000,000 available had been borrowed, and $15,000,000 had been drawn against
the $45,000,000 commitment. At December 31, 1997, the full $20,000,000 available
had been borrowed, and $16,500,000 had been drawn against the $52,500,000
commitment. The amount available for borrowing will decrease annually during its
term with changes over the four years following December 31, 1998 as follows:
1999 -- $2,500,000 reduction per quarter, and 2000 through 2002 -- $3,625,000
per quarter. Any unpaid balance is due on March 31, 2003. The revolving loan
bears an interest rate of either the bank's prime rate plus .25% to 1.75% or
LIBOR plus 1.5% to 2.75%. The specific rate is dependent upon the senior funded
debt ratio which is recalculated quarterly. The weighted average effective
interest rates at December 31, 1998 and 1997 was 8.08% and 8.29%, respectively.
The reducing revolving loan includes a commitment fee of  1/2% per annum on the
unborrowed balance.

     Certain mandatory prepayments may also be required, commencing in fiscal
1997, on the Tranche A term loan, the Tranche B term loan, and the reducing
revolving credit based on the Company's cash flow calculations, proceeds from
the sale of a cable system or equity contributions. Based on the 1998
calculation and the Michigan sale, $3,425,000 of prepayments were required.
Optional prepayments are allowed, subject to certain restrictions. The related
loan agreement contains covenants limiting additional indebtedness, dispositions
of assets, investments in securities, distribution to partners, management fees
and capital expenditures. In addition, the Company must maintain certain
financial levels and ratios. At December 31, 1998, the Company was in compliance
with these covenants.

     The Company also has $3,000,000 of senior subordinated debt payable to a
Rifkin Partner. The debt has a scheduled maturity, interest rate and interest
payment schedule identical to that of the Notes, as discussed above.

     Based on the outstanding debt as of December 31, 1998, the minimum
aggregate maturities for the five years following 1998 are none in 1999,
$7,500,000 in 2000, $16,500,000 in 2001, $23,075,000 in 2002 and $29,500,000 in
2003.

7.  RELATED PARTY TRANSACTIONS

     The Company entered into a management agreement with Rifkin & Associates,
Inc. (Rifkin). The management agreement provides that Rifkin will act as manager
of the Company's CATV systems and be entitled to annual compensation of 3.5% of
the Company's revenue. Effective September 1, 1998, Rifkin conveyed its CATV
management business to R & A Management, LLC (RML). The result of this
transaction included the conveyance of the Rifkin management agreement (Rifkin
Agreement) to RML

                                      F-244
   439
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(RML Agreement). Expenses incurred pursuant to the Rifkin Agreement and the RML
Agreement are disclosed in total on the Consolidated Statement of Operations.

     The Company is associated with a company to purchase certain cable
television programming at a discount. Rifkin acted as the agent and held the
deposit funds required for the Company to participate.

     Effective September 1, 1998, Rifkin conveyed this contract and deposit
amount to RML. The deposit amount recorded at December 31, 1998 and 1997 was
$2,139,274 and $1,225,274, respectively. The Company subsequently received
$1,225,274 of the December 31, 1998 balance.

     The Company paid approximately $550,000 to a law firm in connection with
the public offering in 1996. A partner of this law firm is a relative of one of
the Company's partners.

8.  COMMITMENTS AND RENTAL EXPENSE

     The Company leases certain real and personal property under noncancelable
operating leases expiring through the year 2007. Future minimum lease payments
under such noncancelable leases as of December 31, 1998 are: $316,091 in 1999;
$249,179 in 2000; $225,768 in 2001; $222,669 in 2002; and $139,910 in 2003; and
$344,153 thereafter, totaling $1,497,770.

     Total rental expense and the amount included therein which pertains to
cancelable pole rental agreements were as follows for the periods indicated:

<Table>
<Caption>
                                                   TOTAL       CANCELABLE
                                                   RENTAL      POLE RENTAL
PERIOD                                            EXPENSE        EXPENSE
- ------                                           ----------    -----------
                                                         
Year Ended December 31, 1998...................  $1,592,080    $1,109,544
Year Ended December 31, 1997...................  $1,577,743    $1,061,722
Year Ended December 31, 1996...................  $1,294,084    $  874,778
</Table>

9.  COMPENSATION PLANS AND RETIREMENT PLANS

EQUITY INCENTIVE PLAN

     In 1996, the Company implemented an Equity Incentive Plan (the "Plan") in
which certain Rifkin & Associates' executive officers and key employees, and
certain key employees of the Company are eligible to participate. Plan
participants in the aggregate, have the right to receive (i) cash payments of up
to 2.0% of the aggregate value of all partnership interests of the Company (the
"Maximum Incentive Percentage"), based upon the achievement of certain annual
Operating Cash Flow (as defined in the Plan) targets for the Company for each of
the calendar years 1996 through 2000, and (ii) an additional cash payment equal
to up to 0.5% of the aggregate value of all partnership interests of the Company
(the "Additional Incentive Percentage"), based upon the achievement of certain
cumulative Operating Cash Flow targets for the Company for the five-year period
ended December 31, 2000. Subject to the achievement of such annual targets and
the satisfaction of certain other criteria based on the Company's operating
performance, up to 20% of the Maximum Incentive Percentage will vest in each
such year; provided, that in certain events vesting may accelerate. Payments
under the Plan are subject to certain restrictive covenants contained in the
Notes.

     No amounts are payable under the Plan except upon (i) the sale of
substantially all of the assets or partnership interests of the Company or (ii)
termination of a Plan participant's employment with Rifkin & Associates or the
Company, as applicable, due to (a) the decision of the Advisory Committee to
terminate such participant's employment due to disability, (b) the retirement of
such participant with the Advisory Committee's approval or (c) the death of such
Participant. The value of amounts payable pursuant to

                                      F-245
   440
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

clause (i) above will be based upon the aggregate net proceeds received by the
holders of all of the partnership interests in the Company, as determined by the
Advisory Committee, and the amounts payable pursuant to clause (ii) above will
be based upon the Enterprise Value determined at the time of such payment. For
purposes of the Plan, Enterprise Value generally is defined as Operating Cash
Flow for the immediately preceding calendar year times a specified multiple and
adjusted based on the Company's working capital.

     The amount expensed for the years ended December 31, 1998, 1997 and 1996
relating to this plan were $1,119,996, $859,992 and $660,000, respectively.

RETIREMENT BENEFITS

     The Company has a 401(k) plan for employees that have been employed by the
Company for at least one year. Employees of the Company can contribute up to 15%
of their salary, on a before-tax basis, with a maximum 1998 contribution of
$10,000 (as set by the Internal Revenue Service). The Company matches
participant contributions up to a maximum of 50% of the first 3% of a
participant's salary contributed. All participant contributions and earnings are
fully vested upon contribution and Company contributions and earnings vest 20%
per year of employment with the Company, becoming fully vested after five years.
The Company's matching contributions for the years ended December 31, 1998, 1997
and 1996 were $50,335, $72,707 and $42,636, respectively.

10.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company has a number of financial instruments, none of which are held
for trading purposes. The following method and assumptions were used by the
Company to estimate the fair values of financial instruments as disclosed
herein:

     Cash and Cash Equivalents, Customer Accounts Receivable, Other Receivables,
Accounts Payable and Accrued Liabilities and Customer Deposits and Prepayments:
The carrying value amount approximates fair value because of the short period to
maturity.

     Debt: The fair value of bank debt is estimated based on interest rates for
the same or similar debt offered to the Company having the same or similar
remaining maturities and collateral requirements. The fair value of public
Senior Subordinated Notes is based on the market quoted trading value. The fair
value of the Company's debt is estimated at $236,137,500 and is carried on the
balance sheet at $224,575,000.

11.  CABLE REREGULATION

     Congress enacted the Cable Television Consumer Protection and Competition
Act of 1992 (the Cable Act) and has amended it at various times since.

     The total effects of the present law are, at this time, still unknown.
However, one provision of the present law further redefines a small cable
system, and exempts these systems from rate regulation on the upper tiers of
cable service. The Partnership is awaiting an FCC rulemaking implementing the
present law to determine whether its systems qualify as small cable systems.

12.  SUMMARIZED FINANCIAL INFORMATION

     CEM, CEI and CEC (collective, the "Guarantors") are all wholly-owned
subsidiaries of the Company and, together with RACC, constitute all of the
Partnership's direct and indirect subsidiaries. As discussed in Note 1, RTL and
FNI were dissolved on January 1, 1998 and the assets were transferred to the
Company, however, prior thereto, RTL and FNI, as wholly-owned subsidiaries of
the Company, were Guarantors. Each of the Guarantors provides a full,
unconditional, joint and several guaranty of the obligations under the Notes

                                      F-246
   441
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

discussed in Note 6. Separate financial statements of the Guarantors are not
presented because management has determined that they would not be material to
investors.

     The following tables present summarized financial information of the
Guarantors on a combined basis as of December 31, 1998 and 1997 and for the
years ended December 31, 1998, and 1997 and 1996.

<Table>
<Caption>
                                        12/31/98        12/31/97
           BALANCE SHEET              ------------    ------------
                                                             
Cash................................  $    373,543    $    780,368
Accounts and other receivables,
  net...............................     3,125,830       3,012,571
Prepaid expenses....................       791,492         970,154
Property, plant and equipment net...    48,614,536      66,509,120
Franchise costs and other intangible
  assets, net.......................    56,965,148     103,293,631
Accounts payable and accrued
  liabilities.......................    22,843,354      18,040,588
Other liabilities...................       980,536       1,122,404
Deferred taxes payable..............     7,942,000      12,138,000
Notes payable.......................   140,050,373     167,200,500
Equity (deficit)....................   (61,945,714)    (23,935,648)
</Table>

<Table>
<Caption>
                                       YEAR ENDED      YEAR ENDED      YEAR
ENDED
                                        12/31/98        12/31/97        12/31/96
      STATEMENTS OF OPERATIONS        ------------    ------------
- ------------
                                                             
Total revenue.......................  $ 29,845,826    $ 47,523,592    $
42,845,044
          Total costs and
             expenses...............   (31,190,388)    (53,049,962)
(43,578,178)
Interest expense....................   (14,398,939)    (17,868,497)
(16,238,221)
Income tax benefit..................     4,177,925       5,335,000
3,645,719
                                      ------------    ------------
- ------------
Net loss............................  $(11,565,576)   $(18,059,867)
$(13,325,636)
                                      ============    ============
============
</Table>

13.  QUARTERLY INFORMATION (UNAUDITED)

     The following interim financial information of the Company presents the
1998 and 1997 consolidated results of operations on a quarterly basis (in
thousands):

<Table>
<Caption>
                                                  QUARTERS ENDED 1998

- ------------------------------------------------
                                    MARCH 31(A)    JUNE 30    SEPT. 30    DEC.
31(B)
                                    -----------    -------    --------
- ----------
                                                              
Revenue...........................    $22,006      $22,296    $22,335
$23,284
Operating income (loss)...........        295          511     (1,522)
1,756
Net income (loss).................      1,437       (4,458)    (5,907)
33,347
</Table>

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

     (a) First quarter includes a $5,900 gain from the sale of Michigan assets
         (Note 4).

     (b) Fourth quarter includes a $36,873 gain from the trade sale of certain
         Tennessee assets (Note 4).

                                      F-247
   442
                     RIFKIN ACQUISITION PARTNERS, L.L.L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                    QUARTERS ENDED 1997

- ------------------------------------------
                                         MARCH 31    JUNE 30    SEPT. 30    DEC.
31
                                         --------    -------    --------
- -------
                                                                
Revenue................................  $19,337     $21,331    $21,458
$22,199
Operating loss.........................   (1,220)     (2,818)    (2,777)
(798)
Net loss...............................   (5,998)     (6,890)    (8,127)
(5,029)
</Table>

14.  LITIGATION

     The Company could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Company will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Company's financial position or results of operations.

                                      F-248
   443

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Indiana Cable Associates, Ltd.

     In our opinion, the accompanying balance sheet and the related statements
of operations, of equity and of cash flows present fairly, in all material
respects, the financial position of Rifkin Cable Income Partners L.P. (the
"Partnership") at September 13, 1999, and the results of its operations and its
cash flows for the period January 1, 1999 to September 13, 1999, in conformity
with accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

     On September 13, 1999, all of the Partnership's interest were sold to
Charter Communications, LLC. These financial statements represent the
Partnership just prior to that transaction and do not reflect any adjustments
related thereto.

/S/ PRICEWATERHOUSECOOPERS LLP

DENVER, COLORADO
  FEBRUARY 15, 2000

                                      F-249
   444

                         INDIANA CABLE ASSOCIATES, LTD.

                                 BALANCE SHEET

<Table>
<Caption>
                                                                SEPTEMBER 13,
                                                                    1999
                                                              -----------------
                                                           
ASSETS
Cash........................................................     $   166,550
Customer accounts receivable, less allowance for doubtful
  accounts of $6,523........................................         211,069
Accounts receivable, interpartnership.......................      13,814,907
Other receivables...........................................         436,723
Prepaid expenses and deposits...............................          50,196
Property, plant and equipment, at cost:
  Transmission and distribution systems and related
     equipment..............................................      10,025,106
  Buildings and leasehold improvements......................          55,480
  Vehicles, office furniture and fixtures...................         493,607
  Spare parts and construction inventory....................         101,334
                                                                 -----------
                                                                  10,675,527
Less accumulated depreciation...............................        (838,673)
                                                                 -----------
     Property, plant and equipment, net.....................       9,836,854
Franchise costs, net of accumulated amortization of
  $2,910,123................................................      18,944,392
                                                                 -----------
       Total assets.........................................     $43,460,691
                                                                 ===========
LIABILITIES AND EQUITY
Liabilities:
  Accrued liabilities.......................................     $   263,342
  Customer deposits and prepayments.........................         314,413
  Accounts payable, related party...........................          20,514
  Interpartnership debt.....................................      24,003,000
                                                                 -----------
       Total liabilities....................................      24,601,269
Commitments and contingencies (Notes 4 and 8)
Divisional equity...........................................      18,859,422
                                                                 -----------
       Total equity.........................................      18,859,422
                                                                 -----------
          Total liabilities and equity......................     $43,460,691
                                                                 ===========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-250
   445

                         INDIANA CABLE ASSOCIATES, LTD.

                            STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                              JANUARY 1, 1999 TO
                                                              SEPTEMBER 13, 1999

- -------------------
                                                           
REVENUE
Service.....................................................      $ 5,267,890
Installation and other......................................          765,902
                                                                  -----------
  Total revenue.............................................        6,033,792
COSTS AND EXPENSES
Operating expense...........................................          631,956
Programming expense.........................................        1,268,904
Selling, general and administrative expense.................        1,143,407
Depreciation................................................        1,009,515
Amortization................................................        2,910,123
Management fees.............................................          301,890
Loss on disposal of assets..................................        2,481,838
                                                                  -----------
  Total costs and expenses..................................        9,747,633
                                                                  -----------
Operating loss..............................................       (3,713,841)
Interest expense............................................          621,956
                                                                  -----------
  Net loss..................................................      $(4,335,797)
                                                                  ===========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-251
   446

                         INDIANA CABLE ASSOCIATES, LTD.

                              STATEMENT OF EQUITY

<Table>
<Caption>
                                                                 JANUARY 1, 1999
TO
                                                                 SEPTEMBER 13,
1999

- -------------------------
                                                              DIVISIONAL
                                                                EQUITY
TOTAL
                                                              -----------
- -----------
                                                                      
Equity contribution.........................................  $23,195,219
$23,195,219
  Net loss..................................................   (4,335,797)
(4,335,797)
                                                              -----------
- -----------
Equity, September 13, 1999..................................  $18,859,422
$18,859,422
                                                              ===========
===========
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-252
   447

                         INDIANA CABLE ASSOCIATES, LTD.

                            STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                JANUARY 1, 1999
TO
                                                                SEPTEMBER 13,
1999

- ------------------
                                                             
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................       $ (4,335,797)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation and amortization.............................          3,919,638
  Loss on disposal of assets................................          2,481,838
  Increase in customer accounts receivable..................           (125,274)
  Increase in accounts receivable, interpartnership.........        (13,814,907)
  Increase in other receivables.............................           (141,700)
  Decrease in prepaid expenses and deposits.................            102,379
  Increase in accrued liabilities...........................           (634,431)
  Increase in customer deposits and prepayments.............            266,955
  Increase in accounts payable, related party...............             20,514
                                                                   ------------
     Net cash used in operating activities..................        (12,260,785)
                                                                   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Initial cash acquisition cost, net of cash acquired.........        (23,086,600)
Purchases of property, plant and equipment..................         (2,054,791)
Proceeds from sale of assets................................              2,734
Additions to franchise costs................................            (25,597)
                                                                   ------------
     Net cash used in investing activities..................        (25,164,254)
                                                                   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions.......................................         23,195,219
Proceeds from interpartnership debt.........................         14,807,682
Payments on interpartnership debt...........................           (411,312)
                                                                   ------------
     Net cash provided by financing activities..............         37,591,589
                                                                   ------------
Increase in cash............................................            166,550
Cash, beginning of period...................................                 --
                                                                   ------------
Cash, end of period.........................................       $    166,550
                                                                   ============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid...............................................       $    621,956
                                                                   ============
</Table>

The accompanying notes are an integral part of these financial statements.
                                      F-253
   448

                         INDIANA CABLE ASSOCIATES, LTD.

                         NOTES TO FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Indiana Cable Associates, Ltd. (the "Partnership"), a Colorado limited
partnership, was originally organized in March 1987 for the purpose of acquiring
and operating cable television systems and related operations in Indiana and
Illinois.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP AND BASIS OF PRESENTATION

     Effective December 31, 1998, Interlink Communications Partners, LLLP
("ICP") acquired all of the Partnership's limited partner interest, and agreed
to purchase all of the general Partners' interest for $23.1 million. This
transaction was accounted for as a purchase; as such, assets and liabilities
were written up to their fair value, resulting in an increase to property, plant
and equipment and franchise costs of $7.0 million and $16.8 million,
respectively.

     Effective April 1, 1999, ICP completed the purchase of the remaining
general partner interest in the Partnership and the Partnership was merged into
ICP and ceased to exist as a separate legal entity. The Partnership's financial
statements subsequent to that date represent a divisional carve-out from ICP.

     These financial statements include all the direct costs of operating its
business; however, certain assets, liabilities and costs not specifically
related to the Partnership's activities were allocated and reflected in the
financial position as of September 13, 1999, and the results of its operations
and its cash flows for the period January 1, 1999 to September 13, 1999.
Allocations from ICP include amounts for debt, interest expense and management
expense. Both debt and interest expense were allocated pro rata based on the
Partnership's percentage of subscribers to total ICP subscribers. Management
expense was allocated in accordance with the management agreement (Note 2). In
addition, receivables and payables to ICP are presented in the accompanying
financial statements net as amounts due to/from interpartnership. Management
believes these allocations were made on a reasonable basis. Nonetheless, the
financial information included herein may not necessarily reflect what the
financial position and results of operations of the Partnership would have been
as a stand-alone entity.

ACQUISITION BY CHARTER COMMUNICATIONS HOLDINGS, LLC

     On February 12, 1999, ICP signed a letter of intent to sell all of ICP's
partnership interest to Charter Communications Holdings, LLC ("Charter"). On
April 26, 1999, ICP signed a definitive Purchase and Sales Agreement with
Charter for the sale of the individual partner's interest. The sales transaction
closed on September 13, 1999. These financial statements represent the
Partnership just prior to the transaction and do not reflect any related
adjustments.

PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed, include amounts for material, labor, overhead
and capitalized interest, if applicable. Upon sale or retirement of an asset,
the related costs and accumulated depreciation are removed from the accounts and
any gain or loss is recognized.

     Depreciation expense is calculated using the straight-line method over the
estimated useful lives of the assets as follows:

<Table>
                                                             
Transmission and distribution systems and related
  equipment.................................................    1-15 years
Buildings and leasehold improvements........................    5-27 years
Vehicles, office furniture and fixtures.....................     2-5 years
</Table>

                                      F-254
   449
                         INDIANA CABLE ASSOCIATES, LTD.

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from 2 to 10 years. The carrying value is assessed for recoverability by
management based on an analysis of undiscounted expected future cash flows. The
Partnership's management believes that there has been no impairment thereof as
of September 13, 1999.

INCOME TAXES

     No provision for federal or state income taxes is necessary in the
financial statements of the Partnership, because as a partnership, it is not
subject to federal or state income tax as the tax effect of its activities
accrues to the partners.

REVENUE RECOGNITION

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the period shown.

USE OF ESTIMATES

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

2.  MANAGEMENT AGREEMENT

     The Partnership has a management agreement with R & A Management, LLC
("RML"). The management agreement provides that RML shall manage the Partnership
and shall receive annual compensation equal to 5% of gross revenues and an
additional 5% if a defined cash flow level is met. The result of this
transaction included the conveyance of the Rifkin management agreement (the
"Rifkin Agreement") to RML (the "RML Agreement"). Expenses incurred pursuant to
this agreement are disclosed in the Consolidated Statement of Operations.

3.  DEBT

     The Partnership has interpartnership debt with ICP. Borrowings, including
both principal and interest, at September 13, 1999 were $24,003,000 and had an
effective interest rate of 8.68%.

     ICP has a term loan and revolving loan agreement with a bank. The amount of
the term loan is $150,000,000, and requires varying quarterly payments plus
interest commencing September 30, 2001 and continuing through March 31, 2007. On
February 1, 1999, the term loan agreement was amended to increase the loan
amount to $250,000,000. On July 16, 1999, the term loan agreement was amended
again to increase the loan amount to $290,000,000. The interest rate on the term
loan is generally the bank's prime rate plus 0% to 1.50%. The weighted average
effective rate at September 13, 1999 was 8.74%.

     The revolving loan agreement provided for borrowing up to $100,000,000 at
the Company's discretion. At September 13, 1999, $91,000,000 had been drawn
against the $100,000,000 commitment. The revolving credit
                                      F-255
   450
                         INDIANA CABLE ASSOCIATES, LTD.

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

agreement expires on March 31, 2007. The revolver bears an interest rate at the
bank's prime rate plus 0% to 1.50% or LIBOR plus 1.25% to 2.75%. The specific
rate is dependent upon the leverage ratio of ICP, which is recalculated
quarterly. The weighted average effective interest rate at September 13, 1999
was 8.5%.

     The term loan and revolving loan agreement are collateralized by
substantially all assets of ICP and its consolidated entities, including the
Partnership.

4.  LEASE COMMITMENTS

     The Partnership leases certain real and personal property under
noncancelable operating leases. Future minimum lease payments under these
arrangements at September 13, 1999, were as follows:

<Table>
                                                           
1999........................................................  $ 77,802
2000........................................................    57,386
2001........................................................    45,749
2002........................................................    43,500
2003........................................................    43,500
Thereafter..................................................    40,875
                                                              --------
                                                              $308,812
                                                              ========
</Table>

     Total rent expense for the period January 1, 1999 to September 13, 1999 was
$77,802, including $43,253 relating to cancelable pole rental agreements.

5.  RETIREMENT BENEFITS

     The Partnership has a 401(k) plan for its employees that have been employed
by the Partnership for at least one year. Employees of the Partnership can
contribute up to 15% of their salary, on a before-tax basis, with a maximum 1999
contribution of $10,000 (as set by the Internal Revenue Service). The
Partnership matches participant contributions up to a maximum of 50% of the
first 3% of a participant's salary contributed. All participant contributions
and earnings are fully vested upon contribution and Partnership contributions
and earnings vest 20% per year of employment with the Partnership, becoming
fully vested after five years. The Partnership's matching contributions for the
period January 1, 1999 to September 13, 1999 were $10,524.

6.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Partnership has a number of financial instruments, none of which are
held for trading purposes. The following method and assumptions were used by the
Partnership to estimate the fair values of financial instruments as disclosed
herein:

     Cash, customer accounts receivable, other receivables, accounts payable and
accrued liabilities and customer deposits and prepayments: The carrying value
amount approximates fair value because of the short period to maturity.

     The interest rate on debt is adjusted at least quarterly; therefore, the
carrying value of debt approximates its fair value.

7.  RELATED PARTY TRANSACTIONS

     Certain Partnership expenses were paid by Charter and are reflected as
Payables to affiliates in the accompanying financial statements.

                                      F-256
   451
                         INDIANA CABLE ASSOCIATES, LTD.

                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8.  LITIGATION

     The Partnership could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Partnership will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Partnership's financial position or results of operations.

                                      F-257
   452

                         REPORT OF INDEPENDENT AUDITORS

The Partners
Indiana Cable Associates, Ltd.

We have audited the accompanying balance sheet of Indiana Cable Associates, Ltd.
as of December 31, 1997 and 1998, and the related statements of operations,
partners' deficit and cash flows for the years ended December 31, 1996, 1997 and
1998. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Indiana Cable Associates, Ltd.
at December 31, 1997 and 1998, and the results of its operations and its cash
flows for the years ended December 31, 1996, 1997 and 1998 in conformity with
generally accepted accounting principles.

/s/ Ernst & Young LLP

Denver, Colorado
February 19, 1999

                                      F-258
   453

                         INDIANA CABLE ASSOCIATES, LTD.

                                 BALANCE SHEET
                           DECEMBER 31, 1997 AND 1998

<Table>
<Caption>
                                                                 1997
1998
                                                              -----------
- -----------
                                                                       
ASSETS (PLEDGED)
Cash and cash equivalents...................................  $    82,684    $
108,619
Customer accounts receivable, less allowance for doubtful
  accounts of $18,311 in 1997 and $24,729 in 1998...........       87,154
 85,795
Other receivables...........................................      257,236
295,023
Prepaid expenses and deposits...............................      172,614
152,575
Property, plant and equipment, at cost:
  Buildings.................................................       78,740
 91,682
  Transmission and distribution systems and related
     equipment..............................................   10,174,650
11,336,892
  Office furniture and equipment............................      144,137
161,327
  Spare parts and construction inventory....................      435,554
742,022
                                                              -----------
- -----------
                                                               10,833,081
12,331,923
  Less accumulated depreciation.............................    7,624,570
8,008,158
                                                              -----------
- -----------
     Net property, plant and equipment......................    3,208,511
4,323,765
Other assets, at cost less accumulated amortization (Note
  3)........................................................    5,817,422
5,083,029
                                                              -----------
- -----------
          Total assets......................................  $ 9,625,621
$10,048,806
                                                              ===========
===========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
  Accounts payable and accrued liabilities..................  $   718,716    $
897,773
  Customer prepayments......................................       50,693
 47,458
  Interest payable..........................................       32,475
     --
  Long-term debt (Note 4)...................................   10,650,000
     --
  Interpartnership debt (Note 4)............................           --
9,606,630
                                                              -----------
- -----------
          Total liabilities.................................   11,451,884
10,551,861
Commitments (Notes 5 and 6)
Partners' deficit:
  General partner...........................................      (66,418)
(20,106)
  Limited partner...........................................   (1,759,845)
(482,949)
                                                              -----------
- -----------
Total partners' deficit.....................................   (1,826,263)
(503,055)
                                                              -----------
- -----------
          Total liabilities and partners' deficit...........  $ 9,625,621
$10,048,806
                                                              ===========
===========
</Table>

See accompanying notes.

                                      F-259
   454

                         INDIANA CABLE ASSOCIATES, LTD.

                            STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                    YEARS ENDED

- ------------------------------------
                                                         12/31/96     12/31/97
  12/31/98
                                                        ----------   ----------
 ----------
                                                               
 
REVENUE:
Service...............................................  $6,272,049   $6,827,504
 $7,165,843
Installation and other................................     538,158      622,699
    773,283
                                                        ----------   ----------
 ----------
          Total revenue...............................   6,810,207    7,450,203
  7,939,126
COSTS AND EXPENSES:
Operating expense.....................................     989,456    1,142,932
    974,617
Programming expense...................................   1,474,067    1,485,943
  1,727,089
Selling, general and administrative expense...........   1,112,441    1,142,247
  1,128,957
Depreciation..........................................     889,854      602,554
    537,884
Amortization..........................................     718,334      718,335
    707,539
Management fees.......................................     340,510      372,510
    396,956
Loss on disposal of assets............................       6,266          639
     74,714
                                                        ----------   ----------
 ----------
          Total costs and expenses....................   5,530,928    5,465,160
  5,547,756
                                                        ----------   ----------
 ----------
Operating income......................................   1,279,279    1,985,043
  2,391,370
Interest expense......................................   1,361,415    1,292,469
    970,160
                                                        ----------   ----------
 ----------
Net income (loss) before extraordinary item...........     (82,136)     692,574
  1,421,210
Extraordinary item--loss on early retirement of debt
  (Note 3 and 4)......................................          --           --
     98,002
                                                        ----------   ----------
 ----------
Net income (loss).....................................  $  (82,136)  $  692,574
 $1,323,208
                                                        ==========   ==========
 ==========
</Table>

See accompanying notes.

                                      F-260
   455

                         INDIANA CABLE ASSOCIATES, LTD.

                         STATEMENT OF PARTNERS' DEFICIT

<Table>
<Caption>
                                                    GENERAL       LIMITED
                                                    PARTNERS     PARTNERS
 TOTAL
                                                    --------    -----------
- -----------
                                                          

Partners' deficit at December 31, 1995............  $(87,783)   $(2,348,918)
$(2,436,701)
  Net loss for the year ended December 31, 1996...    (2,875)       (79,261)
  (82,136)
                                                    --------    -----------
- -----------
Partners' deficit at December 31, 1996............   (90,658)    (2,428,179)
(2,518,837)
  Net income for the year ended December 31,
     1997.........................................    24,240        668,334
  692,574
                                                    --------    -----------
- -----------
Partners' deficit at December 31, 1997............   (66,418)    (1,759,845)
(1,826,263)
  Net income for the year ended December 31,
     1998.........................................    46,312      1,276,896
1,323,208
                                                    --------    -----------
- -----------
Partners' deficit at December 31, 1998............  $(20,106)   $  (482,949)   $
 (503,055)
                                                    ========    ===========
===========
</Table>

     The partners' capital accounts for financial reporting purposes vary from
the tax capital accounts.

See accompanying notes.

                                      F-261
   456

                         INDIANA CABLE ASSOCIATES, LTD.

                            STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                        YEARS
ENDED

- ------------------------------------------
                                                          12/31/96
12/31/97        12/31/98
                                                         -----------
- -----------    ------------
                                                                  
      
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)....................................  $   (82,136)   $
692,574    $  1,323,208
  Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
     Depreciation and amortization.....................    1,608,188
1,320,889       1,245,423
     Amortization of deferred loan costs...............       48,764
72,922          23,149
     Loss on disposal of assets........................        6,266
639          74,714
     Loss on write-off of deferred loan cost associated
       with early retirement of debt...................           --
- --          95,832
     Decrease (increase) in customer accounts
       receivable......................................      (13,110)
1,536           1,359
     Increase in other receivables.....................      (80,843)
(108,256)        (37,787)
     Decrease (increase) in prepaid expenses and
       deposits........................................      (53,259)
(5,928)         20,039
     Increase (decrease) in accounts payable and
       accrued liabilities.............................     (190,357)
(147,971)        179,057
     Increase (decrease) in customer prepayments.......       16,355
(13,190)         (3,235)
     Decrease in interest payable......................      (12,314)
(39,471)        (32,475)
                                                         -----------
- -----------    ------------
          Net cash provided by operating activities....    1,247,554
1,773,744       2,889,284
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment...........     (675,244)
(592,685)     (1,732,831)
  Proceeds from sale of assets.........................      227,025
23,662           4,979
                                                         -----------
- -----------    ------------
          Net cash used in investing activities........     (448,219)
(569,023)     (1,727,852)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt.........................    2,000,000
1,450,000      10,636,421
  Proceeds from interpartnership debt..................           --
- --       9,606,630
  Deferred loan cost...................................      (70,000)
(29,776)        (92,127)
  Payments of long-term debt...........................   (2,200,000)
(3,100,000)    (21,286,421)
                                                         -----------
- -----------    ------------
          Net cash used in financing activities........     (270,000)
(1,679,776)     (1,135,497)
                                                         -----------
- -----------    ------------
Net increase (decrease) in cash and cash equivalents...      529,335
(475,055)         25,935
Cash and cash equivalents at beginning of year.........       28,404
557,739          82,684
                                                         -----------
- -----------    ------------
Cash and cash equivalents at end of year...............  $   557,739    $
82,684    $    108,619
                                                         ===========
===========    ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid........................................  $ 1,324,965    $
1,258,078    $    947,606
                                                         ===========
===========    ============
</Table>

See accompanying notes.

                                      F-262
   457

                         INDIANA CABLE ASSOCIATES, LTD.

                         NOTES TO FINANCIAL STATEMENTS

1.  GENERAL INFORMATION

GENERAL INFORMATION:

     Indiana Cable Associates, Ltd. (the "Partnership"), a Colorado limited
partnership, was organized in March 1987 for the purpose of acquiring and
operating cable television systems and related operations in Indiana and
Illinois.

     For financial reporting purposes, Partnership profits or losses are
allocated 3.5% to the general partners and 96.5% to the limited partners.
Limited partners are not required to fund any losses in excess of their capital
contributions.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP:

     Interlink Communications Partners, LLLP ("ICP") agreed to purchase all of
the interests of the Partnership. ICP acquired all of the limited partner
interests, effective December 31, 1998, and is currently in the process of
obtaining the necessary consents to transfer all of the Partnership's franchises
to ICP. Once these are obtained, ICP will then purchase the general partner
interest in the Partnership, and the Partnership will, by operation of law, be
consolidated into ICP.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY, PLANT AND EQUIPMENT:

     The Partnership records additions to property, plant and equipment at cost,
which in the case of assets constructed includes amounts for material, labor,
overhead and capitalized interest, if applicable.

     For financial reporting purposes, the Partnership uses the straight-line
method of depreciation over the estimated useful lives of the assets as follows:

<Table>
                                                           
Buildings and improvements..................................  5-30 years
Transmission and distribution systems and related
  equipment.................................................  3-15 years
Office furniture and equipment..............................     5 years
</Table>

OTHER ASSETS:

     Other assets are carried at cost and are amortized on a straight-line basis
over the following lives:

<Table>
                                      
Franchises                              --  the terms of the franchises
                                            (10-19 1/2 years)
Goodwill                                --  the term of the Partnership
agreement
                                            (12 3/4 years)
Deferred loan costs                     --  the term of the debt (1-6 years)
Organization costs                      --  5 years
</Table>

INCOME TAXES:

     No provision for the payment or refund of income taxes has been provided
for the Partnership since the partners are responsible for reporting their
distributive share of Partnership net income or loss in their personal
capacities.

                                      F-263
   458
                         INDIANA CABLE ASSOCIATES, LTD.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS:

     The Partnership considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION:

     Customer fees are recorded as revenue in the period the service is
provided.

FAIR VALUE OF FINANCIAL INVESTMENTS:

     The carrying values of cash and cash equivalents, customer accounts
receivable, accounts payable and interpartnership debt approximate fair value.

USE OF ESTIMATES:

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

IMPACT OF YEAR 2000 (UNAUDITED):

     The Partnership recognizes that certain of its time-sensitive computer
programs and product distribution equipment may be affected by conversion to the
year 2000. During 1998, management began their evaluation of the information
systems, product distribution facilities, and vendor and supplier readiness. To
date, considerable progress has been made to complete the evaluation process, to
integrate and test compliance installations, and to prepare contingency plans.
In addition, third party suppliers are either fully compliant or are expected to
be compliant by December 31, 1999. Management expects to have all systems
compliant, or have a contingency plan in effect that will result in minimal
impact on the operations.

NEW ACCOUNTING PRONOUNCEMENT:

     In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-Up
Activities," which requires the Partnerships to expense all start-up costs
related to organizing a new business. This new standard also includes one-time
activities related to opening a new facility, introduction of a new product or
service, or conducting business with a new class of customer or in a new
territory. This standard is effective for the Partnerships' 1999 fiscal year.
Organization costs are all fully amortized resulting in SOP 98-5 having no
material effect on its financial position or the results of operations.

RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION:

     Certain reclassifications have been made to the 1996 and 1997 financial
statements to conform with the 1998 financial statement presentation. Such
reclassifications had no effect on the net income or loss as previously stated.

                                      F-264
   459
                         INDIANA CABLE ASSOCIATES, LTD.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3.  OTHER ASSETS

     At December 31, 1997 and 1998, other assets consisted of the following:

<Table>
<Caption>
                                                          1997           1998
                                                       -----------
- -----------
                                                                
Franchises...........................................  $13,144,332
$12,996,580
Goodwill.............................................      378,336
378,336
Deferred loan costs..................................       26,854
- --
Organization costs...................................       63,393
63,393
                                                       -----------
- -----------
                                                        13,612,915
13,438,309
Less accumulated amortization........................    7,795,493
8,355,280
                                                       -----------
- -----------
                                                       $ 5,817,422    $
5,083,029
                                                       ===========
===========
</Table>

     On December 31, 1997, the loan agreement with a financial institution was
amended (Note 4). At that time, the original loan's costs, which were fully
amortized, and the accumulated amortization were written off. The bank loan
amendment required the payment of additional loan costs which will be amortized
over the remaining term of the bank loan.

     On August 31, 1998, the loan with a financial institution and the
subordinated debt loan with two investor groups were paid in full (Note 4). The
related deferred loan costs and associated accumulated amortization were written
off and $9,263 was recorded as an extraordinary loss. On December 30, 1998, the
new loan agreement with a financial institution was paid in full (Note 4). The
related deferred loan costs and associated accumulated amortization were written
off and $86,569 was recorded as an extraordinary loss.

4.  DEBT

     The Partnership had a revolving credit agreement with a financial
institution which provided for borrowing up to $7,000,000 with a maturity date
of December 31, 1997, at which time the balance of the loan was $4,650,000. On
December 31, 1997, the credit agreement was amended to reduce the amount
available to borrow to $5,200,000 and extend the maturity date to December 31,
1998. The Partnership also had subordinated term notes with two investors
totalling $6,000,000 at December 31, 1997. Total outstanding loans at December
31, 1997 were $10,650,000. On August 31, 1998, the revolving credit loan and
subordinated term notes had a balance of $3,450,000 and $6,000,000,
respectively; at that date, the total balance of $10,650,000 and accrued
interest were paid in full. On that same date, the Partnership obtained a new
credit agreement with a financial institution. The new credit agreement provided
for a senior term note payable in the amount of $7,500,000 and a revolving
credit loan which provided for borrowing up to $7,500,000. At December 30, 1998,
the term note and revolving credit had a balance of $7,500,000 and $1,950,000,
respectively; at that date, the total balance of $9,450,000 and accrued interest
were paid in full. The Partnership also incurred a LIBOR break fee of $2,170 in
conjunction with the retirement of debt which was recorded as an extraordinary
item.

     Also on December 30, 1998, the Partnership obtained a new interpartnership
loan agreement with ICP (Note 1). Borrowing under the interpartnership loan, as
well as interest and principal payments are due at the discretion of the
management of ICP, resulting in no minimum required annual principal payments.
The balance of the interpartnership loan at December 31, 1998 was $9,606,630.
The effective interest rate at December 31, 1998 was 8.5%.

                                      F-265
   460
                         INDIANA CABLE ASSOCIATES, LTD.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5.  MANAGEMENT AGREEMENT

     The Partnership has entered into a management agreement with Rifkin and
Associates, Inc., (Rifkin) whose sole stockholder is affiliated with a general
partner of the Partnership. The agreement provides that Rifkin shall manage the
Partnership and shall receive annual compensation equal to 2 1/2% of gross
revenues and an additional 2 1/2% if a defined cash flow level is met. Effective
September 1, 1998, Rifkin conveyed its CATV management business to R & A
Management, LLC (RML). The result of this transaction was the conveyance of the
Rifkin management agreement (Rifkin Agreement) to RML (RML Agreement). Expenses
incurred pursuant to the Rifkin Agreement and the RML Agreement are disclosed on
the Statement of Operations.

6.  LEASE COMMITMENTS

     At December 31, 1998, the Partnership had lease commitments under long-term
operating leases as follows:

<Table>
                                                           
1999........................................................  $27,408
2000........................................................    6,300
2001........................................................    2,700
2002........................................................    1,500
2003........................................................    1,500
Thereafter..................................................   10,500
                                                              -------
          Total.............................................  $49,908
                                                              =======
</Table>

     Rent expense, including pole rent, was as follows for the periods
indicated:

<Table>
<Caption>
                                                               TOTAL
                                                               RENTAL
PERIOD                                                        EXPENSE
- ------                                                        --------
                                                           
Year Ended December 31, 1996................................  $105,590
Year Ended December 31, 1997................................    98,693
Year Ended December 31, 1998................................   104,155
</Table>

7.  RETIREMENT BENEFITS

     The Partnership has a 401(k) plan for its employees that have been employed
by the Partnership for at least one year. Employees of the Partnership can
contribute up to 15% of their salary, on a before-tax basis, with a maximum 1998
contribution of $10,000 (as set by the Internal Revenue Service). The
Partnership matches participant contributions up to a maximum of 50% of the
first 3% of a participant's salary contributed. All participant contributions
and earnings are fully vested upon contribution and Partnership contributions
and earnings vest 20% per year of employment with the Partnership, becoming
fully vested after five years. The Partnership's matching contributions for the
years ended December 31, 1996, 1997 and 1998 were $4,723, $8,769 and $8,639,
respectively.

                                      F-266
   461

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
R/N South Florida Cable Management Limited Partnership

     In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of equity and of cash flows present
fairly, in all material respects, the financial position of R/N South Florida
Cable Management Limited Partnership and its subsidiaries (the "Partnership") at
September 13, 1999, and the results of their operations and their cash flows for
the period January 1, 1999 to September 13, 1999, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

     On September 13, 1999, all of the Partnership's interest were sold to
Charter Communications, LLC. These financial statements represent the
Partnership just prior to that transaction and do not reflect any adjustments
related thereto.

/s/ PRICEWATERHOUSECOOPERS LLP

Denver, Colorado
February 15, 2000

                                      F-267
   462

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                      AS OF
                                                                SEPTEMBER 13,
1999

- ------------------
                                                             
ASSETS
Cash........................................................       $    453,963
Customer accounts receivable, less allowance for doubtful
  accounts of $27,131.......................................            933,646
Accounts receivable, related party..........................            394,142
Accounts receivable, interpartnership.......................         30,273,104
Other receivables...........................................            780,723
Prepaid expenses and deposits...............................            195,198
Property, plant and equipment, at cost:
  Transmission and distribution systems and related
     equipment..............................................         24,629,591
  Vehicles, office furniture and equipment..................          1,131,040
  Leasehold improvements....................................              6,759
  Construction in process and spare parts inventory.........          1,519,099
                                                                   ------------
                                                                     27,286,489
Less accumulated depreciation...............................         (1,935,932)
                                                                   ------------
     Property, plant and equipment, net.....................         25,350,557
Franchise costs, less accumulated amortization of
  $17,527,564...............................................         65,160,673
          Total assets......................................       $123,542,006
                                                                   ============
LIABILITIES AND EQUITY
Liabilities:
  Accounts payable and accrued liabilities..................       $  2,074,095
  Customer deposits and prepayments.........................          1,209,481
  Interpartnership debt.....................................         60,960,000
                                                                   ------------
          Total liabilities.................................         64,243,576
Commitments and contingencies (Notes 4 and 7) Divisional
  equity....................................................         59,298,430
                                                                   ------------
          Total equity......................................         59,298,430
                                                                   ------------
          Total liabilities and equity......................       $123,542,006
                                                                   ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-268
   463

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                   FOR THE
PERIOD
                                                                   JANUARY 1,
1999
                                                                TO SEPTEMBER 13,
1999

- ---------------------
                                                             
REVENUE
  Service...................................................        $ 14,790,346
  Installation and other....................................           2,725,293
                                                                    ------------
          Total revenue.....................................          17,515,639
COSTS AND EXPENSES
  Operating expense.........................................           2,958,925
  Programming expense.......................................           3,957,126
  Selling, general and administrative expense...............           4,532,320
  Depreciation..............................................           1,997,656
  Amortization..............................................          17,527,564
  Management fees...........................................             700,626
  Loss on disposal of assets................................             685,800
                                                                    ------------
          Total costs and expenses..........................          32,360,017
                                                                    ------------
  Operating loss............................................
(14,844,378)
  Interest expense..........................................             760,517
                                                                    ------------
     Net loss...............................................
$(15,604,895)
                                                                    ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-269
   464

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
                        CONSOLIDATED STATEMENT OF EQUITY

<Table>
<Caption>
                                                                        FOR THE
PERIOD
                                                                        JANUARY
1, 1999
                                                                     TO
SEPTEMBER 13, 1999

- -------------------------------
                                                                 DIVISIONAL
                                                                   EQUITY
     TOTAL
                                                                ------------
  ------------
                                                             
  
<Caption>
                                                             
  
Equity contribution.........................................    $ 74,903,325
  $ 74,903,325
  Net loss..................................................     (15,604,895)
   (15,604,895)
                                                                ------------
  ------------
Divisional equity, September 13, 1999.......................    $ 59,298,430
  $ 59,298,430
                                                                ============
  ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-270
   465

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                   FOR THE
PERIOD
                                                                   JANUARY 1,
1999
                                                                TO SEPTEMBER 13,
1999

- ---------------------
                                                             
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss..................................................
$(15,604,895)
  Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation and amortization..........................          19,525,221
     Loss on disposal of assets.............................             685,800
     Increase in customer accounts receivable...............
(478,307)
     Increase in accounts receivable, related party.........
(394,142)
     Increase in accounts receivable, intercompany..........
(30,273,104)
     Decrease in other receivables..........................             910,870
     Decrease in prepaid expenses and deposits..............             197,824
     Decrease in accounts payable and accrued liabilities...
(282,445)
     Increase in customer prepayments and deposits..........             519,116
                                                                    ------------
       Net cash used in operating activities................
(25,194,062)
                                                                    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Initial cash acquisition cost, net of cash acquired.......
(74,224,586)
  Purchases of property, plant and equipment................
(4,487,237)
  Additions to franchise costs..............................
(383,932)
  Proceeds from the sale of assets..........................             102,891
                                                                    ------------
       Net cash used in investing activities................
(78,992,864)
                                                                    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Capital contributions.....................................          74,903,325
  Proceeds from interpartnership debt.......................          30,587,226
  Payments on interpartnership debt.........................
(849,662)
                                                                    ------------
       Net cash provided by financing activities............         104,640,889
                                                                    ------------
Increase in cash............................................             453,963
Cash, beginning of period...................................                  --
Cash, end of period.........................................        $    453,963
                                                                    ============
SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid.............................................        $    760,517
                                                                    ============
</Table>

The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-271
   466

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

     The accompanying consolidated financial statements include the accounts of
R/N South Florida Cable Management Limited Partnership (the "Partnership") and
its substantially wholly owned subsidiary, Rifkin/ Narragansett South Florida
CATV Limited Partnership (the "Operating Partnership"). Each partnership is a
Florida Limited Partnership. The Partnership was originally organized in 1988
for the purpose of being the general partner to the Operating Partnership which
is engaged in the installation, ownership, operation and management of cable
television systems in Florida.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP AND BASIS OF PRESENTATION

     Effective December 31, 1998, Interlink Communications Partners, LLLP
("ICP") acquired all of the Partnership's limited partner interest, and agreed
to purchase all of the Partnership's interest for $74.2 million. This
transaction was accounted for as a purchase; as such, assets and liabilities
were written up to their fair value, resulting in an increase to property, plant
and equipment and franchise costs of $5.0 million $77.1 million, respectively.

     Effective July 1, 1999, ICP completed the purchase of the remaining general
partner interest in the Partnership and the Partnership was merged into ICP and
ceased to exist as a separate legal entity. The Partnership's financial
statements subsequent to that date represent a divisional carve-out from ICP.
These financial statements include all the direct costs of operating its
business; however, certain assets, liabilities and costs not specifically
related to the Partnership's activities were allocated and reflected in the
financial position as of September 13, 1999, and the results of its operations
and its cash flows for the period January 1, 1999 to September 13, 1999.
Allocations from ICP include amounts for debt, interest expense and management
expense. Both debt and interest expense were allocated pro rata based on the
Partnership's percentage of subscribers to total ICP subscribers. Management
expense was allocated in accordance with the management agreement (Note 2). In
addition, receivables and payables to ICP are presented in the accompanying
financial statements net as amounts due to/from interpartnership. Management
believes these allocations were made on a reasonable basis. Nonetheless, the
financial information included herein may not necessarily reflect what the
financial position and results of operations of the Partnership would have been
as a stand-alone entity.

ACQUISITION BY CHARTER COMMUNICATIONS HOLDINGS, LLC

     On February 12, 1999, ICP signed a letter of intent to sell all of ICP's
partnership interest to Charter Communications Holdings, LLC ("Charter"). On
April 26, 1999, ICP signed a definitive Purchase and Sales Agreement with
Charter for the sale of the individual partner's interest. The sales transaction
closed on September 13, 1999. These financial statements represent the
Partnership just prior to the transaction and do not reflect any related
adjustments.

PROPERTY, PLANT AND EQUIPMENT

     Additions to property, plant and equipment are recorded at cost, which in
the case of assets constructed, include amounts for material, labor, overhead
and capitalized interest, if applicable. Upon sale or retirement of an asset,
the related costs and accumulated depreciation are removed from the accounts and
any gain or loss is recognized.

                                      F-272
   467
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation expense is calculated using the straight-line method of
depreciation over the estimated useful lives of the assets as follows:

<Table>
                                                             
Transmission and distribution systems and related
  equipment.................................................    1-15 years
Vehicles, office furniture and equipment....................    2-5 years
Leasehold improvements......................................    5 years
</Table>

FRANCHISE COSTS

     Franchise costs are amortized using the straight-line method over the
remaining lives of the franchises as of the date they were acquired, ranging
from 2 to 10 years. The carrying value is assessed for recoverability by
management based on an analysis of undiscounted expected future cash flows. The
Partnership's management believes that there has been no impairment thereof as
of September 13, 1999.

INCOME TAXES

     No provision for federal or state income taxes is necessary in the
financial statements of the Partnership, because as a partnership, it is not
subject to federal or state income tax as the tax effect of its activities
accrues to the partners.

REVENUE RECOGNITION

     Customer fees are recorded as revenue in the period the service is
provided. The cost to acquire the rights to the programming generally is
recorded when the product is initially available to be viewed by the customer.

ADVERTISING AND PROMOTION EXPENSES

     Advertising and promotion expenses are charged to income during the year in
which they are incurred and were not significant for the period shown.

USE OF ESTIMATES

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

2. MANAGEMENT AGREEMENT

     The Partnership has a management agreement with R & A Management, LLC
("RML"). The management agreement provides that RML shall manage the Operating
Partnership and shall be entitled to annual compensation of 4% of gross
revenues. The result of this transaction included the conveyance of the Rifkin
management agreement (the "Rifkin Agreement") to RML (the "RML Agreement").
Expenses incurred pursuant to this agreement are disclosed in the Consolidated
Statement of Operations.

3. DEBT

     The Partnership has an interpartnership debt with ICP. Borrowings,
including both principal and interest, at September 13, 1999 were $60,960,000
and had an effective interest rate of 8.68%.

     ICP has a term loan and revolving loan agreement with a bank. The amount of
the term loan is $150,000,000, and requires varying quarterly payments plus
interest commencing September 30, 2001 and continuing through March 31, 2007. On
February 1, 1999, the term loan agreement was amended to increase

                                      F-273
   468
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the loan amount to $250,000,000. On July 16, 1999, the term loan agreement was
amended again to increase the loan amount to $290,000,000. The interest rate on
the term loan is generally the bank's prime rate plus 0% to 1.50%. The weighted
average effective rate at September 13, 1999 was 8.74%.

     The revolving loan agreement provided for borrowing up to $100,000,000 at
the Company's discretion. At September 13, 1999, $91,000,000 had been drawn
against the $100,000,000 commitment. The revolving credit agreement expires on
March 31, 2007. The revolver bears an interest rate at the bank's prime rate
plus 0% to 1.50% or LIBOR plus 1.25% to 2.75%. The specific rate is dependent
upon the leverage ratio of ICP, which is recalculated quarterly. The weighted
average effective interest rate at September 13, 1999 was 8.5%.

     The term loan and revolving loan agreement are collateralized by
substantially all assets of ICP and its consolidated entities, including the
Partnership.

4. LEASE COMMITMENTS

     The Partnership leases certain real and personal property under
noncancelable operating leases. Future minimum lease payments under these
arrangements at September 13, 1999, were as follows:

<Table>
                                                           
1999........................................................  $203,667
2000........................................................   178,432
2001........................................................   148,399
                                                              --------
                                                              $530,498
                                                              ========
</Table>

     Total rent expense for the period January 1, 1999 to September 13, 1999 was
$187,831, including $68,806 relating to cancelable pole rental agreements.

5. RETIREMENT BENEFITS

     The Operating Partnership has a 401(k) plan for its employees that have
been employed by the Operating Partnership for at least one year. Employees of
the Operating Partnership can contribute up to 15% of their salary, on a
before-tax basis, with a maximum 1999 contribution of $10,000 (as set by the
Internal Revenue Service). The Operating Partnership matches participant
contributions up to a maximum of 50% of the first 3% of a participant's salary
contributed. All participant contributions and earnings are fully vested upon
contribution and Operating Partnership contributions and earnings vest 20% per
year of employment with the Operating Partnership, becoming fully vested after
five years. The Operating Partnership's matching contributions for the period
January 1, 1999 to September 13, 1999 were $19,721.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Partnership has a number of financial instruments, none of which are
held for trading purposes. The following method and assumptions were used by the
Partnership to estimate the fair values of financial instruments as disclosed
herein:

     Cash, customer accounts receivable, other receivables, accounts payable and
accrued liabilities and customer deposits and prepayments: The carrying value
amount approximates fair value because of the short period to maturity.

     The interest rate on debt is adjusted at least quarterly; therefore, the
carrying value of debt approximates its fair value.

                                      F-274
   469
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LITIGATION

     The Partnership could possibly be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Partnership will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material affect on the
Partnership's financial position or results of operations.

                                      F-275
   470

                         REPORT OF INDEPENDENT AUDITORS

The Partners
R/N South Florida Cable Management
Limited Partnership

We have audited the accompanying consolidated balance sheet of R/N South Florida
Cable Management Limited Partnership as of December 31, 1997 and 1998, and the
related consolidated statements of operations, partners' equity (deficit) and
cash flows for the years ended December 31, 1996, 1997 and 1998. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of R/N
South Florida Cable Management Limited Partnership at December 31, 1997 and
1998, and the consolidated results of its operations and its cash flows for the
years ended December 31, 1996, 1997 and 1998 in conformity with generally
accepted accounting principles.

                                          /s/ ERNST & YOUNG LLP

Denver, Colorado
February 19, 1999

                                      F-276
   471

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

                           CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 1997 AND 1998

<Table>
<Caption>
                                                                 1997
1998
ASSETS (PLEDGED)                                              -----------
- -----------
                                                                       
Cash and cash equivalents...................................  $   362,619    $
678,739
Customer accounts receivable, less allowance for doubtful
  accounts of $85,867 in 1997 and $84,474 in 1998...........      569,296
455,339
Other receivables...........................................    1,180,507
1,691,593
Prepaid expenses and deposits...............................      416,455
393,022
Property, plant and equipment, at cost:
Transmission and distribution system and related
  equipment.................................................   22,836,588
27,981,959
Office furniture and equipment..............................      704,135
755,398
Leasehold improvements......................................      546,909
549,969
Construction in process and spare parts inventory...........      718,165
744,806
                                                              -----------
- -----------
                                                               24,805,797
30,032,132
Less accumulated depreciation...............................    9,530,513
11,368,764
                                                              -----------
- -----------
          Net property, plant and equipment.................   15,275,284
18,663,368
Other assets, at cost less accumulated amortization (Note
  2)........................................................    6,806,578
5,181,012
                                                              -----------
- -----------
          Total assets......................................  $24,610,739
$27,063,073
                                                              ===========
===========

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accounts payable and accrued liabilities....................  $ 2,994,797    $
2,356,540
Interest payable............................................      287,343
     --
Customer prepayments........................................      699,332
690,365
Long-term debt (Note 3).....................................   29,437,500
     --
Interpartnership debt (Note 3)..............................           --
31,222,436
                                                              -----------
- -----------
          Total liabilities.................................   33,418,972
34,269,341
Commitments (Notes 4 and 5)
Partners' equity (deficit):
  General partner...........................................      (96,602)
(81,688)
  Limited partner...........................................   (9,582,050)
(8,104,718)
  Special limited partner...................................      870,419
980,138
                                                              -----------
- -----------
Total partners' equity (deficit)............................   (8,808,233)
(7,206,268)
                                                              -----------
- -----------
          Total liabilities and partners' deficit...........  $24,610,739
$27,063,073
                                                              ===========
===========
</Table>

See accompanying notes.

                                      F-277
   472

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                   YEARS ENDED

- ---------------------------------------
                                                      12/31/96      12/31/97
 12/31/98
                                                     -----------   -----------
- -----------
                                                             

REVENUES:
Service............................................  $16,615,767   $17,520,883
$18,890,202
Installation and other.............................    1,732,681     2,425,742
  3,158,742
                                                     -----------   -----------
- -----------
                                                      18,348,448    19,946,625
 22,048,944
COSTS AND EXPENSES:
Operating expense..................................    2,758,704     3,489,285
  3,707,802
Programming expense................................    4,075,555     4,014,850
  4,573,296
Selling, general and administrative expense........    3,979,002     4,087,845
  4,537,535
Depreciation.......................................    1,787,003     1,912,905
  2,256,765
Amortization.......................................    1,350,195     1,287,588
  1,293,674
Management fees....................................      733,938       797,863
    881,958
Loss on disposal of assets.........................      373,860       513,177
    178,142
                                                     -----------   -----------
- -----------
          Total costs and expenses.................   15,058,257    16,103,513
 17,429,172
                                                     -----------   -----------
- -----------
Operating income...................................    3,290,191     3,843,112
  4,619,772
Interest expense...................................    2,528,617     2,571,976
  2,583,338
                                                     -----------   -----------
- -----------
Net income before extraordinary item...............      761,574     1,271,136
  2,036,434
Extraordinary item -- loss on early retirement of
  debt (Note 2)....................................           --            --
    434,469
                                                     -----------   -----------
- -----------
Net income.........................................  $   761,574   $ 1,271,136
$ 1,601,965
                                                     ===========   ===========
===========
</Table>

See accompanying notes.

                                      F-278
   473

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

              CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (DEFICIT)

<Table>
<Caption>
                                                                        SPECIAL
                                              GENERAL      LIMITED      LIMITED
                                             PARTNERS      PARTNERS     PARTNERS
     TOTAL
                                             ---------   ------------   --------
  ------------
                                                               
  
Partners' equity (deficit) at December 31,
  1995.....................................  $(115,526)  $(11,456,616)  $731,199
  $(10,840,943)
  Net income for the year ended December
     31, 1996..............................      7,090        702,324     52,160
       761,574
                                             ---------   ------------   --------
  ------------
Partners' equity (deficit) at December 31,
  1996.....................................   (108,436)   (10,754,292)   783,359
   (10,079,369)
  Net income for the year ended December
     31, 1997..............................     11,834      1,172,242     87,060
     1,271,136
                                             ---------   ------------   --------
  ------------
Partners' equity (deficit) at December 31,
  1997.....................................    (96,602)    (9,582,050)   870,419
    (8,808,233)
  Net income for the year ended December
     31, 1998..............................     14,914      1,477,332    109,719
     1,601,965
                                             ---------   ------------   --------
  ------------
Partners' equity (deficit) at December 31,
  1998.....................................  $ (81,688)  $ (8,104,718)  $980,138
  $ (7,206,268)
                                             =========   ============   ========
  ============
</Table>

     The partners' capital accounts for financial reporting purposes vary from
the tax capital accounts.

See accompanying notes.

                                      F-279
   474

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                               YEARS ENDED

- ------------------------------------------
                                                 12/31/96       12/31/97
12/31/98
                                                -----------    -----------
- ------------
                                                         

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income..................................  $   761,574    $ 1,271,136    $
1,601,965
  Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization............    3,137,198      3,200,493
3,550,439
     Amortization of deferred loan cost.......       68,898         79,108
   89,788
     Loss on early retirement of debt.........           --             --
  434,469
     Loss on disposal of assets...............      373,860        513,177
  178,142
     Decrease (increase) in customer accounts
       receivable.............................        1,420       (152,229)
  113,957
     Increase in other receivables............     (377,553)      (506,325)
 (511,086)
     Decrease (increase) in prepaid expenses
       and deposits...........................     (114,720)       115,734
   23,433
     Increase (decrease) in accounts payable
       and accrued liabilities................      122,512        513,839
 (638,257)
     Increase (decrease) in customer
       prepayments............................          362        208,021
   (8,967)
     Increase (decrease) in interest
       payable................................          180         16,207
 (287,343)
                                                -----------    -----------
- ------------
          Net cash provided by operating
             activities.......................    3,973,731      5,259,161
4,546,540
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and
     equipment................................   (4,000,631)    (4,288,776)
(5,915,434)
  Additions to other assets, net of
     refranchises.............................      (10,600)      (164,560)
 (186,790)
  Proceeds from the sale of assets............       16,674         70,865
   92,443
                                                -----------    -----------
- ------------
          Net cash used in investing
             activities.......................   (3,994,557)    (4,382,471)
(6,009,781)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt................    2,750,000      3,850,000
5,550,000
  Proceeds from interpartnership debt.........           --             --
31,222,436
  Payments of long-term debt..................   (2,604,913)    (4,562,500)
(34,987,500)
  Deferred loan costs.........................           --       (132,727)
   (5,575)
                                                -----------    -----------
- ------------
          Net cash provided by (used in)
             financing activities.............      145,087       (845,227)
1,779,361
                                                -----------    -----------
- ------------
Net increase in cash and cash equivalents.....      124,261         31,463
  316,120
Cash and cash equivalents at beginning of the
  year........................................      206,895        331,156
  362,619
                                                -----------    -----------
- ------------
Cash and cash equivalents at end of year......  $   331,156    $   362,619    $
  678,739
                                                ===========    ===========
============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid...............................  $ 2,412,038    $ 2,441,662    $
2,780,893
                                                ===========    ===========
============
</Table>

See accompanying notes

                                      F-280
   475

             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND ORGANIZATION:

     The accompanying consolidated financial statements include the accounts of
R/N South Florida Cable Management Limited Partnership (the "Partnership") and
its substantially wholly-owned subsidiary Rifkin/ Narragansett South Florida
CATV Limited Partnership (the "Operating Partnership"). Each partnership is a
Florida Limited Partnership. The Partnership was organized in 1988 for the
purpose of being the general partner to the Operating Partnership which is
engaged in the installation, ownership, operation and management of cable
television systems in Florida.

     In 1992, the Partnership adopted an amendment to the Partnership agreement
(the "Amendment") and entered into a Partnership Interest Purchase Agreement
whereby certain Special Limited Partnership interests were issued in the
aggregate amount of $1,250,000. These new Special Limited Partners are
affiliated with the current General and Limited Partners of the Partnership. The
Amendment provides for the methods under which the gains, losses, adjustments
and distributions are allocated to the accounts of the Special Limited Partners.

     For financial reporting purposes, partnership profits or losses are
allocated to the limited partners, special limited partners and general partners
in the following ratios: 92.22%, 6.849% and .931%, respectively. Limited
partners and special limited partners are not required to fund any losses in
excess of their capital contributions.

ACQUISITION BY INTERLINK COMMUNICATIONS PARTNERS, LLLP:

     InterLink Communications Partners, LLLP ("ICP") agreed to purchase all of
the interests of the Partnerships. ICP acquired all of the limited partner
interests of the Operating Partnership, effective December 31, 1998, and is
currently in the process of obtaining the necessary consents to transfer all of
the Operating Partnership's franchises to ICP. Once obtained, ICP will then
purchase the general partner interest, and the Partnership, by operation of law,
will consolidate into ICP.

PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment additions are recorded at cost, which in the
case of assets constructed includes amounts for material, labor, overhead and
capitalized interest, if applicable.

     For financial reporting purposes, the Operating Partnership uses the
straight-line method of depreciation over the estimated useful lives of the
assets as follows:

<Table>
                                                          
Transmission and distribution systems and related
  equipment................................................      15 years
Office furniture and equipment.............................    3-15 years
Leasehold improvements.....................................     5-8 years
</Table>

OTHER ASSETS:

     Other assets are carried at cost and are amortized on a straight-line basis
over the following lives:

<Table>
                                
Franchises.......................  -- the terms of the franchises (3-13
                                      years)
Goodwill.........................  -- 40 years
Organization costs...............  -- 5 years
Deferred loan costs..............  -- the term of the debt (8 years)
</Table>

INCOME TAXES:

     No provision for the payment or refund of income taxes has been provided
since the partners are responsible for reporting their distributive share of
partnerships net income or loss in their personal capacities.

                                      F-281
   476
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS:

     The Partnerships consider all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION:

     Customer fees are recorded as revenue in the period the service is
provided.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The carrying values of cash and cash equivalents, customer accounts
receivable, accounts payable and interpartnership debt approximate fair value.

USE OF ESTIMATES:

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

IMPACT OF YEAR 2000 (UNAUDITED):

     The Partnerships recognize that certain of its time-sensitive computer
programs and product distribution equipment may be affected by conversion to the
year 2000. During 1998, management began their evaluation of the information
systems, product distribution facilities, and vendor and supplier readiness. To
date, considerable progress has been made to complete the evaluation process, to
integrate and test compliance installations, and to prepare contingency plans.
In addition, third party suppliers are either fully compliant or are expected to
be compliant by December 31, 1999. Management expects to have all systems
compliant, or have a contingency plan in effect that will result in minimal
impact on the operations.

NEW ACCOUNTING PRONOUNCEMENT:

     In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the costs of Start-Up
Activities," which requires the Partnerships to expense all start-up costs
related to organizing a new business. This new standard also includes one-time
activities related to opening a new facility, introduction of a new product or
service, or conducting business with a new class of customer or in a new
territory. This standard is effective for the Partnerships' 1999 fiscal year.
The organization costs are fully amortized, resulting in SOP 98-5 having no
material effect on its financial position or the results of operations.

RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION:

     Certain reclassifications have been made to the 1996 and 1997 financial
statements to conform with the 1998 financial statement presentation. Such
reclassifications had no effect on the net income as previously stated.

                                      F-282
   477
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.  OTHER ASSETS

     At December 31, 1997 and 1998, other assets consisted of the following:

<Table>
<Caption>
                                                  1997           1998
                                               -----------    -----------
                                                        
Franchises and other.........................  $14,348,984    $14,535,774
Goodwill.....................................    3,429,845      3,429,845
Deferred loan costs..........................      694,819             --
Organization costs...........................       23,218         23,218
                                               -----------    -----------
                                                18,496,866     17,988,837
Less accumulated amortization................   11,690,288     12,807,825
                                               -----------    -----------
                                               $ 6,806,578    $ 5,181,012
                                               ===========    ===========
</Table>

     On December 30, 1998, the Partnerships' loan with a financial institution
was paid in full (Note 3). The related deferred loan costs and associated
accumulated amortization were written off and an extraordinary loss of $434,469
was recorded.

3.  DEBT

     The Partnerships had senior term note payable and a revolving credit loan
agreement with a financial institution. The senior term note payable was a
$29,500,000 loan which required varying quarterly payments which commenced on
September 30, 1996. On June 30, 1997, the loan agreement was amended to defer
the June 30, 1997 and September 30, 1997 principal payments and restructured the
required principal payment amounts due through December 31, 2003. The revolving
credit loan provided for borrowing up to $3,000,000 at the discretion of the
Partnerships. On June 30, 1997, the loan agreement was amended to increase the
amount provided for borrowing under the revolving credit loan to $3,750,000. At
December 31, 1997, the term notes and the revolving credit loan had a balance of
$28,387,500 and $1,050,000, respectively, with a total balance of $29,437,500.
At December 30, 1998, the term notes and the revolving credit loan had a balance
of $27,637,500 and $3,300,000, respectively; at that date, the total balance of
$30,937,500 and accrued interest were paid in full.

     Also on December 30, 1998, the Partnerships obtained a new interpartnership
loan agreement with ICP (Note 1). Borrowing under the interpartnership loan, as
well as interest and principal payments are due at the discretion of the
management of ICP, resulting in no minimum required annual principal payments.
The balance of the interpartnership loan at December 31, 1998 was $31,222,436.
The effective interest rate at December 31, 1998 was 8.5%.

4.  MANAGEMENT AGREEMENT

     The Partnerships have entered into a management agreement with Rifkin &
Associates, Inc. (Rifkin). The management agreement provides that Rifkin shall
manage the Operating Partnership and shall be entitled to annual compensation of
4% of gross revenues. Effective September 1, 1998, Rifkin conveyed its CATV
management business to R & A Management, LLC (RML). The result of this
transaction was the conveyance of the Rifkin management agreement (Rifkin
Agreement) to RML (RML Agreement). Expenses incurred pursuant to the Rifkin
Agreement and the RML Agreement are disclosed on the Consolidated Statement of
Operations.

                                      F-283
   478
             R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5.  LEASE COMMITMENTS

     At December 31, 1998, the Operating Partnership had lease commitments under
long-term operating leases as follows:

<Table>
                                                           
1999........................................................  $195,437
2000........................................................   189,643
2001........................................................   116,837
                                                              --------
          Total.............................................  $501,917
                                                              ========
</Table>

     Rent expense, including pole rent, was as follows for the periods
indicated:

<Table>
<Caption>
                                                                 TOTAL
                                                                 RENTAL
PERIOD                                                          EXPENSE
- ------                                                          --------
                                                             
Year Ended December 31, 1996................................    $262,231
Year Ended December 31, 1997................................     279,655
Year Ended December 31, 1998................................     295,107
</Table>

6.  RETIREMENT BENEFITS

     The Operating Partnership has a 401(k) plan for its employees that have
been employed by the Operating Partnership for at least one year. Employees of
the Operating Partnership can contribute up to 15% of their salary, on a
before-tax basis, with a maximum 1998 contribution of $10,000 (as set by the
Internal Revenue Service). The Operating Partnership matches participant
contributions up to a maximum of 50% of the first 3% of a participant's salary
contributed. All participant contributions and earnings are fully vested upon
contribution and Operating Partnership contributions and earnings vest 20% per
year of employment with the Operating Partnership, becoming fully vested after
five years. The Operating Partnership's matching contributions for the years
ended December 31, 1996, 1997 and 1998 were $15,549, $23,292 and $20,652,
respectively.

                                      F-284
   479

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of InterMedia Partners
and InterMedia Capital Partners IV, L.P.

     In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, of changes in equity and of cash flows
present fairly, in all material respects, the financial position of InterMedia
Cable Systems (comprised of components of InterMedia Partners and InterMedia
Capital Partners IV, L.P.) at September 30, 1999 and December 31, 1998, and the
results of their operations and their cash flows for the nine-months ended
September 30, 1999 and for the years ended December 31, 1998 and 1997 in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the management of
InterMedia Partners and InterMedia Capital Partners IV, L.P.; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States which 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,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

                                                  /s/ PRICEWATERHOUSECOOPERS LLP

San Francisco, California
January 6, 2000

                                      F-285
   480

                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

                            COMBINED BALANCE SHEETS

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                SEPTEMBER 30,
DECEMBER 31,
                                                                    1999
    1998
                                                                -------------
- ------------
                                                             

ASSETS
Accounts receivable, net of allowance for doubtful accounts
  of $903 and $899, respectively............................      $ 14,971
  $ 14,425
Receivables from affiliates.................................         7,966
     5,623
Prepaid expenses............................................         1,100
       423
Other current assets........................................           186
       350
                                                                  --------
  --------
  Total current assets......................................        24,223
    20,821
Intangible assets, net......................................       214,182
   255,356
Property and equipment, net.................................       228,676
   218,465
Deferred income taxes.......................................        15,279
    12,598
Investments and other non-current assets....................           544
     2,804
                                                                  --------
  --------
  Total assets..............................................      $482,904
  $510,044
                                                                  --------
  --------
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities....................      $ 15,504
  $ 19,230
Deferred revenue............................................        11,151
    11,104
Payables to affiliates......................................         2,265
     3,158
                                                                  --------
  --------
  Total current liabilities.................................        28,920
    33,492
Note payable to InterMedia Partners IV, L.P.................       406,975
   396,579
Deferred channel launch revenue.............................         3,583
     4,045
                                                                  --------
  --------
  Total liabilities.........................................       439,478
   434,116
                                                                  --------
  --------
Commitments and contingencies
Mandatorily redeemable preferred shares.....................        14,934
    14,184
Equity......................................................        28,492
    61,744
                                                                  --------
  --------
  Total liabilities and equity..............................      $482,904
  $510,044
                                                                  ========
  ========
</Table>

See accompanying notes to combined financial statements.

                                      F-286
   481

                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

                       COMBINED STATEMENTS OF OPERATIONS

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                            NINE MONTHS
YEAR ENDED
                                                               ENDED
DECEMBER 31,
                                                           SEPTEMBER 30,
- --------------------
                                                               1999
1998        1997
                                                           -------------
- --------    --------
                                                                      
       
REVENUES
Basic and cable services...............................      $105,275
$125,920    $112,592
Pay services...........................................        20,699
23,975      24,467
Other services.........................................        26,815
26,167      25,519
                                                             --------
- --------    --------
                                                              152,789
176,062     162,578
COSTS AND EXPENSES
Program fees...........................................        35,579
39,386      33,936
Other direct expenses..................................        15,280
16,580      16,500
Selling, general and administrative expenses...........        33,315
30,787      29,181
Management and consulting fees.........................         2,356
3,147       2,870
Depreciation and amortization..........................        79,325
85,982      81,303
                                                             --------
- --------    --------
                                                              165,855
175,882     163,790
                                                             --------
- --------    --------
Profit/(loss) from operations..........................       (13,066)
180      (1,212)
                                                             --------
- --------    --------
OTHER INCOME (EXPENSE)
Interest expense.......................................       (17,636)
(25,449)    (28,458)
Interest and other income..............................           187
341         429
Gain on sale of investment.............................         1,678
 --          --
Gain on sale/exchange of cable systems.................            --
26,218      10,006
Other expense..........................................        (4,397)
(3,188)     (1,431)
                                                             --------
- --------    --------
                                                              (20,168)
(2,078)    (19,454)
                                                             --------
- --------    --------
Loss before income tax benefit (expense)...............       (33,234)
(1,898)    (20,666)
Income tax benefit (expense)...........................         2,681
(1,623)      4,026
                                                             --------
- --------    --------
NET LOSS...............................................      $(30,553)      $
(3,521)   $(16,640)
                                                             ========
========    ========
</Table>

See accompanying notes to combined financial statements.

                                      F-287
   482

                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

                    COMBINED STATEMENT OF CHANGES IN EQUITY

                             (DOLLARS IN THOUSANDS)

<Table>
                                                             
Balance at January 1, 1997..................................    $ 69,746
Net loss....................................................     (16,640)
Accretion for mandatorily redeemable preferred shares.......        (882)
Net contributions from parent...............................       6,489
                                                                --------
Balance at December 31, 1997................................      58,713
Net loss....................................................      (3,521)
Accretion for mandatorily redeemable preferred shares.......        (945)
Net cash contributions from parent..........................       6,350
In-kind contribution from parent............................       1,147
                                                                --------
Balance at December 31, 1998................................      61,744
Net loss....................................................     (30,553)
Accretion for mandatorily redeemable preferred shares.......        (750)
Net distributions to parent.................................      (1,949)
                                                                --------
Balance at September 30, 1999...............................    $ 28,492
                                                                ========
</Table>

See accompanying notes to combined financial statements.

                                      F-288
   483

                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

                       COMBINED STATEMENTS OF CASH FLOWS

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                            NINE MONTHS
YEAR ENDED
                                                               ENDED
DECEMBER 31,
                                                           SEPTEMBER 30,
- --------------------
                                                               1999
1998        1997
                                                           -------------
- --------    --------
                                                                      
       
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss...............................................      $(30,553)      $
(3,521)   $(16,640)
Adjustments to reconcile net loss to cash flows from
  operating activities:
  Depreciation and amortization........................        79,325
85,982      81,303
  Loss on disposal of fixed assets.....................         1,497
3,177         504
  Gain on sale of investment...........................        (1,678)
 --          --
  Gain on sale/exchange of cable systems...............            --
(26,218)    (10,006)
  Changes in assets and liabilities:
     Accounts receivable...............................          (546)
(1,395)     (2,846)
     Receivables from affiliates.......................        (2,343)
(3,904)       (639)
     Prepaid expenses..................................          (677)
203        (251)
     Other current assets..............................           164
(106)        (10)
     Deferred income taxes.............................        (2,681)
1,623      (4,311)
     Other non-current assets..........................         1,088
(517)        (58)
     Accounts payable and accrued liabilities..........           134
(2,073)      4,436
     Deferred revenue..................................           740
1,208       1,399
     Payables to affiliates............................          (893)
373         469
     Accrued interest..................................        17,636
25,449      28,458
     Deferred channel launch revenue...................        (1,155)
2,895       2,817
                                                             --------
- --------    --------
  Cash flows from operating activities.................        60,058
83,176      84,625
                                                             --------
- --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment..................       (52,848)
(72,673)    (87,253)
  Sale/exchange of cable systems.......................            --
(398)     11,157
  Proceeds from sale of investment.....................         2,850
 --          --
  Intangible assets....................................          (871)
(372)       (506)
                                                             --------
- --------    --------
  Cash flows from investing activities.................       (50,869)
(73,443)    (76,602)
                                                             --------
- --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net (distributions) contributions to/from parent.....        (1,949)
6,350       6,489
  Net repayment of borrowings..........................        (7,240)
(16,083)    (14,512)
                                                             --------
- --------    --------
  Cash flows from financing activities.................        (9,189)
(9,733)     (8,023)
                                                             --------
- --------    --------
Net change in cash.....................................            --
 --          --
                                                             --------
- --------    --------
Cash at beginning of period............................            --
 --          --
                                                             --------
- --------    --------
Cash at end of period..................................      $     --       $
 --    $     --
                                                             ========
========    ========
</Table>

See accompanying notes to combined financial statements.

                                      F-289
   484

                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1.  BASIS OF PRESENTATION

THE CHARTER TRANSACTIONS

     InterMedia Partners, a California limited partnership ("IP-I"), and
InterMedia Capital Partners IV, L.P., a California limited partnership,
("ICP-IV", together with IP-I, "InterMedia") are affiliated through common
control and management. Robin Media Group, Inc. , a Nevada corporation, ("RMG")
is a majority owned subsidiary of ICP-IV. On April 20, 1999 InterMedia and
certain of its affiliates entered into agreements (the "Agreements") with
affiliates of Charter Communications, Inc. ("Charter") to sell and exchange
certain of their cable television systems ("the Charter Transactions"). The
Charter Transactions closed on October 1, 1999.

     Specifically, ICP-IV and its affiliates sold certain of their cable
television systems in Tennessee and Gainesville, Georgia through a combination
of asset sales and the sale of their equity interests in RMG, and exchanged
their systems in and around Greenville and Spartanburg, South Carolina for
Charter systems located in Indiana, Kentucky, Utah and Montana. Immediately upon
Charter's acquisition of RMG, IP-I exchanged its cable television systems in
Athens, Georgia, Asheville and Marion, North Carolina and Cleveland, Tennessee
for RMG's cable television systems located in middle Tennessee.

     The cable systems retained by Charter upon consummation of the Charter
Transactions, together with RMG, are referred to as the "InterMedia Cable
Systems," or the "Systems."

PRESENTATION

     The accompanying combined financial statements represent the financial
position of the InterMedia Cable Systems as of September 30, 1999 and December
31, 1998 and 1997 and the results of their operations and their cash flows for
the nine months ended September 30, 1999 and the years ended December 31, 1998
and 1997. The Systems being sold or exchanged do not individually or
collectively comprise a separate legal entity. Accordingly, the combined
financial statements have been carved-out from the historical accounting records
of InterMedia.

CARVE-OUT METHODOLOGY

     Throughout the periods covered by the combined financial statements, the
individual cable systems were operated and accounted for separately. However,
the Charter Transactions exclude certain systems (the "Excluded Systems") which
were operated as part of the Marion, North Carolina and western Tennessee
systems throughout the periods presented in the combined financial statements.
For purposes of carving out and excluding the results of operations and
financial position of the Excluded Systems from the combined financial
statements, management has estimated the revenues, expenses, assets and
liabilities associated with each Excluded System based on the ratio of each
Excluded System's basic subscribers to the total basic subscribers served by the
Marion, North Carolina and western Tennessee systems, respectively. Management
believes the basis used for these allocations is reasonable. The Systems'
results of operations are not necessarily indicative of future operating results
or the results that would have occurred if the Systems were a separate legal
entity.

     Management and consulting fees represent an allocation of management fees
charged to IP-I and ICP-IV by InterMedia Capital Management, a California
limited partnership ("ICM") and InterMedia Management, Inc. ("IMI"),
respectively. ICM is a limited partner of IP-I. IMI is the managing member of
each of the general partners of IP-I and ICP-IV. These fees are charged at a
fixed amount per annum and have been allocated to the Systems based upon the
allocated contributed capital of the individual systems as compared to the total
contributed capital of InterMedia's subsidiaries.

                                      F-290
   485
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

     As more fully described in Note 9 -- "Related Party Transactions," certain
administrative services are also provided by IMI and are charged to all
affiliates based on relative basic subscriber percentages.

CASH AND INTERCOMPANY ACCOUNTS

     Under InterMedia's centralized cash management system, cash requirements of
its individual operating units were generally provided directly by InterMedia
and the cash generated or used by the Systems was transferred to/from
InterMedia, as appropriate, through intercompany accounts. The intercompany
account balances between InterMedia and the individual operating units, except
RMG's intercompany note payable to InterMedia Partners IV, L.P. ("IP-IV"), as
described in Note 7 -- "Note Payable to InterMedia Partners IV, L.P.," are not
intended to be settled. Accordingly, the balances, other than RMG's note payable
to IP-IV, are included in equity and all net cash flows from operations,
investing activities and financing activities have been included in the Systems'
net (distributions) contributions to/from parent in the combined statements of
cash flows.

     IP-I and ICP-IV or its subsidiaries maintain all external debt to fund and
manage InterMedia's operations on a centralized basis. The combined financial
statements present only the debt and related interest expense of RMG, which was
assumed and repaid by Charter pursuant to the Charter Transactions. See Note
7 -- "Note Payable to InterMedia Partners IV, L.P." Debt, unamortized debt issue
costs and interest expense related to the financing of the cable systems not
owned by RMG have not been allocated to the InterMedia Cable Systems. As such,
the level of debt, unamortized debt issue costs and related interest expense
presented in the combined financial statements are not representative of the
debt that would be required or interest expense incurred if InterMedia Cable
Systems were a separate legal entity.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

     Cable television service revenue is recognized in the period in which
services are provided to customers. Deferred revenue generally represents
revenue billed in advance and deferred until cable service is provided.
Installation fees are recognized immediately into revenue to the extent of
direct selling costs incurred. Any fees in excess of such costs are deferred and
amortized into income over the period that customers are expected to remain
connected to the cable television system.

PROPERTY AND EQUIPMENT

     Additions to property and equipment, including new customer installations,
are recorded at cost. Self-constructed fixed assets include materials, labor and
overhead. Costs of disconnecting and reconnecting cable service are expensed.
Expenditures for maintenance and repairs are charged to expense as incurred.
Expenditures for major renewals and improvements are capitalized. Capitalized
fixed assets are written down to recoverable values whenever recoverability
through operations or sale of the systems becomes doubtful. Gains and losses on
disposal of property and equipment are included in the Systems' statements of
operations when the assets are sold or retired from service.

     Depreciation is computed using the double-declining balance method over the
following estimated useful lives:

<Table>
<Caption>
                                                               YEARS
                                                              -------
                                                           
Cable television plant......................................  5 -- 10
Buildings and improvements..................................    10
Furniture and fixtures......................................  3 -- 7
Equipment and other.........................................  3 -- 10
</Table>

                                      F-291
   486
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

INTANGIBLE ASSETS

     The Systems have franchise rights to operate cable television systems in
various towns and political subdivisions. Franchise rights are being amortized
over the lesser of the remaining franchise lives or the base ten and twelve-year
terms of IP-I and ICP-IV, respectively. The remaining lives of the franchises
range from one to seventeen years.

     Goodwill represents the excess of acquisition costs over the fair value of
net tangible and franchise assets acquired and liabilities assumed and is being
amortized on a straight-line basis over the base ten or twelve-year term of IP-I
and ICP-IV, respectively.

     Capitalized intangibles are written down to recoverable values whenever
recoverability through operations or sale of the systems becomes doubtful. Each
year, the Systems evaluate the recoverability of the carrying value of their
intangible assets by assessing whether the projected cash flows, including
projected cash flows from sale of the systems, is sufficient to recover the
unamortized costs of these assets.

INCOME TAXES

     Income taxes reported in InterMedia Cable Systems' combined financial
statements represent the tax effects of RMG's results of operations. RMG as a
corporation is the only entity within InterMedia Cable Systems which reports a
provision/benefit for income taxes. No provision or benefit for income taxes is
reported by any of the other cable systems within the InterMedia Cable Systems
structure because these systems are currently owned by various partnerships,
and, as such, the tax effects of these cable systems' results of operations
accrue to the partners.

     RMG accounts for income taxes using the asset and liability approach which
requires the recognition of deferred tax assets and liabilities for the tax
consequences of temporary differences by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying value of receivables, payables, deferred revenue and accrued
liabilities approximates fair value due to their short maturity.

3.  SALE AND EXCHANGE OF CABLE PROPERTIES

SALE

     On December 5, 1997, RMG sold its cable television assets serving
approximately 7,400 (unaudited) basic subscribers in and around Royston and
Toccoa, Georgia. The sale resulted in a gain, calculated as follows:

<Table>
                                                             
Proceeds from sale..........................................    $ 11,212
Net book value of assets sold...............................      (1,206)
                                                                --------
Gain on sale................................................    $ 10,006
                                                                ========
</Table>

                                      F-292
   487
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

EXCHANGE

     On December 31, 1998, certain of the Systems' cable television assets
located in and around western and eastern Tennessee ("Exchanged Assets"),
serving approximately 10,600 (unaudited) basic subscribers, plus cash of $398
were exchanged for other cable television assets located in and around western
and eastern Tennessee, serving approximately 10,000 (unaudited) basic
subscribers.

     The cable television assets received have been recorded at fair market
value, allocated as follows:

<Table>
                                                             
Property and equipment......................................    $  5,141
Franchise rights............................................      24,004
                                                                --------
Total.......................................................    $ 29,145
                                                                ========
</Table>

     The exchange resulted in a gain of $26,218 calculated as the difference
between the fair value of the assets received and the net book value of the
Exchanged Assets less cash paid of $398.

4.  INTANGIBLE ASSETS

     Intangible assets consist of the following:

<Table>
<Caption>
                                                             SEPTEMBER 30,
DECEMBER 31,
                                                                 1999
 1998
                                                             -------------
- ------------
                                                          

Franchise rights.........................................      $ 332,800       $
332,157
Goodwill.................................................         58,505
 58,505
Other....................................................            573
    345
                                                               ---------
- ---------
                                                                 391,878
391,007
Accumulated amortization.................................       (177,696)
(135,651)
                                                               ---------
- ---------
                                                               $ 214,182       $
255,356
                                                               =========
=========
</Table>

5.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

<Table>
<Caption>
                                                             SEPTEMBER 30,
DECEMBER 31,
                                                                 1999
 1998
                                                             -------------
- ------------
                                                          

Land.....................................................      $   1,080       $
  1,068
Cable television plant...................................        266,848
231,937
Building and improvements................................          5,546
  5,063
Furniture and fixtures...................................          3,509
  3,170
Equipment and other......................................         29,953
 25,396
Construction-in-progress.................................         22,999
 18,065
                                                               ---------
- ---------
                                                                 329,935
284,699
Accumulated depreciation.................................       (101,259)
(66,234)
                                                               ---------
- ---------
                                                               $ 228,676       $
218,465
                                                               =========
=========
</Table>

                                      F-293
   488
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

6.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued liabilities consist of the following:

<Table>
<Caption>
                                                             SEPTEMBER 30,
DECEMBER 31,
                                                                 1999
 1998
                                                             -------------
- ------------
                                                          

Accounts payable.........................................      $  4,793
$  1,780
Accrued program costs....................................         1,504
  1,897
Accrued franchise fees...................................         2,659
  4,676
Accrued copyright fees...................................           145
    406
Accrued capital expenditures.............................         1,355
  5,215
Accrued payroll costs....................................         2,746
  1,784
Accrued property and other taxes.........................         1,524
    862
Other accrued liabilities................................           778
  2,610
                                                               --------
- --------
                                                               $ 15,504
$ 19,230
                                                               ========
========
</Table>

7.  NOTE PAYABLE TO INTERMEDIA PARTNERS IV, L.P.

     RMG's note payable to IP-IV consists of the following:

<Table>
<Caption>
                                                             SEPTEMBER 30,
DECEMBER 31,
                                                                 1999
 1998
                                                             -------------
- ------------
                                                          

Intercompany revolving credit facility, $1,200,000
  commitment as of September 30, 1999, interest currently
  at 6.60% payable on maturity, matures December 31,
  2006...................................................      $406,975
$396,579
                                                               ========
========
</Table>

     RMG's debt is outstanding under an intercompany revolving credit facility
executed with IP-IV. The revolving credit facility currently provides for
$1,200,000 of available credit.

     RMG's intercompany revolving credit facility requires repayment of the
outstanding principal and accrued interest on the earlier of (i) December 31,
2006, or (ii) acceleration of any of IP-IV's obligations to repay under its bank
debt outstanding under its revolving credit facility ("IP-IV Revolving Credit
Facility") and term loan agreement ("IP-IV Term Loan", together with the IP-IV
Revolving Credit Facility, the "IP-IV Bank Facility") dated July 30, 1996.

     On October 1, 1999, Charter assumed and repaid RMG's intercompany revolving
credit facility pursuant to the Charter Transactions.

     Interest rates under RMG's intercompany revolving credit facility are
calculated monthly and are referenced to those made available under the IP-IV
Bank Facility. Interest rates ranged from 6.21% to 6.96% during the nine months
ended September 30, 1999.

     Advances under the IP-IV Bank Facility are available under interest rate
options related to the base rate of the administrative agent for the IP-IV Bank
Facility ("ABR") or LIBOR. Interest rates on borrowings under the IP-IV Term
Loan vary from LIBOR plus 1.75% to LIBOR plus 2.00% or ABR plus 0.50% to ABR
plus 0.75% based on IP-IV's ratio of debt outstanding to annualized quarterly
operating cash flow ("Senior Debt Ratio"). Interest rates on borrowings under
the IP-IV Revolving Credit Facility also vary from LIBOR plus 0.625% to LIBOR
plus 1.50% or ABR to ABR plus 0.25% based on IP-IV's Senior Debt Ratio. The
IP-IV Bank Facility requires quarterly payment of fees on the unused portion of
the IP-IV Revolving Credit Facility of 0.375% per annum when the Senior Debt
Ratio is greater than 4.0:1.0 and at 0.25% when the Senior Debt Ratio is less
than or equal to 4.0:1.0.

                                      F-294
   489
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

     The terms and conditions of RMG's intercompany debt agreement are not
necessarily indicative of the terms and conditions which would be available if
the Systems were a separate legal entity.

8.  MANDATORILY REDEEMABLE PREFERRED SHARES

     RMG has Redeemable Preferred Stock outstanding at September 30, 1999 and
December 31, 1998, which has an annual dividend of 10.0% and participates in any
dividends paid on the common stock at 10.0% of the dividend per share paid on
the common stock. The Redeemable Preferred Stock bears a liquidation preference
of $12,000 plus any accrued but unpaid dividends at the time of liquidation and
is mandatorily redeemable on September 30, 2006 at the liquidation preference
amount. Pursuant to the terms of the Agreements, upon consummation of the
Charter Transactions, Charter redeemed RMG's Redeemable Preferred Stock at the
liquidation preference amount.

9.  RELATED PARTY TRANSACTIONS

     ICM and IMI provide certain management services to IP-I and ICP-IV,
respectively, for per annum fixed fees, of which 20% per annum is deferred and
payable in each following year in order to support InterMedia's debt. Management
fees charged to InterMedia for the nine months ended September 30, 1999 and the
years ended December 31, 1998 and 1997 amounted to $4,059, $5,410 and $6,395,
respectively, of which $2,356, $3,147 and $2,870, respectively, has been charged
to the Systems.

     IMI has entered into agreements with both IP-I and ICP-IV to provide
accounting and administrative services at cost. Under the terms of the
agreements, the expenses associated with rendering these services are charged to
the Systems and other affiliates based upon relative basic subscriber
percentages. Management believes this method to be reflective of the actual
cost. IMI also pays on behalf of the Systems and other affiliates "pass through
costs" that are specifically identifiable to the Systems and other affiliates.
These include, but are not limited to programming fees and copyright fees.
During the nine months ended September 30, 1999 and the years ended December 31,
1998 and 1997, IMI administrative fees charged to the Systems totaled $3,093,
$3,657 and $4,153, respectively. Receivables from affiliates at September 30,
1999 and December 31, 1998 include $5,873 and $52, respectively, of advances to
IMI, net of administrative fees charged by IMI and operating expenses paid by
IMI on behalf of the Systems.

     IP-I is majority-owned, and ICP-IV is owned in part, by AT&T Broadband &
Internet Services ("AT&TBIS"), formerly Tele-Communications, Inc. As affiliates
of AT&TBIS, IP-I and ICP-IV are able to purchase programming services from a
subsidiary of AT&TBIS. Management believes that the overall programming rates
made available through this relationship are lower than the Systems could obtain
separately. Such volume rates may not continue to be available in the future
should AT&TBIS's ownership interest in InterMedia significantly decrease.
Program fees charged by the AT&TBIS subsidiary to the Systems for the nine
months ended September 30, 1999 and the years ended December 31, 1998 and 1997
amounted to $26,352, $30,884 and $26,815, respectively. Payables to affiliates
include programming fees payable to the AT&TBIS subsidiary of $2,918 at December
31, 1998. There were no programming fees payable to the AT&TBIS subsidiary at
September 30, 1999.

     On January 1, 1998 an affiliate of AT&TBIS entered into agreements with
InterMedia to manage the Systems' advertising business and related services for
an annual fixed fees per advertising sales subscriber as defined by the
agreements. In addition to the annual fixed fee, AT&TBIS is entitled to varying
percentage shares of the incremental growth in annual cash flows from
advertising sales above specified targets. Management fees charged by the
AT&TBIS subsidiary for the nine months ended September 30, 1999 and the year
ended December 31, 1998 amounted to $227 and $292, respectively. Receivables
from affiliates at

                                      F-295
   490
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

September 30, 1999 and December 31, 1998 include $2,034 and $3,437,
respectively, of receivable from AT&TBIS for advertising sales.

     As part of its normal course of business the Systems are involved in
transactions with affiliates of InterMedia which own and operate cable
television systems. Such transactions include purchases and sales, at cost, of
inventories used in construction of cable plant. Receivables from affiliates at
September 30, 1999 and December 31, 1998 include $59 and $2,134, respectively,
of receivables from affiliated systems. Payables to affiliates at September 30,
1999 and December 31, 1998 include $2,265 and $208, respectively, of payables to
affiliated systems.

10.  CABLE TELEVISION REGULATION

     Cable television legislation and regulatory proposals under consideration
from time to time by Congress and various federal agencies have in the past, and
may in the future, materially affect the Systems and the cable television
industry.

     The cable industry is currently regulated at the federal and local levels
under the Cable Act of 1984, the Cable Act of 1992 ("the 1992 Act"), the
Telecommunications Act of 1996 (the "1996 Act") and regulations issued by the
Federal Communications Commission ("FCC") in response to the 1992 Act. FCC
regulations govern the determination of rates charged for basic, expanded basic
and certain ancillary services, and cover a number of other areas including
customer services and technical performance standards, the required transmission
of certain local broadcast stations and the requirement to negotiate
retransmission consent from major network and certain local television stations.
Among other provisions, the 1996 Act eliminated rate regulation on the expanded
basic tier effective March 31, 1999.

     Current regulations issued in conjunction with the 1992 Act empower the FCC
and/or local franchise authorities to order reductions of existing rates which
exceed the maximum permitted levels and to require refunds measured from the
date a complaint is filed in some circumstances or retroactively for up to one
year in other circumstances. Management believes it has made a fair
interpretation of the 1992 Act and related FCC regulations in determining
regulated cable television rates and other fees based on the information
currently available. However, complaints have been filed with the FCC on rates
for certain franchises and certain local franchise authorities have challenged
existing and prior rates. Further complaints and challenges could be
forthcoming, some of which could apply to revenue recorded in 1999 and prior
years. Management believes that the effect, if any, of these complaints and
challenges will not be material to the Systems' financial position or results of
operations.

     Many aspects of regulation at the federal and local levels are currently
the subject of judicial review and administrative proceedings. In addition, the
FCC is required to conduct rulemaking proceedings to implement various
provisions of the 1996 Act. It is not possible at this time to predict the
ultimate outcome of these reviews or proceedings or their effect on the Systems.

11.  COMMITMENTS AND CONTINGENCIES

     The Systems are committed to provide cable television services under
franchise agreements with remaining terms of up to seventeen years. Franchise
fees of up to 5% of gross revenues are payable under these agreements.

     Current FCC regulations require that cable television operators obtain
permission to retransmit major network and certain local television station
signals. The Systems have entered into long-term retransmission agreements with
all applicable stations in exchange for in-kind and/or other consideration.

                                      F-296
   491
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

     InterMedia has been named in purported and certified class actions in
various jurisdictions concerning late fee charges and practices. Certain cable
systems owned by InterMedia charge late fees to customers who do not pay their
cable bills on time. These late fee cases challenge the amount of the late fees
and the practices under which they are imposed. The plaintiffs raise claims
under state consumer protection statutes, other state statutes and common law.
The plaintiffs generally allege that the late fees charged by InterMedia's cable
systems, including the Systems in the States of Tennessee, South Carolina and
Georgia are not reasonably related to the costs incurred by the cable systems as
a result of the late payment. The plaintiffs seek to require cable systems to
reduce their late fees on a prospective basis and to provide compensation for
alleged excessive late fee charges for past periods. These cases are either at
the early stages of the litigation process or are subject to a case management
order that sets forth a process leading to mediation. Based upon the facts
available management believes that, although no assurances can be given as to
the outcome of these actions, the ultimate disposition of these matters should
not have a material adverse effect upon the financial condition of the Systems.

     In the Spring of 1999 the Tennessee Department of Revenue ("TDOR") proposed
legislation that was passed by the Tennessee State Legislature which replaced
the former Amusement Tax with a new sales tax on all cable service revenues in
excess of fifteen dollars per month effective September 1, 1999. The new tax is
computed at a rate approximately equal to the former effective tax rate.

     Prior to the passage of this legislation, the TDOR suggested that under its
interpretation of the former legislation it could assess, for prior periods up
to three years, additional taxes on expanded basic service revenue. Management
believes that based on subsequent correspondence with the TDOR that the TDOR
will not pursue additional taxes under the former amusement tax legislation.

     The Systems are subject to other claims and litigation in the ordinary
course of business. In the opinion of management, the ultimate outcome of any
existing litigation or other claims will not have a material effect on the
Systems' financial position or results of operations.

     The Systems have entered into pole rental agreements and lease certain of
its facilities and equipment under non-cancelable operating leases. Minimum
rental commitments at September 30, 1999 for the next five years and thereafter
under non-cancelable operating leases related to the Systems are as follows:

<Table>
                                                           
1999........................................................  $  169
2000........................................................     623
2001........................................................     580
2002........................................................     366
2003........................................................     252
2004 and thereafter.........................................   1,080
                                                              ------
                                                              $3,070
                                                              ======
</Table>

     Rent expense, including pole rental agreements, for the nine months ended
September 30, 1999 and for the years ended December 31, 1998 and 1997 was
$2,243, $2,817 and $2,828, respectively.

                                      F-297
   492
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

12.  INCOME TAXES

     Income tax benefit (expense) consists of the following:

<Table>
<Caption>
                                                       NINE MONTHS         YEAR
ENDED
                                                          ENDED
DECEMBER 31,
                                                      SEPTEMBER 30,
- ------------------
                                                          1999          1998
  1997
                                                      -------------    -------
 -------
                                                                 
 
Current federal...................................       $     --      $    --
 $  (285)
Deferred federal..................................          2,415       (1,454)
   3,813
Deferred state....................................            266         (169)
     498
                                                         --------      -------
 -------
                                                         $  2,681      $(1,623)
 $ 4,026
                                                         ========      =======
 =======
</Table>

     Deferred income taxes relate to temporary differences as follows:

<Table>
<Caption>
                                                             SEPTEMBER 30,
DECEMBER 31,
                                                                 1999
 1998
                                                             -------------
- ------------
                                                          

Property and equipment...................................      $  (7,425)      $
 (7,258)
Intangible assets........................................        (10,514)
(12,930)
                                                               ---------
- ---------
                                                                 (17,939)
(20,188)
Loss carryforward -- federal.............................         31,924
 31,547
Loss carryforward -- state...............................            341
    297
Other....................................................            953
    942
                                                               ---------
- ---------
                                                               $  15,279       $
 12,598
                                                               =========
=========
</Table>

     At December 31, 1998, RMG had net operating loss carryforwards for federal
income tax purposes aggregating $92,785, which expire through 2018. RMG is a
loss corporation as defined in Section 382 of the Internal Revenue Code.
Therefore, if certain substantial changes in RMG's ownership should occur, there
could be a significant annual limitation on the amount of loss carryforwards
which can be utilized.

     InterMedia's management has not established a valuation allowance to reduce
the deferred tax assets related to RMG's unexpired net operating loss
carryforwards. Due to an excess of appreciated asset value over the tax basis of
RMG's net assets, management believes it is more likely than not that the
deferred tax assets related to unexpired net operating losses will be realized.

     A reconciliation of the tax benefit (expense) computed at the statutory
federal rate and the benefit (expense) reported in the accompanying combined
statements of operations is as follows:

<Table>
<Caption>
                                                   NINE MONTHS           YEAR
ENDED
                                                      ENDED             DECEMBER
31,
                                                  SEPTEMBER 30,
- ----------------------
                                                      1999           1998
 1997
                                                  -------------    ---------
- ---------
                                                             

Tax benefit at federal statutory rate.........      $   4,476      $     626
$   4,454
State taxes, net of federal benefit...........            522             73
     498
Goodwill amortization.........................         (1,675)        (2,309)
  (2,056)
Realization of acquired tax benefit...........             --             --
     346
Other.........................................           (642)           (13)
     784
                                                    ---------      ---------
- ---------
                                                    $   2,681      $  (1,623)
$   4,026
                                                    =========      =========
=========
</Table>

                                      F-298
   493
                            INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS
                                   IV, L.P.)

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

13.  CHANNEL LAUNCH REVENUE

     During 1997 and 1998, the Systems were credited with amounts representing
their share of payments received or to be received by InterMedia from certain
programmers to launch and promote their new channels. Of the total amount
credited, the Systems recognized advertising revenue of $434, $586 and $1,182
during the nine months ended September 30, 1999 and the years ended December 31,
1998 and 1997, respectively, for advertisements provided by the Systems to
promote the new channels. The remaining amounts credited to the Systems are
being amortized over the respective terms of the program agreements which range
between five to ten years. For the nine months ended September 30, 1999 and the
years ended December 31, 1998 and 1997, the Systems amortized and recorded as
other service revenues $721, $956 and $894, respectively. Also, during 1998 the
Systems recorded a receivable from a programmer, of which $853 and $1,791
remained outstanding at September 30, 1999 and December 31, 1998, respectively,
for the launch and promotion of its new channel.

14.  SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

     In connection with RMG's sale of its cable television assets located in
Royston and Toccoa, Georgia in December 1997, as described in Note 3 -- "Sale
and Exchange of Cable Properties," net cash proceeds received were as follows:

<Table>
                                                             
Proceeds from sale..........................................    $ 11,212
Receivable from buyer.......................................         (55)
                                                                --------
  Net proceeds received from buyer..........................    $ 11,157
                                                                ========
</Table>

     In connection with the exchange of certain cable assets in and around
western and eastern Tennessee on December 31, 1998, as described in Note 3, the
Systems paid cash of $398.

     In December 1998, IP-IV contributed its 4.99% partner interest in a limited
partnership to RMG. The book value of the investment at the time of the
contribution was $1,147.

     Total accretion on RMG's Redeemable Preferred Stock for the nine months
ended September 30, 1999 and for the years ended December 31, 1998 and 1997
amounted to $750, $945 and $882, respectively.

15.  EMPLOYEE BENEFIT PLANS

     The Systems participate in the InterMedia Partners Tax Deferred Savings
Plan which covers all full-time employees who have completed at least six months
of employment. The plan provides for a base employee contribution of 1% and a
maximum of 15% of compensation. The Systems' matching contributions under the
plan are at the rate of 50% of the employee's contribution, up to a maximum of
5% of compensation.

                                      F-299
   494

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Charter Communications Holdings, LLC:

     We have audited the accompanying statements of operations and changes in
net assets and cash flows of Sonic Communications Cable Television Systems for
the period from April 1, 1998, through May 20, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Sonic
Communications Cable Television Systems for the period from April 1, 1998,
through May 20, 1998, in conformity with generally accepted accounting
principles.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
February 5, 1999

                                      F-300
   495

                 SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS

               STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                  APRIL 1,
                                                                1998, THROUGH
                                                                   MAY 20,
                                                                    1998
                                                                -------------
                                                             
REVENUES....................................................     $ 6,343,226
                                                                 -----------
OPERATING EXPENSES:
  Operating costs...........................................       1,768,393
  General and administrative................................       1,731,471
  Depreciation and amortization.............................       1,112,057
                                                                 -----------
                                                                   4,611,921
                                                                 -----------
     Income from operations.................................       1,731,305
INTEREST EXPENSE............................................         289,687
                                                                 -----------
     Income before provision for income taxes...............       1,441,618
PROVISION IN LIEU OF INCOME TAXES...........................         602,090
                                                                 -----------
     Net income.............................................         839,528
NET ASSETS, April 1, 1998...................................      55,089,511
                                                                 -----------
NET ASSETS, May 20, 1998....................................     $55,929,039
                                                                 ===========
</Table>

The accompanying notes are an integral part of this statement.

                                      F-301
   496

                 SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS

                            STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                 PERIOD FROM
                                                                  APRIL 1,
                                                                1998, THROUGH
                                                                   MAY 20,
                                                                    1998
                                                                -------------
                                                             

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................     $   839,528
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
     Depreciation and amortization..........................       1,112,057
     Changes in assets and liabilities --
       Accounts receivable, net.............................          49,980
       Prepaid expenses and other...........................         171,474
       Accounts payable and accrued expenses................      (1,479,682)
                                                                 -----------
          Net cash provided by operating activities.........         693,357
                                                                 -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................        (470,530)
  Payments of franchise costs...............................        (166,183)
                                                                 -----------
          Net cash used in investing activities.............        (636,713)
                                                                 -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on long-term debt................................         (41,144)
                                                                 -----------
          Net cash used in financing activities.............         (41,144)
NET INCREASE IN CASH AND CASH EQUIVALENTS...................          15,500
                                                                 -----------
CASH AND CASH EQUIVALENTS, beginning of period..............         532,238
                                                                 -----------
CASH AND CASH EQUIVALENTS, end of period....................     $   547,738
                                                                 ===========
</Table>

The accompanying notes are an integral part of this statement.

                                      F-302
   497

                 SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS

                         NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND BASIS OF PRESENTATION

     Sonic Communications Cable Television Systems (the Company) operates cable
television systems in California and Utah.

     Effective May 21, 1998, the Company's net assets were acquired by Charter
Communications Holdings, LLC.

CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

PROPERTY, PLANT AND EQUIPMENT

     The Company depreciates its cable distribution systems using the
straight-line method over estimated useful lives of 5 to 15 years for systems
acquired on or after April 1, 1981. Systems acquired before April 1, 1981, are
depreciated using the declining balance method over estimated useful lives of 8
to 20 years.

     Vehicles, machinery, office, and data processing equipment and buildings
are depreciated using the straight-line or declining balance method over
estimated useful lives of 3 to 25 years. Capital leases and leasehold
improvements are amortized using the straight-line or declining balance method
over the shorter of the lease term or the estimated useful life of the asset.

INTANGIBLES

     The excess of amounts paid over the fair values of tangible and
identifiable intangible assets acquired in business combinations are amortized
using the straight-line method over the life of the franchise. Identifiable
intangible assets such as franchise rights, noncompete agreements and subscriber
lists are amortized using the straight-line method over their useful lives,
generally 3 to 15 years.

REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of May 20, 1998, no installation revenue has been
deferred, as direct selling costs exceeded installation revenue.

INTEREST EXPENSE

     Interest expense relates to a note payable to a stockholder of the Company,
which accrues interest at 7.8% per annum.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the

                                      F-303
   498
                 SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

2.  COMMITMENTS AND CONTINGENCIES:

FRANCHISES

     The Company has committed to provide cable television services under
franchise agreements with various governmental bodies for remaining terms up to
13 years. Franchise fees of up to 5% of gross revenues are payable under these
agreements.

LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Leases and rental costs charged to expense for the period from
April 1, 1998, through May 20, 1998, were $59,199.

     The Company also rents utility poles 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
period from April 1, 1998, through May 20, 1998, was $64,159.

3.  INCOME TAXES:

     The results of the Company are included in the consolidated federal income
tax return of its parent, Sonic Enterprises, Inc., which is responsible for tax
payments applicable to the Company. The financial statements reflect a provision
in lieu of income taxes as if the Company was filing on a separate company
basis. Accordingly, the Company has included the provision in lieu of income
taxes in the accompanying statement of operations.

     The provision in lieu of income taxes approximates the amount of tax
computed using U.S. statutory rates, after reflecting state income tax expense
of $132,510 for the period from April 1, 1998, through May 20, 1998.

4.  REGULATION IN THE CABLE TELEVISION INDUSTRY:

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject to
judicial proceeding and administrative or legislative proposals. Legislation and
regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. For the period from
April 1, 1998, through May 20, 1998, the amount refunded by the Company has been
insignificant. The Company may be required to refund additional amounts in the
future.

                                      F-304
   499
                 SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The Company believes that it has complied in all material respects with the
ownership of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company are unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Systems.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

                                      F-305
   500

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Long Beach Acquisition Corp.:

     We have audited the accompanying statements of operations, stockholder's
equity and cash flows of Long Beach Acquisition Corp. (a Delaware corporation)
for the period from April 1, 1997, through May 23, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Long Beach
Acquisition Corp. for the period from April 1, 1997, through May 23, 1997, in
conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  July 31, 1998

                                      F-306
   501

                          LONG BEACH ACQUISITION CORP.

                            STATEMENT OF OPERATIONS
            FOR THE PERIOD FROM APRIL 1, 1997, THROUGH MAY 23, 1997

<Table>
                                                             
SERVICE REVENUES............................................    $ 5,313,282
                                                                -----------
EXPENSES:
  Operating costs...........................................      1,743,493
  General and administrative................................      1,064,841
  Depreciation and amortization.............................      3,576,166
  Management fees -- related parties........................        230,271
                                                                -----------
                                                                  6,614,771
                                                                -----------
     Loss from operations...................................     (1,301,489)
INTEREST EXPENSE............................................        753,491
                                                                -----------
     Net loss...............................................    $(2,054,980)
                                                                ===========
</Table>

The accompanying notes are an integral part of this statement.

                                      F-307
   502

                          LONG BEACH ACQUISITION CORP.

                       STATEMENT OF STOCKHOLDER'S EQUITY
            FOR THE PERIOD FROM APRIL 1, 1997, THROUGH MAY 23, 1997

<Table>
<Caption>
                                 CLASS A,     SENIOR
                                  VOTING    REDEEMABLE    ADDITIONAL
          TOTAL
                                  COMMON     PREFERRED      PAID-IN
ACCUMULATED    STOCKHOLDER'S
                                  STOCK        STOCK        CAPITAL
DEFICIT         EQUITY
                                 --------   -----------   -----------
- ------------   -------------
                                                            
      
BALANCE,
  April 1, 1997................    $100     $11,000,000   $33,258,723
$(51,789,655)   $(7,530,832)
  Net loss.....................      --              --            --
(2,054,980)    (2,054,980)
                                   ----     -----------   -----------
- ------------    -----------
BALANCE,
  May 23, 1997.................    $100     $11,000,000   $33,258,723
$(53,844,635)   $(9,585,812)
                                   ====     ===========   ===========
============    ===========
</Table>

The accompanying notes are an integral part of this statement.

                                      F-308
   503

                          LONG BEACH ACQUISITION CORP.

                            STATEMENT OF CASH FLOWS
            FOR THE PERIOD FROM APRIL 1, 1997, THROUGH MAY 23, 1997

<Table>
                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $(2,054,980)
  Adjustments to reconcile net loss to net cash provided by
     operating activities-
     Depreciation and amortization..........................      3,576,166
     Changes in assets and liabilities, net of effects from
      acquisition-
       Accounts receivable, net.............................       (830,725)
       Prepaid expenses and other...........................        (19,583)
       Accounts payable and accrued expenses................       (528,534)
       Other current liabilities............................        203,282
                                                                -----------
          Net cash provided by operating activities.........        345,626
                                                                -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................       (596,603)
                                                                -----------
          Net cash used in investing activities.............       (596,603)
                                                                -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS...................       (250,977)
CASH AND CASH EQUIVALENTS, beginning of period..............      3,544,462
                                                                -----------
CASH AND CASH EQUIVALENTS, end of period....................    $ 3,293,485
                                                                ===========
CASH PAID FOR INTEREST......................................    $ 1,316,462
                                                                ===========
</Table>

The accompanying notes are an integral part of this statement.

                                      F-309
   504

                          LONG BEACH ACQUISITION CORP.

                         NOTES TO FINANCIAL STATEMENTS
                                  MAY 23, 1997

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND BASIS OF PRESENTATION

     Long Beach Acquisition Corp. (LBAC or the "Company") was a wholly owned
corporation of KC Cable Associates, L.P., a partnership formed through a joint
venture agreement between Kohlberg, Kravis, Roberts & Co. (KKR) and Cablevision
Industries Corporation (CVI). The Company was formed to acquire cable television
systems serving Long Beach, California, and surrounding areas.

     On May 23, 1997, the Company executed a stock purchase agreement with
Charter Communications Long Beach, Inc. (CC-LB) whereby CC-LB purchased all of
the outstanding stock of the Company for an aggregate purchase price, net of
cash acquired, of $150.9 million. Concurrent with this stock purchase, CC-LB was
acquired by Charter Communications, Inc. (Charter) and Kelso Investment
Associates V, L.P., an investment fund (Kelso).

     As of May 23, 1997, LBAC provided cable television service to subscribers
in southern California.

CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation. The
costs of disconnecting a customer are charged to expense in the period incurred.
Expenditures for repairs and maintenance are charged to expense as incurred, and
equipment replacement costs and betterments are capitalized.

     Depreciation is provided on a straight-line basis over the estimated useful
life of the related asset as follows:

<Table>
                                                         
Leasehold improvements....................................  Life of respective
lease
Cable systems and equipment...............................                5-10
years
Subscriber devices........................................                   5
years
Vehicles..................................................                   5
years
Furniture, fixtures and office equipment..................                5-10
years
</Table>

FRANCHISES

     Franchises include the assigned fair value of the franchise from purchased
cable television systems. These franchises are amortized on a straight-line
basis over six years, the remaining life of the franchise at acquisition.

INTANGIBLE ASSETS

     Intangible assets include goodwill, which is amortized over fifteen years;
subscriber lists, which are amortized over seven years; a covenant not to
compete which is amortized over five years; organization costs which are
amortized over five years and debt issuance costs which are amortized over ten
years, the life of the loan.

                                      F-310
   505
                          LONG BEACH ACQUISITION CORP.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

IMPAIRMENT OF ASSETS

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted cash flows related
to the asset over its remaining life, the carrying value of such asset is
reduced to its estimated fair value.

REVENUES

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to the
cable television system. As of May 23, 1997, no installation revenue has been
deferred, as direct selling costs have exceeded installation service revenues.

INCOME TAXES

     LBAC's income taxes are recorded in accordance with SFAS No. 109,
"Accounting for Income Taxes."

USE OF ESTIMATES

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

2.  STOCKHOLDER'S EQUITY:

     For the period from April 1, 1997, through May 23, 1997, stockholder's
equity consisted of the following:

<Table>
                                                             
Stockholder's (deficit) equity:
  Common stock -- Class A, voting $1 par value, 100 shares
     authorized, issued and outstanding.....................    $        100
  Common stock -- Class B, nonvoting, $1 par value, 1,000
     shares authorized, no shares issued....................              --
  Senior redeemable preferred stock, no par value, 110,000
     shares authorized, issued and outstanding, stated at
     redemption value.......................................      11,000,000
  Additional paid-in capital................................      33,258,723
  Accumulated deficit.......................................     (53,844,635)
                                                                ------------
     Total stockholder's (deficit) equity...................    $ (9,585,812)
                                                                ============
</Table>

3.  INTEREST EXPENSE:

     The Company has the option of paying interest at either the Base Rate of
the Eurodollar rate, as defined, plus a margin which is based on the attainment
of certain financial ratios. The weighted average interest rate for the period
from April 1, 1997, through May 23, 1997, was 7.3%.

                                      F-311
   506
                          LONG BEACH ACQUISITION CORP.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4.  REGULATION IN THE CABLE TELEVISION INDUSTRY:

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject to
judicial proceeding and administrative or legislative proposals. Legislation and
regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of May 23, 1997,
the amount refunded by the Company has been insignificant. The Company may be
required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
ownership of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company are unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.

     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

5.  RELATED-PARTY TRANSACTIONS:

     The Company has entered into a management agreement (the "Management
Agreement") with CVI under which CVI manages the operations of the Company for
an annual management fee equal to 4% of gross operating revenues, as defined.
Management fees under this agreement amounted to $210,100 for the period

                                      F-312
   507
                          LONG BEACH ACQUISITION CORP.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

from April 1, 1997, through May 23, 1997. In addition, the Company has agreed to
pay a monitoring fee of two dollars per basic subscriber, as defined, per year
for services provided by KKR. Monitoring fees amounted to $20,171 for the period
from April 1, 1997, through May 23, 1997.

6.  COMMITMENTS AND CONTINGENCIES:

LEASES

     The Company leases certain facilities and equipment under noncancelable
operating leases. Rent expense incurred under these leases for the period from
April 1, 1997, through May 23, 1997, was $67,600.

     The Company rents utility poles in its operations. Generally, pole rental
agreements are short term, but LBAC anticipates that such rentals will recur.
Rent expense for pole attachments for the period from April 1, 1997, through May
23, 1997, was $12,700.

LITIGATION

     The Company is a party to lawsuits which are generally incidental to its
business. In the opinion of management, after consulting with legal counsel, the
outcome of these lawsuits will not have a material adverse effect on the
Company's financial position or results of operations.

7.  INCOME TAXES:

     The Company has not recognized the tax benefit associated with its taxable
loss for the period from April 1, 1997, through May 23, 1997, as the Company
believes the benefit will likely not be realized.

8.  EMPLOYEE BENEFIT PLANS:

     Substantially all employees of the Company are eligible to participate in a
defined contribution plan containing a qualified cash or deferred arrangement
pursuant to IRC Section 401(k). The plan provides that eligible employees may
contribute up to 10% of their compensation to the plan. The Company made no
contributions to the plan for the period from April 1, 1997, through May 23,
1997.

                                      F-313
   508

                         REPORT OF INDEPENDENT AUDITORS

The Audit Committee
  CHARTER COMMUNICATIONS, INC.

     We have audited the accompanying combined balance sheets of Fanch Cable
Systems Sold to Charter Communications, Inc. (comprised of components of
TWFanch-one Co., components of TWFanch-two Co., Mark Twain Cablevision, North
Texas Cablevision LTD., Post Cablevision of Texas L.P., Spring Green
Communications L.P., Fanch Narragansett CSI L.P., Cable Systems Inc., ARH, and
Tioga), as of November 11, 1999 and December 31, 1998, and the related combined
statements of operations, net assets and cash flows for the period from January
1, 1999 through November 11, 1999 and for the years ended December 31, 1998 and
1997. These financial statements are the responsibility of Fanch Communications,
Inc.'s management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of North Texas Cablevision, LTD., Spring Green Communications L.P.,
Cable Systems Inc. and Fanch Narragansett CSI Limited Partnership, which
statements reflect total assets of $18,289,788 as of December 31, 1998 and total
revenues of $14,562,704 and $11,906,101 for the years ended December 31, 1998
and 1997. Those statements were audited by other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates to data included
for North Texas Cablevision LTD., Spring Green Communications L.P., Cable
Systems Inc. and Fanch Narragansett CSI Limited Partnership, is based solely on
the reports of the other auditors.

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

     In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the combined financial position of Fanch Cable Systems Sold to Charter
Communications, Inc. at November 11, 1999 and December 31, 1998, and the
combined results of its operations and its cash flows for the period from
January 1, 1999 through November 11, 1999 and the years ended December 31, 1998
and 1997 in conformity with accounting principles generally accepted in the
United States.

                                          /s/ ERNST & YOUNG LLP

Denver, Colorado
January 28, 2000

                                      F-314
   509

                         REPORT OF INDEPENDENT AUDITORS

The Shareholders
  CABLE SYSTEMS, INC.

The Partners
  FANCH NARRAGANSETT CSI LIMITED PARTNERSHIP

     We have audited the accompanying balance sheets of Cable Systems, Inc. and
Fanch Narragansett CSI Limited Partnership as of December 31, 1998 and 1997, and
the related statements of operations and cash flows for the years then ended.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     The accompanying combined financial statements have been prepared pursuant
to Section 5.04(a) of the Loan Agreement between Cable Systems, Inc., Fanch
Narragansett CSI Limited Partnership and Fleet National Bank. Generally accepted
accounting principles do not recognize consolidated financial statements when a
less than 50% ownership ratio exists between two companies. As a result, our
opinion is restricted to the individual company statements shown.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cable Systems, Inc. and
Fanch Narragansett CSI Limited Partnership at December 31, 1998 and 1997, and
the results of its operations and cash flows for the year then ended in
conformity with generally accepted accounting principles.

                                          /s/ SHIELDS & CO.

March 9, 1999
Englewood, Colorado

                                      F-315
   510

                         REPORT OF INDEPENDENT AUDITORS

The Partners
  NORTH TEXAS CABLEVISION, LTD.

     We have audited the accompanying consolidated balance sheets of North Texas
Cablevision, Ltd. as of December 31, 1998 and 1997, and the related consolidated
statements of operations and partners' deficit and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of North Texas Cablevision,
Ltd. at December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.

                                          /s/ SHIELDS & CO.

March 9, 1999
Englewood, Colorado

                                      F-316
   511

                         REPORT OF INDEPENDENT AUDITORS

The Partners
  SPRING GREEN COMMUNICATIONS, L.P.

     We have audited the accompanying balance sheet of Spring Green
Communications, L.P. as of December 31, 1998 and 1997, and the related
statements of operations and partners' capital and cash flows from inception
November 3, 1997, through December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Spring Green Communications,
L.P. at December 31, 1998 and 1997, and the results of its operations and its
cash flows for the periods ended December 31, 1997, and 1998 in conformity with
generally accepted accounting principles.

                                          /s/ SHIELDS & CO.

March 10, 1999
Englewood, Colorado

                                      F-317
   512

            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.
                            COMBINED BALANCE SHEETS

<Table>
<Caption>
                                                                NOVEMBER 11,
DECEMBER 31,
                                                                    1999
   1998
                                                                ------------
- ------------
                                                             

ASSETS
Current assets:
  Cash and cash equivalents.................................    $    568,583
$    809,720
  Accounts receivable, less allowance for doubtful accounts
     of approximately $229,000 and $443,000 in 1999 and
     1998, respectively.....................................       7,424,375
  3,236,751
  Prepaid expenses and other current assets.................       1,529,577
  1,645,785
                                                                ------------
- ------------
Total current assets........................................       9,522,535
  5,692,256
Property, plant and equipment:
  Transmission and distribution systems and related
     equipment..............................................     325,687,737
200,526,755
  Furniture and equipment...................................      13,704,415
  8,389,207
                                                                ------------
- ------------
                                                                 339,392,152
208,915,962
  Less accumulated depreciation.............................     (73,807,164)
(52,484,281)
                                                                ------------
- ------------
Net property, plant and equipment...........................     265,584,988
156,431,681
Goodwill, net of accumulated amortization of approximately
  $85,370,000 and $63,030,000 in 1999 and 1998,
  respectively..............................................     515,312,398
266,776,690
Subscriber lists, net of accumulated amortization of
  approximately $28,168,000 and $15,024,000 in 1999 and
  1998, respectively........................................      67,444,869
 17,615,056
Other intangible assets, net of accumulated amortization of
  approximately $17,157,000 and $14,411,000 in 1999 and
  1998, respectively........................................      12,032,316
 11,482,409
                                                                ------------
- ------------
Total intangible assets.....................................     594,789,583
295,874,155
Other assets................................................              --
  1,050,815
                                                                ============
============
Total assets................................................    $869,897,106
$459,048,907
                                                                ============
============
LIABILITIES AND NET ASSETS
Current liabilities:
  Accounts payable and other accrued liabilities............    $  7,065,436
$ 13,630,205
  Subscriber advances and deposits..........................       5,492,869
  2,033,992
                                                                ------------
- ------------
Total current liabilities...................................      12,558,305
 15,664,197
Net assets..................................................     857,338,801
443,384,710
                                                                ------------
- ------------
Total liabilities and net assets............................    $869,897,106
$459,048,907
                                                                ============
============
</Table>

See accompanying notes.

                                      F-318
   513

            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.
                       COMBINED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                     PERIOD FROM
                                                     JANUARY 1 TO     YEAR ENDED
DECEMBER 31,
                                                     NOVEMBER 11,
- ---------------------------
                                                         1999           1998
      1997
                                                     ------------   ------------
  ------------
                                                              
  
Revenues:
  Service.........................................   $165,967,333   $123,183,391
  $113,954,539
  Installation and other..........................     19,948,268     17,920,743
    16,587,074
                                                     ------------   ------------
  ------------
                                                      185,915,601    141,104,134
   130,541,613
Operating expenses, excluding depreciation and
  amortization....................................     58,504,674     42,616,007
    40,346,214
Selling, general and administrative expenses......     27,071,932     20,361,890
    21,363,377
                                                     ------------   ------------
  ------------
                                                       85,576,606     62,977,897
    61,709,591
Income before other expenses......................    100,338,995     78,126,237
    68,832,022
Other expenses:
  Depreciation and amortization...................     62,097,138     45,885,038
    61,502,426
  Management fees.................................      6,161,558      3,998,259
     3,663,561
  Loss (gain) on disposal of assets...............      8,135,954      6,420,250
    (1,229,272)
  Other (income) expense, net.....................       (340,049)       313,693
       232,102
                                                     ------------   ------------
  ------------
  Net income before tax expense...................     24,284,394     21,508,997
     4,663,205
  Income tax expense..............................        197,334        286,451
     2,260,369
                                                     ------------   ------------
  ------------
Net income........................................   $ 24,087,060   $ 21,222,546
  $  2,402,836
                                                     ============   ============
  ============
</Table>

See accompanying notes.

                                      F-319
   514

            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

                       COMBINED STATEMENTS OF NET ASSETS

<Table>
<Caption>
                                                     PERIOD FROM
                                                     JANUARY 1 TO     YEAR ENDED
DECEMBER 31,
                                                     NOVEMBER 11,
- ---------------------------
                                                         1999           1998
      1997
                                                     ------------   ------------
  ------------
                                                              
  
Net assets at beginning of period.................   $443,384,710   $455,085,231
  $481,540,621
Net income........................................     24,087,060     21,222,546
     2,402,836
Contributions from (payments to) owners...........    389,867,031
(32,923,067)   (28,858,226)
                                                     ------------   ------------
  ------------
Net assets at end of period.......................   $857,338,801   $443,384,710
  $455,085,231
                                                     ============   ============
  ============
</Table>

See accompanying notes.

                                      F-320
   515

            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

                       COMBINED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                     PERIOD FROM
                                                    JANUARY 1 TO      YEAR ENDED
DECEMBER 31,
                                                    NOVEMBER 11,
- ---------------------------
                                                        1999            1998
      1997
                                                    -------------   ------------
  ------------
                                                              
  
OPERATING ACTIVITIES
Net income.......................................   $  24,087,060   $ 21,222,546
  $  2,402,836
Adjustments to reconcile net income to net cash
  provided by operating activities:
     Depreciation and amortization...............      62,097,138     45,885,038
    61,502,426
     Loss (gain) on disposal of assets...........       8,135,954      6,420,250
    (1,229,272)
     (Increase) decrease in accounts receivable,
       prepaid expenses and other current
       assets....................................      (3,020,601)
(2,053,483)     2,067,370
     (Decrease) increase in accounts payable and
       other accrued liabilities and subscriber
       advances and deposits.....................      (3,105,892)     1,434,091
    (4,676,441)
                                                    -------------   ------------
  ------------
Net cash provided by operating activities........      88,193,659     72,908,442
    60,066,919
INVESTING ACTIVITIES
Acquisition of systems...........................    (413,345,351)            --
   (18,243,593)
Purchases of property, plant and equipment.......     (64,956,476)
(39,343,681)   (17,213,637)
Additions to intangibles, net....................              --
(909,674)    (1,116,251)
Proceeds from sale of equipment..................              --        103,028
     5,337,321
                                                    -------------   ------------
  ------------
Net cash used in investing activities............    (478,301,827)
(40,150,327)   (31,236,160)
FINANCING ACTIVITIES
Contributions from (payments to) owners..........     389,867,031
(32,923,067)   (28,858,226)
                                                    -------------   ------------
  ------------
Net cash provided by (used in) financing
  activities.....................................     389,867,031
(32,923,067)   (28,858,226)
Net change in cash and cash equivalents..........        (241,137)
(164,952)       (27,467)
Cash and cash equivalents at beginning of year...         809,720        974,672
     1,002,139
                                                    -------------   ------------
  ------------
Cash and cash equivalents at end of year.........   $     568,583   $    809,720
  $    974,672
                                                    =============   ============
  ============
</Table>

See accompanying notes.

                                      F-321
   516

            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                               NOVEMBER 11, 1999

1. BASIS OF PRESENTATION

ACQUISITION BY CHARTER COMMUNICATIONS, INC. AND BASIS OF PRESENTATION

     The Fanch Cable Systems Sold to Charter Communications, Inc. are comprised
of the following entities: components of TWFanch-one Co., components of
TWFanch-two Co., Mark Twain Cablevision, North Texas Cablevision LTD., Post
Cablevision of Texas L.P., Spring Green Communications L.P., Fanch Narragansett
CSI L.P., Cable Systems Inc., ARH, and Tioga (the "Combined Systems"). The
Combined Systems were managed by Fanch Communications, Inc. (the "Management
Company").

     Pursuant to a purchase agreement, dated May 12, 1999 between certain
partners ("Partners") of the Combined Systems and Charter Communications, Inc.
("Charter"), the Partners of the Combined Systems entered into a distribution
agreement whereby the Partners will distribute and/or sell certain of their
cable systems to certain of their respective Partners. These Partners will then
sell the Combined Systems through a combination of asset sales and the sale of
equity and partnership interests to Charter.

     Accordingly, these combined financial statements of the Combined Systems
reflect the "carved out" financial position, results of operations, cash flows
and changes in net assets of the operations of the Combined Systems as if they
had been operating as a separate company. For purposes of determining the
financial statement amounts of the Combined Systems, management excluded certain
systems (the "Excluded Systems"). In order to exclude the results of operations
and financial position of the Excluded Systems from the combined financial
statements, management has estimated certain revenues, expenses, assets and
liabilities that are not specifically identified to systems based on the ratio
of each Excluded System's basic subscribers to the total basic subscribers
served by the respective partnerships. Management believes the basis used for
these allocations is reasonable. The Combined Systems' results of operations are
not necessarily indicative of future operating results or the results that would
have occurred if the Combined Systems were a separate legal entity.

DESCRIPTION OF BUSINESS

     The Combined Systems, operating in various states throughout the United
States, are principally engaged in operating cable television systems and
related activities under non-exclusive franchise agreements.

PRINCIPLES OF COMBINATION

     The accompanying combined financial statements include the accounts of the
Combined Systems, as if the Combined Systems were a single company. All material
intercompany balances and transactions have been eliminated.

CASH, INTERCOMPANY ACCOUNTS AND DEBT

     Under the Combined Systems' centralized cash management system, the cash
requirements of its individual operating units were generally subsidized by the
Management Company and the cash generated or used by the individual operating
units was transferred to/from the Management Company, as appropriate, through
the use of intercompany accounts. The resulting intercompany account balances
are included in net assets and all the net cash generated from (used in)
operations, investing activities and financing activities has been included in
the Combined Systems' net contributions by (payments to) the Management Company
in the combined statements of cash flows. The Management Company maintains
external debt to fund and manage operations on a centralized basis. Debt,
unamortized loan costs and interest expense of the Management Company have not
been allocated to the Combined Systems. As such, the debt, unamortized

                                      F-322
   517
            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

1. BASIS OF PRESENTATION (CONTINUED)
loan costs, and related interest are not representative of the debt that would
be required or interest expense incurred if the Combined Systems were a separate
legal entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY, PLANT AND EQUIPMENT

     The Combined Systems record additions to property, plant and equipment at
cost, which in the case of assets constructed includes amounts for material,
labor and overhead. Maintenance and repairs are charged to expense as incurred.

     For financial reporting purposes, the Combined Systems use the
straight-line method of depreciation over the estimated useful lives of the
assets as follows:

<Table>
<Caption>
                                                                    LIVES
                                                                    -----
                                                    
Transmission and distribution systems and related
  equipment                                                     3 to 20 years
Furniture and equipment                                       4 to 8 1/2 years
</Table>

INCOME TAXES

     The Combined Systems pay an immaterial amount of income taxes. Taxes are
paid for Cable Systems, Inc., Hornell, ARH, Tioga, and systems operating in the
State of Michigan. The majority of the Combined Systems are various partnerships
and, as such, the tax effects of the Combined Systems' results of operations
accrue to the partners.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
disclosures made in the accompanying notes to the financial statements. Actual
results could differ from those estimates.

REVENUE RECOGNITION

     The Combined Systems recognize revenue when services have been delivered.
Revenues on long-term contracts are recognized over the term of the contract
using the straight-line method.

INTANGIBLES

     Intangibles are recorded at cost and are amortized on a straight-line basis
over their estimated useful lives. The estimated useful lives are as follows:

<Table>
<Caption>
                                                          LIVES
                                                          -----
                                       
Goodwill                                     7 to 20 years (7 to 10 in 1997)
Subscriber list                                        3 to 7 years
Other, including franchise costs                      2 to 13 years
</Table>

     Amortization expense was $38,229,923, $25,955,253, and $44,595,992 for the
period from January 1, 1999 to November 11, 1999 and for the years ended
December 31, 1998 and 1997, respectively. Certain of the Combined Systems
changed the estimated useful life of goodwill from 7 and 10 years in 1997 to 20
years

                                      F-323
   518
            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
effective January 1, 1998 to better match the amortization period to anticipated
economic lives of the franchises and to better reflect industry practice. This
change in estimate resulted in an increase in net income of approximately $20
million for the year ended December 31, 1998.

3. DISPOSAL OF ASSETS

     During the periods presented, various upgrades were performed on certain
plant locations. The cost and accumulated depreciation applicable to the plant
replaced has been estimated and recorded as a loss on disposal, which is
summarized as follows:

<Table>
<Caption>
                                                           PERIOD FROM
                                                           JANUARY 1 TO     YEAR
ENDED DECEMBER 31
                                                           NOVEMBER 11
- -------------------------
                                                               1999
1998          1997
                                                           ------------
- ----          ----
                                                                     
        
Cost...................................................    $12,238,388
$8,606,851    $ 5,529,505
  Accumulated depreciation.............................     (4,102,434)
(2,083,573)    (2,003,191)
  Proceeds.............................................             --
(103,028)    (5,337,321)
  Disposal of intangible assets........................             --
  --      2,978,143
  Accumulated amortization.............................             --
  --     (2,396,408)
                                                           -----------
- ----------    -----------
  Loss (gain) on disposal..............................    $ 8,135,954
$6,420,250    $(1,229,272)
                                                           ===========
==========    ===========
</Table>

4. PURCHASE AND SALE OF SYSTEMS

     On March 30, 1997, the Combined Systems acquired cable television systems,
including plant and franchise and business licenses, serving communities in the
states of Pennsylvania and Virginia. The purchase price was $1.4 million, of
which $765,000 was allocated to property, plant and equipment and $635,000 was
allocated to intangible assets.

     Concurrent with the purchase of the systems in Pennsylvania on March 30,
1997, the Combined Systems sold certain of these assets, including plant and
franchise and business licenses, for $340,000. No gain or loss on this
transaction was recorded.

     On June 30, 1997, the Combined Systems acquired cable television systems,
including plant and franchise and business licenses, serving communities in the
State of Indiana. The purchase price was $6,345,408, of which $2,822,260 was
allocated to property, plant and equipment and $3,523,148 was allocated to
intangible assets.

     On November 3, 1997, the Combined Systems acquired substantially all of the
assets, including franchise and business licenses, for cable systems serving
various communities in Wisconsin. The purchase price was $8.7 million, of which
$3.9 million was allocated to property, plant and equipment and $4.8 million was
allocated to intangible assets.

     On June 12, 1998, the Combined Systems entered into an agreement to acquire
cable television systems, including plant and franchise and business licenses,
serving communities in the State of Michigan. The purchase price was $42
million, subject to purchase price adjustments. In connection with the
agreement, the Combined Systems received an additional $8.76 million in capital
contributions. The agreement was completed and the assets were transferred to
the Combined Systems on February 1, 1999. The Combined Systems recorded
approximately $11.7 million in property, plant and equipment and approximately
$30.3 million in intangible assets.

                                      F-324
   519
            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. PURCHASE AND SALE OF SYSTEMS (CONTINUED)
     On July 8, 1998, the Combined Systems entered into an Asset Purchase
Agreement to acquire cable television systems, including plant and franchise and
business licenses, serving communities in the states of Maryland, Ohio and West
Virginia. The purchase price was $248 million, subject to purchase price
adjustments. The transaction was completed and the assets were transferred to
the Combined Systems on February 24, 1999. The Combined Systems recorded
approximately $39 million to property, plant and equipment and approximately
$209 million to intangible assets.

     On January 15, 1999, the Combined Systems entered into an agreement to
acquire cable television systems, including plant and franchise and business
licenses, serving communities in the State of Michigan from a related party. The
purchase price was $70 million, subject to purchase price adjustments. The
agreement was completed and the assets were transferred to the Combined Systems
on March 31, 1999. In connection with the agreement, the Combined Systems
received an additional $25 million in capital contributions. The Combined
Systems recorded approximately $14.4 million to property, plant and equipment
and approximately $55.6 million to intangible assets.

     On May 12, 1999, the Combined Systems entered into an agreement to acquire
the stock of ARH, Ltd. ARH, Ltd. is engaged in the business of owning and
operating cable television systems in Texas and West Virginia. The purchase
price was $50 million subject to purchase price adjustments. The transaction was
completed and the assets were transferred to the Combined Systems on June 22,
1999. The Combined Systems recorded approximately $3.9 million to property,
plant and equipment and approximately $46.1 million to intangible assets.

     Unaudited pro forma operating results as though the acquisitions discussed
above had occurred at the beginning of the periods, with adjustments to give
effect to amortization of franchises and certain other adjustments for the
period, are as follows:

<Table>
<Caption>
                                                      PERIOD FROM
                                                      JANUARY 1 TO     YEAR
ENDED
                                                      NOVEMBER 11     DECEMBER
31
                                                          1999            1998
                                                      ------------
- -----------
                                                                
Revenues..........................................    $202,259,532
$197,803,975
Income from operations............................      92,986,581
107,053,905
Net income........................................      27,704,095
32,130,293
</Table>

     The unaudited pro forma information has been presented for comparative
purposes and does not purport to be indicative of the results of operations had
these transactions been complete as of the assumed date or which may be obtained
in the future.

5. RELATED PARTIES

     The Combined Systems have entered into management agreements with the
Management Company whose sole stockholder is affiliated with several of the
Combined Systems. The Combined Systems have also entered into a management
agreement with an entity (the "Affiliated Company") that has ownership interest
in certain of the Combined Systems. The agreements provide that the Management
Company and the Affiliated Company will manage their respective systems and
receive annual compensation equal to 2.5% to 5% of the gross revenues from
operations from their respective systems. Management fees were $6,161,558,
$4,072,179, and $3,663,560 for the period from January 1, 1999 to November 11,
1999 and the years ended December 31, 1998 and 1997, respectively.

     A company affiliated with the Management Company provides subscriber
billing services for a portion of the Combined Systems' subscribers. The
Combined Systems incurred fees for monthly billing and related

                                      F-325
   520
            FANCH CABLE SYSTEMS SOLD TO CHARTER COMMUNICATIONS, INC.

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

5. RELATED PARTIES (CONTINUED)
services in the approximate amounts of $362,000, $507,000, and $535,000 for the
period from January 1, 1999 to November 11, 1999 and the years ended December
31, 1998 and 1997, respectively.

     The Combined Systems purchase the majority of their programming through the
Affiliated Company. Fees incurred for programming were approximately
$38,356,000, $24,600,000, and $22,200,000 for the period from January 1, 1999 to
November 11, 1999 and the years ended December 31, 1998 and 1997, respectively.

     The Management Company pays amounts on behalf of and receives amounts from
the Combined Systems in the ordinary course of business. Accounts receivable and
payable of the Combined Systems include amounts due from and due to the
Management Company.

6. COMMITMENTS

     The Combined Systems, as an integral part of their cable operations, have
entered into lease contracts for certain items including tower rental, microwave
service and office space. Rent expense, including office, tower and pole rent,
for the period from January 1, 1999 to November 11, 1999 and the years ended
December 31, 1998 and 1997 was approximately $3,110,000, $2,462,866, and
$2,238,394, respectively. The majority of these agreements are on month-to-month
arrangements and, accordingly, the Combined Systems have no material future
minimum commitments related to these leases.

7. EMPLOYEE BENEFIT PLAN

     The Combined Systems each have a defined contribution plan (the "Plan")
which qualifies under section 401(k) of the Internal Revenue Code. Therefore,
each system of the Combined Systems participates in the respective plan.
Combined Systems contributions were approximately $497,000, $354,000, and
$297,000 for the period from January 1, 1999 to November 11, 1999 and the years
ended December 31, 1998 and 1997, respectively.

                                      F-326
   521

                         REPORT OF INDEPENDENT AUDITORS

Partners
Falcon Communications, L.P.

     We have audited the accompanying consolidated balance sheets of Falcon
Communications, L.P. as of December 31, 1998 and November 12, 1999, and the
related consolidated statements of operations, partners' equity (deficit) and
cash flows for each of the two years in the period ended December 31, 1998 and
for the period from January 1, 1999 to November 12, 1999 (date of disposition).
These consolidated financial statements are the responsibility of the
Partnership'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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Falcon Communications, L.P. at December 31, 1998 and November 12, 1999 and the
consolidated results of its operations and its cash flows for each of the two
years in the period ended December 31, 1998 and for the period from January 1,
1999 to November 12, 1999 (date of disposition), in conformity with accounting
principles generally accepted in the United States.

                                          /s/ ERNST & YOUNG LLP

Los Angeles, California
March 2, 2000

                                      F-327
   522

                          FALCON COMMUNICATIONS, L.P.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>

NOVEMBER 12,

   1999
                                                                DECEMBER 31,
 (DATE OF
                                                                    1998
DISPOSITION)
                                                                ------------
- ------------
                                                                   (DOLLARS IN
THOUSANDS)
                                                             

ASSETS:
  Cash and cash equivalents.................................     $   14,284
$    9,995
  Receivables:
     Trade, less allowance of $670,000 and $1,074,000 for
       possible losses......................................         15,760
    18,946
     Affiliates.............................................          2,322
     3,511
  Other assets..............................................         16,779
    33,456
  Property, plant and equipment, less accumulated
     depreciation and amortization..........................        505,894
   553,851
  Franchise cost, less accumulated amortization of
     $226,526,000 and $269,752,000..........................        397,727
   370,461
  Goodwill, less accumulated amortization of $25,646,000 and
     $31,636,000............................................        135,308
   130,581
  Customer lists and other intangible costs, less
     accumulated amortization of $59,422,000 and
     $127,314,000...........................................        333,017
   273,851
  Deferred loan costs, less accumulated amortization of
     $2,014,000 and $3,137,000..............................         24,331
    22,623
                                                                 ----------
- ----------
                                                                 $1,445,422
$1,417,275
                                                                 ==========
==========
                             LIABILITIES AND PARTNERS' DEFICIT
LIABILITIES:
  Notes payable.............................................     $1,611,353
$1,711,835
  Accounts payable..........................................         10,341
    16,790
  Due to affiliate..........................................             --
    15,202
  Accrued expenses..........................................         83,077
    56,160
  Customer deposits and prepayments.........................          2,257
     8,070
  Deferred income taxes.....................................          8,664
     8,393
  Minority interest.........................................            403
       541
                                                                 ----------
- ----------
TOTAL LIABILITIES...........................................      1,716,095
 1,816,991
                                                                 ----------
- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PARTNERS' EQUITY.................................        133,023
   424,280
                                                                 ----------
- ----------
PARTNERS' EQUITY (DEFICIT):
  General partners..........................................       (408,369)
  (826,681)
  Limited partners..........................................          4,673
     2,685
                                                                 ----------
- ----------
TOTAL PARTNERS' DEFICIT.....................................       (403,696)
  (823,996)
                                                                 ----------
- ----------
                                                                 $1,445,422
$1,417,275
                                                                 ==========
==========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-328
   523

                          FALCON COMMUNICATIONS, L.P.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>

     PERIOD FROM
                                                      YEAR ENDED DECEMBER 31,
 JANUARY 1, 1999 TO
                                                      ------------------------
  NOVEMBER 12, 1999
                                                         1997         1998
(DATE OF DISPOSITION)
                                                      ----------   -----------
- ---------------------
                                                                   (DOLLARS IN
THOUSANDS)
                                                             

REVENUES...........................................    $255,886     $ 307,558
      $ 371,617
                                                       --------     ---------
      ---------
EXPENSES:
Service costs......................................      75,643        97,832
        125,246
General and administrative expenses................      46,437        63,401
        139,462
Depreciation and amortization......................     118,856       152,585
        196,260
                                                       --------     ---------
      ---------
Total expenses.....................................     240,936       313,818
        460,968
                                                       --------     ---------
      ---------
Operating income (loss)............................      14,950        (6,260)
        (89,351)
                                                       --------     ---------
      ---------
OTHER INCOME (EXPENSE):
Interest expense, net..............................     (79,137)     (102,591)
       (114,993)
Equity in net income (loss) of investee
  partnerships.....................................         443          (176)
            (41)
Other income (expense), net........................         885        (2,917)
          8,062
Income tax benefit (expense).......................       2,021        (1,897)
         (2,509)
                                                       --------     ---------
      ---------
Net loss before extraordinary item.................     (60,838)     (113,841)
       (198,832)
Extraordinary item, retirement of debt.............          --       (30,642)
             --
                                                       --------     ---------
      ---------
NET LOSS...........................................    $(60,838)    $(144,483)
      $(198,832)
                                                       ========     =========
      =========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-329
   524

                          FALCON COMMUNICATIONS, L.P.

             CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

<Table>
<Caption>
                                                          GENERAL      LIMITED
                                                          PARTNERS     PARTNERS
    TOTAL
                                                         ----------   ----------
  ----------
                                                                (DOLLARS IN
THOUSANDS)
                                                                
  
PARTNERS' DEFICIT,
  January 1, 1997.....................................   $  (12,591)  $
(443,908)  $ (456,499)
     Reclassification from redeemable partners'
       equity.........................................           --      100,529
     100,529
     Capital contribution.............................           --           53
          53
     Net loss for year................................         (609)
(60,229)     (60,838)
                                                         ----------   ----------
  ----------
PARTNERS' DEFICIT,
  December 31, 1997...................................      (13,200)
(403,555)    (416,755)
     Reclassification of partners' deficit............     (408,603)     408,603
          --
     Redemption of partners' interests................     (155,908)          --
    (155,908)
     Net assets retained by the managing general
       partner........................................       (5,392)          --
      (5,392)
     Reclassification from redeemable partners'
       equity.........................................       38,350           --
      38,350
     Acquisition of Falcon Video and TCI net assets...      280,409           --
     280,409
     Capital contributions............................           83           --
          83
     Net loss for year................................     (144,108)
(375)    (144,483)
                                                         ----------   ----------
  ----------
PARTNERS' EQUITY (DEFICIT)
  December 31, 1998...................................     (408,369)       4,673
    (403,696)
     Reclassification to redeemable partners'
       equity.........................................     (291,257)          --
    (291,257)
     Capital contributions............................       70,723           --
      70,723
     Acquisition of TCI net assets adjustment.........         (934)          --
        (934)
     Net loss for period..............................     (196,844)
(1,988)    (198,832)
                                                         ----------   ----------
  ----------
PARTNERS' EQUITY (DEFICIT)
  November 12, 1999...................................   $ (826,681)  $    2,685
  $ (823,996)
                                                         ==========   ==========
  ==========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-330
   525

                          FALCON COMMUNICATIONS, L.P.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>

    PERIOD FROM
                                                     YEAR ENDED DECEMBER 31,
JANUARY 1, 1999 TO
                                                     ------------------------
 NOVEMBER 12, 1999
                                                       1997          1998
(DATE OF DISPOSITION)
                                                     ---------   ------------
- ---------------------
                                                                  (DOLLARS IN
THOUSANDS)
                                                           

Cash flows from operating activities:
  Net loss........................................   $(60,838)   $  (144,483)
    $  (198,832)
  Adjustments to reconcile net loss to net cash
     provided by operating activities:
     Payment-in-kind interest expense.............     20,444             --
             --
     Amortization of debt discount................         --         19,342
         24,103
     Depreciation and amortization................    118,856        152,585
        196,260
     Amortization of deferred loan costs..........      2,192          2,526
          1,782
     Compensation funded by Managing General
       Partner....................................         --             --
         70,723
     Write-off deferred loan costs................         --         10,961
             (4)
     Gain on sale of cable system.................         --             --
        (11,069)
     Casualty (gain) loss.........................     (3,476)          (314)
             69
     Equity in net (income) loss of investee
       partnerships...............................       (443)           176
             41
     Provision for losses on receivables, net of
       recoveries.................................      5,714          4,775
          4,510
     Deferred income taxes........................     (2,748)         1,111
           (271)
     Other........................................      1,319            278
            348
  Increase (decrease) from changes in:
     Receivables..................................     (9,703)        (1,524)
         (6,114)
     Other assets.................................     (4,021)           906
         (7,194)
     Accounts payable.............................     (1,357)           337
          6,450
     Accrued expenses and due to affiliate........     13,773         24,302
        (11,634)
     Customer deposits and prepayments............       (175)           633
          5,813
                                                     --------    -----------
    -----------
     Net cash provided by operating activities....     79,537         71,611
         74,981
                                                     --------    -----------
    -----------
Cash flows from investing activities:
  Capital expenditures............................    (76,323)       (96,367)
       (126,548)
  Increase in intangible assets...................     (1,770)        (7,124)
         (3,344)
  Acquisitions of cable television systems........         --        (83,391)
        (27,161)
  Cash acquired in connection with the acquisition
     of TCI and Falcon Video Communications,
     L.P..........................................         --            317
             --
  Proceeds from sale of cable system..............         --             --
          3,178
  Assets retained by the Managing General
     Partner......................................         --         (3,656)
             --
  Other...........................................      1,806          1,893
         (1,871)
                                                     --------    -----------
    -----------
     Net cash used in investing activities........    (76,287)      (188,328)
       (155,746)
                                                     --------    -----------
    -----------
Cash flows from financing activities:
  Borrowings from notes payable...................     37,500      2,388,607
      1,153,250
  Repayment of debt...............................    (40,722)    (2,244,752)
     (1,076,871)
  Deferred loan costs.............................        (29)       (25,684)
            (70)
  Capital contributions...........................         93             --
             --
  Redemption of partners' interests...............         --         (1,170)
             --
  Minority interest capital contributions.........        192             83
            167
                                                     --------    -----------
    -----------
     Net cash provided by (used in) financing
       activities.................................     (2,966)       117,084
         76,476
                                                     --------    -----------
    -----------
Increase (decrease) in cash and cash
  equivalents.....................................        284            367
         (4,289)
Cash and cash equivalents, at beginning of
  period..........................................     13,633         13,917
         14,284
                                                     --------    -----------
    -----------
Cash and cash equivalents, at end of period.......   $ 13,917    $    14,284
    $     9,995
                                                     ========    ===========
    ===========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-331
   526

                          FALCON COMMUNICATIONS, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES

FORM OF PRESENTATION

     Falcon Communications, L.P. ("FCLP"), a California limited partnership (the
"Partnership") and successor to Falcon Holding Group, L.P. ("FHGLP"), owned and
operated cable television systems serving small to medium-sized communities and
the suburbs of certain cities in 23 states through November 12, 1999. On
September 30, 1998, pursuant to a Contribution and Purchase Agreement dated as
of December 30, 1997, as amended (the "Contribution Agreement"), FHGLP acquired
the assets and liabilities of Falcon Video Communications, L.P. ("Falcon
Video"), in exchange for ownership interests in FHGLP. Simultaneously with the
closing of that transaction, in accordance with the Contribution Agreement,
FHGLP contributed substantially all of the existing cable television system
operations owned by FHGLP and its subsidiaries (including the Falcon Video
Systems) to the Partnership and TCI Falcon Holdings, LLC ("TCI") contributed
certain cable television systems owned and operated by affiliates of TCI (the
"TCI Systems") to the Partnership (the "TCI Transaction"). As a result,
Tele-Communications, Inc. held approximately 46% of the equity interest of the
Partnership and FHGLP owned the remaining 54% and served as the managing general
partner of the Partnership. The TCI Transaction has been accounted for as a
recapitalization of FHGLP into the Partnership and the concurrent acquisition by
the Partnership of the TCI systems. In March 1999, AT&T and Tele-Communications,
Inc. completed a merger under which Tele-Communications, Inc. became a unit of
AT&T called AT&T Broadband & Internet Services, which became a general partner
of FCLP as a result of a merger.

     On November 12, 1999, Charter Communications Holding Company, LLC
("Charter") acquired the Partnership in a cash and stock transaction valued at
approximately $3.6 billion, including assumption of liabilities. Upon closing of
the transaction, the Partnership was merged with CC VII Holdings, LLC, a
Delaware limited liability company and successor to FCLP.

     The consolidated financial statements include the accounts of the
Partnership and its subsidiary holding companies and cable television operating
partnerships and corporations, which include Falcon Cable Communications LLC
("Falcon LLC"), a Delaware limited liability company that serves as the general
manager of the cable television subsidiaries. Such statements reflect balances
immediately prior to the acquisition transaction. The assets contributed by
FHGLP in 1998 to the Partnership excluded certain immaterial investments,
principally FHGLP's ownership of 100% of the outstanding stock of Enstar
Communications Corporation ("ECC"), which is the general partner and manager of
fifteen limited partnerships operating under the name "Enstar." ECC's ownership
interest in the Enstar partnerships ranges from 0.5% to 5%. Upon the
consummation of the TCI Transaction, the management of the Enstar partnerships
was assigned to the Partnership by FHGLP. The consolidated statements of
operations and statements of cash flows for the year ended December 31, 1998
include FHGLP's interest in ECC for the nine months ended September 30, 1998.
The effects of ECC's operations on all previous periods presented are
immaterial. On November 12, 1999, Charter acquired ECC.

     FHGLP also controlled, held varying equity interests in and managed certain
other cable television partnerships (the "Affiliated Partnerships") for a fee.
FHGLP is a limited partnership, the sole general partner of which is Falcon
Holding Group, Inc., a California corporation ("FHGI"). FHGI also holds a 1%
interest in certain of the subsidiaries of the Partnership. At the beginning of
1998, the Affiliated Partnerships were comprised of Falcon Classic Cable Income
Properties, L.P. ("Falcon Classic") whose cable television systems are referred
to as the "Falcon Classic Systems," Falcon Video and the Enstar partnerships. As
discussed in Note 3, the Falcon Classic Systems were acquired by FHGLP during
1998. The Falcon Video Systems were acquired on September 30, 1998 in connection
with the TCI Transaction. As a result of these transactions, the Affiliated
Partnerships consist solely of the Enstar partnerships from October 1, 1998
forward.

                                      F-332
   527
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED)

     All significant intercompany accounts and transactions have been eliminated
in consolidation. The consolidated financial statements do not give effect to
any assets that the partners may have outside their interests in the
Partnership, nor to any obligations, including income taxes, of the partners.

CASH EQUIVALENTS

     For purposes of the consolidated statements of cash flows, the Partnership
considers all highly liquid debt instruments purchased with an initial maturity
of three months or less to be cash equivalents. Cash equivalents at December 31,
1997 and 1998 included $4.5 million and $345,000 of investments in commercial
paper and short-term investment funds of major financial institutions. There
were no such cash equivalents at November 12, 1999.

INVESTMENTS IN AFFILIATED PARTNERSHIPS

     Prior to closing the TCI Transaction, the Partnership was the general
partner of certain entities, which in turn acted as general partner of the
Affiliated Partnerships. The Partnership's effective ownership interests in the
Affiliated Partnerships were less than one percent. The Affiliated Partnerships
were accounted for using the equity method of accounting. Equity in net losses
were recorded to the extent of the investments in and advances to the
partnerships plus obligations for which the Partnership, as general partner, was
responsible. The liabilities of the Affiliated Partnerships, other than amounts
due the Partnership, principally consisted of debt for borrowed money and
related accrued interest. The Partnership's ownership interests in the
Affiliated Partnerships were eliminated in 1998 with the acquisition of Falcon
Video and Falcon Classic and the retention by FHGLP of its interests in the
Enstar partnerships.

PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION AND AMORTIZATION

     Property, plant and equipment are stated at cost. Direct costs associated
with installations in homes not previously served by cable are capitalized as
part of the distribution system, and reconnects are expensed as incurred. For
financial reporting, depreciation and amortization is computed using the
straight-line method over the following estimated useful lives.

<Table>
                                                           
CABLE TELEVISION SYSTEMS:
Headend buildings and equipment............................     10-16 years
Trunk and distribution.....................................      5-15 years
Microwave equipment........................................     10-15 years

OTHER:
Furniture and equipment....................................       3-7 years
Vehicles...................................................      3-10 years
Leasehold improvements.....................................   Life of lease
</Table>

FRANCHISE COST AND GOODWILL

     The excess of cost over the fair values of tangible assets and customer
lists of cable television systems acquired represents the cost of franchises and
goodwill. In addition, franchise cost includes capitalized costs incurred in
obtaining new franchises and in the renewal of existing franchises. These costs
are amortized using the straight-line method over the lives of the franchises,
ranging up to 28 years (composite 15 year average). Goodwill is amortized over
20 years. Costs relating to unsuccessful franchise applications are charged to
expense when it is determined that the efforts to obtain the franchise will not
be successful.

                                      F-333
   528
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED)

CUSTOMER LISTS AND OTHER INTANGIBLE COSTS

     Customer lists and other intangible costs include customer lists, covenants
not to compete and organization costs which are amortized using the
straight-line method over two to five years.

DEFERRED LOAN COSTS

     Costs related to borrowings are capitalized and amortized to interest
expense over the life of the related loan.

RECOVERABILITY OF ASSETS

     The Partnership assesses on an ongoing basis the recoverability of
intangible assets (including goodwill) and capitalized plant assets based on
estimates of future undiscounted cash flows compared to net book value. If the
future undiscounted cash flow estimates were less than net book value, net book
value would then be reduced to estimated fair value, which generally
approximates discounted cash flows. The Partnership also evaluates the
amortization periods of assets, including goodwill and other intangible assets,
to determine whether events or circumstances warrant revised estimates of useful
lives.

REVENUE RECOGNITION

     Revenues from customer fees, equipment rental and advertising are
recognized in the period that services are delivered. Installation revenue is
recognized in the period the installation services are provided to the extent of
direct selling costs. Any remaining amount is deferred and recognized over the
estimated average period that customers are expected to remain connected to the
cable television system. Management fees are recognized on the accrual basis
based on a percentage of gross revenues of the respective cable television
systems managed. Effective October 1, 1998, 20% of the management fees from the
Enstar partnerships was retained by FHGLP.

DERIVATIVE FINANCIAL INSTRUMENTS

     As part of the Partnership's management of financial market risk and as
required by certain covenants in its New Credit Agreement, the Partnership
enters into various transactions that involve contracts and financial
instruments with off-balance-sheet risk, principally interest rate swap and
interest rate cap agreements. The Partnership enters into these agreements in
order to manage the interest-rate sensitivity associated with its variable-rate
indebtedness. The differential to be paid or received in connection with
interest rate swap and interest rate cap agreements is recognized as interest
rates change and is charged or credited to interest expense over the life of the
agreements. Gains or losses for early termination of those contracts are
recognized as an adjustment to interest expense over the remaining portion of
the original life of the terminated contract.

INCOME TAXES

     The Partnership and its subsidiaries, except for Falcon First, Inc., are
limited partnerships or limited liability companies and pay no income taxes as
entities except for nominal taxes assessed by certain state jurisdictions. All
of the income, gains, losses, deductions and credits of the Partnership are
passed through to its partners. The basis in the Partnership's assets and
liabilities differs for financial and tax reporting purposes. At November 12,
1999, the book basis of the Partnership's net assets exceeded its tax basis by
$623 million.

ADVERTISING COSTS

     All advertising costs are expensed as incurred.
                                      F-334
   529
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED)

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE 2 -- PARTNERSHIP MATTERS

     The Amended and Restated Agreement of Limited Partnership of FCLP ("FCLP
Partnership Agreement") provided that profits and losses will be allocated, and
distributions will be made, in proportion to the partners' percentage interests.
Prior to November 13, 1999, FHGLP was the managing general partner and a limited
partner and owned a 54% interest in FCLP, and Tele-Communications, Inc. was a
general partner and owned a 46% interest. The partners' percentage interests
were based on the relative net fair market values of the assets contributed to
FCLP under the Contribution Agreement, as estimated at the closing. The
percentage interests were subsequently adjusted to reflect the December 1998
redemption of a small part of FHGLP's partnership interest.

     Through the closing of the sale to Charter, FCLP was required, under
certain circumstances, on or after April 1, 2006, to purchase the interests of
the non-management limited partners of FHGLP at their then fair value. The
estimated redemption value at December 31, 1998 was $133 million and was
reflected in the consolidated financial statements as redeemable partners'
equity. Such amount was determined based on management's estimate of the
relative fair value of such interests under then current market conditions.
These limited partners were redeemed from their portion of the Charter sale
proceeds as of November 12, 1999 for $424 million, which amount is shown as
redeemable partners' equity at that date.

     The Partnership assumed the obligations of FHGLP under the 1993 Incentive
Performance Plan (the "Incentive Performance Plan"), but FHGLP funded this
obligation from its portion of the Charter sale proceeds. See Note 8.

NOTE 3 -- ACQUISITIONS AND SALES

     In March and July 1998, FHGLP acquired the Falcon Classic Systems for an
aggregate purchase price of $83.4 million. Falcon Classic had revenue of
approximately $20.3 million for the year ended December 31, 1997.

     As discussed in Note 1, on September 30, 1998 the Partnership acquired the
TCI Systems and the Falcon Video Systems in accordance with the Contribution
Agreement.

                                      F-335
   530
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- ACQUISITIONS AND SALES -- (CONTINUED)
     Sources and uses of funds for each of the transactions were as follows:

<Table>
<Caption>
                                                                   FALCON
                                                                  CLASSIC
FALCON VIDEO
                                                  TCI SYSTEMS     SYSTEMS
 SYSTEMS
                                                  -----------   ------------
- --------------
                                                            (DOLLARS IN
THOUSANDS)
                                                          

Sources of Funds:
Cash on hand...................................    $ 11,429       $ 59,038
 $ 6,591
Advance under bank credit facilities...........     429,739         56,467
  76,800
                                                   --------       --------
 -------
  Total sources of funds.......................    $441,168       $115,505
 $83,391
                                                   ========       ========
 =======
Uses of Funds:
Repay debt assumed from TCI and existing debt
  of Falcon Video, including accrued
  interest.....................................    $429,739       $115,505
 $    --
Purchase price of assets.......................          --             --
  83,391
Payment of assumed obligations at closing......       6,495             --
      --
Transaction fees and expenses..................       2,879             --
      --
Available funds................................       2,055             --
      --
                                                   --------       --------
 -------
  Total uses of funds..........................    $441,168       $115,505
 $83,391
                                                   ========       ========
 =======
</Table>

     The following unaudited condensed consolidated statements of operations
present the consolidated results of operations of the Partnership as if the
acquisitions referred to above had occurred at the beginning of the periods
presented and are not necessarily indicative of what would have occurred had the
acquisitions been made as of such dates or of results which may occur in the
future.

<Table>
<Caption>
                                                               YEAR ENDED
DECEMBER 31,

- -----------------------
                                                                  1997
1998
                                                               ----------
- ----------
                                                               (DOLLARS IN
THOUSANDS)
                                                                      
Revenues....................................................   $ 424,994    $
426,827
Expenses....................................................    (438,623)
(444,886)
                                                               ---------
- ---------
  Operating loss............................................     (13,629)
(18,059)
Interest and other expenses.................................    (115,507)
(130,632)
                                                               ---------
- ---------
Loss before extraordinary item..............................   $(129,136)
$(148,691)
                                                               =========
=========
</Table>

                                      F-336
   531
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- ACQUISITIONS AND SALES -- (CONTINUED)
     The acquisitions of the TCI Systems, the Falcon Video Systems and the
Falcon Classic Systems were accounted for by the purchase method of accounting,
whereby the purchase prices were allocated to the assets acquired and
liabilities assumed based on their estimated fair values at the dates of
acquisition, as follows:

<Table>
<Caption>
                                                        TCI         FALCON
    FALCON
                                                      SYSTEMS    VIDEO SYSTEMS
CLASSIC SYSTEMS
                                                      --------   -------------
- ---------------
                                                                (DOLLARS IN
THOUSANDS)
                                                           

Purchase Price:
General partnership interests issued...............   $234,457     $ 43,073
    $    --
Debt assumed.......................................    275,000      112,196
         --
Debt incurred......................................         --           --
     83,391
Other liabilities assumed..........................        955        3,315
      2,804
Transaction costs..................................      2,879           --
         --
                                                      --------     --------
    -------
                                                       513,291      158,584
     86,195
                                                      --------     --------
    -------
Fair Market Value of Net Assets Acquired:
Property, plant and equipment......................     77,992       41,889
     33,539
Franchise costs....................................    170,799       36,374
      7,847
Customer lists and other intangible assets.........    217,443       53,602
     34,992
Other assets.......................................      4,165        2,381
      3,164
                                                      --------     --------
    -------
                                                       470,399      134,246
     79,542
                                                      --------     --------
    -------
  Excess of purchase price over fair value of
     assets acquired and liabilities assumed.......   $ 42,892     $ 24,338
    $ 6,653
                                                      ========     ========
    =======
</Table>

     The excess of purchase price over the fair value of net assets acquired has
been recorded as goodwill and is being amortized using the straight-line method
over 20 years.

     The general partnership interests issued in the TCI Transaction were valued
in proportion to the estimated fair value of the TCI Systems and the Falcon
Video Systems as compared to the estimated fair value of the Partnership's
assets, which was agreed upon in the Contribution Agreement by all holders of
Partnership interests.

     In January 1999, the Partnership acquired the assets of certain cable
systems serving approximately 591 customers in Oregon for $801,000. On March 15,
1999, the Partnership acquired the assets of certain cable systems serving
approximately 7,928 customers in Utah for $6.8 million. On March 22, 1999, the
Partnership acquired the assets of the Franklin, Virginia system in exchange for
the assets of its Scottsburg, Indiana systems and $8 million in cash and
recognized a gain of $8.5 million. The Franklin system serves approximately
9,042 customers and the Scottsburg systems served approximately 4,507 customers.
On July 30, 1999, the Partnership acquired the assets of certain cable systems
serving approximately 6,500 customers in Oregon for $9.5 million.

     On March 1, 1999, the Partnership contributed $2.4 million cash and certain
systems located in Oregon with a net book value of $5.6 million to a joint
venture with Bend Cable Communications, Inc., which manages the joint venture.
The Partnership owns 17% of the joint venture. These systems had been acquired
from Falcon Classic in March 1998, and served approximately 3,471 subscribers at
March 1, 1999. On March 26, 1999, the Partnership sold certain systems serving
approximately 2,550 subscribers in Kansas for $3.0 million and recognized a gain
of $2.4 million. The effects of these transactions on results of operations are
not material.

                                      F-337
   532
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

Cash and Cash Equivalents

     The carrying amount approximates fair value due to the short maturity of
those instruments.

Notes Payable

     The fair value of the Partnership's 8.375% Senior Debentures and 9.285%
Senior Discount Debentures is based on quoted market prices for those issues of
debt as of December 31, 1998. The fair value at December 31, 1999 is based on
the redemption amounts paid by Charter to retire the obligations after the
acquisition by Charter. The fair value of the Partnership's other subordinated
notes is based on quoted market prices for similar issues of debt with similar
maturities. The carrying amount of the Partnership's remaining debt outstanding
approximates fair value due to its variable rate nature.

Interest Rate Hedging Agreements

     The fair value of interest rate hedging agreements is estimated by
obtaining quotes from brokers as to the amount either party would be required to
pay or receive in order to terminate the agreements.

     The following table depicts the fair value of each class of financial
instruments for which it is practicable to estimate that value as of December
31:

<Table>
<Caption>
                                                  DECEMBER 31, 1998
NOVEMBER 12, 1999
                                               -----------------------
- -----------------------
                                                CARRYING       FAIR
CARRYING       FAIR
                                                 VALUE        VALUE        VALUE
       VALUE
                                               ----------   ----------
- ----------   ----------
                                                            (DOLLARS IN
THOUSANDS)
                                                                
     
Cash and cash equivalents...................   $   14,284   $   14,284   $
9,995   $    9,995
Notes payable (Note 6):
  8.375% Senior Debentures..................      375,000      382,500
375,000      378,750
  9.285% Senior Discount Debentures.........      294,982      289,275
319,085      321,459
  Bank credit facilities....................      926,000      926,000
1,017,750    1,017,750
  Other Subordinated Notes..................       15,000       16,426
- --           --
  Other.....................................          371          371
- --           --
</Table>

<Table>
<Caption>
                                                NOTIONAL       FAIR
NOTIONAL       FAIR
                                                 AMOUNT       VALUE
AMOUNT       VALUE
                                               ----------   ----------
- ----------   ----------
                                                                
     
Interest Rate Hedging Agreements (Note 6):
Interest rate swaps.........................   $1,534,713   $  (22,013)
$1,279,713   $   22,518
</Table>

     The carrying value of interest rate swaps was a net obligation of $9.3
million at December 31, 1998 and $9 million at November 12, 1999. See Note 6(e).
The amount of debt on which current interest expense has been affected is $960
million and $745 million for swaps at December 31, 1998 and November 12, 1999,
respectively. The balance of the contract totals presented above reflects
contracts entered into as of November 12, 1999 which do not become effective
until existing contracts expire.

                                      F-338
   533
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of:

<Table>
<Caption>
                                                               DECEMBER 31,
NOVEMBER 12,
                                                                   1998
 1999
                                                               ------------
- ------------
                                                                 (DOLLARS IN
THOUSANDS)
                                                            

Cable television systems....................................     $765,641
$862,889
Furniture and equipment.....................................       25,576
 29,514
Vehicles....................................................       18,381
 19,835
Land, buildings and improvements............................       16,505
 16,568
                                                                 --------
- --------
                                                                  826,103
928,806
Less accumulated depreciation and amortization..............     (320,209)
(374,955)
                                                                 --------
- --------
                                                                 $505,894
$553,851
                                                                 ========
========
</Table>

NOTE 6 -- NOTES PAYABLE

     Notes payable consist of:

<Table>
<Caption>
                                                               DECEMBER 31,
NOVEMBER 12,
                                                                   1998
 1999
                                                               ------------
- ------------
                                                                 (DOLLARS IN
THOUSANDS)
                                                            

FCLP Only:
  8.375% Senior Debentures(a)...............................    $  375,000     $
 375,000
  9.285% Senior Discount Debentures, less unamortized
     discount(a)............................................       294,982
 319,085
Owned Subsidiaries:
  Credit Facility(b)........................................       926,000
      --
  Amended and Restated Credit Agreement(c)..................            --
1,017,750
  Other subordinated notes(d)...............................        15,000
      --
  Other.....................................................           371
      --
                                                                ----------
- ----------
                                                                $1,611,353
$1,711,835
                                                                ==========
==========
</Table>

     (a) 8.375% SENIOR DEBENTURES AND 9.285% SENIOR DISCOUNT DEBENTURES

     On April 3, 1998, FHGLP and its wholly-owned subsidiary, Falcon Funding
Corporation ("FFC" and, collectively with FHGLP, the "Issuers"), sold
$375,000,000 aggregate principal amount of 8.375% Senior Debentures due 2010
(the "Senior Debentures") and $435,250,000 aggregate principal amount at
maturity of 9.285% Senior Discount Debentures due 2010 (the "Senior Discount
Debentures" and, collectively with the Senior Debentures, the "Debentures") in a
private placement. The Debentures were exchanged for debentures with the same
form and terms, but registered under the Securities Act of 1933, as amended, in
August 1998.

     In connection with consummation of the TCI Transaction, the Partnership was
substituted for FHGLP as an obligor under the Debentures and thereupon FHGLP was
released and discharged from any further obligation with respect to the
Debentures and the related Indenture. FFC remains as an obligor under the
Debentures and is now a wholly owned subsidiary of the Partnership. FFC was
incorporated solely for the purpose of serving as a co-issuer of the Debentures
and does not have any material operations or assets and will not have any
revenues.

     The Senior Discount Debentures were issued at a price of 63.329% per $1,000
aggregate principal amount at maturity, for total gross proceeds of
approximately $275.6 million, and will accrete to stated value at an

                                      F-339
   534
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- NOTES PAYABLE -- (CONTINUED)
annual rate of 9.285% until April 15, 2003. The unamortized discount amounted to
$140.3 million at December 31, 1998 and $116.2 at November 12, 1999,
respectively. After giving effect to offering discounts, commissions and
estimated expenses of the offering, the sale of the Debentures (representing
aggregate indebtedness of approximately $650.6 million as of the date of
issuance) generated net proceeds of approximately $631 million. The Partnership
used substantially all the net proceeds from the sale of the Debentures to repay
outstanding bank indebtedness.

     (b) CREDIT FACILITY

     On June 30, 1998, the Partnership entered into a $1.5 billion senior credit
facility (the "Credit Facility") which replaced its earlier credit facility and
provided funds for the closing of the TCI Transaction. See Note 1. The borrowers
under the Credit Facility were the operating subsidiaries prior to consummation
of the TCI Transaction and, following the TCI Transaction, the borrower is
Falcon LLC. The restricted companies, as defined under the Credit Facility, are
Falcon LLC and each of its subsidiaries (excluding certain subsidiaries
designated as excluded companies from time to time) and each restricted company
(other than Falcon LLC) is also a guarantor of the Credit Facility.

     The Credit Facility consisted of three committed facilities (one revolver
and two term loans) and one uncommitted $350 million supplemental credit
facility (the terms of which will be negotiated at the time the Partnership
makes a request to draw on such facility). Facility A is a $650 million
revolving credit facility maturing December 29, 2006; Facility B is a $200
million term loan maturing June 29, 2007; and Facility C is a $300 million term
loan maturing December 31, 2007. All of Facility C and approximately $126
million of Facility B were funded on June 30, 1998, and the debt outstanding
under the Partnership's earlier credit facility of approximately $329 million
was repaid. As a result, from June 30, 1998 until September 29, 1998, FHGLP had
an excess cash balance of approximately $90 million. Immediately prior to
closing the TCI Transaction, approximately $39 million was borrowed under
Facility A to discharge certain indebtedness of Falcon Video. In connection with
consummation of the TCI Transaction, Falcon LLC assumed the approximately $433
million of indebtedness outstanding under the Credit Facility. In addition to
utilizing cash on hand of approximately $63 million, Falcon LLC borrowed the
approximately $74 million remaining under Facility B and approximately $366
million under Facility A to discharge approximately $73 million of Falcon Video
indebtedness and to retire approximately $430 million of TCI indebtedness
assumed as part of the contribution of the TCI Systems. As a result of these
borrowings, the amount outstanding under the Credit Facility at December 31,
1998 was $926 million. Subject to covenant limitations, the Partnership had
available to it additional borrowing capacity thereunder of $224 million at
December 31, 1998. However, limitations imposed by the Partnership's partnership
agreement, as amended, would limit available borrowings at December 31, 1998 to
$23.1 million.

     (c) AMENDED AND RESTATED CREDIT AGREEMENT

     On November 12, 1999, the Partnership amended the Credit Facility with the
Amended and Restated Credit Agreement (the "Amended Agreement") providing for a
$1.85 billion senior credit facility. The Amended Agreement consists of four
committed facilities (two revolvers and two term loans) and one uncommitted $590
million supplemental credit facility (the terms of which will be negotiated at
the time the Partnership makes a request to draw on such facility). Facility A
is a $646 million revolving credit facility maturing December 29, 2006; Facility
B is a $200 million term loan maturing June 29, 2007; Facility C is a $300
million term loan maturing December 31, 2007; and Facility D is a $110 million
supplemental revolving credit facility maturing on December 31, 2007. As a
result of borrowings, the amount outstanding under the Amended Agreement at
November 12, 1999 was $1.018 billion. The Partnership had available to it
additional borrowing capacity thereunder of $235 million. However debt covenants
limit the amount that can be
                                      F-340
   535
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- NOTES PAYABLE -- (CONTINUED)
borrowed to $205 million at November 12, 1999, which was subject to limitations
imposed by the Partnership's partnership agreement. Charter paid the lenders a
fee of $2 million to obtain the Amended Agreement.

     (d) OTHER SUBORDINATED NOTES

     Other subordinated notes consisted of 11.56% Subordinated Notes due March
2001. The subordinated notes were repaid by Charter on November 12, 1999 with
accrued interest of $202,000 and a prepayment premium of $1,143,000.

     (e) INTEREST RATE HEDGING AGREEMENTS

     The Partnership utilizes interest rate hedging agreements to establish
long-term fixed interest rates on a portion of its variable-rate debt. The
Amended Agreement requires that interest be tied to the ratio of consolidated
total debt to consolidated annualized cash flow (in each case, as defined
therein), and further requires that the Partnership maintain hedging
arrangements with respect to at least 50% of the outstanding borrowings
thereunder plus any additional borrowings of the Partnership, including the
Debentures, for a two year period. As of November 12, 1999, borrowings under the
Amended Agreement bore interest at an average rate of 7.51% (including the
effect of interest rate hedging agreements). The Partnership has entered into
fixed interest rate hedging agreements with an aggregate notional amount at
November 12, 1999 of $1.28 billion. Agreements in effect at November 12, 1999
totaled $745 million, with the remaining $535 million to become effective as
certain of the existing contracts mature from 2000 through October 2004. These
agreements expire at various times through October 2006.

     The hedging agreements resulted in additional interest expense of $350,000,
$1.2 million and $3.9 million for the years ended December 31, 1997 and 1998 and
for the period from January 1, 1999 to November 12, 1999, respectively. The
Partnership does not believe that it has any significant risk of exposure to
non-performance by any of its counterparties.

     (f) DEBT MATURITIES

     The Partnership's notes payable outstanding at November 12, 1999 mature as
follows:

<Table>
<Caption>
                                             8.375%       9.285%
                                             SENIOR       SENIOR     NOTES TO
YEAR                                       DEBENTURES   DEBENTURES    BANKS
 TOTAL
- ----                                       ----------   ----------   --------
- ----------
                                                       (DOLLARS IN THOUSANDS)
                                                            

2000....................................    $     --     $     --    $  5,000
$    5,000
2001....................................          --           --       5,000
    5,000
2002....................................          --           --       5,000
    5,000
2003....................................          --           --       5,000
    5,000
2004....................................          --           --       5,000
    5,000
Thereafter..............................    $375,000     $435,250    $992,750
$1,803,000
</Table>

     (G) EXTRAORDINARY ITEM

     Fees and expenses incurred in connection with the repurchase of the
Partnership's 11% Notes (the "Notes") on May 19, 1998 and the retirement of the
remaining Notes on September 15, 1998 were $19.7 million in the aggregate. In
addition, the unamortized portion of deferred loan costs related to the Notes
and a previous credit facility, which amounted to $10.9 million in the
aggregate, were written off as an extraordinary charge upon the extinguishment
of the related debt in 1998.
                                      F-341
   536
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- COMMITMENTS AND CONTINGENCIES

     The Partnership leases land, office space and equipment under operating
leases expiring at various dates through the year 2039. See Note 9.

     Future minimum rentals for operating leases at November 12, 1999 are as
follows:

<Table>
<Caption>
YEAR                                                                    TOTAL
- ----
- ----------------------
                                                                (DOLLARS IN
THOUSANDS)
                                                             
1999........................................................           $   353
2000........................................................             2,904
2001........................................................             2,527
2002........................................................             2,132
2003........................................................             1,232
Thereafter..................................................             4,612
                                                                       -------
                                                                       $13,760
                                                                       =======
</Table>

     In most cases, management expects that, in the normal course of business,
these leases will be renewed or replaced by other leases. Rent expense amounted
to $2.4 million in 1997, $3.1 million in 1998 and $3.6 million for the period
from January 1, 1999 to November 12, 1999.

     In addition, the Partnership rents line space on utility poles in some of
the franchise areas it serves. These rentals amounted to $3.1 million for 1997,
$3.9 million for 1998 and $4.5 million for the period from January 1, 1999 to
November 12, 1999. Generally, such pole rental agreements are short-term;
however, the Partnership anticipates such rentals will continue in the future.

     Beginning in August 1997, the Partnership elected to self-insure its cable
distribution plant and subscriber connections against property damage as well as
possible business interruptions caused by such damage. The decision to
self-insure was made due to significant increases in the cost of insurance
coverage and decreases in the amount of insurance coverage available. In October
1998, the Partnership reinstated third party insurance coverage against damage
to its cable distribution plant and subscriber connections and against business
interruptions resulting from such damage. This coverage is subject to a
significant annual deductible and is intended to limit the Partnership's
exposure to catastrophic losses, if any, in future periods. Management believes
that the relatively small size of the Partnership's markets in any one
geographic area, coupled with their geographic separation, will mitigate the
risk that the Partnership could sustain losses due to seasonal weather
conditions or other events that, in the aggregate, could have a material adverse
effect on the Partnership's liquidity and cash flows. The Partnership continues
to purchase insurance coverage in amounts management views as appropriate for
all other property, liability, automobile, workers' compensation and other types
of insurable risks.

     The Partnership is required under various franchise agreements at November
12, 1999 to rebuild certain existing cable systems at a cost of approximately
$125.4 million.

     The Partnership is regulated by various federal, state and local government
entities. The Cable Television Consumer Protection and Competition Act of 1992
(the "1992 Cable Act"), provides for among other things, federal and local
regulation of rates charged for basic cable service, cable programming service
tiers ("CPSTs") and equipment and installation services. Regulations issued in
1993 and significantly amended in 1994 by the Federal Communications Commission
(the "FCC") have resulted in changes in the rates charged for the Partnership's
cable services. The Partnership believes that compliance with the 1992 Cable Act
has had a negative impact on its operations and cash flow. It also presently
believes that any potential future liabilities for refund claims or other
related actions would not be material. The Telecommunications Act of 1996 (the
"1996 Telecom Act") was signed into law on February 8, 1996. As it pertains to
cable television,

                                      F-342
   537
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7 -- COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
the 1996 Telecom Act, among other things, (i) ends the regulation of certain
CPSTs in 1999; (ii) expands the definition of effective competition, the
existence of which displaces rate regulation; (iii) eliminates the restriction
against the ownership and operation of cable systems by telephone companies
within their local exchange service areas; and (iv) liberalizes certain of the
FCC's cross-ownership restrictions.

     The Partnership has various contracts to obtain basic and premium
programming from program suppliers whose compensation is generally based on a
fixed fee per customer or a percentage of the gross receipts for the particular
service. Some program suppliers provide volume discount pricing structures or
offer marketing support to the Partnership. The Partnership's programming
contracts are generally for a fixed period of time and are subject to negotiated
renewal. The Partnership does not have long-term programming contracts for the
supply of a substantial amount of its programming. Accordingly, no assurances
can be given that the Partnership's programming costs will not continue to
increase substantially or that other materially adverse terms will not be added
to the Partnership's programming contracts. Management believes, however, that
the Partnership's relations with its programming suppliers generally are good.

     Effective December 1, 1998, the Partnership elected to obtain certain of
its programming services through an affiliate of TCI. This election resulted in
a reduction in the Partnership's programming costs, the majority of which will
be passed on to its customers in the form of reduced rates in compliance with
FCC rules. The Partnership has elected to continue to acquire its remaining
programming services under its existing programming contracts. The Partnership,
in the normal course of business, purchases cable programming services from
certain program suppliers owned in whole or in part by an affiliate of TCI.

     The Partnership is periodically a party to various legal proceedings. Such
legal proceedings are ordinary and routine litigation proceedings that are
incidental to the Partnership's business, and management presently believes that
the outcome of all pending legal proceedings will not, individually or in the
aggregate, have a material adverse effect on the financial condition of the
Partnership.

     The Partnership, certain of its affiliates, and certain third parties were
named as defendants in an action entitled Frank O'Shea I.R.A. et al. v. Falcon
Cable Systems Company, et al., Case No. BC 147386, in the Superior Court of the
State of California, County of Los Angeles (the "Action"). Plaintiffs in the
Action were certain former unitholders of Falcon Cable Systems Company ("FCSC")
purporting to represent a class consisting of former unitholders of FCSC other
than those affiliated with FCSC and/or its controlling persons. The complaint in
the Action alleged, among other things, that defendants breached their fiduciary
and contractual duties to unitholders, and acted negligently, with respect to
the purchase from former unitholders of their interests in FCSC in 1996. A
settlement of the action was approved by the court in May 1999 and has become
effective. The terms of the settlement did not have a material adverse effect on
the financial condition of the Partnership. Net of insurance proceeds, the
settlement's cost to the Partnership amounted to approximately $2.9 million. The
Partnership recognized expenses related to the settlement of $145,000, $2.5
million and $166,000 in 1997, 1998, and for the period from January 1, 1999 to
November 12, 1999, respectively.

     In various states, customers have filed punitive class action lawsuits on
behalf of all persons residing in those states who are or were customers of the
Partnership's cable television service, and who have been charged a fee for
delinquent payment of their cable bill. The actions challenge the legality of
the processing fee and seek declaratory judgment, injunctive relief and
unspecified damages. At this stage, the Partnership is not able to project the
outcome of the actions.

                                      F-343
   538
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8 -- EMPLOYEE BENEFIT PLANS

     The subsidiaries of the Partnership have a cash or deferred profit sharing
plan (the "Profit Sharing Plan") covering substantially all of their employees.
FHGLP joined in the adoption of the FHGI cash or deferred profit sharing plan as
of March 31, 1993. The provisions of this plan were amended to be substantially
identical to the provisions of the Profit Sharing Plan.

     The Profit Sharing Plan provides that each participant may elect to make a
contribution in an amount up to 20% of the participant's annual compensation
which otherwise would have been payable to the participant as salary. The
Partnership's contribution to the Profit Sharing Plan, as determined by
management, is discretionary but may not exceed 15% of the annual aggregate
compensation (as defined) paid to all participating employees. Effective January
1, 1999 the Profit Sharing Plan was amended, whereby the Partnership would make
an employer contribution equal to 100% of the first 3% and 50% of the next 2% of
the participant's contributions, respectively. There were no contributions for
the Profit Sharing Plan in 1997 or 1998. The partnership contributed $1.0
million during the period from January 1, 1999 to November 12, 1999.

     On September 30 1998, the Partnership assumed the obligations of FHGLP for
its 1993 Incentive Performance Plan (the "Incentive Plan"). The value of the
interests in the Incentive Plan was tied to the equity value of certain
partnership units in FHGLP held by FHGI. In connection with the assumption by
the Partnership, FHGLP agreed to fund any benefits payable under the Incentive
Plan through additional capital contributions to the Partnership, the waiver of
its rights to receive all or part of certain distributions from the Partnership
and/or a contribution of a portion of its partnership units to the Partnership.
The benefits which were payable under the Incentive Plan are equal to the amount
of distributions which FHGI would have otherwise received with respect to
1,932.67 of the units of FHGLP held by FHGI and a portion of FHGI's interest in
certain of the partnerships that are the general partners of the Partnership's
operating subsidiaries. Benefits were payable under the Incentive Plan only when
distributions would otherwise be paid to FHGI with respect to the
above-described units and interests.

     In 1999, the Partnership adopted a Restricted Unit Plan (the "New FCLP
Incentive Plan" or "Plan") for the benefit of certain employees. Grants of
restricted units are provided at the discretion of the Advisory Committee. The
value of the units in the New FCLP Incentive Plan is tied to the equity value of
FCLP above a base equity as determined initially in 1999 by the partners, and
for grants in subsequent years by an appraisal. Benefits are payable under the
New FCLP Incentive Plan only when distributions would otherwise be payable to
equity holders of FCLP. An initial grant of 100,000 units representing 2.75% of
the equity of FCLP in excess of the equity base was approved and will be
allocated to the participants in the Plan. There is a five-year vesting
requirement for all participants.

     In connection with the sale of the Partnership to Charter discussed in Note
1, the Partnership recorded compensation expense in the amount of approximately
$46.4 million related to both the Incentive Plan ($21 million) and the New FCLP
Incentive Plan ($25.4 million). The amount was determined based on the value of
the underlying ownership units, as established by the sale of the Partnership to
Charter, and on estimated closing working capital and debt balances of the
Partnership. The Partnership paid $33 million on November 12, 1999 to certain
employees. The payments were funded by net proceeds of the sale. The Partnership
transferred its remaining liability approximating $13.4 million to FHGLP who
will make the final payments under the plans. The participants in the Incentive
Plan were present and former employees of the Partnership, FHGLP and its
operating affiliates, all of whom were 100% vested. Prior to the closing of the
TCI Transaction, FHGLP amended the Incentive Plan to provide for payments by
FHGLP at the closing of the TCI Transaction to participants in an aggregate
amount of approximately $6.5 million and to reduce by such amount FHGLP's
obligations to make future payments to participants under the Incentive Plan.

     In addition to the amounts expensed pursuant to the equity plans, the
Partnership recorded bonuses to certain employees in the aggregate amount of $20
million upon the closing of the sale to Charter. The
                                      F-344
   539
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8 -- EMPLOYEE BENEFIT PLANS -- (CONTINUED)
Partnership also recorded employee severance and other compensation aggregating
$4.2 million. The Partnership paid $11.8 million on November 12, 1999 to certain
employees. The payments were funded by net proceeds of the sale. The Partnership
transferred its remaining liability approximating $12.4 million to FHGLP who
will make the final payment. The aggregate amount of expenses recorded under
benefit plans and severance and other compensation of $70.7 million was recorded
as a capital contribution, as FHGLP's share of the proceeds from the sale have
been, or will be, used to fund such obligations.

NOTE 9 -- RELATED PARTY TRANSACTIONS

     The Partnership is a separate, stand-alone holding company which employs
all of the management personnel. The Partnership is financially dependent on the
receipt of permitted payments from its operating subsidiaries, management and
consulting fees from domestic cable ventures, and the reimbursement of specified
expenses by certain of the Affiliated Partnerships to fund its operations.
Expected increases in the funding requirements of the Partnership combined with
limitations on its sources of cash may create liquidity issues for the
Partnership in the future. Specifically, the Credit Facility permitted the
subsidiaries of the Partnership to remit to the Partnership no more than 4.25%
of their net cable revenues, as defined, in any year. Beginning on January 1,
1999, this limitation was increased to 4.5% of net cable revenues in any year.
As a result of the 1998 acquisition by the Partnership of the Falcon Classic and
Falcon Video Systems, the Partnership will no longer receive management fees and
reimbursed expenses from Falcon Classic or receive management fees from Falcon
Video. Commencing on October 1, 1998, FHGLP retains 20% of the management fees
paid by the Enstar partnerships. The management fees earned from the Enstar
partnerships were $2 million, $1.9 million and $1.4 million for the years ended
December 31, 1997 and 1998 and for the period from January 1, 1999 to November
12, 1999, respectively.

     The management and consulting fees and expense reimbursements earned from
the Affiliated Partnerships amounted to approximately $5.2 million and $2.1
million, $3.7 million and $1.5 million and $1.4 million and $1.4 million for the
years ended December 31, 1997 and 1998 and for the period ended November 12,
1999, respectively. The fees and expense reimbursements of $3.7 million and $1.5
million earned in 1998 included $191,000 and $128,000 earned from Falcon Classic
from January 1, 1998 through July 16, 1998, and $1.2 million in management fees
from Falcon Video from January 1, 1998 through September 30, 1998. Subsequent to
these acquisitions, the amounts payable to the Partnership in respect of its
management of the former Falcon Classic and Falcon Video systems became subject
to the limitations contained in the Credit Facility.

     Included in Commitments and Contingencies (Note 7) is a facility lease
agreement with the Partnership's Chief Executive Officer and his wife, or
entities owned by them, requiring annual future minimum rental payments
aggregating $2.5 million through 2005. During the years ended December 31, 1997
and 1998 and for the period ended November 12, 1999, rent expense on the
facility amounted to $383,000, $416,000 and $369,000, respectively. FCLP
purchased a facility owned by the Partnership's Chief Executive Officer and his
wife in February 1999 for $283,000 which was previously leased by FCLP.

     In addition, the Partnership provides certain accounting, bookkeeping and
clerical services to the Partnership's Chief Executive Officer. The costs of
services provided were determined based on allocations of time plus overhead
costs (rent, parking, supplies, telephone, etc.). Such services amounted to
$163,000, $212,000 and $256,000 for the years ended December 31, 1997 and 1998
and for the period from January 1, 1999 to November 12, 1999, respectively.
These costs were net of amounts reimbursed to the Partnership by the Chief
Executive Officer amounting to $55,000, $72,000 and $77,000 for the years ended
December 31, 1997 and 1998 and for the period from January 1, 1999 to November
12, 1999, respectively.

                                      F-345
   540
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10 -- OTHER INCOME (EXPENSE)

     Other income (expense) is comprised of the following:

<Table>
<Caption>
                                                                YEAR ENDED
  PERIOD FROM
                                                               DECEMBER 31,
JANUARY 1, 1999
                                                             -----------------
TO NOVEMBER 12,
                                                              1997      1998
     1999
                                                             -------   -------
- ---------------
                                                                   (DOLLARS IN
THOUSANDS)
                                                                 

Gain (loss) on insured casualty losses....................   $ 3,476   $   314
    $   (69)
Gain on sale of system....................................        --        --
     10,671
Sale of system -- Falcon..................................        --        --
     (2,427)
Gain (loss) on sale of investment.........................    (1,360)      174
         --
Net lawsuit settlement costs..............................    (1,030)   (2,614)
       (166)
Other, net................................................      (201)     (791)
         53
                                                             -------   -------
    -------
                                                             $   885   $(2,917)
    $ 8,062
                                                             =======   =======
    =======
</Table>

NOTE 11 -- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Operating activities

     During the years ended December 31, 1997 and 1998 and the period from
January 1, 1999 to November 12, 1999, FCLP paid cash interest amounting to
approximately $48.1 million, $84.9 million and $93.9 million, respectively.

Investing activities

     See Note 3 regarding the non-cash investing activities related to the
acquisitions of the cable systems of the TCI Systems, the Falcon Video Systems
and the Falcon Classic Systems. Also included in Note 3 are the non-cash
investing activities related to the exchange of the Partnership's Scottsburg,
Indiana system for a system in Franklin, Virginia.

Financing activities

     See Note 3 regarding the non-cash financing activities relating to the
acquisitions of the cable systems of the TCI Systems, the Falcon Video Systems
and the Falcon Classic Systems. See Note 2 regarding the reclassification to
redeemable partners' equity.

NOTE 12 -- FCLP (PARENT COMPANY ONLY)

     The following parent-only condensed financial information presents Falcon
Communications, L.P.'s balance sheets and related statements of operations and
cash flows by accounting for the investments in its subsidiaries on the equity
method of accounting. The accompanying condensed financial information should be
read in conjunction with the consolidated financial statements and notes
thereto.

                                      F-346
   541
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- FCLP (PARENT COMPANY ONLY) -- (CONTINUED)
                      CONDENSED BALANCE SHEET INFORMATION

<Table>
<Caption>

 NOVEMBER 12,
                                                               DECEMBER 31,
     1999
                                                                   1998
(DATE OF DISPOSITION)
                                                               ------------
- ---------------------
                                                                      (DOLLARS
IN THOUSANDS)
                                                            

ASSETS:
  Cash and cash equivalents.................................    $    1,605
  $    3,363
  Receivables:
     Intercompany notes and accrued interest receivable.....       655,128
     674,409
     Due from affiliates and other entities.................         2,129
         108
  Prepaid expenses and other................................           236
         305
  Property, plant and equipment, less accumulated
     depreciation and amortization..........................         3,599
       4,572
  Deferred loan costs, less accumulated amortization........        20,044
      18,718
                                                                ----------
  ----------
                                                                $  682,741
  $  701,475
                                                                ==========
  ==========
LIABILITIES:
  Senior notes payable......................................    $  669,982
  $  694,085
  Notes payable to affiliates...............................        70,805
      71,801
  Accounts payable..........................................           135
         340
  Accrued expenses..........................................        14,000
      10,432
  Equity in net losses of subsidiaries in excess of
     investment.............................................       198,492
     324,533
                                                                ----------
  ----------
     TOTAL LIABILITIES......................................       953,414
   1,101,191
REDEEMABLE PARTNERS' EQUITY.................................       133,023
     424,280
PARTNERS' DEFICIT...........................................      (403,696)
    (823,996)
                                                                ----------
  ----------
                                                                $  682,741
  $  701,475
                                                                ==========
  ==========
</Table>

                                      F-347
   542
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- FCLP (PARENT COMPANY ONLY) -- (CONTINUED)
                 CONDENSED STATEMENT OF OPERATIONS INFORMATION

<Table>
<Caption>

     PERIOD FROM
                                                      YEAR ENDED DECEMBER 31,
 JANUARY 1, 1999 TO
                                                      ------------------------
  NOVEMBER 12, 1999
                                                         1997         1998
(DATE OF DISPOSITION)
                                                      ----------   -----------
- ---------------------
                                                                   (DOLLARS IN
THOUSANDS)
                                                             

REVENUES:
  Management fees:
     Affiliated Partnerships.......................    $  2,873     $   2,120
      $   1,372
     Subsidiaries..................................      13,979        14,010
         16,530
     International and other.......................         281            33
             29
                                                       --------     ---------
      ---------
       Total revenues..............................      17,133        16,163
         17,931
                                                       --------     ---------
      ---------
EXPENSES:
  General and administrative expenses..............      11,328        21,134
         83,180
  Depreciation and amortization....................         274           559
          1,242
                                                       --------     ---------
      ---------
       Total expenses..............................      11,602        21,693
         84,422
                                                       --------     ---------
      ---------
       Operating income (loss).....................       5,531        (5,530)
        (66,491)
OTHER INCOME (EXPENSE):
  Interest income..................................      22,997        50,562
         49,731
  Interest expense.................................     (30,485)      (59,629)
        (56,861)
  Equity in net losses of subsidiaries.............     (56,422)     (105,659)
       (126,041)
  Equity in net losses of investee partnerships....          (4)          (31)
             --
  Other, net.......................................      (2,455)           --
            830
                                                       --------     ---------
      ---------
Net loss before extraordinary item.................     (60,838)     (120,287)
       (198,832)
Extraordinary item, retirement of debt.............          --       (24,196)
             --
                                                       --------     ---------
      ---------
NET LOSS...........................................    $(60,838)    $(144,483)
      $(198,832)
                                                       ========     =========
      =========
</Table>

                                      F-348
   543
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- FCLP (PARENT COMPANY ONLY) -- (CONTINUED)
                 CONDENSED STATEMENT OF CASH FLOWS INFORMATION

<Table>
<Caption>
                                                           YEAR ENDED
 PERIOD FROM
                                                          DECEMBER 31,
JANUARY 1, 1999 TO
                                                       ------------------
NOVEMBER 12, 1999
                                                        1997      1998
(DATE OF DISPOSITION)
                                                       ------   ---------
- ---------------------
                                                                 (DOLLARS IN
THOUSANDS)
                                                                    
Net cash provided by (used in) Operating
  activities........................................   $1,478   $(418,226)
   $2,982
                                                       ------   ---------
   ------
Cash flows from investing activities:
  Distributions from affiliated partnerships........       --       1,820
       --
  Capital expenditures..............................     (417)     (2,836)
   (2,218)
  Investments in affiliated partnerships and other
     investments....................................     (254)     (2,998)
       --
  Proceeds from sale of investments and other
     assets.........................................      702       1,694
        4
  Assets retained by Falcon Holding Group, L.P......       --      (2,893)
       --
                                                       ------   ---------
   ------
Net cash provided by (used in) investing
  activities........................................       31      (5,213)
   (2,214)
                                                       ------   ---------
   ------
Cash flows from financing activities:
  Repayment of debt.................................     (131)   (282,203)
       --
  Borrowings from notes payable.....................       --     650,639
       --
  Borrowings from subsidiaries......................       --      70,805
      996
  Capital contributions.............................       93          --
       --
  Redemption of partners' equity....................       --      (1,170)
       --
  Deferred loan costs...............................       --     (21,204)
       (7)
                                                       ------   ---------
   ------
Net cash provided by (used in) financing
  activities........................................      (38)    416,867
      989
                                                       ------   ---------
   ------
Net increase (decrease) in cash and cash
  equivalents.......................................    1,471      (6,572)
    1,757
Cash and cash equivalents, at beginning of period...    6,706       8,177
    1,605
                                                       ------   ---------
   ------
Cash and cash equivalents, at end of period.........   $8,177   $   1,605
   $3,362
                                                       ======   =========
   ======
</Table>

NOTE 13 -- VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
                                                      ADDITIONS
                                        BALANCE AT   CHARGED TO
             BALANCE AT
                                        BEGINNING     COST AND
               END OF
                                        OF PERIOD    EXPENSES(A)   DEDUCTIONS(B)
  OTHER(C)     PERIOD
                                        ----------   -----------   -------------
  --------   ----------
                                                             (DOLLARS IN
THOUSANDS)
                                                          
          
Allowance for possible losses on
  receivables
Year ended December 31,
  1997...............................      $907        $5,714         $(5,796)
      --       $  825
  1998...............................      $825        $4,775         $(5,299)
    $369       $  670
Period from January 1, 1999 to
  November 12, 1999..................      $670        $4,510         $(4,106)
      --       $1,074
</Table>

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

(a) Provision for losses, net of recoveries.

(b) Write-off uncollectible accounts.

(c) Allowance for losses on receivables acquired in connection with the
    acquisition of Falcon Classic, Falcon Video and the TCI Systems.

                                      F-349
   544
                          FALCON COMMUNICATIONS, L.P.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14 -- YEAR 2000 (UNAUDITED)

     In the prior years, the Partnership discussed the nature and progress of
its plans to become Year 2000 ready. In late 1999, the Partnership completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Partnership experienced no significant disruptions
in mission critical information technology and non-information technology
systems and believes those systems successfully responded to the Year 2000 date
change. The Partnership expensed approximately $4.7 million during the period
from January 1, 1999 to November 12, 1999 in connection with remediating its
systems. The Partnership is not aware of any material problems resulting from
Year 2000 issues, either with its products, its internal systems, or the
products and services of third parties.

                                      F-350
   545

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Tele-Communications, Inc.:

     We have audited the accompanying combined balance sheets of the TCI Falcon
Systems (as defined in Note 1 to the combined financial statements) as of
September 30, 1998 and December 31, 1997, and the related combined statements of
operations and parent's investment, and cash flows for the nine-month period
ended September 30, 1998 and for each of the years in the two-year period ended
December 31, 1997. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.

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

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the TCI Falcon
Systems as of September 30, 1998 and December 31, 1997, and the results of their
operations and their cash flows for the nine-month period ended September 30,
1998 and for each of the years in the two-year period ended December 31, 1997,
in conformity with generally accepted accounting principles.

                                   /s/ KPMG LLP

Denver, Colorado
June 21, 1999

                                      F-351
   546

                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

                            COMBINED BALANCE SHEETS

<Table>
<Caption>
                                                              SEPTEMBER 30,
DECEMBER 31,
                                                                  1998
  1997
                                                              -------------
- ------------
                                                                 (AMOUNTS IN
THOUSANDS)
                                                           

ASSETS
Trade and other receivables, net............................    $  2,452
$  4,665
Property and equipment, at cost:
  Land......................................................       1,289
   1,232
  Distribution systems......................................     151,017
 137,767
  Support equipment and buildings...........................      20,687
  18,354
                                                                --------
- --------
                                                                 172,993
 157,353
  Less accumulated depreciation.............................      80,404
  69,857
                                                                --------
- --------
                                                                  92,589
  87,496
                                                                --------
- --------
Franchise costs.............................................     399,258
 393,540
  Less accumulated amortization.............................      70,045
  62,849
                                                                --------
- --------
                                                                 329,213
 330,691
                                                                --------
- --------
Other assets, net of accumulated amortization...............         630
     714
                                                                --------
- --------
                                                                $424,884
$423,566
                                                                ========
========
LIABILITIES AND PARENT'S INVESTMENT
Accounts payable............................................    $    729
$    350
Accrued expenses............................................       5,267
   3,487
Deferred income taxes (note 4)..............................     124,586
 121,183
                                                                --------
- --------
          Total liabilities.................................     130,582
 125,020
Parent's investment (note 5)................................     294,302
 298,546
                                                                --------
- --------
Commitments and contingencies (note 6)......................    $424,884
$423,566
                                                                ========
========
</Table>

            See accompanying notes to combined financial statements.
                                      F-352
   547

                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

           COMBINED STATEMENTS OF OPERATIONS AND PARENT'S INVESTMENT

<Table>
<Caption>
                                                          JANUARY 1, 1998
YEARS ENDED
                                                              THROUGH
DECEMBER 31,
                                                           SEPTEMBER 30,
- --------------------
                                                               1998
1997        1996
                                                          ---------------
- --------    --------
                                                                  (AMOUNTS IN
THOUSANDS)
                                                                       
        
Revenue.................................................     $ 86,476
$113,897    $102,155
Operating costs and expenses:
  Operating (note 5)....................................       31,154
39,392      33,521
  Selling, general and administrative...................       17,234
19,687      21,695
  Administrative fees (note 5)..........................        2,853
5,034       5,768
  Depreciation..........................................       10,317
12,724      12,077
  Amortization..........................................        7,440
9,785       8,184
                                                             --------
- --------    --------
                                                               68,998
86,622      81,245
                                                             --------
- --------    --------
     Operating income...................................       17,478
27,275      20,910
Other income (expense):
  Intercompany interest expense (note 5)................       (4,343)
(5,832)     (4,701)
  Other, net............................................           28
 (84)        (44)
                                                             --------
- --------    --------
                                                               (4,315)
(5,916)     (4,745)
                                                             --------
- --------    --------
     Earnings before income taxes.......................       13,163
21,359      16,165
Income tax expense......................................       (5,228)
(8,808)     (6,239)
                                                             --------
- --------    --------
     Net earnings.......................................        7,935
12,551       9,926
Parent's investment:
  Beginning of period...................................      298,546
319,520     262,752
  Change in due to Tele-Communications, Inc. ("TCI")
     (note 5)...........................................      (12,179)
(33,525)     46,842
                                                             --------
- --------    --------
  End of period.........................................     $294,302
$298,546    $319,520
                                                             ========
========    ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-353
   548

                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

                       COMBINED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                          JANUARY 1, 1998
YEARS ENDED
                                                              THROUGH
DECEMBER 31,
                                                           SEPTEMBER 30,
- --------------------
                                                               1998
1997        1996
                                                          ---------------
- --------    --------
                                                                  (AMOUNTS IN
THOUSANDS)
                                                                       
        
Cash flows from operating activities:
  Net earnings..........................................     $  7,935        $
12,551    $  9,926
  Adjustments to reconcile net earnings to net cash
     provided by operating activities:
     Depreciation and amortization......................       17,757
22,509      20,261
     Deferred income tax expense........................        3,403
7,181       4,533
     Changes in operating assets and liabilities, net of
       effects of acquisitions:
       Change in receivables............................        2,213
(1,644)        (55)
       Change in other assets...........................           84
(125)       (248)
       Change in accounts payable and accrued
          expenses......................................        2,159
 418        (473)
                                                             --------
- --------    --------
          Net cash provided by operating activities.....       33,551
40,890      33,944
                                                             --------
- --------    --------
Cash flows from investing activities:
  Capital expended for property and equipment...........      (13,540)
(7,586)    (13,278)
  Cash paid for acquisitions............................           --
  --     (68,240)
  Other investing activities............................         (809)
 221         732
                                                             --------
- --------    --------
          Net cash used in investing activities.........      (14,349)
(7,365)    (80,786)
                                                             --------
- --------    --------
Cash flows from financing activities:
  Change in due to TCI..................................      (19,202)
(33,525)     46,842
                                                             --------
- --------    --------
          Net cash provided by (used in) financing
            activities..................................      (19,202)
(33,525)     46,842
                                                             --------
- --------    --------
          Net change in cash............................           --
  --          --
          Cash:
            Beginning of period.........................           --
  --          --
                                                             --------
- --------    --------
            End of period...............................     $     --        $
  --    $     --
                                                             ========
========    ========
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest..............     $  4,343        $
5,832    $  4,701
                                                             ========
========    ========
  Cash paid during the period for income taxes..........     $     --        $
 140    $     86
                                                             ========
========    ========
</Table>

            See accompanying notes to combined financial statements.
                                      F-354
   549

                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

                     NOTES TO COMBINED FINANCIAL STATEMENTS
           FOR THE PERIOD FROM JANUARY 1, 1998 TO SEPTEMBER 30, 1998,
               AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

(1) BASIS OF PRESENTATION

     The combined financial statements include the accounts of thirteen of TCI's
cable television systems serving certain subscribers within Oregon, Washington,
Alabama, Missouri and California (collectively, the "TCI Falcon Systems"). This
combination was created in connection with the Partnership formation discussed
below. The TCI Falcon Systems were indirectly wholly-owned by TCI in all periods
presented herein up to the date of the Contribution, as defined below. All
significant inter-entity accounts and transactions have been eliminated in
combination. The combined net assets of the TCI Falcon Systems including amounts
due to TCI are referred to as "Parent's Investment".

     TCI's ownership interests in the TCI Falcon Systems, as described above,
were acquired through transactions wherein TCI acquired various larger cable
entities (the "Original Systems"). The TCI Falcon System's combined financial
statements include an allocation of the purchase price and certain purchase
accounting adjustments, including the related deferred tax effects, from TCI's
acquisition of the Original Systems. Such allocation and the related franchise
cost amortization was based on the relative fair market value of the systems
acquired. In addition, certain costs of TCI are charged to the TCI Falcon
Systems based on their number of customers (see note 5). Although such
allocations are not necessarily indicative of the costs that would have been
incurred by the TCI Falcon Systems on a stand alone basis, management believes
that the resulting allocated amounts are reasonable.

  Partnership Formation

     On September 30, 1998, TCI and Falcon Holding Group, LP ("Falcon") closed a
transaction under a Contribution and Purchase Agreement (the "Contribution"),
whereby TCI contributed the TCI Falcon Systems to a newly formed partnership
(the "Partnership") between TCI and Falcon in exchange for an approximate 46%
ownership interest in the Partnership. The accompanying combined financial
statements reflect the position, results of operations and cash flows of the TCI
Falcon Systems immediately prior to the Contribution, and, therefore, do not
include the effects of such Contribution.

(2) ACQUISITION

     On January 1, 1998, a subsidiary of TCI acquired certain cable television
assets in and around Ellensburg, WA from King Videocable Company. On the same
date, these assets were transferred to the TCI Falcon Systems. As a result of
these transactions, the TCI Falcon Systems recorded non-cash increases in
property and equipment of $2,100,000, in franchise costs of $4,923,000, and in
parent's investment of $7,023,000. Assuming the acquisition had occurred on
January 1, 1997, the TCI Falcon Systems' pro forma results of operations would
not have been materially different from the results of operations for the year
ended December 31, 1997.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Receivables

     Receivables are reflected net of an allowance for doubtful accounts. Such
allowance at September 30, 1998 and December 31, 1997 was not significant.

  Property and Equipment

     Property and equipment are stated at cost, including acquisition costs
allocated to tangible assets acquired. Construction costs, labor and applicable
overhead related to installations, and interest during

                                      F-355
   550
                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

construction are capitalized. During the nine-month period ended September 30,
1998 and for the years ended December 31, 1997 and 1996, interest capitalized
was not significant.

     Depreciation is computed on a straight-line basis using estimated useful
lives of 3 to 15 years for distribution systems and 3 to 40 years for support
equipment and buildings.

     Repairs and maintenance are charged to operations, and renewals and
additions are capitalized. At the time of ordinary retirements, sales or other
dispositions of property, the original cost and cost of removal of such property
are charged to accumulated depreciation, and salvage, if any, is credited
thereto. Gains or losses are only recognized in connection with the sales of
properties in their entirety.

  Franchise Costs

     Franchise costs include the difference between the cost of acquiring cable
television systems and amounts assigned to their tangible assets. Such amounts
are generally amortized on a straight-line basis over 40 years. Costs incurred
by the TCI Falcon Systems in negotiating and renewing franchise agreements are
amortized on a straight-line basis over the life of the franchise, generally 10
to 20 years.

  Impairment of Long-Lived Assets

     Management periodically reviews the carrying amounts of property, plant and
equipment and its intangible assets to determine whether current events or
circumstances warrant adjustments to such carrying amounts. If an impairment
adjustment is deemed necessary based on an analysis of undiscounted cash flows,
such loss is measured by the amount that the carrying value of such assets
exceeds their fair value. Considerable management judgment is necessary to
estimate the fair value of assets, accordingly, actual results could vary
significantly from such estimates. Assets to be disposed of are carried at the
lower of their financial statement carrying amount or fair value less costs to
sell.

  Revenue Recognition

     Cable revenue for customer fees, equipment rental, advertising, and
pay-per-view programming is recognized in the period that services are
delivered. Installation revenue is recognized in the period the installation
services are provided to the extent of direct selling costs. Any remaining
amount is deferred and recognized over the estimated average period that
customers are expected to remain connected to the cable television system.

  Combined Statements of Cash Flows

     Transactions effected through the intercompany account with TCI (except for
the acquisition and dividend discussed in notes 2 and 5, respectively) have been
considered constructive cash receipts and payments for purposes of the combined
statements of cash flows.

  Estimates

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

  Reclassifications

     Certain prior year amounts have been reclassified for comparability with
the 1998 presentation.

                                      F-356
   551
                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(4) INCOME TAXES

     The TCI Falcon Systems were included in the consolidated federal income tax
return of TCI. Income tax expense for the TCI Falcon Systems is based on those
items in the consolidated calculation applicable to the TCI Falcon Systems.
Intercompany tax allocation represents an apportionment of tax expense or
benefit (other than deferred taxes) among subsidiaries of TCI in relation to
their respective amounts of taxable earnings or losses. The payable or
receivable arising from the intercompany tax allocation is recorded as an
increase or decrease in amounts due to TCI. Deferred income taxes are based on
the book and tax basis differences of the assets and liabilities within the TCI
Falcon Systems. The income tax amounts included in the accompanying combined
financial statements approximate the amounts that would have been reported if
the TCI Falcon Systems had filed a separate income tax return.

     Income tax expense for the nine-month period ended September 30, 1998 and
for the years ended December 31, 1997 and 1996 consists of:

<Table>
<Caption>
                                                        CURRENT    DEFERRED
TOTAL
                                                        -------    --------
- -------
                                                            (AMOUNTS IN
THOUSANDS)
                                                             

Nine-month period ended September 30, 1998:
  Intercompany allocation.............................  $(1,825)   $    --
$(1,825)
  Federal.............................................       --     (2,778)
(2,778)
  State and local.....................................       --       (625)
 (625)
                                                        -------    -------
- -------
                                                        $(1,825)   $(3,403)
$(5,228)
                                                        =======    =======
=======
Year ended December 31, 1997:
  Intercompany allocation.............................  $(1,487)   $    --
$(1,487)
  Federal.............................................       --     (5,862)
(5,862)
  State and local.....................................     (140)    (1,319)
(1,459)
                                                        -------    -------
- -------
                                                        $(1,627)   $(7,181)
$(8,808)
                                                        =======    =======
=======
Year ended December 31, 1996:
  Intercompany allocation.............................  $(1,620)   $    --
$(1,620)
  Federal.............................................       --     (4,032)
(4,032)
  State and local.....................................      (86)      (501)
 (587)
                                                        -------    -------
- -------
                                                        $(1,706)   $(4,533)
$(6,239)
                                                        =======    =======
=======
</Table>

     Income tax expense differs from the amounts computed by applying the
federal income tax rate of 35% as a result of the following:

<Table>
<Caption>
                                                    JANUARY 1, 1998       YEARS
ENDED
                                                        THROUGH
DECEMBER 31,
                                                     SEPTEMBER 30,
- ------------------
                                                         1998           1997
  1996
                                                    ---------------    -------
 -------
                                                           (AMOUNTS IN
THOUSANDS)
                                                                 
 
Computed "expected" tax expense...................      $(4,607)       $(7,476)
 $(5,658)
Amortization not deductible for tax purposes......         (198)          (265)
    (178)
State and local income taxes, net of federal
  income tax benefit..............................         (406)          (948)
    (382)
Other.............................................          (17)          (119)
     (21)
                                                        -------        -------
 -------
                                                        $(5,228)       $(8,808)
 $(6,239)
                                                        =======        =======
 =======
</Table>

                                      F-357
   552
                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset and deferred tax liabilities at September 30,
1998 and December 31, 1997 are presented below:

<Table>
<Caption>
                                                     SEPTEMBER 30,    DECEMBER
31,
                                                         1998             1997
                                                     -------------
- ------------
                                                        (AMOUNTS IN THOUSANDS)
                                                                
Deferred tax asset -- principally due to
  non-deductible accruals..........................    $    146         $    128
                                                       --------         --------
Deferred tax liabilities:
  Property and equipment, principally due to
     differences in depreciation...................      24,246           20,985
  Franchise costs, principally due to differences
     in amortization and initial basis.............     100,486          100,326
                                                       --------         --------
          Total gross deferred tax liabilities.....     124,732          121,311
                                                       --------         --------
          Net deferred tax liability...............    $124,586         $121,183
                                                       ========         ========
</Table>

(5) PARENT'S INVESTMENT

     Parent's investment in the TCI Falcon Systems at September 30, 1998 and
December 31, 1997 is summarized as follows:

<Table>
<Caption>
                                                     SEPTEMBER 30,    DECEMBER
31,
                                                         1998             1997
                                                     -------------
- ------------
                                                        (AMOUNTS IN THOUSANDS)
                                                                
Due to TCI.........................................    $ 642,228        $224,668
Retained earnings (deficit)........................     (347,926)         73,878
                                                       ---------        --------
                                                       $ 294,302        $298,546
                                                       =========        ========
</Table>

     The amount due to TCI represents advances for operations, acquisitions and
construction costs, as well as, the amounts owed as a result of the allocation
of certain costs from TCI. TCI charges intercompany interest expense at variable
rates to cable systems within the TCI Falcon Systems based upon amounts due to
TCI from the cable systems. Such amounts are due on demand.

     On August 15, 1998, TCI caused the TCI Falcon Systems to effect
distributions from the TCI Falcon Systems to TCI aggregating $429,739,000 (the
"Dividend"). The Dividend resulted in a non-cash increase to the intercompany
amounts owed to TCI and a corresponding non-cash decrease to retained earnings.

     As a result of TCI's ownership of 100% of the TCI Falcon Systems prior to
the Contribution, the amounts due to TCI have been classified as a component of
parent's investment in the accompanying combined financial statements.

     The TCI Falcon Systems purchase, at TCI's cost, substantially all of their
pay television and other programming from affiliates of TCI. Charges for such
programming were $21,479,000, $25,500,000 and $20,248,000 for the nine months
ended September 30, 1998 and the years ended December 31, 1997 and 1996,
respectively, and are included in operating expenses in the accompanying
combined financial statements.

     Certain subsidiaries of TCI provide administrative services to the TCI
Falcon Systems and have assumed managerial responsibility of the TCI Falcon
Systems' cable television system operations and construction. As compensation
for these services, the TCI Falcon Systems pay a monthly fee calculated on a
per-customer basis.

                                      F-358
   553
                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     The intercompany advances and expense allocation activity in amounts due to
TCI consists of the following:

<Table>
<Caption>
                                                  JANUARY 1, 1998        YEARS
ENDED
                                                      THROUGH
DECEMBER 31,
                                                   SEPTEMBER 30,
- --------------------
                                                       1998            1997
  1996
                                                  ---------------    --------
- --------
                                                          (AMOUNTS IN THOUSANDS)
                                                               

Beginning of period.............................     $224,668        $258,193
$211,351
  Transfer of cable system acquisition purchase
     price......................................        7,023              --
  68,240
  Programming charges...........................       21,479          25,500
  20,248
  Administrative fees...........................        2,853           5,034
   5,768
  Intercompany interest expense.................        4,343           5,832
   4,701
  Tax allocations...............................        1,825           1,487
   1,620
  Distribution to TCI...........................      429,739              --
      --
  Cash transfer.................................      (49,702)        (71,378)
 (53,735)
                                                     --------        --------
- --------
End of period...................................     $642,228        $224,668
$258,193
                                                     ========        ========
========
</Table>

(6) COMMITMENTS AND CONTINGENCIES

     The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") imposed certain rate regulations on the cable television
industry. Under the 1992 Cable Act, all cable systems are subject to rate
regulation, unless they face "effective competition," as defined by the 1992
Cable Act and expanded in the Telecommunications Act of 1996 (the "1996 Act"),
in their local franchise area.

     Although the Federal Communications Commission (the "FCC") has established
regulations required by the 1992 Cable Act, local government units (commonly
referred to as local franchising authorities) are primarily responsible for
administering the regulation of a cable system's basic service tier ("BST"). The
FCC itself directly administered rate regulation of any cable programming
service tier ("CPST"). The FCC's authority to regulate CPST rates expired on
March 31, 1999. The FCC has taken the position that it will still adjudicate
CPST complaints filed after this sunset date (but no later than 180 days after
the last CPST rate increase imposed prior to March 31, 1999), and will strictly
limit its review (and possible refund orders) to the time period predating the
sunset date.

     Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price structure that allows for the recovery
of inflation and certain increased costs, as well as providing some incentive
for expanding channel carriage. Operators also have the opportunity to bypass
this "benchmark" regulatory structure in favor of the traditional
"cost-of-service" regulation in cases where the latter methodology appears
favorable. Premium cable services offered on a per-channel or per-program basis
remain unregulated, as do affirmatively marketed packages consisting entirely of
new programming product.

     The management of the TCI Falcon Systems believes that it has complied in
all material respects with the provisions of the 1992 Cable Act and the 1996
Act, including its rate setting provisions. If, as a result of the review
process, a system cannot substantiate its rates, it could be required to
retroactively reduce its rates to the appropriate benchmark and refund the
excess portion of rates received. Any refunds of the excess portion of CPST
rates would be retroactive to the date of complaint. Any refunds of the excess
portion of BST or equipment rates would be retroactive to one year prior to the
implementation of the rate reductions.

                                      F-359
   554
                               TCI FALCON SYSTEMS
            (A COMBINATION OF CERTAIN ASSETS, AS DEFINED IN NOTE 1)

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Certain plaintiffs have filed or threatened separate class action
complaints against certain of the systems of TCI Falcon Systems, alleging that
the systems' practice of assessing an administrative fee to customers whose
payments are delinquent constitutes an invalid liquidated damage provision, a
breach of contract, and violates local consumer protection statutes. Plaintiffs
seek recovery of all late fees paid to the subject systems as a class purporting
to consist of all customers who were assessed such fees during the applicable
limitation period, plus attorney fees and costs.

     The TCI Falcon Systems have contingent liabilities related to legal
proceedings and other matters arising in the ordinary course of business.
Although it is possible the TCI Falcon Systems may incur losses upon conclusion
of the matters referred to above, an estimate of any loss or range of loss
cannot presently be made. Based upon the facts available, management believes
that, although no assurance can be given as to the outcome of these actions, the
ultimate disposition should not have a material adverse effect upon the combined
financial condition of the TCI Falcon Systems.

     The TCI Falcon Systems lease business offices, have entered into pole
rental agreements and use certain equipment under lease arrangements. Rental
expense under such arrangements amounted to $1,268,000, $1,868,000 and
$1,370,000 for the nine-month period ended September 30, 1998, and the years
ended December 31, 1997 and 1996, respectively.

     Future minimum lease payments under noncancellable operating leases for
each of the next five years are summarized as follows (amounts in thousands):

<Table>
<Caption>
YEARS ENDING
SEPTEMBER 30,
- -------------
                                                           
1999........................................................  $  762
2000........................................................     667
2001........................................................     533
2002........................................................     469
2003........................................................     414
Thereafter..................................................   2,768
                                                              ------
                                                              $5,613
                                                              ======
</Table>

     TCI formed a year 2000 Program Management Office (the "PMO") to organize
and manage its year 2000 remediation efforts. The PMO is responsible for
overseeing, coordinating and reporting on TCI's year 2000 remediation efforts,
including the year 2000 remediation efforts of the TCI Falcon Systems prior to
the Contribution. Subsequent to the date of the Contribution, the year 2000
remediation efforts of the TCI Falcon Systems are no longer the responsibility
of TCI or the PMO.

     The failure to correct a material year 2000 problem could result in an
interruption or failure of certain important business operations. There can be
no assurance that the TCI Falcon Systems or the systems of other companies on
which the TCI Falcon Systems relies will be converted in time or that any such
failure to convert by the TCI Falcon Systems or other companies will not have a
material adverse effect on its financial position, results of operations or cash
flows.

                                      F-360
   555

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO CC V HOLDINGS, LLC:

     We have audited the accompanying consolidated balance sheet of CC V
Holdings, LLC and subsidiaries as of December 31, 1999, and the related
consolidated statements of operations and cash flows for the period from
November 15, 1999, through December 31, 1999, and the consolidated statements of
operations, changes in shareholders' equity and cash flows for the period from
January 1, 1999, through November 14, 1999. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits 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 CC V
Holdings, LLC and subsidiaries as of December 31, 1999, and the results of their
operations and their cash flows for the period from November 15, 1999, through
December 31, 1999, and for the period from January 1, 1999, through November 14,
1999, in conformity with accounting principles generally accepted in the United
States.

     As discussed in Note 1 to the consolidated financial statements,
substantially all of CC V Holdings, LLC was acquired by Charter Communications
Holding Company, LLC as of November 15, 1999, in a business combination
accounted for as a purchase. As a result of the application of purchase
accounting, the consolidated financial statements of CC V Holdings, LLC and
subsidiaries as of December 31, 1999, and for the Successor Period (November 15,
1999, through December 31, 1999), are presented on a different cost basis than
financial statements presented for the Predecessor Period (January 1, 1999,
through November 14, 1999), and accordingly, are not directly comparable.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri,
  February 16, 2000

                                      F-361
   556

                      CC V HOLDINGS, LLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               SUCCESSOR
                                                              ------------
                                                              DECEMBER 31,
                                                                  1999
                                                              ------------
                                                           
                           ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $  6,806
  Accounts receivable, net of allowance for doubtful
     accounts of $1,143.....................................       1,920
  Prepaid expenses and other................................         663
                                                                --------
       Total current assets.................................       9,389
                                                                --------
INVESTMENT IN CABLE PROPERTIES:
  Property, plant and equipment.............................     121,285
  Franchises................................................     721,744
                                                                --------
       Total investment in cable properties.................     843,029
                                                                --------
DEFERRED FINANCING COSTS....................................       1,983
                                                                --------
                                                                $854,401
                                                                ========
              LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses.....................    $ 25,132
  Payables to manager of cable systems--related parties.....       4,971
                                                                --------
       Total current liabilities............................      30,103
                                                                --------
LONG-TERM DEBT..............................................     451,212
DEFERRED MANAGEMENT FEES--RELATED PARTIES...................         262
MEMBER'S EQUITY--100 units issued and outstanding...........     372,824
                                                                --------
                                                                $854,401
                                                                ========
</Table>

  The accompanying notes are an integral part of this consolidated statement.
                                      F-362
   557

                      CC V HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               SUCCESSOR
PREDECESSOR
                                                              ------------
- ------------
                                                              PERIOD FROM
PERIOD FROM
                                                              NOVEMBER 15,
JANUARY 1,
                                                                 1999,
1999,
                                                                THROUGH
THROUGH
                                                              DECEMBER 31,
NOVEMBER 14,
                                                                  1999
1999
                                                              ------------
- ------------
                                                                       
REVENUES:
  Basic services............................................    $ 11,281       $
76,721
  Premium services..........................................       1,008
 7,088
  Other.....................................................       1,641
10,574
                                                                --------
- --------
                                                                  13,930
94,383
                                                                --------
- --------
OPERATING EXPENSES:
  Programming...............................................       3,597
24,927
  General and administrative................................       1,991
10,968
  Service...................................................       2,377
16,311
  Marketing.................................................         316
   883
  Depreciation and amortization.............................       7,822
39,943
  Corporate expense charges--related parties................         501
- --
                                                                --------
- --------
                                                                  16,604
93,032
                                                                --------
- --------
     (Loss) income from operations..........................      (2,674)
 1,351
                                                                --------
- --------
OTHER INCOME (EXPENSE):
  Interest income...........................................      --
   764
  Interest expense..........................................      (7,537)
(40,162)
                                                                --------
- --------
                                                                  (7,537)
(39,398)
                                                                --------
- --------
     Loss before income taxes...............................     (10,211)
(38,047)
BENEFIT FROM INCOME TAXES...................................      --
(13,936)
                                                                --------
- --------
     Loss before minority interest..........................     (10,211)
(24,111)
MINORITY INTEREST IN LOSS OF SUBSIDIARY.....................      --
 4,499
                                                                --------
- --------
     Net loss...............................................    $(10,211)
$(19,612)
                                                                ========
========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-363
   558

                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                ADDITIONAL
              TOTAL
                                                      COMMON     PAID-IN
ACCUMULATED   SHAREHOLDERS'
                                                       STOCK     CAPITAL
DEFICIT        EQUITY
                                                      ------    ----------
- -----------   -------------
                                                                    
          
BALANCE, January 1, 1999............................  $    --    $35,000      $
(8,918)      $ 26,082
  Net loss..........................................       --         --
(19,612)       (19,612)
                                                      -------    -------
- --------       --------
BALANCE, November 14, 1999..........................  $    --    $35,000
$(28,530)      $  6,470
                                                      =======    =======
========       ========
</Table>

  The accompanying notes are an integral part of this consolidated statement.
                                      F-364
   559

                      CC V HOLDINGS, LLC AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               SUCCESSOR
PREDECESSOR
                                                              ------------
- ------------
                                                              PERIOD FROM
PERIOD FROM
                                                              NOVEMBER 15,
JANUARY 1,
                                                                 1999,
1999,
                                                                THROUGH
THROUGH
                                                              DECEMBER 31,
NOVEMBER 14,
                                                                  1999
1999
                                                              ------------
- ------------
                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $(10,211)
$(19,612)
  Adjustments to reconcile net loss to net cash provided by
     operating activities--
     Depreciation and amortization..........................       7,822
39,943
     Deferred income taxes..................................      --
(16,969)
     Minority interest in loss of subsidiary................      --
 4,499
     Noncash interest expense...............................       1,855
11,764
     Net change in certain assets and liabilities, net of
      effects from acquisitions--
       Accounts receivable..................................         782
(1,182)
       Prepaid expenses and other...........................          76
  (409)
       Receivable from affiliate............................      --
   124
       Accounts payable and accrued expenses................      (3,399)
15,285
       Payables to manager of cable systems--related
        parties.............................................       4,971
- --
       Payable to affiliate.................................      --
(2,206)
       Other operating activities...........................        (469)
(2,905)
                                                                --------
- --------
     Net cash provided by operating activities..............       1,427
28,332
                                                                --------
- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment................      (2,042)
(13,683)
  Payments for acquisitions, net of cash acquired...........      --
(47,237)
  Other investing activities................................      --
(11,414)
                                                                --------
- --------
     Net cash used in investing activities..................      (2,042)
(72,334)
                                                                --------
- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..............................       5,000
39,428
  Repayments of long-term debt..............................      --
   (20)
  Payment of deferred financing costs.......................      (2,000)
- --
  Distributions.............................................        (273)
- --
                                                                --------
- --------
     Net cash provided by financing activities..............       2,727
39,408
                                                                --------
- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........       2,112
(4,594)
                                                                --------
- --------
CASH AND CASH EQUIVALENTS, beginning of period..............       4,694
 9,288
                                                                --------
- --------
CASH AND CASH EQUIVALENTS, end of period....................    $  6,806       $
 4,694
                                                                ========
========
CASH PAID FOR INTEREST......................................    $  2,551       $
30,429
                                                                ========
========
CASH PAID FOR TAXES.........................................    $ --           $
   283
                                                                ========
========
NONCASH TRANSACTION--Increase in franchises and member's
  equity resulting from the application of purchase
  accounting................................................    $383,308       $
- --
                                                                ========
========
</Table>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-365
   560

                      CC V HOLDINGS, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

     The accompanying consolidated financial statements include the accounts of
CC V Holdings, LLC (CC V Holdings), (formerly known as Avalon Cable LLC (Avalon
Cable)), and its wholly owned subsidiaries (collectively, the "Company"). CC V
Holdings is a Delaware limited liability company. The Company derives its
primary source of revenues by providing various levels of cable programming and
services to residential and business customers. The Company operates primarily
in the state of Michigan and in the New England area. The Company also owns and
operates various Internet service providers, which provide dial-up telephone
access to the Internet via a modem.

     All significant intercompany accounts and transactions have been eliminated
in consolidation.

Acquisition

     On November 15, 1999, Charter Communications Holding Company, LLC (Charter
Holdco) purchased directly and indirectly all of the equity interests of Avalon
Cable of Michigan Holdings, Inc. (Avalon Michigan Holdings) for an aggregate
purchase price of $832,000, including assumed debt of $273,400 (the "Charter
Acquisition"). In connection with a multistep restructuring following the
acquisition of Avalon Michigan Holdings, Avalon Michigan Holdings was merged
with and into CC V Holdings. Effective January 1, 2000, these interests acquired
were transferred to Charter Communications Holdings, LLC, a wholly owned
subsidiary of Charter Holdco.

     As a result of the Charter Acquisition, the Company has applied purchase
accounting in the preparation of the accompanying consolidated financial
statements. Accordingly, CC V Holdings' increased its member's equity to
$383,308 to reflect the amount paid in the Charter Acquisition and has allocated
that amount to assets acquired and liabilities assumed based on their relative
fair values including amounts assigned to franchises of $727,720. The allocation
of the purchase price is based, in part, on preliminary information, which is
subject to adjustment upon completion of certain appraisal and valuation
information. Management believes that finalization of the purchase price and
allocation will not have a material impact on the consolidated results of
operations or financial position of the Company.

     As a result of the Charter Acquisition and the application of purchase
accounting, financial information in the accompanying consolidated financial
statements and notes thereto as of December 31, 1999, and for the period from
November 15, 1999, through December 31, 1999 (the "Successor Period") are
presented on a different cost basis than the financial information for the
period from January 1, 1999, through November 14, 1999, (the "Predecessor
Period") and therefore, such information is not comparable.

     Prior to the Charter Acquisition, Avalon Michigan Holdings had a majority
interest in CC V Holdings.

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 that approximates market value.

Property, Plant and Equipment

     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installations. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for repairs and maintenance are charged to
expense as incurred, while equipment replacement and betterments are
capitalized.
                                      F-366
   561
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation for the Successor Period is provided on the straight-line
method over the estimated useful lives of the related assets as follows:

<Table>
                                                           
Cable distribution systems..................................  3-15 years
Buildings and leasehold improvements........................  5-15 years
Vehicles and equipment......................................   3-5 years
</Table>

     Depreciation for the Predecessor Period was provided on the straight-line
method over the estimated useful lives of the related assets as follows:

<Table>
                                                           
Buildings and improvement...................................  10-25 years
Cable plant and equipment...................................   5-12 years
Vehicles....................................................      5 years
Office furniture and equipment..............................   5-10 years
</Table>

Franchises

     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable systems, including the Charter
Acquisition, represent the excess of the cost of properties acquired over the
amounts assigned to net tangible assets and identifiable intangible assets at
the date of acquisition and are amortized using the straight-line method over a
period of 15 years. The period of 15 years is management's best estimate of the
useful lives of the franchises and assumes substantially all of those franchises
that expire during the period will be renewed by the Company. Accumulated
amortization was $5,976 at December 31, 1999. Amortization expense for the
period from January 1, 1999 through November 14, 1999 and for the period from
November 15, 1999, through December 31, 1999, was $29,679 and $5,976,
respectively.

Deferred Financing Costs

     Costs related to the Senior Credit Facilities (as defined below) are
deferred and amortized to interest expense using the effective interest rate
method over the term of the related borrowing. As of December 31, 1999,
accumulated amortization of deferred financing costs is $17.

Impairment of Assets

     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted cash flows related
to the asset over its remaining life, the carrying value of such asset is
reduced to its estimated fair value.

Revenues

     Cable television revenues from basic and premium services are recognized
when the related services are provided.

     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable system. As of December 31, 1999, no installation revenue has been
deferred, as direct selling costs have exceeded installation revenue.

     Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts. Local governmental
authorities impose franchise fees on the Company ranging up to a

                                      F-367
   562
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

federally mandated maximum of 5.0% of gross revenues. Such fees are collected on
a monthly basis from the Company's customers and are periodically remitted to
local franchises. Franchise fees collected and paid are reported as revenues and
expenses.

Interest Rate Hedge Agreements

     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain of its debt agreements. Interest rate
caps are accounted for as hedges of debt obligations, and accordingly, the net
settlement amounts are recorded as adjustments to interest expense in the period
incurred. Premiums paid for interest rate caps are deferred, included in other
assets, and are amortized over the original term of the interest rate agreement
as an adjustment to interest expense.

     Interest rate caps are entered into by the Company to reduce the impact of
rising interest rates on floating rate debt.

     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designated for hedging purposes
and are not held or issued for speculative purposes.

Income Taxes

     Prior to the Charter Acquisition, the Company filed a consolidated income
tax return. The tax benefit of $13,936 in the accompanying consolidated
statement of operations for the period from January 1, 1999, through November
14, 1999, is recorded at 37%. This approximates the statutory tax rate of the
Company.

     Beginning November 15, 1999, the Company and all subsidiaries are limited
liability companies such that all income taxes are the responsibility of the
equity member of the Company and are not provided for in the accompanying
consolidated financial statements. In addition, certain subsidiaries or
corporations are subject to income taxes but have no operations and, therefore,
no material income tax liabilities or assets.

Segments

     Segments have been identified based upon management responsibility. The
Company operates in one segment, cable services.

Use of Estimates

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

Concentration of Credit Risk

     Financial instruments which potentially expose the Company to a
concentration of credit risk include cash and subscriber and other receivables.
The Company had cash in excess of federally insured deposits at financial
institutions at December 31, 1999. The Company does not believe that such
deposits are subject to any unusual credit risk beyond the normal credit risk
associated with operating its business. The Company extends credit to customers
on an unsecured basis in the normal course of business. The Company maintains
reserves for potential credit losses and such losses, in the aggregate, have not
historically exceeded management's expectations. The Company's trade receivables
reflect a customer base centered in Michigan

                                      F-368
   563
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and New England. The Company routinely assesses the financial strength of its
customers; as a result, concentrations of credit risk are limited.

2. MEMBER'S EQUITY:

     For the period from November 15, 1999, through December 31, 1999, successor
member's equity consisted of the following:

<Table>
                                                             
BALANCE, November 15, 1999..................................    $383,308
  Net loss..................................................     (10,211)
  Distributions to Charter Communications, Inc. and
     Charter Investment, Inc................................        (273)
                                                                --------
BALANCE, December 31, 1999..................................    $372,824
                                                                ========
</Table>

3. ACQUISITIONS:

     On March 26, 1999, Avalon Michigan Holdings acquired the minority interest
of Mercom Inc. (Mercom) for $21,875. In addition, the Company acquired eight
cable systems for an aggregate purchase price of $25,362 in 1999. These eight
acquisitions, which were completed during the Predecessor Period, were accounted
for using the purchase method of accounting and, accordingly, results of
operations of the acquired systems have been included in the accompanying
consolidated financial statements from the dates of acquisition. The purchase
prices were allocated to tangible and intangible assets based on estimated fair
market values at the dates of acquisition. The excess of the consideration paid
over the estimated fair market values of the net assets acquired was $12,940 and
was amortized using the straight-line method over 15 years during the
Predecessor Period. All goodwill was eliminated as a result of the Charter
Acquisition.

     Unaudited pro forma operating results as though the 1999 acquisitions
discussed above, including the Charter Acquisition, had occurred on January 1,
1999, with adjustments to give effect to amortization of franchises, interest
expense and certain other adjustments are as follows:

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                                    1999
                                                                ------------
                                                                (UNAUDITED)
                                                             
Revenues....................................................      $110,308
Loss from operations........................................       (17,580)
Net loss....................................................       (59,668)
</Table>

     The unaudited pro forma financial information has been presented for
comparative purposes and does not purport to be indicative of the results of
operations had these transactions been completed as of the assumed date or which
may be obtained in the future.

                                      F-369
   564
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment consists of the following at December 31,
1999:

<Table>
                                                             
Cable distribution systems..................................    $101,675
Buildings and leasehold improvements........................      16,636
Vehicles and equipment......................................       4,776
                                                                --------
                                                                 123,087
Less--Accumulated depreciation..............................      (1,802)
                                                                --------
                                                                $121,285
                                                                ========
</Table>

     Depreciation expense for assets owned by the Company for the period from
January 1, 1999, through November 14, 1999, and for the period from November 15,
1999, through December 31, 1999, was $10,264 and $1,802, respectively.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

     Accounts payable and accrued expenses consist of the following at December
31, 1999:

<Table>
                                                             
Accrued litigation costs--see Note 10.......................    $ 9,435
Accrued interest............................................      5,417
Accounts payable............................................      3,427
Accrued programming.........................................      3,047
Accrued franchises..........................................      1,578
Other.......................................................      2,228
                                                                -------
                                                                $25,132
                                                                =======
</Table>

6. LONG-TERM DEBT:

     The Company has outstanding the following borrowings on long-term debt
arrangements at December 31, 1999:

<Table>
                                                             
Senior Credit Facility......................................    $170,000
Senior Subordinated Notes...................................     150,000
Senior Discount Notes.......................................     196,000
7.0% Note Payable, due May 2003.............................         500
                                                                --------
                                                                 516,500
Less--Unamortized net discount..............................     (65,288)
                                                                --------
                                                                $451,212
                                                                ========
</Table>

Credit Facilities

     On November 6, 1998, Avalon Michigan became a co-borrower along with Avalon
Cable of New England LLC (Avalon New England) and Avalon Cable Finance, Inc.
(Avalon Finance), affiliated companies on the $320,888 senior credit facilities,
which included term loan facilities consisting of (i) tranche A term loans of
$120,888 and (ii) tranche B term loans of $170,000 and a revolving credit
facility of $30,000 (collectively, the "Old Credit Facilities").

     In connection with the Senior Subordinated Notes (as defined below) and
Senior Discount Notes (as defined below) offerings, Avalon Michigan repaid
$125,013 of the Old Credit Facilities, and the availability under the Old Credit
Facilities was reduced to $195,875 prior to the Charter Acquisition.
                                      F-370
   565
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The interest rate under the Old Credit Facilities was a rate based on
either (i) the base rate (a rate per annum equal to the greater of the Prime
Rate and the Federal Funds Effective Rate plus 1/2 of 1%) or (ii) the Eurodollar
rate (a rate per annum equal to the Eurodollar Base Rate divided by 1.00 less
the Eurocurrency Reserve Requirements) plus, in either case, an applicable
margin.

     In connection with the Charter Acquisition, the Old Credit Facilities were
terminated.

     Effective November 15, 1999, the Company became a borrower on $300,000
senior credit facilities, which includes term loan facilities consisting of (i)
a Term B Loan of $125,000 that matures on November 15, 2008, and (ii) a
revolving credit facility of $175,000 that matures on May 15, 2008
(collectively, the "Senior Credit Facilities"). The Senior Credit Facilities
also provide for, at the option of the lenders, supplemental credit facilities
in the amounts of $75,000, available until December 31, 2003.

     The interest rate under the Senior Credit Facilities is a rate based on
either (i) the base rate (a rate per annum equal to the greater of the Prime
Rate and the Federal Funds Effective Rate plus 1/2 of 1%) or (ii) the Eurodollar
rate (a rate per annum equal to the Eurodollar Base Rate divided by 1.00 less
the Eurocurrency Reserve Requirements) plus, in either case, an applicable
margin. The variable interest rate as of December 31, 1999, ranged from 7.995%
to 8.870%. A quarterly commitment fee of between 0.250% to 0.375% per annum is
payable on the unborrowed balance of the revolving credit facility.

     Commencing March 31, 2003, and at the end of each quarter thereafter
through September 30, 2008, the Term B Loan is payable in installments of 0.25%
of the outstanding balance, and the remaining 94.25% unpaid outstanding balance
is due on November 15, 2008. Commencing March 31, 2003, and at the end of each
quarter thereafter, available borrowings under the revolving credit facility
shall be reduced on an annual basis by 5.0% in 2003, 15.0% in 2004, 20.0% in
2005, 22.0% in 2006, 24.0% in 2007 and 14.0% in 2008.

     The Senior Credit Facilities contain restrictive covenants which, among
other things, require the Company to maintain certain ratios including
consolidated leverage ratios and the interest coverage ratio, fixed charge ratio
and debt service coverage.

     The obligations of the Company under the Senior Credit Facilities agreement
are secured by substantially all of the assets of the Company.

Senior Subordinated Notes

     In December 1998, Avalon Michigan became a co-issuer of a $150,000
principal amount of 9.375% Senior Subordinated Notes (the "Senior Subordinated
Notes").

     The indenture governing the Senior Subordinated Notes provides that upon
the occurrence of a change of control each holder of the Senior Subordinated
Notes has the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Senior Subordinated
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereon plus accrued and unpaid interest and Liquidated Damages (as defined in
the indentures) thereof, if any, to the date of purchase. The Charter
Acquisition constituted a change of control.

     Pursuant to a change of control offer dated December 3, 1999, 134,050 of
the Company's 9.375% Senior Subordinated Notes due December 1, 2008 were validly
tendered.

     The aggregate repurchase price was $137,400, including accrued and unpaid
interest through January 28, 2000, and was funded with equity contributions from
Charter Communications Holdings, LLC (Charter Holdings), a wholly owned
subsidiary of Charter Holdco and parent of CC V Holdings, which made the cash
available from the proceeds of its sale of $1.5 billion of high yield notes in
January 2000 (the "January 2000 Charter Holdings Notes").

                                      F-371
   566
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In addition to the above change of control repurchase, the Company
repurchased the remaining 15,950 notes (including accrued and unpaid interest)
in the open market for $16,300, also using cash received from equity
contributions ultimately from Charter Holdings, which made the cash available
from the sale proceeds of the January 2000 Charter Holdings Notes.

Senior Discount Notes

     On December 10, 1998, Avalon Michigan Holdings and Avalon Cable Holdings
Finance, Inc. (collectively, the "Holdings Co-Issuers") issued $196,000
aggregate principal amount at maturity of 11.875% Senior Discount Notes (the
"Senior Discount Notes") due 2008.

     The Senior Discount Notes were issued at a substantial discount from their
principal amount at maturity, for proceeds of approximately $110,400. Interest
on the Senior Discount Notes will accrue but not be payable before December 1,
2003. Thereafter, interest on the Senior Discount Notes will accrue on the
principal amount at maturity at a rate of 11.875% per annum commencing December
1, 2003, and will be payable semiannually in arrears on June 1 and December 1 of
each year. Prior to December 1, 2003, the accreted value of the Senior Discount
Notes will increase, representing amortization of original issue discount,
between the date of original issuance and December 1, 2003, on a semiannual
basis using a 360-day year comprised of twelve 30-day months, such that the
accreted value shall be equal to the full principal amount at maturity of the
Senior Discount Notes on December 1, 2003.

     On December 1, 2003, the Holdings Co-Issuers will be required to redeem an
amount equal to $369.79 per $1,000 principal amount at maturity of each Senior
Discount Note then outstanding on a pro rata basis at a redemption price of 100%
of the principal amount at maturity.

     On or after December 1, 2003, the Senior Discount Notes will be subject to
redemption at any time at the option of the Holdings Co-Issuers, in whole or in
part, at the redemption prices, which are expressed as percentages of principal
amount, shown below plus accrued and unpaid interest, if any, and liquidated
damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on December 1 of the years indicated below:

<Table>
<Caption>
                            YEAR                              PERCENTAGE
                            ----                              ----------
                                                           
2003........................................................  105.938%
2004........................................................  103.958%
2005........................................................  101.979%
2006 and thereafter.........................................  100.000%
</Table>

     Notwithstanding the foregoing, at any time before December 1, 2001, the
holding companies may on any one or more occasions redeem up to 35% of the
aggregate principal amount at maturity of senior discount notes originally
issued under the Senior Discount Note indenture at a redemption price equal to
111.875% of the accreted value at the date of redemption, plus liquidated
damages, if any, to the redemption date, with the net cash proceeds of any
equity offering and/or the net cash proceeds of a strategic equity investment.

     Upon the occurrence of a change of control, each holder of Senior Discount
Notes will have the right to require the Holdings Co-Issuers to repurchase all
or any part of such holder's Senior Discount Notes pursuant to a change of
control offer at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and liquidated damages thereon,
if any, to the date of purchase. The Charter Acquisition constituted a change of
control.

     Upon expiration of the change of control offer (January 26, 2000), 16,250
of the Senior Discount Notes due were validly tendered.

                                      F-372
   567
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Senior Discount Notes were repurchased for $10,500 using cash received
from equity contributions from Charter Holdings. As of February 29, 2000,
179,750 Senior Discount Notes remain outstanding with an accreted value of
$116,400.

     Based upon outstanding indebtedness at December 31, 1999, and the
amortization of term, and scheduled reductions in available borrowings of the
revolving credit facility, aggregate future principal payments on the total
borrowings under all debt agreements at December 31, 1999, are as follows:

<Table>
<Caption>
                            YEAR                               AMOUNT
                            ----                              --------
                                                           
2000........................................................  $  --
2001........................................................     --
2002........................................................     --
2003........................................................    74,229
2004........................................................     1,250
Thereafter..................................................   441,021
                                                              --------
                                                              $516,500
                                                              ========
</Table>

7. FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The carrying and fair values of the Company's significant financial
instruments as of December 31, 1999, are as follows:

<Table>
<Caption>
                                                              CARRYING
NOTIONAL     FAIR
                                                               VALUE      AMOUNT
    VALUE
                                                              --------
- --------    -----
                                                                   
   
Debt:
  Senior Credit Facilities..................................  $170,000   $ --
   $170,000
  Senior Subordinated Notes.................................   151,500     --
    151,500
  Senior Discount Notes.....................................   129,212     --
    129,212
  7.0% Note payable, due May 2003...........................       500     --
        500
Interest Rate Hedge Agreement:
  Cap.......................................................     --       15,000
         16
</Table>

     The carrying amount of the Senior Credit Facilities approximates fair value
as the outstanding borrowings bear interest at market rates. The fair values of
the Senior Subordinated Notes and Senior Discount Notes are based on quoted
market prices.

     The interest pay rate for the interest rate cap agreement was 9.0% at
December 31, 1999.

     The notional amount of the interest rate hedge agreement does not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of the interest rate hedge agreement. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contract.

     The fair value of the interest rate hedge agreement generally reflects the
estimated amount that the Company would receive (excluding accrued interest) to
terminate the contract on the reporting date, thereby taking into account the
current unrealized gains or losses of the open contract. Dealer quotations are
available for the Company's interest rate hedge agreement.

     Management believes that the seller of the interest rate hedge agreement
will be able to meet their obligations under the agreement. In addition, the
interest rate hedge agreement is with certain of the participating banks under
the Company's Senior Credit Facilities thereby reducing the exposure to credit
loss. The Company has policies regarding the financial stability and credit
standing of the major counterparties. Nonperformance by the counterparties is
not anticipated nor would it have a material adverse effect on the Company's
consolidated financial position or results of operations.

                                      F-373
   568
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. RELATED-PARTY TRANSACTIONS:

     Charter Investment, Inc. (Charter Investment) provides management services
to the Company including centralized customer billing services, and data
processing and related support. Costs for these services are charged directly to
the Company's operating subsidiaries and are included in operating costs. These
billings are determined based on the number of basic customers. Charter
Investment utilizes a combination of excess insurance coverage and
self-insurance programs for its medical, dental and workers' compensation
claims. Charges are made to the Company as determined by independent actuaries
at the present value of the actuarially computed present and future liabilities
for such benefits. Depreciation and amortization incurred by Charter Investment
and Charter have been allocated to the Company based on the number of the basic
customers. Such costs totaled $44 for the period from November 15, 1999, through
December 31, 1999, are reflected as a capital contribution. Management believes
that costs incurred by Charter Investment on the Company's behalf and included
in the accompanying financial statements are not materially different than costs
the Company would have incurred as a stand-alone entity.

     Charter, an entity controlled by Paul G. Allen, was named manager of CC V
Holdings pursuant to the terms of the limited liability company agreement for CC
V Holdings dated as of November 15, 1999. Furthermore, Charter now manages and
operates the Company's cable systems pursuant to a Management Agreement entered
into with certain subsidiaries of CC V Holdings. The term of the management
agreement is 10 years, commencing on November 15, 1999. Charter is entitled to
reimbursement for all expenses, costs, losses and liabilities or damages
incurred by Charter in connection with the performance of its services. Payment
of the management fee is permitted under the Company's credit agreement, but
ranks below the Company's senior debt and shall not be paid except to the extent
permitted under the Senior Credit Facilities. Such costs totaled $501 for the
period from November 15, 1999, through December 31, 1999, and are recorded in
corporate expense charges-related parties in the accompanying consolidated
financial statements. Deferred management fees at December 31, 1999, are $262.

9. EMPLOYEE BENEFIT PLAN:

     Avalon Michigan had a qualified savings plan under Section 401(k) of the
Internal Revenue Code (the "Plan"). In connection with the Charter Acquisition,
the Plan's assets were frozen as of November 14, 1999, and employees became
fully vested. Effective January 1, 2000, the Company's employees with two months
of service are eligible to participate in the Charter Communications, Inc.
401(k) Plan (the "Charter Plan"). Employees that qualify for participation in
the Charter Plan can contribute up to 15% of their salary, on a before tax
basis, subject to a maximum contribution limit as determined by the Internal
Revenue Service.

10. COMMITMENTS AND CONTINGENCIES:

Leases

     The Company rents poles from utility companies for use in its operations.
While rental agreements are generally short-term, the Company anticipates such
rentals will continue in the future. The Company also leases office facilities
and various equipment under month-to-month operating leases. Rent expense was
$1,506 and $212 for the periods from January 1, 1999, through November 14, 1999,
and from November 15, 1999, through December 31, 1999, respectively. Rental
commitments are expected to continue at approximately the same level for the
foreseeable future, including pole rental commitments which are cancelable.

Regulation in the Cable Television Industry

     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable

                                      F-374
   569
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996
Telecom Act"), establish a national policy to guide the development and
regulation of cable television systems. The Federal Communications Commission
(FCC) has principal responsibility for implementing the policies of the Cable
Acts. Many aspects of such regulation are currently the subject of judicial
proceedings and administrative or legislative proposals. Legislation and
regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.

     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.

     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 31,
1999, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.

     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. As of
December 31, 1999, approximately 26% of the Company's local franchising
authorities are certified to regulate basic tier rates. The Company is unable to
estimate at this time the amount of refunds, if any, that may be payable by the
Company in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC. The Company does
not believe that the amount of any such refunds would have a material adverse
effect on the consolidated financial position or results of operations of the
Company.

     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulated rates on the cable
programming service tier (CPST). The FCC has taken the position that it will
still adjudicate pending CPST complaints but will strictly limit its review, and
possible refund orders, to the time period predating the sunset date, March 31,
1999. The Company does not believe any adjudications regarding their pre-sunset
complaints will have a material adverse effect on the Company's consolidated
financial position or results of operations.

     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation.

Litigation

     In connection with the Company's acquisition of Mercom, former Mercom
shareholders holding approximately 731,894 Mercom common shares (approximately
15.3% of all outstanding Mercom common shares) gave notice of their election to
exercise appraisal rights as provided by Delaware law. On July 2, 1999, former
Mercom shareholders holding 535,501 shares of Mercom common stock filed a
petition for appraisal of stock in the Delaware Chancery Court. With respect to
209,893 of the total number of shares for which the Company received notice, the
notice provided to the Company was received from beneficial holders of Mercom
shares who were not holders of record. The Company believes that the notice with
respect to these shares did not comply with Delaware law and is ineffective.

     The Company cannot predict at this time the effect of the elections to
exercise appraisal rights on the Company since the Company does not know the
extent to which these former Mercom shareholders will
                                      F-375
   570
                      CC V HOLDINGS, LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

continue to pursue appraisal rights under Delaware law or choose to abandon
these efforts and seek to accept the consideration payable in the Mercom merger.
If these former Mercom shareholders continue to pursue their appraisal rights
and if a Delaware court were to find that the fair value of the Mercom common
shares, exclusive of any element of value arising from our acquisition of
Mercom, exceeded $12.00 per share, the Company would have to pay the additional
amount for each Mercom common share subject to the appraisal proceedings
together with a fair rate of interest. The Company could be ordered by the
Delaware court also to pay reasonable attorney's fees and the fees and expenses
of experts for the shareholders. In addition, the Company would have to pay
their own litigation costs. The Company has already provided for the
consideration of $12.00 per Mercom common share due under the terms of the
merger with Mercom with respect to these shares but has not provided for any
additional amounts or costs. The Company can provide no assurance as to what a
Delaware court would find in any appraisal proceeding or when this matter will
be resolved. Accordingly, the Company cannot assure you that the ultimate
outcome would have no material adverse impact on the Company.

11. ACCOUNTING STANDARDS NOT YET IMPLEMENTED:

     The Company is required to adopt Financial Accounting Standards Board
issued Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133) in 2001. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded on the
consolidated balance sheet as either an asset or liability measured at its fair
value and that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. The adoption of SFAS No. 133 is not expected to
have a material impact on the consolidated financial statements.

                                      F-376
   571

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers
of Avalon Cable LLC

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, changes in members' interest and
cash flows present fairly, in all material respects, the financial position of
Avalon Cable LLC and its subsidiaries (the "Company") at December 31, 1997 and
1998 and the results of their operations, changes in members' interest and their
cash flows for the period from September 4, 1997 (inception), through December
31, 1997 and for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on the financial statements based on our audits. We conducted our audits
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audits 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

                                            /s/ PRICEWATERHOUSECOOPERS LLP

New York, New York
March 30, 1999, except for Note 12,
as to which the date is May 13, 1999

                                      F-377
   572

                       AVALON CABLE LLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                   DECEMBER 31,

- ----------------------
                                                                 1998
1997
                                                              ----------
- ------
                                                              (DOLLARS IN
THOUSANDS)
                                                           

ASSETS
CURRENT ASSETS:
Cash........................................................   $  9,288        $
- --
Subscriber receivables, less allowance for doubtful accounts
  of $943...................................................      5,862
- --
Accounts receivable-affiliate...............................        124
- --
Deferred income taxes.......................................        479
- --
Prepaid expenses and other current assets...................        580
504
                                                               --------
- ----
Total current assets........................................     16,333
504
Property, plant and equipment, net..........................    111,421
- --
Intangible assets, net......................................    462,117
- --
Other assets................................................        227
- --
                                                               --------
- ----
Total assets................................................   $590,098
$504
                                                               ========
====
LIABILITIES AND MEMBERS' INTEREST
CURRENT LIABILITIES:
Current portion of notes payable............................   $     20        $
- --
Accounts payable and accrued expenses.......................     11,646
- --
Accounts payable, net-affiliate.............................      2,023
500
Advance billings and customer deposits......................      3,171
- --
                                                               --------
- ----
Total current liabilities...................................     16,860
500
Note payable, net of current portion........................    402,949
- --
Note payable-affiliate......................................      3,341
- --
Deferred income taxes.......................................      1,841
- --
                                                               --------
- ----
Total liabilities...........................................    424,991
500
                                                               --------
- ----
Minority interest...........................................     13,855
- --
Commitments and contingencies (Note 10)
MEMBERS' INTEREST:
Members' capital............................................    166,630
- --
Accumulated earnings (deficit)..............................    (15,378)
 4
                                                               --------
- ----
Total member's interest.....................................    151,252
 4
                                                               --------
- ----
Total liabilities and member's interest.....................   $590,098
$504
                                                               ========
====
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-378
   573

                       AVALON CABLE LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>

 FOR THE PERIOD FROM
                                                               FOR THE YEAR
  SEPTEMBER 4, 1997
                                                                   ENDED
 (INCEPTION) THROUGH
                                                             DECEMBER 31, 1998
  DECEMBER 31, 1997
                                                             -----------------
 -------------------
                                                                      (DOLLARS
IN THOUSANDS)
                                                          
 
REVENUE:
Basic services.............................................      $ 14,976
       $    --
Premium services...........................................         1,468
            --
Other......................................................         1,743
            --
                                                                 --------
       -------
Total revenues.............................................        18,187
            --
Operating expenses:
Selling, general and administrative........................         4,207
            --
Programming................................................         4,564
            --
Technical and operations...................................         1,951
            --
Depreciation and amortization..............................         8,183
            --
                                                                 --------
       -------
Loss from operations.......................................          (718)
            --
Other income (expense):
Interest income............................................           173
             4
Interest expense...........................................        (8,223)
            --
Other expense, net.........................................           (65)
            --
                                                                 --------
       -------
Income (loss) before income taxes..........................        (8,833)
             4
Provision for income taxes.................................          (186)
            --
                                                                 --------
       -------
Income (loss) before minority interest and extraordinary
  item.....................................................        (9,019)
             4
Minority interest in consolidated entity...................          (398)
            --
                                                                 --------
       -------
Income (loss) before the extraordinary loss on early
  extinguishment of debt...................................        (9,417)
             4
Extraordinary loss on early extinguishment of debt.........        (5,965)
            --
                                                                 --------
       -------
Net income (loss)..........................................      $(15,382)
       $     4
                                                                 ========
       =======
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-379
   574

                       AVALON CABLE LLC AND SUBSIDIARIES

             CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' INTEREST
  FROM THE PERIOD FROM SEPTEMBER 4, 1997 (INCEPTION) THROUGH DECEMBER 31, 1998

<Table>
<Caption>
                                             CLASS A              CLASS B-1
  ACCUMULATED    TOTAL
                                       --------------------   ------------------
   EARNINGS     MEMBERS'
                                         UNITS        $        UNITS       $
   (DEFICIT)    INTEREST
                                       ---------   --------   -------   --------
  -----------   --------
                                                   (DOLLARS IN THOUSANDS, EXCEPT
SHARE DATA)
                                                            
             
Net income for the period from
  September 4, 1997 through December
  31, 1997...........................       --     $    --         --   $     --
   $      4     $      4
Issuance of Class A units............   45,000      45,000         --         --
         --       45,000
Issuance of Class B-1 units in
  consideration for Avalon Cable of
  New England LLC....................       --          --     64,696      4,345
         --        4,345
Contribution of assets and
  liabilities of Avalon Cable of
  Michigan Inc.......................       --          --    510,994    117,285
         --      117,285
Net loss for the year ended December
  31, 1998...........................       --          --         --         --
    (15,382)     (15,382)
                                        ------     -------    -------   --------
   --------     --------
Balance at December 31, 1998.........   45,000     $45,000    575,690   $121,630
   $(15,378)    $151,252
                                        ======     =======    =======   ========
   ========     ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-380
   575

                       AVALON CABLE LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>

   FOR THE PERIOD

 SEPTEMBER 4, 1997
                                                               FOR THE YEAR
    (INCEPTION)
                                                                   ENDED
      THROUGH
                                                             DECEMBER 31, 1998
 DECEMBER 31, 1997
                                                             -----------------
 ------------------
                                                                     (DOLLARS IN
THOUSANDS)
                                                          
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..........................................      $ (15,382)
        $ 4
Adjustments to reconcile net income to net cash provided by
  operating activities
Depreciation and amortization..............................          8,183
         --
Deferred income taxes, net.................................          1,010
         --
Extraordinary loss on extinguishment of debt...............          5,965
         --
Provision for loss on accounts receivable..................             75
         --
Minority interest in consolidated entity...................            398
         --
Accretion of senior discount notes.........................          1,083
         --
Changes in operating assets and liabilities Increase in
  subscriber receivables...................................         (1,679)
         --
Increase in accounts receivable-affiliates.................           (124)
         --
Increase in prepaid expenses and other current assets......            (76)
         (4)
Increase in accounts payable and accrued expenses..........          4,863
         --
Increase in accounts payable-affiliates....................          1,523
         --
Increase in advance billings and customer deposits.........          1,684
         --
Change in Other, net.......................................           (227)
         --
                                                                 ---------
        ---
Net cash provided by operating activities..................          7,296
         --
                                                                 ---------
        ---
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................................        (11,468)
         --
Acquisitions, net of cash acquired.........................       (554,402)
         --
                                                                 ---------
        ---
Net cash used in investing activities......................       (565,870)
         --
                                                                 ---------
        ---
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of credit facility..................        265,888
         --
Principal payment on credit facility.......................       (125,013)
         --
Proceeds from issuance of senior subordinated debt.........        150,000
         --
Proceeds from issuance of note payable-affiliate...........          3,341
         --
Proceeds from issuance of senior discount notes............        110,411
         --
Proceeds from other notes payable..........................            600
         --
Payments for debt issuance costs...........................         (3,995)
         --
Contribution by members....................................        166,630
         --
                                                                 ---------
        ---
Net cash provided by financing activities..................        567,862
         --
Increase in cash...........................................          9,288
         --
Cash, beginning of period..................................             --
         --
                                                                 ---------
        ---
Cash, end of period........................................      $   9,288
        $--
                                                                 =========
        ===
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest...................      $   3,480
        $--
                                                                 =========
        ===
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-381
   576

                       AVALON CABLE LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998
                             (DOLLARS IN THOUSANDS)

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

     Avalon Cable LLC ("Avalon"), and its wholly owned subsidiaries Avalon Cable
Holdings Finance, Inc. ("Avalon Holdings Finance") and Avalon Cable of Michigan
LLC ("Avalon Michigan"), were formed in October 1998, pursuant to the laws of
the State of Delaware, as a wholly owned subsidiary of Avalon Cable of New
England Holdings, Inc. ("Avalon New England Holdings").

     On November 6, 1998, Avalon New England Holdings contributed its 100%
interest in Avalon Cable of New England LLC ("Avalon New England") to Avalon in
exchange for a membership interest in Avalon. This contribution was between
entities under common control and was accounted for similar to a pooling-of-
interests. Under this pooling-of-interests method, the results of operations for
Avalon include the results of operations from the date of inception (September
4, 1997) of Avalon New England. On that same date, Avalon received $63,000 from
affiliated entities, which was comprised of (i) a $45,000 capital contribution
by Avalon Investors, LLC ("Avalon Investors") and (ii) a $18,000 promissory note
from Avalon Cable Holdings LLC ("Avalon Holdings"), which was used to make a
$62,800 cash contribution to Avalon New England.

     The cash contribution received by Avalon New England was used to (i)
extinguish existing indebtedness of $29,600 and (ii) fund a $33,200 loan to
Avalon Holdings Finance which matures on December 31, 2001.

     On December 10, 1998, Avalon received a dividend distribution from Avalon
New England in the amount of $18,206, which was used by Avalon to pay off the
promissory note payable to Avalon Holdings, plus accrued interest.

     Avalon Cable of Michigan, Inc. was formed in June 1998, pursuant to the
laws of the state of Delaware, as a wholly owned subsidiary of Avalon Cable of
Michigan Holdings, Inc. ("Michigan Holdings".) On June 3, 1998, Avalon Cable of
Michigan, Inc. entered into an Agreement and Plan of Merger (the "Agreement")
among Avalon Cable of Michigan, Inc., Michigan Holdings and Cable Michigan, Inc.
("Cable Michigan"), pursuant to which Avalon Cable of Michigan, Inc. will merge
into Cable Michigan and Cable Michigan will become a wholly owned subsidiary of
Michigan Holdings (the "Merger"). As part of the Merger, the name of the company
was changed to Avalon Cable of Michigan, Inc.

     In accordance with the terms of the Agreement, each share of common stock,
par value $1.00 per share ("common stock"), of Cable Michigan outstanding prior
to the effective time of the Merger (other than treasury stock shares owned by
Michigan Holdings or its subsidiaries, or shares as to which dissenters' rights
have been exercised) shall be converted into the right to receive $40.50 in cash
(the "Merger Consideration"), subject to certain possible closing adjustments.

     In conjunction with the acquisition of Cable Michigan, Avalon Cable of
Michigan, Inc. acquired Cable Michigan's 62% ownership interest in Mercom, Inc.
("Mercom").

     On November 6, 1998, Avalon Cable of Michigan, Inc. completed its Merger.
The total consideration payable in conjunction with the Merger, including fees
and expenses is $431,629, including repayment of all existing Cable Michigan
indebtedness and accrued interest of $135,205. Subsequent to the Merger, the
arrangements with RCN and CTE for certain support services were terminated. The
Agreement also permitted Avalon Cable of Michigan, Inc. to agree to acquire the
remaining shares of Mercom that it did not own.

     Michigan Holdings contributed $137,375 in cash to Avalon Cable of Michigan,
Inc., which was used to consummate the Merger. On November 5, 1998, Michigan
Holdings received $105,000 in cash in exchange for promissory notes to lenders
(the "Bridge Agreement"). On November 6, 1998, Michigan Holdings contributed the
proceeds received from the Bridge Agreement and an additional $35,000 in cash to
Avalon Cable of Michigan Inc. in exchange for 100 shares of common stock.
                                      F-382
   577
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On March 26, 1999, Avalon completed a series of transactions to facilitate
certain aspects of its financing between affiliated entities under common
control. As a result of these transactions:

     - Avalon Cable of Michigan Inc. contributed its assets and liabilities
       excluding deferred tax liabilities, net to Avalon in exchange for an
       approximate 88% voting interest in Avalon. Avalon contributed these
       assets and liabilities to its wholly-owned subsidiary, Avalon Cable of
       Michigan.

     - Avalon Michigan has become the operator of the Michigan cluster replacing
       Avalon Cable of Michigan, Inc.

     - Avalon Michigan is an obligor on the Senior Subordinated Notes replacing
       Avalon Cable of Michigan, Inc., and

     - Avalon Cable of Michigan, Inc. is a guarantor of the obligations of
       Avalon Michigan under the Senior Subordinated Notes. Avalon Cable of
       Michigan, Inc. does not have significant assets, other than its
       investment in Avalon.

     - Avalon is an obligor on the Senior Discount Notes replacing Avalon Cable
       of Michigan Holdings, Inc.

     As a result of the reorganization between entities under common control,
Avalon accounted for the reorganization similar to a pooling-of-interests. Under
the pooling-of-interests method, the results of operations for Avalon include
the results of operations from the date of inception (June 2, 1998) inception of
Avalon Cable of Michigan, Inc. and the date of acquisition of the completed
acquisitions.

     Avalon New England and Avalon Michigan provide cable service to the western
New England area and the state of Michigan, respectively. Avalon cable systems
offer customer packages of basic and premium cable programming services which
are offered at a per channel charge or are packaged together to form a tier of
services offered at a discount from the combined channel rate. Avalon cable
systems also provide premium cable services to their customers for an extra
monthly charge. Customers generally pay initial connection charges and fixed
monthly fees for cable programming and premium cable services, which constitute
the principal sources of revenue for Avalon.

     Avalon Holdings Finance was formed for the sole purpose of facilitating
financings associated with the acquisitions of various cable operating
companies. Avalon Holdings Finance conducts no other activities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of consolidation

     The consolidated financial statements of Avalon and its subsidiaries,
include the accounts of Avalon and its wholly owned subsidiaries, Avalon New
England, Avalon Michigan and Avalon Holdings Finance (collectively, the
"Company"). All significant transactions between Avalon and its subsidiaries
have been eliminated.

  Use of estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reported period. Actual results may vary from estimates used.

                                      F-383
   578
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Revenue recognition

     Revenue is recognized as cable services are provided. Installation fee
revenue is recognized in the period in which the installation occurs to the
extent that direct selling costs meet or exceed installation revenues.

  Advertising costs

     Advertising costs are charged to operations as incurred. Advertising costs
were $82 for the year ended December 31, 1998.

  Concentration of credit risk

     Financial instruments which potentially expose the Company to a
concentration of credit risk include cash and subscriber and other receivables.
The Company had cash in excess of federally insured deposits at financial
institutions at December 31, 1998. The Company does not believe that such
deposits are subject to any unusual credit risk beyond the normal credit risk
associated with operating its business. The Company extends credit to customers
on an unsecured basis in the normal course of business. The Company maintains
reserves for potential credit losses and such losses, in the aggregate, have not
historically exceeded management's expectations. The Company's trade receivables
reflect a customer base centered in the state of Michigan and New England. The
Company routinely assesses the financial strength of its customers; as a result,
concentrations of credit risk are limited.

  Property, plant and equipment

     Property, plant and equipment is stated at its fair value for items
acquired from Cable Michigan, historical cost for the minority interests share
of Mercom property, plant and equipment and cost for additions subsequent to the
merger. Initial subscribers installation costs, including materials, labor and
overhead costs, are capitalized as a component of cable plant and equipment. The
cost of disconnection and reconnection are charged to expense when incurred.
Depreciation is computed for financial statement purposes using the
straight-line method based upon the following lives:

<Table>
                                                           
Vehicles....................................................      5 years
Cable plant and equipment...................................   5-12 years
Office furniture and equipment..............................   5-10 years
Buildings and improvements..................................  10-25 years
</Table>

  Intangible assets

     Intangible assets represent the estimated fair value of cable franchises
and goodwill resulting from acquisitions. Goodwill is the excess of the purchase
price over the fair value of the net assets acquired, determined through an
independent appraisal. Deferred financing costs represent direct costs incurred
to obtain long-term financing and are amortized to interest expense over the
term of the underlying debt utilizing the effective interest method.
Amortization is computed for financial statement purposes using the straight-
line method based upon the anticipated economic lives:

<Table>
                                                             
Cable franchises............................................    13-15 years
Goodwill....................................................       15 years
Non-compete agreement.......................................        5 years
</Table>

                                      F-384
   579
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Accounting for impairments

     The Company follows the provisions of Statement of Financial Accounting
Standards No. 121 -- "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS 121").

     SFAS 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for recoverability, the Company
estimates the net future cash flows expected to result from the use of the asset
and its eventual disposition. If the sum of the expected net future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Measurement of an impairment loss
for long-lived assets and identifiable intangibles expected to be held and used
is based on the fair value of the asset.

     No impairment losses have been recognized by the Company pursuant to SFAS
121.

  Financial instruments

     The Company estimates that the fair value of all financial instruments at
December 31, 1998 does not differ materially from the aggregate carrying values
of its financial instruments recorded in the accompanying balance sheet. The
fair value of the notes payable-affiliate are considered to be equal to carrying
values since the Company believes that its credit risk has not changed from the
time this debt instrument was executed and therefore, would obtain a similar
rate in the current market.

  Income taxes

     The Company is not subject to federal and state income taxes since the
income or loss of the Company is included in the tax returns of Avalon Cable of
Michigan, Inc. and the Company's minority partners. However, Mercom, its
majority-owned subsidiary is subject to taxes that are accounted for using
Statement of Financial Accounting Standards No. 109 -- "Accounting for Income
Taxes". The statement requires the use of an asset and liability approach for
financial reporting purposes. The asset and liability approach requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between financial reporting basis and tax
basis of assets and liabilities. If it is more likely than not that some portion
or all of a deferred tax asset will not be realized, a valuation allowance is
recognized.

3. MEMBERS' CAPITAL

     Avalon has authorized two classes of equity units; class A units ("Class A
Units") and class B units ("Class B Units") (collectively, the "Units"). Each
class of the Units represents a fractional part of the membership interests in
Avalon and has the rights and obligations specified in Avalon's Limited
Liability Company Agreement. Each Class B Unit is entitled to voting rights
equal to the percentage such units represents of the aggregate number of
outstanding Class B Units. The Class A Units are not entitled to voting rights.

  Class A Units

     The Class A Units are participating preferred equity interests. A preferred
return accrues annually (the Company's "Preferred Return") on the initial
purchase price (the Company's "Capital Value") of each Class A Unit at a rate of
15, or 17% under certain circumstances, per annum. The Company cannot pay
distributions in respect of other classes of securities including distributions
made in connection with a liquidation until the Company's Capital Value and
accrued Preferred Return in respect of each Class A Unit is paid to the holders
thereof (such distributions being the Company's "Priority Distributions"). So
long as any portion of the Company's Priority Distributions remains unpaid, the
holders of a majority of the Class A
                                      F-385
   580
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Units are entitled to block certain actions by the Company including the payment
of certain distributions, the issuance of senior or certain types of pari passu
equity securities or the entering into or amending of certain related-party
agreements. In addition to the Company's Priority Distributions, each Class A
Unit is also entitled to participate in common distributions, pro rata according
to the percentage such unit represents of the aggregate number of the Company's
units then outstanding.

  Class B Units

     The Class B Units are junior equity securities which are divided into two
identical subclasses, Class B-1 Units and Class B-2 Units. After the payment in
full of Avalon's Priority Distributions, each Class B Unit is entitled to
participate in distributions pro rata according to the percentage such unit
represents of the aggregate number of the Avalon units then outstanding.

4. MERGER AND ACQUISITIONS

     The Merger was accounted for using the purchase method of accounting.
Accordingly, the consideration was allocated to the net assets acquired based on
their fair market values at the date of the Merger. The purchase price was
allocated as follows: current assets and liabilities at fair values of $470,
approximately $94,000 to property, plant and equipment, $315,000 to cable
franchises and the excess of consideration paid over the fair market value of
the net assets acquired, or goodwill, of $81,705, offset by deferred taxes net
of $60,000.

     The Merger agreement between Michigan Holdings and Avalon Cable of
Michigan, Inc. permitted Avalon Cable of Michigan, Inc. to agree to acquire the
1,822,810 shares (approximately 38% of the outstanding stock) of Mercom that it
did not own (the "Mercom Acquisition"). On September 10, 1998 Avalon Cable of
Michigan, Inc. and Mercom entered into a definitive agreement (the "Mercom
Merger Agreement") providing for the acquisition by Avalon Cable of Michigan,
Inc. of all of such shares at a price of $12.00 per share. Avalon Cable of
Michigan, Inc. completed this acquisition in March 1999. The total estimated
consideration payable in conjunction with the Mercom Acquisition, excluding fees
and expenses was $21,900.

     In March 1999, Avalon Michigan acquired the cable television systems of
Nova Cablevision, Inc., Nova Cablevision VI, L.P. and Nova Cablevision VII, L.P.
for approximately $7,800, excluding transaction fees.

     On May 29, 1998, the Company acquired certain assets of Amrac Clear View, A
Limited Partnership ("Amrac") for consideration of $8,124, including acquisition
costs of $589. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the consideration was allocated to the net assets
acquired based on the fair market values at the date of acquisition as
determined through the use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $256.

     On July 21, 1998, the Company acquired certain assets and liabilities from
Pegasus Cable Television, Inc. and Pegasus Cable Television of Connecticut, Inc.
(collectively, "Pegasus") for consideration of $30,467, including acquisition
costs of $175. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the consideration was allocated to the net assets
acquired based on the fair market values at the date of acquisition as
determined through use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $977.

     Unaudited pro forma results of operations of the Company for the year ended
December 31, 1998, as if the Merger and acquisitions occurred on January 1,
1998.

                                      F-386
   581
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
                                                              (UNAUDITED)
                                                           
Revenues....................................................    $ 96,751
                                                                ========
Loss from operations........................................    $ (5,292)
                                                                ========
Net loss....................................................    $(22,365)
                                                                ========
</Table>

     In September 1998, the Company entered into a definitive agreement to
purchase all of the cable systems of Taconic Technology Corporation ("Taconic")
for approximately $8,525 (excluding transaction fees). As of December 31, 1998,
the Company incurred $41 of transaction costs related to the acquisition of
Taconic. This merger is expected to close in the second quarter of 1999.

5. PROPERTY, PLANT AND EQUIPMENT

     At December 31, 1998, property, plant and equipment consists of the
following:

<Table>
                                                           
Cable plant and equipment...................................  $106,602
Vehicles....................................................     2,572
Office furniture and fixtures...............................     1,026
Buildings and improvements..................................     2,234
Construction in process.....................................       768
                                                              --------
                                                               113,202
Less: accumulated depreciation..............................    (1,781)
                                                              --------
                                                              $111,421
                                                              ========
</Table>

     Depreciation expense charged to operations was $1,781 for the year ended
December 31, 1998.

6. INTANGIBLE ASSETS

     At December 31, 1998, intangible assets consist of the following:

<Table>
<Caption>
                                                                1998
                                                              --------
                                                           
Cable franchises............................................  $374,773
Goodwill....................................................    82,928
Deferred financing costs....................................    10,658
Non-compete agreement.......................................       100
                                                              --------
                                                               468,459
Less: accumulated amortization..............................    (6,342)
                                                              --------
                                                              $462,117
                                                              ========
</Table>

     Amortization expense was $6,342 for the year ended December 31, 1998.

                                      F-387
   582
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     At December 31, 1998, accounts payable and accrued expenses consist of the
following:

<Table>
                                                           
Accounts payable............................................  $ 5,321
Accrued corporate expenses..................................      404
Accrued programming costs...................................    2,388
Taxes payable...............................................    1,383
Other.......................................................    2,150
                                                              -------
                                                              $11,646
                                                              =======
</Table>

8. DEBT

     At December 31, 1998, Long-term debt consists of the following:

<Table>
                                                           
Senior Credit Facility......................................  $140,875
Senior Subordinated Notes...................................   150,000
Senior Discount Notes.......................................   111,494
Other Note Payable..........................................       600
                                                              --------
                                                               402,969
Less: current portion of notes payable......................        20
                                                              --------
                                                              $402,949
                                                              ========
</Table>

  Credit Facilities

     On May 28, 1998, Avalon New England entered into a term loan and revolving
credit agreement with a major commercial lending institution (the "Credit
Agreement"). The Credit Agreement allowed for aggregate borrowings under Term
Loans A and B (collectively, the "Term Loans") and a revolving credit facility
of $30,000 and $5,000, respectively. The proceeds from the Term Loans and
revolving credit facility were used to fund the acquisitions made by Avalon New
England and to provide for Avalon New England's working capital requirements.

     In December 1998, Avalon New England retired the Term Loans and revolving
credit agreement through the proceeds of a capital contribution from Avalon. The
fees and associated costs relating to the early retirement of this debt was
$1,110.

     On November 6, 1998, Avalon New England became a co-borrower along with
Avalon Michigan and Avalon Cable Finance, Inc. ("Avalon Finance"), affiliated
companies (collectively referred to as the "Co-Borrowers"), on a $320,888 senior
credit facility, which includes term loan facilities consisting of (i) tranche A
term loans of $120,888 and (ii) tranche B term loans of $170,000, and a
revolving credit facility of $30,000 (collectively, the "Credit Facility").
Subject to compliance with the terms of the Credit Facility, borrowings under
the Credit Facility will be available for working capital purposes, capital
expenditures and pending and future acquisitions. The ability to advance funds
under the tranche A term loan facility terminated on March 31, 1999. The tranche
A term loans are subject to minimum quarterly amortization payments commencing
on January 31, 2001 and maturing on October 31, 2005. The tranche B term loans
are subject to minimum quarterly payments commencing on January 31, 2001 with
substantially all of tranche B term loans scheduled to be repaid in two equal
installments on July 31, 2006 and October 31, 2006. The revolving credit
facility borrowings are scheduled to be repaid on October 31, 2005.

                                      F-388
   583
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On November 6, 1998, Avalon Michigan borrowed $265,888 under the Credit
Facility. In connection with the Senior Subordinated Notes and Senior Discount
Notes offerings, Avalon Michigan repaid $125,013 of the Credit Facility, and the
availability under the Credit Facility was reduced to $195,000. Avalon Michigan
had borrowings of $11,300 and $129,575 outstanding under the tranche A and
tranche B term note facilities, respectively, and had available $30,000 for
borrowings under the revolving credit facility. Avalon New England and Avalon
Finance had no borrowings outstanding under the Credit Facility at December 31,
1998.

     The interest rate under the Credit Facility is a rate based on either (i)
the Base Rate (a rate per annum equal to the greater of the prime rate and the
federal funds rate plus one-half of 1%) or (ii) the Eurodollar Rate (a rate per
annum equal to the Eurodollar base rate divided by 1.00 less the Eurocurrency
reserve requirement plus, in either case, the applicable margin). As of December
31, 1998, the applicable margin was (a) with respect to the tranche B term loans
was 2.75% per annum for Base Rate loans and 3.75% per annum for Eurodollar loans
and (b) with respect to tranche A term loans and the revolving credit facility
was 2.00% per annum for Base Rate loans and 3.00% for Eurodollar loans. The
applicable margin for the tranche A term loans and the revolving credit facility
are subject to performance based grid pricing which is determined based upon the
consolidated leverage ratio of the Co-Borrowers. The interest rate for the
tranche A and tranche B term loans outstanding at December 31, 1998 was 8.58%
and 9.33%, respectively. Interest is payable on a quarterly basis. Accrued
interest on the borrowings incurred by Avalon Cable of Michigan Inc. under the
credit facility was $1,389 at December 31, 1998.

     The Credit Facility contains restrictive covenants which among other things
require the Co-Borrowers to maintain certain ratios including consolidated
leverage ratios and the interest coverage ratio, fixed charge ratio and debt
service coverage ratio.

     The obligations of the Co-Borrowers under the Credit Facility are secured
by substantially all of the assets of the Co-Borrowers. In addition, the
obligations of the Co-Borrowers under the Credit Facility are guaranteed by
affiliated companies; Avalon Cable of Michigan Holdings, Inc., Avalon Cable
Finance Holdings, Inc., Avalon New England Holdings, Inc., Avalon Cable
Holdings, LLC and the Company.

     A Change of Control as defined under the Credit Facility agreement would
constitute an event of default under the Credit Facility giving the lender the
right to terminate the credit commitment and declare all amounts outstanding
immediately due and payable.

  Subordinated Debt

     In December 1998, Avalon New England and Avalon Michigan became co-issuers
of a $150,000 principal balance, Senior Subordinated Notes ("Subordinated
Notes") offering. In conjunction with this financing, Avalon New England
received $18,130 from Avalon Michigan as a partial payment against the Company's
note receivable-affiliate from Avalon Michigan. Avalon Michigan paid $75 in
interest during the period from October 21, 1998 (inception) through December
31, 1998. The cash proceeds received by Avalon New England of $18,206 was paid
to Avalon as a dividend.

     The Subordinated Notes mature on December 1, 2008, and interest accrued at
a rate of 9.375% per annum. Interest is payable semi-annually in arrears on June
1 and December 1 of each year, commencing on June 1, 1999. Accrued interest on
the Subordinated Notes was $1,078 at December 31, 1998.

     The Senior Subordinated Notes will not be redeemable at the Co-Borrowers'
option prior to December 1, 2003. Thereafter, the Senior Subordinated Notes will
be subject to redemption at any time at the option of the Co-Borrowers, in whole
or in part at the redemption prices (expressed as percentages of principal
amount) set

                                      F-389
   584
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

forth below plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
December 1 of the years indicated below:

<Table>
<Caption>
YEAR                                                        PERCENTAGE
- ----                                                        ----------
                                                         
2003......................................................   104.688%
2004......................................................   103.125%
2005......................................................   101.563%
2006 and thereafter.......................................   100.000%
</Table>

     The scheduled maturities of the long-term debt are $2,000 in 2001, $4,000
in 2002, $7,000 in 2003, and the remainder thereafter.

     At any time prior to December 1, 2001, the Co-Borrowers may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Senior
Subordinate Notes originally issued under the Indenture at a redemption price
equal to 109.375% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date, with the net cash proceeds of any
equity offering and/or the net cash proceeds of a strategic equity investment;
provided that at least 65% of the aggregate principal amount at maturity of
Senior Subordinated Notes originally issued remain outstanding immediately after
each such redemption.

     As used in the preceding paragraph, "Equity Offering and Strategic Equity
Investment" means any public or private sale of Capital Stock of any of the
Co-Borrowers pursuant to which the Co-Borrowers together receive net proceeds of
at least $25 million, other than issuances of Capital Stock pursuant to employee
benefit plans or as compensation to employees; provided that to the extent such
Capital Stock is issued by the Co-Borrowers, the net cash proceeds thereof shall
have been contributed to one or more of the Co-Borrowers in the form of an
equity contribution.

     The Indentures provide that upon the occurrence of a change of control (a
"Change of Control") each holder of the Notes has the right to require the
Company to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of such holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereon plus accrued and unpaid interest and
Liquidated Damages (as defined in the Indentures) thereof, if any, to the date
of purchase.

  The Senior Discount Notes

     On December 3, 1998, the Company, Avalon Michigan and Avalon Cable Holdings
Finance, Inc. (the "Holding Co-Borrowers") issued $196.0 million aggregate
principal amount at maturity of 117/8% Senior Discount Notes ("Senior Discount
Notes") due 2008.

     The Senior Discount Notes were issued at a substantial discount from their
principal amount at maturity, to generate gross proceeds of approximately $110.4
million. Interest on the Senior Discount Notes will accrue but not be payable
before December 1, 2003. Thereafter, interest on the Senior Discount Notes will
accrue on the principal amount at maturity at a rate of 11.875% per annum, and
will be payable semi-annually in arrears on June 1 and December 1 of each year,
commencing December 1, 2003. Prior to December 1, 2003, the accreted value of
the Senior Discount Notes will increase, representing amortization of original
issue discount, between the date of original issuance and December 1, 2003 on a
semi-annual basis using a 360-day year comprised of twelve 30-day months, such
that the accreted value shall be equal to the full principal amount at maturity
of the Senior Discount Notes on December 1, 2003. Original issue discount
accretion on the Senior Discount Notes was $1,083 at December 31, 1998.

     On December 1, 2003, the Holding Co-Borrowers will be required to redeem an
amount equal to $369.79 per $1,000 principal amount at maturity of each Senior
Discount Note then outstanding on a pro rata basis at a redemption price of 100%
of the principal amount at maturity of the Senior Discount Notes so redeemed.

                                      F-390
   585
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On or after December 1, 2003, the Senior Discount Notes will be subject to
redemption at any time at the option of the Holding Co-borrowers, in whole or in
part, at the redemption prices, which are expressed as percentages of principal
amount, shown below plus accrued and unpaid interest, if any, and liquidated
damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on December 1 of the years indicated below:

<Table>
<Caption>
YEAR                                                        PERCENTAGE
- ----                                                        ----------
                                                         
2003....................................................     105.938%
2004....................................................     103.958%
2005....................................................     101.979%
2006 and thereafter.....................................     100.000%
</Table>

     Notwithstanding the foregoing, at any time before December 1, 2001, the
holding companies may on any one or more occasions redeem up to 35% of the
aggregate principal amount at maturity of senior discount notes originally
issued under the Senior Discount Note indenture at a redemption price equal to
111.875% of the accreted value at the date of redemption, plus liquidated
damages, if any, to the redemption date, with the net cash proceeds of any
equity offering and/or the net cash proceeds of a strategic equity investment;
provided that at least 65% of the aggregate principal amount at maturity of
Senior Discount Notes originally issued remain outstanding immediately after
each occurrence of such redemption.

     Upon the occurrence of a Change of Control, each holder of Senior Discount
Notes will have the right to require the Holding Co-Borrowers to repurchase all
or any part of such holder's Senior Discount Notes pursuant to a Change of
Control offer at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and liquidated damages thereon,
if any, to the date of purchase.

  Mercom debt

     In August 1997, the Mercom revolving credit agreement for $2,000 expired.
Mercom had no borrowings under the revolving credit agreement in 1996 or 1997.

     On September 29, 1997, Cable Michigan, Inc. purchased and assumed all of
the bank's interest in the term credit agreement and the note issued thereunder.
Immediately after the purchase, the term credit agreement was amended in order
to, among other things, provide for less restrictive financial covenants,
eliminate mandatory amortization of principal and provide for a bullet maturity
of principal on December 31, 2002, and remove the change of control event of
default. Mercom's borrowings under the term credit agreement contain pricing and
security provisions substantially the same as those in place prior to the
purchase of the loan. The borrowings are secured by a pledge of the stock of
Mercom's subsidiaries and a first lien on certain of the assets of Mercom and
its subsidiaries, including inventory, equipment and receivables. At December
31, 1998, $14,151 of principal was outstanding. The borrowings under the term
credit agreement are eliminated in the Company's consolidated balance sheet.

  Note payable

     Avalon New England issued a note payable for $500 which is due on May 29,
2003, and bears interest at a rate of 7% per annum (which approximates Avalon
New England's incremental borrowing rate) payable annually. Additionally, Avalon
New England has a $100 non-compete agreement. The agreement calls for five
annual payments of $20, commencing on May 29, 1999.

                                      F-391
   586
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. INCOME TAXES

     The income tax provision in the accompanying consolidated financial
statements of operations relating to Mercom, Inc., a majority-owned subsidiary,
is comprised of the following:

<Table>
<Caption>
                                                              1998
                                                              ----
                                                           
CURRENT
Federal.....................................................  $ --
State.......................................................    --
                                                              ----
Total Current...............................................    --
                                                              ----
DEFERRED
Federal.....................................................   171
State.......................................................    15
                                                              ----
Total Deferred..............................................   186
                                                              ----
Total provision for income taxes............................  $186
                                                              ====
</Table>

     The benefit for income taxes is different from the amounts computed by
applying the U.S. statutory federal tax rate of 35% for 1998. The differences
are as follows:

<Table>
<Caption>
                                                               1998
                                                              -------
                                                           
Loss before provision for income taxes......................  $(8,833)
                                                              =======
Federal tax provision at statutory rates....................  $(3,092)
State income taxes..........................................     (182)
Allocated to members........................................    3,082
Goodwill....................................................        6
                                                              -------
Provision for income taxes..................................  $   186
                                                              =======
</Table>

<Table>
<Caption>
                                                           TAX NET
                                                          OPERATING
EXPIRATION
YEAR                                                       LOSSES         DATE
- ----                                                      ---------
- ----------
                                                                 
1998....................................................    $922          2018
</Table>

     Temporary differences that give rise to significant portion of deferred tax
assets and liabilities at December 31 are as follows:

<Table>
<Caption>
                                                               1998
                                                              -------
                                                           
NOL carryforwards...........................................  $   922
Reserves....................................................      459
Other, net..................................................       20
                                                              -------
Total deferred assets.......................................    1,401
                                                              -------
Property, plant and equipment...............................   (2,725)
Intangible assets...........................................      (38)
                                                              -------
Total deferred liabilities..................................   (2,763)
                                                              -------
Subtotal....................................................   (1,362)
                                                              -------
Valuation allowance.........................................       --
                                                              -------
Total deferred taxes........................................  $(1,362)
                                                              =======
</Table>

                                      F-392
   587
                       AVALON CABLE LLC AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. COMMITMENTS AND CONTINGENCIES

  Leases

     Avalon New England and Avalon Michigan rent poles from utility companies
for use in their operations. While rental agreements are generally short-term,
Avalon New England and Avalon Michigan anticipate such rentals will continue in
the future. Avalon New England and Avalon Michigan also lease office facilities
and various items of equipment under month-to-month operating leases. Rent
expense was $58 for the year ended December 31, 1998. Rental commitments are
expected to continue at approximately $1 million a year for the foreseeable
future, including pole rental commitments which are cancelable.

  Legal matters

     Avalon and its subsidiaries are subject to regulation by the Federal
Communications Commission ("FCC") and other franchising authorities.

     Avalon and its subsidiaries are subject to the provisions of the Cable
Television Consumer Protection and Competition Act of 1992, as amended, and the
Telecommunications Act of 1996. Avalon and its Subsidiaries have either settled
challenges or accrued for anticipated exposures related to rate regulation;
however, there is no assurance that there will not be further additional
challenges to its rates.

     In the normal course of business, there are various legal proceedings
outstanding. In the opinion of management, these proceedings will not have a
material adverse effect on the financial condition or results of operations of
Avalon and its subsidiaries.

11. RELATED PARTY TRANSACTIONS AND BALANCES

     During 1998, Avalon New England received $3,341 from Avalon Holdings. In
consideration for this amount, Avalon New England executed a note payable to
Avalon Holdings. This note is recorded as note payable-affiliate on the balance
sheet at December 31, 1998. Interest accrues at a rate of 5.57% per year and
Avalon New England has recorded accrued interest on this note of $100 at
December 31, 1998.

12. SUBSEQUENT EVENT

     In May 1999, the Company signed an agreement with Charter Communications,
Inc. ("Charter Communications") under which Charter Communications agreed to
purchase Avalon Cable LLC's cable television systems and assume some of their
debt. The acquisition by Charter Communications is subject to regulatory
approvals. The Company expects to consummate this transaction in the fourth
quarter of 1999.

     This agreement, if closed, would constitute a change in control under the
Indenture pursuant to which the Senior Subordinated Notes and the Senior
Discount Notes (collectively, the "Notes") were issued. The Indenture provides
that upon the occurrence of a change of control of the Company (a "Change of
Control") each holder of the Notes has the right to require the Company to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereon (or 101% of the accreted value for the Senior Discount
Notes as of the date of purchase if prior to the full accretion date) plus
accrued and unpaid interest and Liquidated Damages (as defined in the Indenture)
thereof, if any, to the date of purchase.

     This agreement, if closed, would represent a Change of Control which, on
the closing date, constitutes an event of default under the Credit Facility
giving the lender the right to terminate the credit commitment and declare all
amounts outstanding immediately due and payable. Charter Communications has
agreed to repay all amounts due under the Credit Facility or cause all events of
default under the Credit Facility arising from the Change of Control to be
waived.

                                      F-393
   588

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers of
Avalon Cable of Michigan Holdings, Inc. and Subsidiaries

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows present fairly, in all material respects, the financial position
of Avalon Cable of Michigan Holdings, Inc. and subsidiaries (collectively, the
"Company") at December 31, 1997 and 1998, and the results of their operations,
changes in shareholders' equity and their cash flows for the period from
September 4, 1997 (inception) through December 31, 1997, and for the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statements presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
                                            /s/ PRICEWATERHOUSECOOPERS LLP

New York, New York
March 30, 1999, except for Note 13,
as to which the date is May 13, 1999

                                      F-394
   589

            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                   DECEMBER 31,

- ----------------------
                                                                 1998
1997
                                                              ----------
- ------
                                                              (DOLLARS IN
THOUSANDS)
                                                           

                           ASSETS
Cash........................................................   $  9,288        $
- --
Accounts receivable, net of allowance for doubtful accounts
  of $943...................................................      5,862
- --
Prepayments and other current assets........................      1,388
504
Accounts receivable from related parties....................        124
- --
Deferred income taxes.......................................        377
- --
                                                               --------
- ----
Current assets..............................................     17,039
504
Property, plant and equipment, net..........................    111,421
- --
Intangible assets, net......................................    462,117
- --
Deferred charges and other assets...........................      1,302
- --
                                                               --------
- ----
Total assets................................................   $591,879
$504
                                                               ========
====
            LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of notes payable............................   $     20        $
- --
Accounts payable and accrued expenses.......................     11,646
- --
Advance billings and customer deposits......................      3,171
- --
Accounts payable-affiliate..................................      2,023
500
                                                               --------
- ----
Current liabilities.........................................     16,860
500
Long-term debt..............................................    402,949
- --
Notes payable-affiliate.....................................      3,341
- --
Deferred income taxes.......................................     80,811
- --
                                                               --------
- ----
Total liabilities...........................................    503,961
500
                                                               --------
- ----
Commitments and contingencies (Note 11).....................         --
- --
Minority interest...........................................     61,836
 4
                                                               --------
- ----
Stockholders equity:
Common stock................................................         --
- --
Additional paid-in capital..................................     35,000
- --
Accumulated deficit.........................................     (8,918)
- --
                                                               --------
- ----
Total shareholders' equity..................................     26,082
- --
                                                               --------
- ----
Total liabilities and shareholders' equity..................   $591,879
$504
                                                               ========
====
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-395
   590

            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>

   FOR THE PERIOD
                                                               FOR THE YEAR
  SEPTEMBER 4, 1997
                                                                   ENDED
 (INCEPTION) THROUGH
                                                             DECEMBER 31, 1998
  DECEMBER 31, 1997
                                                             -----------------
 -------------------
                                                                      (DOLLARS
IN THOUSANDS)
                                                          
 
REVENUE:
Basic services.............................................       $14,976
       $    --
Premium services...........................................         1,468
            --
Other......................................................         1,743
            --
                                                                  -------
       -------
                                                                   18,187
            --
OPERATING EXPENSES:
Selling, general and administrative........................         4,207
            --
Programming................................................         4,564
            --
Technical and operations...................................         1,951
            --
Depreciation and amortization..............................         8,183
            --
                                                                  -------
       -------
Loss from operations.......................................          (718)
            --
Interest income............................................           173
             4
Interest expense...........................................        (8,223)
            --
Other expense, net.........................................           (65)
            --
                                                                  -------
       -------
Income (loss) before income taxes..........................        (8,833)
             4
(Benefit) from income taxes................................        (2,754)
            --
                                                                  -------
       -------
Income (loss) before minority interest and extraordinary
  item.....................................................        (6,079)
             4
Minority interest in income of consolidated entity.........         1,331
            (4)
                                                                  -------
       -------
Income (loss) before extraordinary item....................        (4,748)
            --
Extraordinary loss on extinguishment of debt (net of tax of
  $1,743)..................................................        (4,170)
            --
                                                                  -------
       -------
Net income (loss)..........................................       $(8,918)
       $    --
                                                                  =======
       =======
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-396
   591

            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
  FOR THE PERIOD FROM SEPTEMBER 4, 1997 (INCEPTION) THROUGH DECEMBER 31, 1998

<Table>
<Caption>
                                      COMMON                 ADDITIONAL
             TOTAL
                                      SHARES       COMMON     PAID-IN
ACCUMULATED    SHAREHOLDERS'
                                    OUTSTANDING    STOCK      CAPITAL
DEFICIT         EQUITY
                                    -----------    ------    ----------
- -----------    -------------
                                                   (IN THOUSANDS, EXCEPT SHARE
AMOUNTS)
                                                               
         
Net income from date of inception
  through December 31, 1997.......       --          $--      $    --        $
 --         $    --
Balance, January 1, 1998..........      100          --            --
 --              --
Net loss..........................       --          --            --
(8,918)         (8,918)
Contributions by parent...........       --          --        35,000
 --          35,000
                                        ---          --       -------
- -------         -------
Balance, December 31, 1998........      100          $--      $35,000
$(8,918)        $26,082
                                        ===          ==       =======
=======         =======
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-397
   592

            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>

  FOR THE PERIOD FROM

   SEPTEMBER 4, 1997
                                                             FOR THE YEAR ENDED
  (INCEPTION) THROUGH
                                                             DECEMBER 31, 1998
   DECEMBER 31, 1997
                                                             ------------------
  -------------------
                                                                      (DOLLARS
IN THOUSANDS)
                                                          
  
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..........................................      $  (8,918)
       $       4
Extraordinary loss on extinguishment of debt...............          4,170
              --
Depreciation and amortization..............................          8,183
              --
Deferred income taxes, net.................................         82,370
              --
Provision for loss on accounts receivable..................             75
              --
Increase in minority interest..............................          1,331
              --
Accretion on senior discount notes.........................          1,083
              --
Net change in certain assets and liabilities, net of
  business acquisitions Increase in accounts receivable....         (1,679)
              --
Increase in accounts receivable from related parties.......           (124)
              --
Increase in prepayment and other current assets............           (884)
              (4)
Increase in accounts payable and accrued expenses..........          4,863
              --
Increase in accounts payable to related parties............          1,523
              --
Increase in deferred revenue...............................          1,684
              --
Change in Other, net.......................................          1,339
              --
                                                                 ---------
       ---------
Net cash provided by operating activities..................         92,338
              --
                                                                 ---------
       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment.................        (11,468)
              --
Payment for acquisition....................................       (554,402)
              --
                                                                 ---------
       ---------
Net cash used in investing activities......................        565,870
              --
                                                                 ---------
       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of the Credit Facility..........        265,888
              --
Principal payment on debt..................................       (125,013)
              --
Proceeds from the issuance of senior subordinated notes....        150,000
              --
Payments made on bridge loan...............................       (105,000)
              --
Proceeds from bridge loan..................................        105,000
              --
Proceeds from the senior discount notes....................        110,411
              --
Proceeds from sale to minority interest....................         46,588
              --
Proceeds from other notes payable..........................            600
              --
Proceeds from the issuance of note payable affiliate.......          3,341
              --
Payments made for debt financing costs.....................         (3,995)
              --
Proceeds from the issuance of common stock.................         35,000
              --
                                                                 ---------
       ---------
Net cash provided by financing activities..................        482,820
              --
                                                                 ---------
       ---------
Net increase in cash.......................................          9,288
              --
Cash at beginning of the period............................             --
              --
                                                                 ---------
       ---------
Cash at end of the period..................................      $   9,288
       $      --
                                                                 =========
       =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for Interest.....................      $   3,480
       $      --
Income taxes...............................................             --
              --
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-398
   593

            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

     Avalon Cable of Michigan Holdings, Inc. ("the Company") was formed in June
1998, pursuant to the laws of the state of Delaware. Avalon Cable of Michigan
Inc. ("Avalon Michigan") was formed in June 1998, pursuant to the laws of the
state of Delaware as a wholly owned subsidiary of the Company. On June 3, 1998,
Avalon Michigan entered into an Agreement and Plan of Merger (the "Agreement")
among the Company, Cable Michigan, Inc. ("Cable Michigan") and Avalon Michigan,
pursuant to which Avalon Michigan will merge into Cable Michigan and Cable
Michigan will become a wholly owned subsidiary of the Company (the "Merger").

     In accordance with the terms of the Agreement, each share of common stock,
par value $1.00 per share ("common stock"), of Cable Michigan outstanding prior
to the effective time of the Merger (other than treasury stock shares owned by
the Company or its subsidiaries, or shares as to which dissenters' rights have
been exercised) shall be converted into the right to receive $40.50 in cash (the
"Merger Consideration"), subject to certain possible closing adjustments.

     In conjunction with the acquisition of Cable Michigan, Avalon Michigan
acquired Cable Michigan's 62% ownership interest in Mercom, Inc. ("Mercom").

     On November 6, 1998, Avalon Michigan completed its merger into and with
Cable Michigan. The total consideration paid in conjunction with the merger,
including fees and expenses was $431,629, including repayment of all existing
Cable Michigan indebtedness and accrued interest of $135,205. Subsequent to the
merger, the arrangements with RCN and CTE for certain support services were
terminated. The Agreement also permitted Avalon Michigan to agree to acquire the
remaining shares of Mercom that it did not own.

     The Company contributed $137,375 in cash to Avalon Michigan, which was used
to consummate the Merger. On November 5, 1998, the Company received $105,000 in
cash in exchange for promissory notes to lenders (the "Bridge Agreement"). On
November 6, 1998, the Company contributed the proceeds received from the Bridge
Agreement and an additional $35,000 in cash to Avalon Michigan in exchange for
100 shares of common stock.

     On November 6, 1998, Avalon Cable of New England Holdings, Inc. contributed
its 100% interest in Avalon Cable of New England LLC ("Avalon New England") to
Avalon Cable LLC in exchange for a membership interest in Avalon Cable LLC. This
contribution was between entities under common control and was accounted for
similar to a pooling-of-interests. Under this pooling-of-interests method, the
results of operations for Avalon include the results of operations from the date
of inception (September 4, 1997) of Avalon New England. On that same date,
Avalon Cable LLC received $63,000 from affiliated entities, which was comprised
of (i) a $45,000 capital contribution by Avalon Investors, LLC ("Avalon
Investors") and (ii) a $18,000 promissory note from Avalon Cable Holdings LLC
("Avalon Holdings"), which was used to make a $62,800 cash contribution to
Avalon New England.

     The cash contribution received by Avalon New England was used to (i)
extinguish existing indebtedness of $29,600 and (ii) fund a $33,200 loan to
Avalon Holdings Finance which matures on December 31, 2001.

     On December 10, 1998, Avalon Cable LLC received a dividend distribution
from Avalon New England in the amount of $18,206, which was used by Avalon Cable
LLC to pay off the promissory note payable to Avalon Holdings, plus accrued
interest.

                                      F-399
   594
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

     On March 26, 1999, after the acquisition of Mercom, Inc., the Company
completed a series of transactions to facilitate certain aspects of its
financing between affiliated entities under common control. As a result of these
transactions:

     - Avalon Michigan contributed its assets and liabilities excluding deferred
       tax liabilities, net to Avalon Cable LLC in exchange for an approximate
       88% voting interest in Avalon Cable LLC. Avalon Cable LLC contributed
       these assets and liabilities to its wholly-owned subsidiary, Avalon Cable
       of Michigan LLC ("Avalon Michigan LLC");

     - Avalon Michigan LLC has become the operator of the Michigan cluster
       replacing Avalon Michigan;

     - Avalon Michigan LLC is an obligor on the Senior Subordinated Notes
       replacing Avalon Michigan; and

     - Avalon Michigan is a guarantor of the obligations of Avalon Michigan LLC
       under the Senior Subordinated Notes. Avalon Michigan does not have
       significant assets, other than its investment in Avalon Cable LLC.

     - The Company contributed the Senior Discount Notes to Avalon Cable LLC and
       became a guarantor of the Senior Discount Notes. The Company does not
       have significant assets, other than its 88% investment in Avalon Cable
       LLC.

     As a result of this reorganization between entities under common control,
the Company accounted for the reorganization similar to a pooling-of-interests.
Under the pooling-of-interests method, the results of operations include the
results of operations from the earliest date that a member became a part of the
control group by inception or acquisition. For the Company, the results of
operations are from the date of inception (September 4, 1997) for Avalon New
England, a wholly-owned subsidiary of Avalon Cable LLC.

     Avalon Michigan has a majority-interest in Avalon Cable LLC. Avalon Cable
LLC wholly-owns Avalon Cable Holdings Finance, Avalon New England, and Avalon
Michigan LLC.

     Avalon New England and Avalon Michigan provide cable service to the western
New England area and the state of Michigan, respectively. Avalon New England and
Avalon Michigan LLC's cable systems offer customer packages for basic cable
programming services which are offered at a per channel charge or packaged
together to form a tier of services offered at a discount from the combined
channel rate. Avalon New England and Avalon Michigan LLC's cable systems also
provide premium cable services to their customers for an extra monthly charge.
Customers generally pay initial connection charges and fixed monthly fees for
cable programming and premium cable services, which constitute the principle
sources of revenue for the Company.

     Avalon Holdings Finance was formed for the sole purpose of facilitating
financings associated with the acquisitions of various cable operating
companies. Avalon Holdings Finance conducts no other activities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of consolidation

     The consolidated financial statements of the Company include the accounts
of the Company and of all its wholly and majority owned subsidiaries. All
significant transactions between the Company and its subsidiaries have been
eliminated.

                                      F-400
   595
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

  Use of estimates

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

  Revenue recognition

     Revenues from cable services are recorded in the month the service is
provided. Installation fee revenue is recognized in the period in which the
installation occurs to the extent that direct selling costs meet or exceed
installation revenues.

  Advertising expense

     Advertising costs are expensed as incurred. Advertising expense charged to
operations was $82 for the year ended December 31, 1998.

  Concentration of credit risk

     Financial instruments which potentially expose the Company to a
concentration of credit risk include cash and subscriber and other receivables.
The Company had cash in excess of federally insured deposits at financial
institutions at December 31, 1998. The Company does not believe that such
deposits are subject to any unusual credit risk beyond the normal credit risk
associated with operating its business. The Company extends credit to customers
on an unsecured basis in the normal course of business. The Company maintains
reserves for potential credit losses and such losses, in the aggregate, have not
historically exceeded management's expectations. The Company's trade receivables
reflect a customer base centered in Michigan and New England. The Company
routinely assesses the financial strength of its customers; as a result,
concentrations of credit risk are limited.

  Property, plant and equipment

     Property, plant and equipment is stated at its fair value for items
acquired from Cable Michigan, historical cost for the minority interests' share
of Mercom property, plant and equipment and cost for additions subsequent to the
merger. Initial subscribers installation costs, including materials, labor and
overhead costs, are capitalized as a component of cable plant and equipment. The
cost of disconnection and reconnection are charged to expense when incurred.
Depreciation is computed for financial statement purposes using the
straight-line method based on the following lives:

<Table>
                                                           
Buildings and improvements..................................  10-25 years
Cable plant and equipment...................................   5-12 years
Vehicles....................................................      5 years
Office furniture and equipment..............................   5-10 years
</Table>

  Intangible assets

     Intangible assets represent the estimated fair value of cable franchises
and goodwill resulting from acquisitions. Cable franchises are amortized over a
period ranging from 13 to 15 years on a straight-line basis. Goodwill is the
excess of the purchase price over the fair value of the net assets acquired,
determined through

                                      F-401
   596
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

an independent appraisal, and is amortized over 15 years using the straight-line
method. Deferred financing costs represent direct costs incurred to obtain
long-term financing and are amortized to interest expense over the term of the
underlying debt utilizing the effective interest method.

  Accounting for impairments

     The Company follows the provisions of Statement of Financial Accounting
Standards No. 121 -- "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS 121").

     SFAS 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for recoverability, the Company
estimates the net future cash flows expected to result from the use of the asset
and its eventual disposition. If the sum of the expected net future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Measurement of an impairment loss
for long-lived assets and identifiable intangibles expected to be held and used
is based on the fair value of the asset.

     No impairment losses have been recognized by the Company pursuant to SFAS
121.

  Fair value of Financial Instruments

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

          a. The Company estimates that the fair value of all financial
     instruments at December 31, 1998 does not differ materially from the
     aggregate carrying values of its financial instruments recorded in the
     accompanying balance sheet. The fair value of the notes payable-affiliate
     are considered to be equal to carrying values since the Company believes
     that its credit risk has not changed from the time this debt instrument was
     executed and therefore, would obtain a similar rate in the current market.

          b. The fair value of the cash and temporary cash investments
     approximates fair value because of the short maturity of these instruments.

  Income taxes

     The Company and Mercom file separate consolidated federal income tax
returns. The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109 -- "Accounting for Income Taxes". The statement
requires the use of an asset and liability approach for financial reporting
purposes. The asset and liability approach requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of temporary
differences between financial reporting basis and tax basis of assets and
liabilities. If it is more likely than not that some portion or all of a
deferred tax asset will not be realized, a valuation allowance is recognized.

3. MERGER AND ACQUISITIONS

     The Merger was accounted for using the purchase method of accounting.
Accordingly, the consideration was allocated to the net assets acquired based on
their fair market values at the date of the Merger. The purchase price was
allocated as follows: current assets and liabilities at fair values of $470,
approximately $94,000 to property, plant and equipment, $315,000 to cable
franchises and the excess of consideration paid

                                      F-402
   597
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

over the fair market value of the net assets acquired, or goodwill, of $81,705,
offset by deferred taxes, net of $60,000.

     The Merger agreement between the Company and Avalon Michigan permitted
Avalon Michigan to agree to acquire the 1,822,810 shares (approximately 38% of
the outstanding stock) of Mercom that it did not own (the "Mercom Acquisition").
On September 10, 1998 Avalon Michigan and Mercom entered into a definitive
agreement (the "Mercom Merger Agreement") providing for the acquisition by
Avalon Michigan of all of such shares at a price of $12.00 per share. Avalon
Michigan completed this acquisition in March 1999. The total estimated
consideration payable in conjunction with the Mercom Acquisition, excluding fees
and expenses was $21,900.

     On May 29, 1998, the Company acquired certain assets of Amrac Clear View, A
Limited Partnership ("Amrac") for consideration of $8,124, including acquisition
costs of $589. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the consideration was allocated to the net assets
acquired based on the fair market values at the date of acquisition as
determined through the use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $256.

     On July 21, 1998, the Company acquired certain assets and liabilities from
Pegasus Cable Television, Inc. and Pegasus Cable Television of Connecticut, Inc.
(collectively, "Pegasus") for consideration of $30,467, including acquisition
costs of $175. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the consideration was allocated to the net assets
acquired based on the fair market values at the date of acquisition as
determined through use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $977.

     Following is the unaudited pro forma results of operations for the year
ended December 31, 1998, as if the Merger and acquisitions occurred on January
1, 1998:

<Table>
<Caption>
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
                                                              (UNAUDITED)
                                                           
Revenue.....................................................    $ 96,751
                                                                ========
Loss from operations........................................    $ (5,292)
                                                                ========
Net loss....................................................    $(22,365)
                                                                ========
</Table>

     In March 1999, Avalon Michigan acquired the cable television systems of
Nova Cablevision, Inc., Nova Cablevision VI, L.P. and Nova Cablevision VII, L.P.
for approximately $7,800, excluding transaction fees.

     In September 1998, the Company entered into a definitive agreement to
purchase all of the cable systems of Taconic Technology Corporation ("Taconic")
for approximately $8,525 (excluding transaction fees). As of December 31, 1998,
the Company incurred $41 of transaction costs related to the acquisition of
Taconic. This merger is expected to close in the second quarter of 1999.

                                      F-403
   598
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

4. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consists of the following:

<Table>
                                                           
Cable plant and equipment...................................  $106,602
Vehicles....................................................     2,572
Buildings and improvements..................................     1,026
Office furniture and equipment..............................     2,234
Construction in process.....................................       768
                                                              --------
Total property, plant and equipment.........................   113,202
Less-accumulated depreciation...............................    (1,781)
                                                              --------
Property, plant and equipment, net..........................  $111,421
                                                              ========
</Table>

     Depreciation expense was $1,781 for the year ended December 31, 1998.

5. INTANGIBLE ASSETS

     Intangible assets consist of the following:

<Table>
                                                           
Cable Franchise.............................................  $374,773
Goodwill....................................................    82,928
Deferred Financing Costs....................................    10,658
Non-compete agreement.......................................       100
                                                              --------
Total.......................................................   468,459
Less-accumulated amortization...............................    (6,342)
                                                              --------
Intangible assets, net......................................  $462,117
                                                              ========
</Table>

     Amortization expense for the year ended December 31, 1998 was $6,342.

6. ACCOUNT PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses consist of the following:

<Table>
                                                           
Accounts payable............................................  $ 5,321
Accrued corporate expenses..................................      404
Accrued cable programming costs.............................    2,388
Accrued taxes...............................................    1,383
Other.......................................................    2,150
                                                              -------
                                                              $11,646
                                                              =======
</Table>

                                      F-404
   599
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

7. INCOME TAXES

     The income tax provision (benefit) in the accompanying consolidated
financial statements of operations is comprised of the following:

<Table>
<Caption>
                                                               1998
                                                              -------
                                                           
CURRENT
Federal.....................................................  $   243
State.......................................................       --
                                                              -------
Total Current...............................................      243
                                                              -------
DEFERRED
Federal.....................................................   (2,757)
State.......................................................     (240)
                                                              -------
Total Deferred..............................................   (2,997)
                                                              -------
Total (benefit) for income taxes............................  $(2,754)
                                                              =======
</Table>

     The benefit for income taxes is different from the amounts computed by
applying the U.S. statutory federal tax rate of 35% for 1998. The differences
are as follows:

<Table>
<Caption>
                                                               1998
                                                              -------
                                                           
(Loss) before (benefit) for income taxes....................  $(8,833)
                                                              =======
Federal tax (benefit) at statutory rates....................  $(3,092)
State income taxes..........................................     (177)
Goodwill....................................................       77
Benefit for taxes allocated to minority partners............       84
                                                              -------
(Benefit) for income taxes..................................  $(3,108)
                                                              =======
</Table>

<Table>
<Caption>
                                                           TAX NET
                                                          OPERATING
EXPIRATION
YEAR                                                       LOSSES         DATE
- ----                                                      ---------
- ----------
                                                                 
1998....................................................   $10,360        2018
</Table>

                                      F-405
   600
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

     Temporary differences that give rise to significant portion of deferred tax
assets and liabilities at December 31 are as follows:

<Table>
<Caption>
                                                                1998
                                                              --------
                                                           
NOL carryforwards...........................................  $  5,363
Alternative minimum tax credits.............................       141
Reserves....................................................       210
Other, net..................................................       309
                                                              --------
Total deferred assets.......................................     6,023
                                                              --------
Property, plant and equipment...............................   (10,635)
Intangible assets...........................................   (76,199)
                                                              --------
Total deferred liabilities..................................   (86,834)
                                                              --------
Subtotal....................................................   (80,811)
                                                              --------
Valuation allowance.........................................        --
                                                              --------
Total deferred taxes........................................  $(80,811)
                                                              ========
</Table>

     The tax benefit related to the loss on extinguishment of debt results in
deferred tax, and it approximates the statutory U.S. tax rate. The tax benefit
of $2,036 related to the exercise of certain stock options of Cable Michigan
Inc. was charged directly to goodwill in conjunction with the closing of the
merger.

8. DEBT

     At December 31, 1998, long-term debt consists of the following:

<Table>
                                                             
Senior Credit Facility......................................    $140,875
Senior Subordinated Notes...................................     150,000
Senior Discount Notes.......................................     111,494
Other Note Payable..........................................         600
                                                                --------
                                                                 402,969
Current portion.............................................          20
                                                                --------
                                                                $402,949
                                                                ========
</Table>

  Credit Facilities

     On May 28, 1998, Avalon New England entered into a term loan and revolving
credit agreement with a major commercial lending institution (the "Credit
Agreement"). The Credit Agreement allowed for aggregate borrowings under Term
Loans A and B (collectively, the "Term Loans") and a revolving credit facility
of $30,000 and $5,000, respectively. The proceeds from the Term Loans and
revolving credit facility were used to fund the acquisitions made by Avalon New
England and to provide for Avalon New England's working capital requirements.

     In December 1998, Avalon New England retired the Term Loans and revolving
credit agreement through the proceeds of a capital contribution from Avalon
Cable LLC. The fees and associated costs relating to the early retirement of
this debt was $1,110.

                                      F-406
   601
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

     On November 6, 1998, Avalon Michigan became a co-borrower along with Avalon
New England and Avalon Cable Finance, Inc. (Avalon Finance), affiliated
companies, collectively referred to as the ("Co-Borrowers") on a $320,888 senior
credit facility, which includes term loan facilities consisting of (i) tranche A
term loans of $120,888 and (ii) tranche B term loans of $170,000 and a revolving
credit facility of $30,000 (collectively, the "Credit Facility"). Subject to
compliance with the terms of the Credit Facility, borrowings under the Credit
Facility will be available for working capital purposes, capital expenditures
and pending and future acquisitions. The ability to advance funds under the
tranche A term loan facility terminated on March 31, 1999. The tranche A term
loans are subject to minimum quarterly amortization payments commencing on
January 31, 2001 and maturing on October 31, 2005. The tranche B term loans are
scheduled to be repaid in two equal installments on July 31, 2006 and October
31, 2006. The revolving credit facility borrowings are scheduled to be repaid on
October 31, 2005.

     On November 6, 1998, Avalon Michigan borrowed $265,888 under the Credit
Facility in order to consummate the Merger. In connection with the Senior
Subordinated Notes (as defined below) and Senior Discount Notes (as defined
below) offerings, Avalon Michigan repaid $125,013 of the Credit Facility, and
the availability under the Credit Facility was reduced to $195,000. Avalon
Michigan had borrowings of $11,300 and $129,575 outstanding under the tranche A
and tranche B term note facilities, and had available $30,000 for borrowings
under the revolving credit facility. Avalon New England and Avalon Finance had
no borrowings outstanding under the Credit Facility at December 31, 1998.

     The interest rate under the Credit Facility is a rate based on either (i)
the base rate (a rate per annum equal to the greater of the Prime Rate and the
Federal Funds Effective Rate plus 1/2 of 1%) or (ii) the Eurodollar rate (a rate
per annum equal to the Eurodollar Base Rate divided by 1.00 less the
Eurocurrency Reserve Requirements) plus, in either case, the applicable margin.
As of December 31, 1998, the applicable margin was (a) with respect to the
tranche B term loans was 2.75% per annum for Base Rate loans and 3.75% per annum
for Eurodollar loans and (b) with respect to tranche A term loans and the
revolving credit facility was 2.00% per annum for Base Rate loans and 3.00% for
Eurodollar loans. The applicable margin for the tranche A term loans and the
revolving credit facility are subject to performance based grid pricing which is
determined based on upon the consolidated leverage ratio of the Co-Borrowers.
The interest rate for the tranche B term loans outstanding at December 31, 1998
was 9.19%. Interest is payable on a quarterly basis. Accrued interest on the
borrowings under the credit facility was $1,389 at December 31, 1998.

     The Credit Facility contains restrictive covenants which among other things
require the Co-Borrowers to maintain certain ratios including consolidated
leverage ratios and the interest coverage ratio, fixed charge ratio and debt
service coverage ratio.

     The obligations of the Co-Borrowers under the Credit Facility are secured
by substantially all of the assets of the Co-Borrowers. In addition, the
obligations of the Co-Borrowers under the Credit Facility are guaranteed by the
Company, Avalon Cable LLC, Avalon Cable Finance Holdings, Inc., Avalon Cable of
New England Holdings, Inc. and Avalon Cable Holdings, LLC.

     A Change of Control as defined under the Credit Facility agreement would
constitute an event of default under the Credit Facility giving the lender the
right to terminate the credit commitment and declare all amounts outstanding
immediately due and payable.

  Subordinated Debt

     In December 1998, Avalon Michigan became a co-issuer of a $150,000
principal balance, Senior Subordinated Notes ("Subordinated Notes") offering and
Michigan Holdings became a co-issuer of a $196,000, gross proceeds, Senior
Discount Notes (defined below) offering. In conjunction with these

                                      F-407
   602
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

financings, Avalon Michigan paid $18,130 to Avalon Finance as a partial payment
against Avalon Michigan's note payable-affiliate. Avalon Michigan paid $76 in
interest on this note payable-affiliate during the period from inception (June
2, 1998) through December 31, 1998.

     The Subordinated Notes mature on December 1, 2008, and interest accrued at
a rate of 9.375% per annum. Interest is payable semi-annually in arrears on June
1 and December 1 of each year, commencing on June 1, 1999. Accrued interest on
the Subordinated Notes was $1,078 at December 31, 1998.

     The Senior Subordinated Notes will not be redeemable at the Co-Borrowers'
option prior to December 1, 2003. Thereafter, the Senior Subordinated Notes will
be subject to redemption at any time at the option of the Co-Borrowers, in whole
or in part at the redemption prices (expressed as percentages of principal
amount) plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
December 1 of the years indicated below:

<Table>
<Caption>
YEAR                                                        PERCENTAGE
- ----                                                        ----------
                                                         
2003......................................................   104.688%
2004......................................................   103.125%
2005......................................................   101.563%
2006 and thereafter.......................................   100.000%
</Table>

     The scheduled maturities of the long-term debt are $2,000 in 2001, $4,000
in 2002, $72,479 in 2003, and the remainder thereafter.

     At any time prior to December 1, 2001, the Co-Borrowers may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Senior
Subordinate Notes originally issued under the Indenture at a redemption price
equal to 109.375% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date, with the net cash proceeds of any
equity offering and/or the net cash proceeds of a strategic equity investment;
provided that at least 65% of the aggregate principal amount at maturity of
Senior Subordinated Notes originally issued remain outstanding immediately after
each such redemption.

     As used in the preceding paragraph, "Equity Offering and Strategic Equity
Investment" means any public or private sale of Capital Stock of any of the
Co-Borrowers pursuant to which the Co-Borrowers together receive net proceeds of
at least $25 million, other than issuances of Capital Stock pursuant to employee
benefit plans or as compensation to employees; provided that to the extent such
Capital Stock is issued by the Co-Borrowers, the net cash proceeds thereof shall
have been contributed to one or more of the Co-Borrowers in the form of an
equity contribution.

     The Indentures provide that upon the occurrence of a change of control (a
"Change of Control") each holder of the Notes has the right to require the
Company to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of such holder's Notes at an offer price in cash to 101% of the
aggregate principal amount thereon plus accrued and unpaid interest and
Liquidated Damages (as defined in the Indentures) thereof, if any, to the date
of purchase.

  The Senior Discount Notes

     On December 3, 1998, the Company, Avalon Cable LLC and Avalon Cable
Holdings Finance, Inc. ("Holdings Co-Borrowers") issued $196.0 million aggregate
principal amount at maturity of 11 7/8% Senior Discount Notes ("Senior Discount
Notes") due 2008.

     The Senior Discount Notes were issued at a substantial discount from their
principal amount at maturity, to generate gross proceeds of approximately $110.4
million. Interest on the Senior Discount Notes will accrue but not be payable
before December 1, 2003. Thereafter, interest on the Senior Discount Notes will
accrue on the principal amount at maturity at a rate of 11.875% per annum, and
will be payable semi-annually in arrears

                                      F-408
   603
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

on June 1 and December 1 of each year, commencing December 1, 2003. Prior to
December 1, 2003, the accreted value of the Senior Discount Notes will increase,
representing amortization of original issue discount, between the date of
original issuance and December 1, 2003 on a semi-annual basis using a 360-day
year comprised of twelve 30-day months, such that the accreted value shall be
equal to the full principal amount at maturity of the Senior Discount Notes on
December 1, 2003. Original issue discount accretion on the Senior Discount Notes
was $1,083 at December 31, 1998.

     On December 1, 2003, the Holding Co-borrowers will be required to redeem an
amount equal to $369.79 per $1,000 principal amount at maturity of each Senior
Discount Note then outstanding on a pro rata basis at a redemption price of 100%
of the principal amount at maturity of the Senior Discount Notes so redeemed.

     On or after December 1, 2003, the Senior Discount Notes will be subject to
redemption at any time at the option of the Holding Co-borrowers, in whole or in
part, at the redemption prices, which are expressed as percentages of principal
amount, shown below plus accrued and unpaid interest, if any, and liquidated
damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on December 1 of the years indicated below:

<Table>
<Caption>
YEAR                                                        PERCENTAGE
- ----                                                        ----------
                                                         
2003......................................................   105.938%
2004......................................................   103.958%
2005......................................................   101.979%
2006 and thereafter.......................................   100.000%
</Table>

     Notwithstanding the foregoing, at any time before December 1, 2001, the
holding companies may on any one or more occasions redeem up to 35% of the
aggregate principal amount at maturity of senior discount notes originally
issued under the Senior Discount Note indenture at a redemption price equal to
111.875% of the accreted value at the date of redemption, plus liquidated
damages, if any, to the redemption date, with the net cash proceeds of any
equity offering and/or the net cash proceeds of a strategic equity investment;
provided that at least 65% of the aggregate principal amount at maturity of
Senior Discount Notes originally issued remain outstanding immediately after
each occurrence of such redemption.

     Upon the occurrence of a Change of Control, each holder of Senior Discount
Notes will have the right to require the Holding Co-borrowers to repurchase all
or any part of such holder's Senior Discount Notes pursuant to a Change of
Control offer at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and liquidated damages thereon,
if any, to the date of purchase.

  Note Payable

     Avalon New England issued a note payable for $500 which is due on May 29,
2003, and bears interest at a rate of 7% per annum (which approximates Avalon
New England's incremental borrowing rate) payable annually. Additionally, Avalon
New England has a $100 non-compete agreement. The agreement calls for five
annual payments of $20, commencing on May 29, 1999.

  Mercom debt

     In August 1997, the Mercom revolving credit agreement for $2,000 expired.
Mercom had no borrowings under the revolving credit agreement in 1996 or 1997.

     On September 29, 1997, Avalon Michigan purchased and assumed all of the
bank's interest in the term credit agreement and the note issued thereunder.
Immediately after the purchase, the term credit agreement was amended in order
to, among other things, provide for less restrictive financial covenants,
eliminate
                                      F-409
   604
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

mandatory amortization of principal and provide for a bullet maturity of
principal on December 31, 2002, and remove the change of control event of
default. Mercom's borrowings under the term credit agreement contain pricing and
security provisions substantially the same as those in place prior to the
purchase of the loan. The borrowings are secured by a pledge of the stock of
Mercom's subsidiaries and a first lien on certain of the assets of Mercom and
its subsidiaries, including inventory, equipment and receivables at December 31,
1998, $14,151 of principal was outstanding. The borrowings under the term credit
agreement are eliminated in the Company's consolidated balance sheet.

9. MINORITY INTEREST

     The activity in minority interest for the year ended December 31, 1998 is
as follows:

<Table>
<Caption>
                                                                   AVALON
                                                                    CABLE
                                                        MERCOM       LLC
TOTAL
                                                        -------    -------
- -------
                                                             

Issuance of Class A units by Avalon Cable LLC.........  $    --    $45,000
$45,000
Issuance of Class B-1 units by Avalon Cable LLC.......       --      4,345
4,345
Allocated to minority interest prior to
  restructuring.......................................       --        365
 365
Purchase of Cable Michigan, Inc.......................   13,457         --
13,457
Income (loss) allocated to minority interest..........      398     (1,729)
(1,331)
                                                        -------    -------
- -------
Balance at December 31, 1998..........................  $13,855    $47,981
$61,836
                                                        =======    =======
=======
</Table>

10. EMPLOYEE BENEFIT PLANS

     Avalon Michigan has a qualified savings plan under Section 401(K) of the
Internal Revenue Code. Contributions charged to expense for the period from
November 5, 1998 to December 31, 1998 was $30.

11. COMMITMENTS AND CONTINGENCIES

  Leases

     Avalon New England and Avalon Michigan rent poles from utility companies
for use in their operations. While rental agreements are generally short-term,
Avalon New England and Avalon Michigan anticipate such rentals will continue in
the future. Avalon New England and Avalon Michigan also lease office facilities
and various items of equipment under month-to-month operating leases. Rent
expense was $58 for the year ended December 31, 1998. Rental commitments are
expected to continue at approximately $1 million a year for the foreseeable
future, including pole rental commitments which are cancelable.

  Legal Matters

     The Company and its subsidiaries are subject to regulation by the Federal
Communications Commission ("FCC") and other franchising authorities.

     The Company and its subsidiaries are subject to the provisions of the Cable
Television Consumer Protection and Competition Act of 1992, as amended, and the
Telecommunications Act of 1996. The Company and its subsidiaries have either
settled challenges or accrued for anticipated exposures related to rate
regulation; however, there is no assurance that there will not be further
additional challenges to its rates.

     In the normal course of business, there are various legal proceedings
outstanding. In the opinion of management, these proceedings will not have a
material adverse effect on the financial condition or results of operations of
the Company and its subsidiaries.

                                      F-410
   605
            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

12. RELATED PARTY TRANSACTIONS AND BALANCES

     During 1998, Avalon New England received $3,341 from Avalon Holdings. In
consideration for this amount, Avalon New England executed a note payable to
Avalon Holdings. This note is recorded as note payable-affiliate on the balance
sheet at December 31, 1998. Interest accrues at the rate of 5.57% per year and
Avalon New England has recorded accrued interest on this note of $100 at
December 31, 1998.

13. SUBSEQUENT EVENT

     In May 1999, the Company signed an agreement with Charter Communications,
Inc. ("Charter Communications") under which Charter Communications agreed to
purchase Avalon Cable LLC's cable television systems and assume some of their
debt. The acquisition by Charter Communications is subject to regulatory
approvals. The Company expects to consummate this transaction in the fourth
quarter of 1999.

     This agreement, if closed, would constitute a change in control under the
Indenture pursuant to which the Senior Subordinated Notes and the Senior
Discount Notes (collectively, the "Notes") were issued. The Indenture provides
that upon the occurrence of a change of control of the Company (a "Change of
Control") each holder of the Notes has the right to require the Company to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereon (or 101% of the accreted value for the Senior Discount
Notes as of the date of purchase if prior to the full accretion date) plus
accrued and unpaid interest and Liquidated Damages (as defined in the Indenture)
thereof, if any, to the date of purchase.

     This agreement, if closed, would represent a Change of Control which, on
the closing date, constitutes an event of default under the Credit Facility
giving the lender the right to terminate the credit commitment and declare all
amounts outstanding immediately due and payable. Charter Communications has
agreed to repay all amounts due under the Credit Facility or cause all events of
default under the Credit Facility arising from the Change of Control to be
waived.

                                      F-411
   606

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders of
Avalon Cable of Michigan, Inc.

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and changes in shareholders'
deficit and of cash flows present fairly, in all material respects, the
financial position of Cable Michigan, Inc. and subsidiaries (collectively, the
"Company") at December 31, 1996 and 1997 and November 5, 1998, and the results
of their operations and their cash flows for each of the two years ended
December 31, 1996 and 1997 and the period from January 1, 1998 to November 5,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

                                            /s/ PRICEWATERHOUSECOOPERS LLP

New York, New York
March 30, 1999

                                      F-412
   607

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 31,
NOVEMBER 5,
                                                                  1997
1998
                                                              ------------
- -----------
                                                                (DOLLARS IN
THOUSANDS)
                                                           

                           ASSETS
Cash and temporary cash investments.........................    $ 17,219       $
 6,093
Accounts receivable, net of reserve for doubtful accounts of
  $541 at December 31, 1997 and $873 at November 5, 1998....       3,644
 4,232
Prepayments and other.......................................         663
   821
Accounts receivable from related parties....................         166
   396
Deferred income taxes.......................................       1,006
   541
                                                                --------
- --------
Total current assets........................................      22,698
12,083
Property, plant and equipment, net..........................      73,836
77,565
Intangible assets, net......................................      45,260
32,130
Deferred charges and other assets...........................         803
 9,442
                                                                --------
- --------
Total assets................................................    $142,597
$131,220
                                                                ========
========
           LIABILITIES AND SHAREHOLDERS' DEFICIT
Current portion of long-term debt...........................    $     --       $
15,000
Accounts payable............................................       5,564
 8,370
Advance billings and customer deposits......................       2,242
 1,486
Accrued taxes...............................................         167
 1,035
Accrued cable programming expense...........................       2,720
 5,098
Accrued expenses............................................       4,378
 2,052
Accounts payable to related parties.........................       1,560
   343
                                                                --------
- --------
Total current liabilities...................................      16,631
33,384
Long-term debt..............................................     143,000
120,000
Deferred income taxes.......................................      22,197
27,011
                                                                --------
- --------
Total liabilities...........................................     181,828
180,395
                                                                --------
- --------
Minority interest...........................................      14,643
14,690
                                                                --------
- --------
Commitments and contingencies (Note 11).....................          --
    --
Preferred Stock.............................................          --
    --
Common stock................................................          --
    --
Common shareholders' deficit................................     (53,874)
(63,865)
                                                                --------
- --------
Total Liabilities and Shareholders' Deficit.................    $142,597
$131,220
                                                                ========
========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-413
   608

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>

     FOR THE
                                                       FOR THE YEARS ENDED
   PERIOD FROM
                                                           DECEMBER 31,
 JANUARY 1, 1998
                                                     ------------------------
       TO
                                                        1996          1997
NOVEMBER 5, 1998
                                                     ----------    ----------
- -----------------
                                                        (DOLLARS IN THOUSANDS
EXCEPT PER SHARE
                                                                  AND SHARE
AMOUNTS)
                                                             

Revenues...........................................  $   76,187    $   81,299
   $   74,521
Costs and expenses, excluding management fees and
  depreciation and amortization....................      40,593        44,467
       41,552
Management fees....................................       3,498         3,715
        3,156
Depreciation and amortization......................      31,427        32,082
       28,098
Merger related expenses............................          --            --
        5,764
                                                     ----------    ----------
   ----------
Operating income...................................         669         1,035
       (4,049)
Interest income....................................         127           358
          652
Interest expense...................................     (15,179)      (11,751)
       (8,034)
Gain on sale of Florida cable system...............          --         2,571
           --
Other (expense), net...............................        (736)         (738)
         (937)
                                                     ----------    ----------
   ----------
(Loss) before income taxes.........................     (15,119)       (8,525)
      (12,368)
(Benefit) from income taxes........................      (5,712)       (4,114)
       (1,909)
                                                     ----------    ----------
   ----------
(Loss) before minority interest and equity in
  unconsolidated entities..........................      (9,407)       (4,411)
      (10,459)
Minority interest in loss (income) of consolidated
  entity...........................................       1,151            53
          (75)
                                                     ----------    ----------
   ----------
Net (Loss).........................................  $   (8,256)   $   (4,358)
   $  (10,534)
                                                     ==========    ==========
   ==========
Basic and diluted earnings per average common share
  Net (loss) to shareholders.......................  $    (1.20)   $     (.63)
   $    (1.53)
Average common shares and common stock equivalents
  outstanding......................................   6,864,799     6,870,528
    6,891,932
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-414
   609

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT

<Table>
<Caption>
                                                    FOR THE YEARS ENDED DECEMBER
31, 1996 AND 1997 AND
                                                   THE PERIOD FROM JANUARY 1,
1998 TO NOVEMBER 5, 1998

- ----------------------------------------------------------------------------
                                         COMMON               ADDITIONAL
     SHAREHOLDER'S       TOTAL
                                         SHARES      COMMON    PAID-IN
          NET        SHAREHOLDERS'
                                       OUTSTANDING   STOCK     CAPITAL
DEFICIT     INVESTMENT        DEFICIT
                                       -----------   ------   ----------
- --------   -------------   -------------
                                                       (DOLLARS IN THOUSANDS
EXCEPT SHARE AMOUNTS)
                                                               
                  
Balance, December 31, 1995...........       1,000    $   1       $ --      $
- --     $(73,758)       $(73,757)
Net loss.............................          --       --         --
- --       (8,256)         (8,256)
Transfers from CTE...................          --       --         --
- --        2,272           2,272
                                        ---------    ------      ----
- --------     --------        --------
Balance, December 31, 1996...........       1,000        1         --
- --      (79,742)        (79,741)
Net loss from 1/1/97 through
  9/30/97............................          --       --         --
- --       (3,251)         (3,251)
Net loss from 10/1/97 through
  12/31/97...........................          --       --         --
(1,107)          --          (1,107)
Transfers from RCN
  Corporation........................          --       --         --
- --       30,225          30,225
Common stock issued in connection
  with the Distribution..............   6,870,165    6,870         --
(59,638)      52,768              --
                                        ---------    ------      ----
- --------     --------        --------
Balance, December 31, 1997...........   6,871,165    6,871         --
(60,745)          --         (53,874)
Net loss from January 1, 1998 to
  November 5, 1998...................          --       --         --
(10,534)          --         (10,534)
Exercise of stock options............      30,267       30        351
- --           --             381
Tax benefits of stock option
  exercises..........................          --       --        162
- --           --             162
                                        ---------    ------      ----
- --------     --------        --------
Balance, November 5, 1998............   6,901,432    $6,901      $513
$(71,279)    $     --        $(63,865)
                                        =========    ======      ====
========     ========        ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                      F-415
   610

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                              FOR THE YEARS
ENDED
                                                                  DECEMBER 31,
    FOR THE PERIOD FROM

- --------------------   JANUARY 1, 1998 TO
                                                                1996       1997
     NOVEMBER 5, 1998
                                                              --------
- ---------   -------------------
                                                                        (DOLLARS
IN THOUSANDS)
                                                                   
    
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)..................................................  $ (8,256)  $
(4,358)       $(10,534)
Gain on pension curtailment/settlement......................      (855)
- --              --
Depreciation and amortization...............................    31,427
32,082          28,098
Deferred income taxes, net..................................       988
(4,359)         (3,360)
Provision for losses on accounts receivable.................       843
826             710
Gain on sale of Florida cable systems.......................        --
(2,571)             --
Increase (decrease) in minority interest....................    (1,151)
(53)             47
Other non-cash items........................................     2,274
1,914              --
Net change in certain assets and liabilities, net of
  business acquisitions
Accounts receivable and customer deposits...................    (1,226)
(617)         (2,054)
Accounts payable............................................     1,365
2,234           2,806
Accrued expenses............................................       125
580              52
Accrued taxes...............................................       (99)
61             868
Accounts receivable from related parties....................       567
1,549            (230)
Accounts payable to related parties.........................     1,314
(8,300)         (1,217)
Other, net..................................................       501
(644)           (158)
                                                              --------
- ---------        --------
Net cash provided by operating activities...................    27,817
18,344          15,028
                                                              --------
- ---------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment..................    (9,605)
(14,041)        (18,697)
Acquisitions, net of cash acquired..........................        --
(24)             --
Proceeds from sale of Florida cable systems.................        --
3,496              --
Other.......................................................       390
560              --
                                                              --------
- ---------        --------
Net cash used in investing activities.......................    (9,215)
(10,009)        (18,697)
                                                              --------
- ---------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt..................................        --
128,000              --
Redemption of long-term debt................................    (1,500)
(17,430)         (8,000)
Proceeds from the issuance of common stock..................        --
- --             543
Transfers from CTE..........................................        --
12,500              --
Change in affiliate notes, net..............................   (16,834)
(116,836)             --
Payments made for debt financing costs......................        --
(647)             --
                                                              --------
- ---------        --------
Net cash provided by (used in) financing activities.........   (18,334)
5,587          (7,457)
Net increase/(decrease) in cash and temporary cash
  investments...............................................       268
13,922         (11,126)
Cash and temporary cash investments at beginning of year....     3,029
3,297          17,219
                                                              --------
- ---------        --------
Cash and temporary cash investments at end of year..........  $  3,297   $
17,219        $  6,093
                                                              ========
=========        ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for Interest......................  $ 15,199   $
11,400        $  7,777
Income taxes................................................        29
370             315
</Table>

Supplemental Schedule of Non-cash Investing and Financing Activities:

  In September 1997, in connection with the transfer of CTE's investment in
  Mercom to the Company, the Company assumed CTE's $15,000 Term Credit Facility.

  Certain intercompany accounts receivable and payable and intercompany note
  balances were transferred to shareholders' net investment in connection with
  the Distribution described in note 1.

     The accompanying notes are an integral part of these consolidated financial
statements.
                                      F-416
   611

                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                               DECEMBER 31, 1998

1. BACKGROUND AND BASIS OF PRESENTATION

     Prior to September 30, 1997, Cable Michigan, Inc. and subsidiaries (the
"Company") was operated as part of C-TEC Corporation ("C-TEC"). On September 30,
1997, C-TEC distributed 100 percent of the outstanding shares of common stock of
its wholly owned subsidiaries, RCN Corporation ("RCN") and the Company to
holders of record of C-TEC's Common Stock and C-TEC's Class B Common Stock as of
the close of business on September 19, 1997 (the "Distribution") in accordance
with the terms of the Distribution Agreement dated September 5, 1997 among
C-TEC, RCN and the Company. The Company consists of C-TEC's Michigan cable
operations, including its 62% ownership in Mercom, Inc. ("Mercom"). In
connection with the Distribution, C-TEC changed its name to Commonwealth
Telephone Enterprises, Inc. ("CTE"). RCN consists primarily of C-TEC's bundled
residential voice, video and Internet access operations in the Boston to
Washington, D.C. corridor, its existing New York, New Jersey and Pennsylvania
cable television operations, a portion of its long distance operations and its
international investment in Megacable, S.A. de C.V. C-TEC, RCN, and the Company
continue as entities under common control until the Company completes the Merger
(as described below).

     On June 3, 1998, the Company entered into an Agreement and Plan of Merger
(the "Agreement") among the Company, Avalon Cable of Michigan Holdings Inc.
("Avalon Holdings") and Avalon Cable of Michigan Inc. ("Avalon Sub"), pursuant
to which Avalon Sub will merge into the Company and the Company will become a
wholly owned subsidiary of Avalon Holdings (the "Merger").

     In accordance with the terms of the Agreement, each share of common stock,
par value $1.00 per share ("common stock"), of the Company outstanding prior to
the effective time of the Merger (other than treasury stock, shares owned by
Avalon Holdings or its subsidiaries, or shares as to which dissenters' rights
have been exercised) shall be converted into the right to receive $40.50 in cash
(the "Merger Consideration"), subject to certain possible closing adjustments.

     On November 6, 1998, the Company completed its merger into and with Avalon
Cable Michigan, Inc. The total consideration payable in conjunction with the
merger, including fees and expenses is approximately 431,600. Subsequent to the
merger, the arrangements with RCN and CTE (as described below) were terminated.
The Merger agreement also permitted the Company to agree to acquire the
remaining shares of Mercom that it did not own.

     Cable Michigan provides cable services to various areas in the state of
Michigan. Cable Michigan's cable television systems offer customer packages for
basic cable programming services which are offered at a per channel charge or
packaged together to form a tier of services offered at a discount from the
combined channel rate. Cable Michigan's cable television systems also provide
premium cable services to their customers for an extra monthly charge. Customers
generally pay initial connection charges and fixed monthly fees for cable
programming and premium cable services, which constitute the principle sources
of revenue for the Company.

     The consolidated financial statements have been prepared using the
historical basis of assets and liabilities and historical results of operations
of all wholly and majority owned subsidiaries. However, the historical financial
information presented herein reflects periods during which the Company did not
operate as an independent company and accordingly, certain assumptions were made
in preparing such financial information. Such information, therefore, may not
necessarily reflect the results of operations, financial condition or cash flows
of the Company in the future or what they would have been had the Company been
an independent, public company during the reporting periods. All material
intercompany transactions and balances have been eliminated.

     RCN's corporate services group has historically provided substantial
support services such as finance, cash management, legal, human resources,
insurance and risk management. Prior to the Distribution, the
                                      F-417
   612
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

corporate office of C-TEC allocated the cost for these services pro rata among
the business units supported primarily based on assets; contribution to
consolidated earnings before interest, depreciation, amortization, and income
taxes; and number of employees. In the opinion of management, the method of
allocating these costs is reasonable; however, such costs are not necessarily
indicative of the costs that would have been incurred by the Company on a
stand-alone basis.

     CTE, RCN and the Company have entered into certain agreements subsequent to
the Distribution, and governing various ongoing relationships, including the
provision of support services between the three companies, including a
distribution agreement and a tax-sharing agreement.

     The fee per year for support services from RCN will be 4.0% of the revenues
of the Company plus a direct allocation of certain consolidated cable
administration functions of RCN. The direct charge for customer service along
with the billing service and the cable guide service will be a pro rata share
(based on subscribers) of the expenses incurred by RCN to provide such customer
service and to provide such billing and cable guide service for RCN and the
Company.

     CTE has agreed to provide or cause to be provided to RCN and the Company
certain financial data processing services for a transitional period after the
Distribution. The fees for such services will be an allocated portion (based on
relative usage) of the cost incurred by CTE to provide such financial data
processing services to all three groups.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Use of estimates

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

  Cash and temporary cash investments

     For purposes of reporting cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be temporary cash investments. Temporary cash investments are stated at cost,
which approximates market.

  Property, plant and equipment and depreciation

     Property, plant and equipment reflects the original cost of acquisition or
construction, including payroll and related costs such as taxes, pensions and
other fringe benefits, and certain general administrative costs.

     Depreciation is provided on the straight-line method based on the useful
lives of the various classes of depreciable property. The average estimated
lives of depreciable cable property, plant and equipment are:

<Table>
                                                           
Buildings...................................................   12-25 years
Cable television distribution equipment.....................  8.5-12 years
Vehicles....................................................       5 years
Other equipment.............................................      12 years
</Table>

     Maintenance and repair costs are charged to expense as incurred. Major
replacements and betterments are capitalized. Gain or loss is recognized on
retirements and dispositions.

                                      F-418
   613
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Intangible assets

     Intangible assets are amortized on a straight-line basis over the expected
period of benefit ranging from 5 to 19.3 years. Intangible assets include cable
franchises. The cable systems owned or managed by the Company are constructed
and operated under fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") that are generally
nonexclusive and are granted by local governmental authorities. The provisions
of these local franchises are subject to federal regulation. Costs incurred to
obtain or renew franchises are capitalized and amortized over the term of the
applicable franchise agreement.

  Accounting for impairments

     The Company follows the provisions of Statement of Financial Accounting
Standards No. 121 -- "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS 121").

     SFAS 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for recoverability, the Company
estimates the net future cash flows expected to result from the use of the asset
and its eventual disposition. If the sum of the expected net future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Measurement of an impairment loss
for long-lived assets and identifiable intangibles expected to be held and used
is based on the fair value of the asset.

     No impairment losses have been recognized by the Company pursuant to SFAS
121.

  Revenue recognition

     Revenues from cable programming services are recorded in the month the
service is provided. Installation fee revenue is recognized in the period in
which the installation occurs.

  Advertising expense

     Advertising costs are expensed as incurred. Advertising expense charged to
operations was $514, $560, and $505 in 1996, 1997, and for the period from
January 1, 1998 to November 5, 1998 respectively.

  Stock-based compensation

     The Company applies Accounting Principles Board Opinion No.
25 -- "Accounting for Stock Issued to Employees" ("APB 25") in accounting for
its stock plans. The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 -- "Accounting for
Stock-Based Compensation" ("SFAS 123").

  Earnings (loss) per share

     The Company has adopted statement of Financial Accounting Standards No.
128 -- "Earnings Per Share" ("SFAS 128"). Basic earnings (loss) per share is
computed based on net income (loss) divided by the weighted average number of
shares of common stock outstanding during the period.

     Diluted earnings (loss) per share is computed based on net income (loss)
divided by the weighted average number of shares of common stock outstanding
during the period after giving effect to convertible securities considered to be
dilutive common stock equivalents. The conversions of stock options during
periods in which the Company incurs a loss from continuing operations is not
assumed since the effect is anti-dilutive.

                                      F-419
   614
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The number of stock options which would have been converted in 1997 and in 1998
and had a dilutive effect if the Company had income from continuing operations
are 55,602 and 45,531, respectively.

     For periods prior to October 1, 1997, during which the Company was a wholly
owned subsidiary of C-TEC, earnings (loss) per share was calculated by dividing
net income (loss) by one-fourth the average common shares of C-TEC outstanding,
based upon a distribution ratio of one share of Company common stock for each
four shares of C-TEC common equity owned.

  Income taxes

     The Company and Mercom file separate consolidated federal income tax
returns. Prior to the Distribution, income tax expense was allocated to C-TEC's
subsidiaries on a separate return basis except that C-TEC's subsidiaries receive
benefit for the utilization of net operating losses and investment tax credits
included in the consolidated tax return even if such losses and credits could
not have been used on a separate return basis. The Company accounts for income
taxes using Statement of Financial Accounting Standards No. 109 -- "Accounting
for Income Taxes". The statement requires the use of an asset and liability
approach for financial reporting purposes. The asset and liability approach
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between financial reporting
basis and tax basis of assets and liabilities. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.

  Reclassification

     Certain amounts have been reclassified to conform with the current year's
presentation.

3. BUSINESS COMBINATION AND DISPOSITIONS

     The Agreement between Avalon Cable of Michigan Holdings, Inc. and the
Company permitted the Company to agree to acquire the 1,822,810 shares
(approximately 38% of the outstanding stock) of Mercom that it did not own (the
"Mercom Acquisition"). On September 10, 1998 the Company and Mercom entered into
a definitive agreement (the "Mercom Merger Agreement") providing for the
acquisition by the Company of all of such shares at a price of $12.00 per share.
The Company completed this acquisition in March 1999. The total estimated
consideration payable in conjunction with the Mercom Acquisition, excluding fees
and expenses was $21,900.

     In March 1999, Avalon Michigan Inc. acquired the cable television systems
of Nova Cablevision, Inc., Nova Cablevision VI, L.P. and Nova Cablevision VII,
L.P. for approximately $7,800, excluding transaction fees.

     In July 1997, Mercom sold its cable system in Port St. Lucie, Florida for
cash of approximately $3,500. The Company realized a pretax gain of $2,571 on
the transaction.

                                      F-420
   615
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

<Table>
<Caption>
                                                      DECEMBER 31,    NOVEMBER
5,
                                                          1997           1998
                                                      ------------
- -----------
                                                                
Cable plant.........................................    $158,655       $ 174,532
Buildings and land..................................       2,837           2,917
Furniture, fixtures and vehicles....................       5,528           6,433
Construction in process.............................         990             401
                                                        --------       ---------
Total property, plant and equipment.................     168,010         184,283
Less accumulated depreciation.......................     (94,174)
(106,718)
                                                        --------       ---------
Property, plant and equipment, net..................    $ 73,836       $  77,565
                                                        ========       =========
</Table>

     Depreciation expense was $15,728, $16,431 and $14,968 for the years ended
December 31, 1996 and 1997, and the period from January 1, 1998 to November 5,
1998, respectively.

5. INTANGIBLE ASSETS

     Intangible assets consist of the following at:

<Table>
<Caption>
                                                      DECEMBER 31,    NOVEMBER
5,
                                                          1997           1998
                                                      ------------
- -----------
                                                                
Cable Franchises....................................    $134,889       $ 134,889
Noncompete agreements...............................         473             473
Goodwill............................................       3,990           3,990
Other...............................................       1,729           1,729
                                                        --------       ---------
Total...............................................     141,081         141,081
Less accumulated amortization.......................     (95,821)
(108,951)
                                                        --------       ---------
Intangible assets, net..............................    $ 45,260       $  32,130
                                                        ========       =========
</Table>

     Amortization expense charged to operations for the years ended December 31,
1996 and 1997 was $15,699 and $15,651, respectively, and $13,130 for the period
from January 1, 1998 to November 5, 1998.

6. INCOME TAXES

     The income tax provision (benefit) in the accompanying consolidated
financial statements of operations is comprised of the following:

<Table>
<Caption>
                                                         1996       1997
1998
                                                        -------    -------
- -------
                                                             

CURRENT:
Federal...............................................  $(6,700)   $   245    $
 320
State.................................................       --         --
  28
                                                        -------    -------
- -------
Total Current.........................................   (6,700)       245
 348
                                                        -------    -------
- -------
DEFERRED:
Federal...............................................      988     (4,359)
(2,074)
State.................................................       --         --
(183)
                                                        -------    -------
- -------
Total Deferred........................................      988     (4,359)
(2,257)
                                                        -------    -------
- -------
Total (benefit) for income taxes......................  $(5,712)   $(4,114)
$(1,909)
                                                        =======    =======
=======
</Table>

                                      F-421
   616
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The benefit for income taxes is different from the amounts computed by
applying the U.S. statutory federal tax rate of 35% for 1996, 34% for 1997 and
35% for the period from January 1, 1998 to November 5, 1998. The differences are
as follows:

<Table>
<Caption>
                                                YEAR ENDED DECEMBER 31,
PERIOD FROM
                                                -----------------------
JANUARY 1, 1998 TO
                                                   1996         1997
NOVEMBER 11, 1998
                                                ----------    ---------
- ------------------
                                                                  
(Loss) before (benefit) for income taxes....     $(15,119)     $(8,525)
$(12,368)
                                                 ========      =======
========
Federal tax (benefit) at statutory rates....     $ (5,307)     $(2,899)
$ (4,329)
State income taxes..........................           --           --
   (101)
Goodwill....................................          175          171
    492
Increase (decrease) in valuation
  allowance.................................         (518)      (1,190)
     --
Nondeductible expenses......................           --          147
  2,029
Benefit of rate differential applied to
  reversing timing differences..............           --         (424)
     --
Other, net..................................          (62)          81
     --
                                                 --------      -------
- --------
(Benefit) for income taxes..................     $ (5,712)     $(4,114)
$ (1,909)
                                                 ========      =======
========
</Table>

     Mercom, which files a separate consolidated income tax return, has the
following net operating losses available:

<Table>
<Caption>
                                                             TAX NET
                                                            OPERATING
EXPIRATION
YEAR                                                         LOSSES        DATE
- ----                                                        ---------
- ----------
                                                                  
1992......................................................   $  435        2007
1995......................................................   $2,713        2010
</Table>

     In 1997, Mercom was liable for Federal Alternative Minimum Tax (AMT). At
December 31, 1997 and at November 5, 1998, the cumulative minimum tax credits
are $141 and $141, respectively. This amount can be carried forward indefinitely
to reduce regular tax liabilities that exceed AMT in future years.

     Temporary differences that give rise to a significant portion of deferred
tax assets and liabilities are as follows:

<Table>
<Caption>
                                                        DECEMBER 31,   NOVEMBER
5,
                                                            1997          1998
                                                        ------------
- -----------
                                                                 
NOL carryforwards.....................................    $  1,588      $  1,132
Alternative minimum tax credits.......................         141           141
Reserves..............................................         753           210
Other, net............................................         230           309
                                                          --------      --------
Total deferred assets.................................       2,712         1,792
                                                          --------      --------
Property, plant and equipment.........................     (11,940)
(10,515)
Intangible assets.....................................     (11,963)
(10,042)
                                                          --------      --------
Total deferred liabilities............................     (23,903)
(20,557)
                                                          --------      --------
Subtotal..............................................     (21,191)
(18,765)
Valuation allowance...................................          --            --
                                                          --------      --------
Total deferred taxes..................................    $(21,191)
$(18,765)
                                                          ========      ========
</Table>

                                      F-422
   617
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In the opinion of management, based on the future reversal of taxable
temporary differences, primarily depreciation and amortization, the Company will
more likely than not be able to realize all of its deferred tax assets. As a
result, the net change in the valuation allowance for deferred tax assets during
1997 was a decrease of $1,262, which $72 related to Mercom of Florida.

     Due to the sale of Mercom of Florida, the Company's deferred tax
liabilities decreased by $132.

7. DEBT

     Long-term debt outstanding at November 5, 1998 is as follows:

<Table>
<Caption>
                                                        DECEMBER 31,   NOVEMBER
5,
                                                            1997          1998
                                                        ------------
- -----------
                                                                 
Term Credit Facility..................................    $100,000      $100,000
Revolving Credit Facility.............................      28,000        20,000
Term Loan.............................................      15,000        15,000
                                                          --------      --------
Total.................................................     143,000       135,000
Current portion of long-term debt.....................          --        15,000
                                                          --------      --------
Total Long-Term Debt..................................    $143,000      $120,000
                                                          ========      ========
</Table>

  Credit Facility

     The Company had an outstanding line of credit with a banking institution
for $3 million. No amounts were outstanding under this facility.

     The Company has in place two secured credit facilities (the "Credit
Facilities") pursuant to a single credit agreement with a group of lenders for
which First Union National Bank acts as agent (the "Credit Agreement"), which
was effective as of July 1, 1997. The first is a five-year revolving credit
facility in the amount of $65,000 (the "Revolving Credit Facility"). The second
is an eight-year term credit facility in the amount of $100,000 (the "Term
Credit Facility").

     The interest rate on the Credit Facilities will be, at the election of the
Company, based on either a LIBOR or a Base Rate option (6.25% at November 5,
1998) (each as defined in the Credit Agreement).

     The entire amount of the Term Credit Facility has been drawn and as of
November 5, 1998, $100,000 of the principal was outstanding thereunder. The
entire amount of the Revolving Credit Facility is available to the Company until
June 30, 2002. As of November 5, 1998, $20,000 of principal was outstanding
thereunder. Revolving loans may be repaid and reborrowed from time to time.

     The Term Credit Facility is payable over six years in quarterly
installments, from September 30, 1999 through June 30, 2005. Interest only is
due through June 1999. The Credit Agreement is currently unsecured.

     The Credit Agreement contains restrictive covenants which, among other
things, require the Company to maintain certain debt to cash flow, interest
coverage and fixed charge coverage ratios and place certain limitations on
additional debt and investments. The Company does not believe that these
covenants will materially restrict its activities.

  Term Loan

     On September 30, 1997, the Company assumed all obligations of CTE under a
$15 million credit facility extended by a separate group of lenders for which
First Union National Bank also acts as agent (the "$15 Million Facility"). The
$15 Million Facility matures in a single installment on June 30, 1999 and is
collateralized by a first priority pledge of all shares of Mercom owned by the
Company. The $15 Million

                                      F-423
   618
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Facility has interest rate provisions (6.25% at November 5, 1998), covenants and
events of default substantially the same as the Credit Facilities.

     On November 6, 1998, the long-term debt of the Company was paid off in
conjunction with the closing of the merger.

  Mercom debt

     In August 1997, the Mercom revolving credit agreement for $2,000 expired.
Mercom had no borrowings under the revolving credit agreement in 1996 or 1997.

     On September 29, 1997, the Company purchased and assumed all of the bank's
interest in the term credit agreement and the note issued thereunder.
Immediately after the purchase, the term credit agreement was amended in order
to, among other things, provide for less restrictive financial covenants,
eliminate mandatory amortization of principal and provide for a bullet maturity
of principal on December 31, 2002, and remove the change of control event of
default. Mercom's borrowings under the term credit agreement contain pricing and
security provisions substantially the same as those in place prior to the
purchase of the loan. The borrowings are secured by a pledge of the stock of
Mercom's subsidiaries and a first lien on certain of the assets of Mercom and
its subsidiaries, including inventory, equipment and receivables. At November 5,
1998, $14,151 of principal was outstanding. The borrowings under the term credit
agreement are eliminated in the Company's consolidated balance sheet.

8. COMMON STOCK AND STOCK PLANS

     The Company has authorized 25,000,000 shares of $1 par value common stock,
and 50,000,000 shares of $1 par value Class B common stock. The Company also has
authorized 10,000,000 shares of $1 par value preferred stock. At November 5,
1998, 6,901,432 common shares are issued and outstanding.

     In connection with the Distribution, the Company Board of Directors (the
"Board") adopted the Cable Michigan, Inc. 1997 Equity Incentive Plan (the "1997
Plan"), designed to provide equity-based compensation opportunities to key
employees when shareholders of the Company have received a corresponding benefit
through appreciation in the value of Cable Michigan Common Stock.

     The 1997 Plan contemplates the issuance of incentive stock options, as well
as stock options that are not designated as incentive stock options,
performance-based stock options, stock appreciation rights, performance share
units, restricted stock, phantom stock units and other stock-based awards
(collectively, "Awards"). Up to 300,000 shares of Common Stock, plus shares of
Common Stock issuable in connection with the Distribution related option
adjustments, may be issued pursuant to Awards granted under the 1997 Plan.

     All employees and outside consultants to the Company and any of its
subsidiaries and all Directors of the Company who are not also employees of the
Company are eligible to receive discretionary Awards under the 1997 Plan.

     Unless earlier terminated by the Board, the 1997 Plan will expire on the
10th anniversary of the Distribution. The Board or the Compensation Committee
may, at any time, or from time to time, amend or suspend and, if suspended,
reinstate, the 1997 Plan in whole or in part.

     Prior to the Distribution, certain employees of the Company were granted
stock option awards under C-TEC's stock option plans. In connection with the
Distribution, 380,013 options covering Common Stock were issued. Each C-Tec
option was adjusted so that each holder would hold options to purchase shares of
Commonwealth Telephone Enterprise Common Stock, RCN Common Stock and Cable
Michigan Common Stock. The number of shares subject to, and the exercise price
of, such options were adjusted to take into account the Distribution and to
ensure that the aggregate intrinsic value of the resulting RCN, the Company and
Commonwealth Telephone Enterprises options immediately after the Distribution
was equal to the aggregate intrinsic value of the C-TEC options immediately
prior to the Distribution.

                                      F-424
   619
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Information relating to the Company stock options is as follows:

<Table>
<Caption>

WEIGHTED

AVERAGE
                                                              NUMBER OF
EXERCISE
                                                               SHARES      PRICE
                                                              ---------
- --------
                                                                    
Outstanding December 31, 1995...............................   301,000
Granted.....................................................    33,750     $
8.82
Exercised...................................................    (7,250)
- --
Canceled....................................................   (35,500)
10.01
                                                               -------
- ------
Outstanding December 31, 1996...............................   292,000
8.46
Granted.....................................................    88,013
8.82
Exercised...................................................        --
- --
Canceled....................................................      (375)
10.01
                                                               -------
- ------
Outstanding December 31, 1997...............................   379,638
8.82
Granted.....................................................    47,500
31.25
Exercised...................................................   (26,075)
26.21
Canceled....................................................   (10,250)
- --
                                                               -------
- ------
Outstanding November 5, 1998................................   390,813
$11.52
                                                               =======
======
Shares exercisable November 5, 1998.........................   155,125     $
8.45
</Table>

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

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

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

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

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

                                      F-425
   620
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma net earnings and earnings per share were as follows:

<Table>
<Caption>
                                                        FOR THE YEARS      FOR
THE PERIOD
                                                      ENDED DECEMBER 31,   FROM
JANUARY 1,
                                                      ------------------   TO
NOVEMBER 5,
                                                       1996       1997
1998
                                                      -------    -------
- ---------------
                                                                  
Net (Loss) as reported..............................  $(8,256)   $(4,358)
$(10,534)
Net (Loss) pro forma................................   (8,256)    (4,373)
(10,174)
Basic (Loss) per share-as reported..................    (1.20)     (0.63)
(1.45)
Basic (Loss) per share-pro forma....................    (1.20)     (0.64)
(1.48)
Diluted (Loss) per share-as reported................    (1.20)     (0.63)
(1.45)
Diluted (Loss) per share-pro forma..................    (1.20)     (0.64)
(1.48)
</Table>

     In November 1996, the C-TEC shareholders approved a stock purchase plan for
certain key executives (the "Executive Stock Purchase Plan" or "C-TEC ESPP").
Under the C-TEC ESPP, participants may purchase shares of C-TEC Common Stock in
an amount of between 1% and 20% of their annual base compensation and between 1%
and 100% of their annual bonus compensation and provided, however, that in no
event shall the participant's total contribution exceed 20% of the sum of their
annual compensation, as defined by the C-TEC ESPP. Participant's accounts are
credited with the number of share units derived by dividing the amount of the
participant's contribution by the average price of a share of C-TEC Common Stock
at approximately the time such contribution is made. The share units credited to
participant's account do not give such participant any rights as a shareholder
with respect to, or any rights as a holder or record owner of, any shares of
C-TEC Common Stock. Amounts representing share units that have been credited to
a participant's account will be distributed, either in a lump sum or in
installments, as elected by the participant, following the earlier of the
participant's termination of employment with the Company or three calendar years
following the date on which the share units were initially credited to the
participant's account. It is anticipated that, at the time of distribution, a
participant will receive one share of C-TEC Common Stock for each share unit
being distributed.

     Following the crediting of each share unit to a participant's account, a
matching share of Common Stock is issued in the participant's name. Each
matching share is subject to forfeiture as provided in the C-TEC ESPP. The
issuance of matching shares will be subject to the participant's execution of an
escrow agreement. A participant will be deemed to be the holder of, and may
exercise all the rights of a record owner of, the matching shares issued to such
participant while such matching shares are held in escrow. Shares of restricted
C-TEC Common Stock awarded under the C-TEC ESPP and share units awarded under
the C-TEC ESPP that relate to C-TEC Common Stock were adjusted so that following
the Distribution, each such participant was credited with an aggregate
equivalent value of restricted shares of common stock of CTE, the Company and
RCN. In September 1997, the Board approved the Cable Michigan, Inc. Executive
Stock Purchase Plan, ("the "Cable Michigan ESPP"), with terms substantially the
same as the C-TEC ESPP. The number of shares which may be distributed under the
Cable Michigan ESPP as matching shares or in payment of share units is 30,000.

9. PENSIONS AND EMPLOYEE BENEFITS

     Prior to the Distribution, the Company's financial statements reflect the
costs experienced for its employees and retirees while included in the C-TEC
plans.

     Through December 31, 1996, substantially all employees of the Company were
included in a trusteed noncontributory defined benefit pension plan, maintained
by C-TEC. Upon retirement, employees are provided a monthly pension based on
length of service and compensation. C-TEC funds pension costs to the extent
necessary to meet the minimum funding requirements of ERISA. Substantially, all
employees of

                                      F-426
   621
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

C-TEC's Pennsylvania cable television operations (formerly Twin Country Trans
Video, Inc.) were covered by an underfunded plan which was merged into C-TEC's
overfunded plan on February 28, 1996.

     The information that follows relates to the entire C-TEC noncontributory
defined benefit plan. The components of C-TEC's pension cost are as follows for
1996:

<Table>
                                                           
Benefits earned during the year (service costs).............  $ 2,365
Interest cost on projected benefit obligation...............    3,412
Actual return on plan assets................................   (3,880)
Other components -- net.....................................   (1,456)
                                                              -------
Net periodic pension cost...................................  $   441
                                                              =======
</Table>

     The following assumptions were used in the determination of the
consolidated projected benefit obligation and net periodic pension cost (credit)
for December 31, 1996:

<Table>
                                                           
Discount Rate...............................................  7.5%
Expected long-term rate of return on plan assets............  8.0%
Weighted average long-term rate of compensation increases...  6.0%
</Table>

     The Company's allocable share of the consolidated net periodic pension
costs (credit), based on the Company's proportionate share of consolidated
annualized salaries as of the valuation date, was approximately $10 for 1996.
These amounts are reflected in operating expenses. As discussed below, no
pension cost (credit) was recognized in 1997.

     In connection with the restructuring, C-TEC completed a comprehensive study
of its employee benefit plans in 1996. As a result of this study, effective
December 31, 1996, in general, employees of the Company no longer accrue
benefits under the defined benefit pension plans and became fully vested in
their benefit accrued through that date. C-TEC notified affected participants in
December 1996. In December 1996, C-TEC allocated pension plan assets of $6,984
and the related liabilities to a separate plan for employees who no longer
accrue benefits after sum distributions. The allocation of assets and
liabilities resulted in a curtailment/settlement gain of $4,292. The Company's
allocable share of this gain was $855. This gain results primarily from the
reduction of the related projected benefit obligation. The curtailed plan has
assets in excess of the projected benefit obligation.

     C-TEC sponsors a 401(k) savings plan covering substantially all employees
of the Company who are not covered by collective bargaining agreements.
Contributions made by the Company to the 401(k) plan are based on a specific
percentage of employee contributions. Contributions charged to expense were $128
in 1996. Contributions charged to expense in 1997 prior to the Distribution were
$107.

     In connection with the Distribution, the Company established a qualified
saving plan under Section 401(k) of the Code. Contributions charged to expense
in 1997 were $53. Contributions charged to expense for the period from January
1, 1998 to November 5, 1998 were $164.

10. COMMITMENTS AND CONTINGENCIES

     Total rental expense, primarily for office space and pole rental, was $984,
$908 and $1,077 for the year ended December 31, 1996, 1997 and for the period
from January 1, 1998 to November 5, 1998, respectively. Rental commitments are
expected to continue to approximate $1 million a year for the foreseeable
future, including pole rental commitments which are cancelable.

     The Company is subject to the provisions of the Cable Television Consumer
Protection and Competition Act of 1992, as amended, and the Telecommunications
Act of 1996. The Company has either settled challenges or accrued for
anticipated exposures related to rate regulation; however, there is no assurance
that

                                      F-427
   622
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

there will not be further additional challenges to its rates. The 1996
statements of operations include charges aggregating approximately $833 relating
to cable rate regulation liabilities. No additional charges were incurred in the
year ended December 31, 1997 and for the period from January 1, 1998 to November
5, 1998.

     In the normal course of business, there are various legal proceedings
outstanding. In the opinion of management, these proceedings will not have a
material adverse effect on the financial condition or results of operations of
the Company.

     The Company has agreed to indemnify RCN and C-TEC and their respective
subsidiaries against any and all liabilities which arise primarily from or
relate primarily to the management or conduct of the business of the Company
prior to the effective time of the Distribution. The Company has also agreed to
indemnify RCN and C-TEC and their respective subsidiaries against 20% of any
liability which arises from or relates to the management or conduct prior to the
effective time of the Distribution of the businesses of C-TEC and its
subsidiaries and which is not a true C-TEC liability, a true RCN liability or a
true Company liability.

     The Tax Sharing Agreement, by and among the Company, RCN and C-TEC (the
"Tax Sharing Agreement"), governs contingent tax liabilities and benefits, tax
contests and other tax matters with respect to tax returns filed with respect to
tax periods, in the case of the Company, ending or deemed to end on or before
the Distribution date. Under the Tax Sharing Agreement, adjustments to taxes
that are clearly attributable to the Company group, the RCN group, or the C-TEC
group will be borne solely by such group. Adjustments to all other tax
liabilities will be borne 50% by C-TEC, 20% by the Company and 30% by RCN.

     Notwithstanding the above, if as a result of the acquisition of all or a
portion of the capital stock or assets of the Company, the Distribution fails to
qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code, then the Company will be liable for any and all increases in tax
attributable thereto.

11. AFFILIATE AND RELATED PARTY TRANSACTIONS

     The Company has the following transactions with affiliates:

<Table>
<Caption>
                                                         FOR THE YEAR
FOR THE
                                                             ENDED
PERIOD ENDED
                                                       -----------------
NOVEMBER 5,
                                                        1996       1997
1998
                                                       -------    ------
- ------------
                                                                   
Corporate office costs allocated to the Company......  $ 3,498    $3,715
$1,866
Cable staff and customer service costs allocated from
  RCN Cable..........................................    3,577     3,489
3,640
Interest expense on affiliate notes..................   13,952     8,447
 795
Royalty fees charged by CTE..........................      585       465
  --
Charges for engineering services.....................      296        --
  --
Other affiliate expenses.............................      189       171
 157
</Table>

     In addition, RCN has agreed to obtain programming from third party
suppliers for Cable Michigan, the costs of which will be reimbursed to RCN by
Cable Michigan. In those circumstances where RCN purchases third party
programming on behalf of both RCN and the Company, such costs will be shared by
each company, on a pro rata basis, based on each company's number of
subscribers.

     At December 31, 1997 and November 5, 1998, the Company has accounts
receivable from related parties of $166 and $396 respectively, for these
transactions. At December 31, 1997 and November 5, 1998, the Company has
accounts payable to related parties of $1,560 and $343 respectively, for these
transactions.

     The Company had a note payable to RCN Corporation of $147,567 at December
31, 1996 primarily related to the acquisition of the Michigan cable operations
and its subsequent operations. The Company repaid approximately $110,000 of this
note payable in 1997. The remaining balance was transferred to shareholder's net
investment in connection with the Distribution.

                                      F-428
   623
                     CABLE MICHIGAN, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. OFF BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK

     The Company places its cash and temporary investments with high credit
quality financial institutions. The Company also periodically evaluates the
creditworthiness of the institutions with which it invests. The Company does,
however, maintain unsecured cash and temporary cash investment balances in
excess of federally insured limits.

     The Company's trade receivables reflect a customer base centered in the
state of Michigan. The Company routinely assesses the financial strength of its
customers; as a result, concentrations of credit risk are limited.

13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

          a. The fair value of the revolving credit agreement is considered to
     be equal to carrying value since the debt re-prices at least every six
     months and the Company believes that its credit risk has not changed from
     the time the floating rate debt was borrowed and therefore, would obtain
     similar rates in the current market.

          b. The fair value of the cash and temporary cash investments
     approximates fair value because of the short maturity of these instruments.

14. QUARTERLY INFORMATION (UNAUDITED)

     The Company estimated the following quarterly data based on assumptions
which it believes are reasonable. The quarterly data may differ from quarterly
data subsequently presented in interim financial statements.

<Table>
<Caption>
                                               FIRST     SECOND      THIRD
FOURTH
                                              QUARTER    QUARTER    QUARTER
QUARTER
                                              -------    -------    -------
- -------
                                                           

1998
Revenue.....................................  $20,734    $22,311    $22,735    $
8,741
Operating income before depreciation,
  amortization, and management fees.........    9,043     10,047     10,185
12,277
Operating income (loss).....................    7,000     (3,324)      (674)
(7,051)
Net (loss)..................................   (1,401)    (5,143)    (2,375)
(1,615)
Net (loss) per average Common Share.........    (0.20)     (0.75)     (0.34)
(0.23)
1997
Revenue.....................................  $19,557    $20,673    $20,682
$20,387
Operating income before depreciation,
  amortization, and management fees.........    8,940      9,592      9,287
9,013
Operating income (loss).....................      275        809       (118)
   69
Net (loss)..................................      N/A        N/A        N/A
(1,107)
Net (loss) per average Common Share.........      N/A        N/A        N/A
(0.16)
</Table>

     The fourth quarter information for the quarter ended December 31, 1998
includes the results of operations of the Company for the period from October 1,
1998 through November 5, 1998.

                                      F-429
   624

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers
of Avalon Cable of New England LLC

     In our opinion, the accompanying balance sheet and the related statements
of operations, partners' equity (deficit) and of cash flows present fairly, in
all material respects, the financial position of Amrac Clear View, a Limited
Partnership, (the "Partnership"), as of May 28, 1998 and the results of its
operations and its cash flows for the period ended May 28, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

                                            /s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
September 11, 1998

                                      F-430
   625

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                                 BALANCE SHEET
                                  MAY 28, 1998

<Table>
                                                           
                           ASSETS
Current Assets
Cash and cash equivalents...................................  $  415,844
Subscribers and other receivables, net of allowance for
  doubtful accounts of $16,445..............................      45,359
Prepaid expenses and other current assets...................     129,004
                                                              ----------
Total current assets........................................     590,207
Property, plant and equipment, net..........................     483,134
                                                              ----------
                                                              $1,073,341
                                                              ==========
</Table>

<Table>
                                                           
              LIABILITIES AND PARTNERS' EQUITY
Accounts payable............................................  $   57,815
Accrued expenses............................................      84,395
                                                              ----------
Total current liabilities...................................     142,210
                                                              ----------
Commitments and contingencies (Note 7)
Partners' equity............................................     931,131
                                                              ----------
                                                              $1,073,341
                                                              ==========
</Table>

   The accompanying notes are an integral part of these financial statements.
                                      F-431
   626

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                            STATEMENT OF OPERATIONS
            FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 28, 1998

<Table>
                                                           
REVENUE:
Basic services..............................................  $651,878
Premium services............................................    78,365
Other.......................................................    49,067
                                                              --------
                                                               779,310
                                                              --------
OPERATING EXPENSES:
Programming.................................................   193,093
Selling, general and administrative.........................   151,914
Technical and operations....................................    98,628
Depreciation and amortization...............................    47,268
Management fees.............................................    41,674
                                                              --------
Income from operations......................................   246,733
Interest income.............................................     2,319
Interest (expense)..........................................    (1,871)
                                                              --------
Net income..................................................  $247,181
                                                              ========
</Table>

   The accompanying notes are an integral part of these financial statements.
                                      F-432
   627

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

               STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
            FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 28, 1998

<Table>
<Caption>
                                                    CLASS A    CLASS B
INVESTOR
                                         GENERAL    LIMITED    LIMITED
LIMITED
                                         PARTNER    PARTNER    PARTNER
PARTNERS     TOTAL
                                         -------    -------    -------
- --------    --------
                                                              
     
Partners' (deficit) equity at December
  31, 1997.............................  $(6,756)   $(6,756)   $(2,703)
$700,165    $683,950
Net income.............................    6,180      6,180      2,472
232,349     247,181
                                         -------    -------    -------
- --------    --------
Partners' equity at May 28, 1998.......  $  (576)   $  (576)   $  (231)
$932,514    $931,131
                                         =======    =======    =======
========    ========
</Table>

   The accompanying notes are an integral part of these financial statements.
                                      F-433
   628

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                            STATEMENT OF CASH FLOWS
            FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 28, 1998

<Table>
                                                           
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................  $247,181
Adjustments to reconcile net earnings to net cash provided
  by operating activities:
Depreciation and amortization...............................    47,268
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Decrease in subscribers and other receivables...............    21,038
Increase in prepaid expenses and other current assets.......   (52,746)
Increase in accounts payable................................     9,866
Increase in accrued expenses................................     3,127
                                                              --------
Net cash provided by operating activities...................   275,734
                                                              --------
CASH FLOWS FOR INVESTING ACTIVITIES
Capital expenditures........................................   (61,308)
                                                              --------
Cash flows for financing activities Repayment of long-term
  debt......................................................  (560,500)
                                                              --------
Net increase in cash and cash equivalents...................  (346,074)
                                                              --------
Cash and cash equivalents, beginning of the period..........   761,918
                                                              --------
Cash and cash equivalents, end of the period................  $415,844
                                                              ========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest....................................................  $  6,939
                                                              ========
</Table>

   The accompanying notes are an integral part of these financial statements.
                                      F-434
   629

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF BUSINESS

     The Partnership is a Massachusetts limited partnership created pursuant to
a Limited Partnership Agreement, dated as of October 1, 1986, as amended (the
"Partnership Agreement"), by and among (1) Amrac Telecommunications as the
general partner (the "General Partner"), (2) Clear View Cablevision, Inc. as the
class A limited partner (the "Class A Limited Partner"), (3) Schuparra
Properties, Inc., as the class B limited partner (the "Class B Limited
Partner"), and (4) those persons admitted to the Partnership from time to time
as investor limited partners (the "Investor Limited Partner").

     The Partnership provides cable television service to the towns of Hadley
and Belchertown located in western Massachusetts. At May 28, 1998, the
Partnership provided services to approximately 5,100 customers residing in those
towns.

     The Partnership's cable television systems offer customer packages of basic
and cable programming services which are offered at a per channel charge or are
packaged together to form a tier of services offered at a discount from the
combined channel rate. The Partnership's cable television systems also provide
premium television services to their customers for an extra monthly charge.
Customers generally pay initial connection charges and fixed monthly fees for
cable programming and premium television services, which constitute the
principal sources of revenue for the Partnership.

     On October 7, 1997, the Partnership entered into a definitive agreement
with Avalon Cable of New England LLC ("Avalon New England") whereby Avalon New
England would purchase the assets and operations of the Partnership for
$7,500,000. This transaction was consummated and became effective on May 29,
1998. The assets and liabilities at May 28, 1998, have not been adjusted or
reclassified to reflect this transaction.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reported period. Actual results may vary from estimates used.

  Cash and Cash Equivalents

     Cash and cash equivalents include highly liquid investments purchased with
an initial maturity of three months or less.

  Revenue Recognition

     Revenue is recognized as cable television services are provided.

  Concentration of Credit Risk

     Financial instruments which potentially expose the Partnership to a
concentration of credit risk include cash, cash equivalents and subscriber and
other receivables. The Partnership does not believe that such deposits are
subject to any unusual credit risk beyond the normal credit risk associated with
operating its business. The Partnership extends credit to customers on an
unsecured basis in the normal course of business. The Partnership maintains
reserves for potential credit losses and such losses, in the aggregate, have not
historically exceeded management's expectations.

                                      F-435
   630
                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  Property and Equipment

     Property and equipment is stated at cost. Initial subscriber installation
costs, including material, labor and overhead costs, are capitalized as a
component of cable plant and equipment. Depreciation is computed for financial
statement purposes using the straight-line method based upon the following
lives:

<Table>
                                                           
Cable plant and equipment...................................       10 years
Office furniture and equipment..............................  5 to 10 years
Vehicles....................................................        6 years
</Table>

  Financial Instruments

     The Partnership estimates that the fair value of all financial instruments
at May 28, 1998 does not differ materially from the aggregate carrying values of
its financial instruments recorded in the accompanying balance sheet.

  Income Taxes

     The Partnership is not subject to federal and state income taxes.
Accordingly, no recognition has been given to income taxes in the accompanying
financial statements of the Partnership since the income or loss of the
Partnership is to be included in the tax returns of the individual partners.

  Allocation of Profits and Losses and Distributions of Cash Flow

     Partnership profits and losses (other than those arising from capital
transactions, described below) and distributions of cash flow are allocated 94%
to the Investor Limited Partners, 2.5% to the Class A Limited Partner, 1% to the
Class B Limited Partner and 2.5% to the General Partner until Payout (as defined
in the Partnership Agreement) and after Payout, 65% to the Investor Limited
Partners, 15% to the Class A Limited Partner, 5% to the Class B Limited Partner
and 15% to the General Partner.

     Partnership profits and capital transactions are allocated first, in
proportion to the partners' respective capital accounts until their respective
account balances are zero and second, in proportion to any distributed cash
proceeds resulting from the capital transaction and third, any remaining profit,
if any, is allocated 65% to the Investor Limited Partners, 15% to the Class A
Limited Partner, 5% to the Class B Limited Partner, and 15% to the General
Partner.

     Partnership losses from capital transactions are allocated first, in
proportion to the partners' respective capital accounts until their respective
account balances are zero and, second, any remaining loss, if any, is allocated
65% to the Investor Limited Partners, 15% to the Class A Limited Partner, 5% to
the Class B Limited Partner, and 15% to the General Partner.

  New Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income," which establishes standards for
reporting and display of comprehensive income and its components in financial
statements. SFAS No. 130 states that comprehensive income includes reported net
income of a company, adjusted for items that are currently accounted for as
direct entries to equity, such as the net unrealized gain or loss on securities
available for sale. SFAS No. 130 is effective for both interim and annual
periods beginning after December 15, 1997. Management does not anticipate that
adoption of SFAS No. 130 will have a material effect on the financial
statements.

     In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," which establishes standards for
reporting by public companies about operating segments of their business. SFAS
No. 131 also establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 is effective for
periods beginning after

                                      F-436
   631
                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

December 15, 1997. Management does not anticipate that the adoption of SFAS No.
131 will have a material effect on the financial statements.

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

     At May 28, 1998, prepaid expenses and other current assets consist of the
following:

<Table>
                                                           
Deferred transaction costs..................................  $ 91,024
Other.......................................................    37,980
                                                              --------
                                                              $129,004
                                                              ========
</Table>

     Deferred transaction costs consist primarily of attorney fees related to
the sale of assets of the Partnership (Note 1).

4. PROPERTY, PLANT AND EQUIPMENT

     At May 28, 1998, property, plant and equipment consists of the following:

<Table>
                                                           
Cable plant and equipment...................................  $ 3,460,234
Office furniture and equipment..............................       52,531
Vehicles....................................................       32,468
                                                              -----------
                                                                3,545,233
Accumulated depreciation....................................   (3,062,099)
                                                              -----------
                                                              $   483,134
                                                              ===========
</Table>

     Depreciation expense was $47,018 for the period from January 1, 1998
through May 28, 1998.

5. ACCRUED EXPENSES

     At May 28, 1998, accrued expenses consist of the following:

<Table>
                                                           
Accrued compensation and benefits...........................  $17,004
Accrued programming costs...................................   24,883
Accrued legal costs.........................................   25,372
Other.......................................................   17,136
                                                              -------
                                                              $84,395
                                                              =======
</Table>

6. LONG-TERM DEBT

     The Partnership repaid its term loan, due to a bank, on January 15, 1998.
Interest on the loan was paid monthly and accrued at the bank's prime rate plus
2% (10.5% at December 31, 1997). The loan was collateralized by substantially
all of the assets of the Partnership and a pledge of all partnership interests.
The total principal outstanding at December 31, 1997 was $560,500.

7. COMMITMENTS AND CONTINGENCIES

     The Partnership rents poles from utility companies for use in its
operations. These rentals amounted to approximately $15,918 of rent expense
during the period. While rental agreements are generally short-term, the
Partnership anticipates such rentals will continue in the future. The
Partnership leases office facilities and various items of equipment under
month-to-month operating leases. Rental expense under operating leases amounted
to $8,171 during the period.

     The operations of the Partnership are subject to regulation by the Federal
Communications Commission and various franchising authorities.

                                      F-437
   632
                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     From time to time the Partnership is also involved with claims that arise
in the normal course of business. In the opinion of management, the ultimate
liability with respect to these claims will not have a material adverse effect
on the operations, cash flows or financial position of the Partnership.

8. RELATED PARTY TRANSACTIONS

     The General Partner provides management services to the Partnership for
which it receives a management fee of 5% of revenue. The General Partner also
allocates, in accordance with a management agreement, certain general,
administrative and payroll costs to the Partnership. For the period from January
1, 1998 through May 28, 1998, management fees totaled $41,674 and allocated
general, administrative and payroll costs totaled $3,625, which are included in
selling general and administrative expenses.

     The Partnership believes that these fees and allocations were made on a
reasonable basis. However, the amounts paid are not necessarily indicative of
the level of expenses that might have been incurred had the Partnership
contracted directly with third parties. The Partnership has not attempted to
obtain quotes from third parties to determine what the cost of obtaining such
services from third parties would have been.

                                      F-438
   633

                          INDEPENDENT AUDITORS' REPORT

To the Partners of
AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

     We have audited the accompanying balance sheets of Amrac Clear View, a
Limited Partnership as of December 31, 1996 and 1997, and the related statements
of net earnings, changes in partners' equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements based on our
audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Amrac Clear View, a Limited
Partnership as of December 31, 1996 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.

                                      /s/ GREENFIELD, ALTMAN, BROWN, BERGER &
                                                   KATZ, P.C.

Canton, Massachusetts
February 13, 1998

                                      F-439
   634

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                                 BALANCE SHEETS
                         AT DECEMBER 31, 1996 AND 1997

<Table>
<Caption>
                                                                 1996
1997
                                                              ----------
- ----------
                                                                      
                           ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................  $  475,297    $
761,918
Subscribers and other receivables, net of allowance for
  doubtful accounts of $2,500 in 1996 and $3,000 in 1997....      49,868
66,397
Prepaid expenses:
Legal.......................................................          --
53,402
Miscellaneous...............................................      28,016
20,633
                                                              ----------
- ----------
Total current assets........................................     553,181
902,350
                                                              ----------
- ----------
Property and equipment, net of accumulated depreciation
  $2,892,444 in 1996 and $3,015,081 in 1997.................     473,438
468,844
                                                              ----------
- ----------
OTHER ASSETS:
Franchise cost, net of accumulated amortization of $6,757 in
  1996 and $7,417 in 1997...................................       3,133
2,473
Deferred financing costs, net of accumulated amortization of
  $60,247 in 1996 and $73,447 in 1997.......................      13,200
   --
                                                              ----------
- ----------
                                                                  16,333
2,473
                                                              ----------
- ----------
                                                              $1,042,952
$1,373,667
                                                              ==========
==========
              LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt........................  $  356,500    $
397,500
Accounts payable-trade......................................      34,592
47,949
Accrued expenses:
Utilities...................................................      59,668
   --
Miscellaneous...............................................      50,074
81,268
                                                              ----------
- ----------
Total current liabilities...................................     500,834
526,717
                                                              ----------
- ----------
Long-term debt, net of current maturities...................     488,000
163,000
                                                              ----------
- ----------
Commitments and contingencies (Note 4)
Partners' equity............................................      54,118
683,950
                                                              ----------
- ----------
                                                              $1,042,952
$1,373,667
                                                              ==========
==========
</Table>

                       See notes to financial statements
                                      F-440
   635

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                           STATEMENTS OF NET EARNINGS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

<Table>
<Caption>
                                                            1995          1996
       1997
                                                         ----------
- ----------    ----------
                                                                 
    
Revenues...............................................  $1,701,322
$1,807,181    $1,902,080
Less cost of service...................................     644,736
656,881       687,433
                                                         ----------
- ----------    ----------
Net revenues...........................................   1,056,586
1,150,300     1,214,647
                                                         ----------
- ----------    ----------
Operating expenses excluding management fees and
  depreciation and amortization........................     330,574
388,284       351,031
Management fees........................................      94,317
96,742       101,540
Depreciation and amortization..........................     330,913
340,166       136,497
                                                         ----------
- ----------    ----------
                                                            755,804
825,192       589,068
                                                         ----------
- ----------    ----------
Earnings from operations...............................     300,782
325,108       625,579
                                                         ----------
- ----------    ----------
OTHER EXPENSES (INCOME):
Interest income........................................          --
(7,250)      (23,996)
Interest expense.......................................     130,255
98,603        70,738
Utility refunds........................................          --
- --       (50,995)
                                                         ----------
- ----------    ----------
                                                            130,255
91,353        (4,253)
                                                         ----------
- ----------    ----------
Net earnings...........................................  $  170,527    $
233,755    $  629,832
                                                         ==========
==========    ==========
</Table>

                       See notes to financial statements
                                      F-441
   636

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

               STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

<Table>
<Caption>
                                                     CLASS A     CLASS B
INVESTOR
                                         GENERAL     LIMITED     LIMITED
LIMITED
                                         PARTNER     PARTNER     PARTNER
PARTNERS       TOTAL
                                         --------    --------    --------
- ---------    ---------
                                                                 
         
Partners' deficit at December 31,
  1994.................................  $(31,012)   $(31,012)   $(12,405)
$(211,905)   $(286,334)
Net earnings for the year..............     4,263       4,263       1,705
160,296      170,527
Partners' distributions during the
  year.................................    (1,596)     (1,596)       (638)
(60,000)     (63,830)
                                         --------    --------    --------
- ---------    ---------
Partners' deficit at December 31,
  1995.................................   (28,345)    (28,345)    (11,338)
(111,609)    (179,637)
Net earnings for the year..............     5,844       5,844       2,337
219,730      233,755
                                         --------    --------    --------
- ---------    ---------
Partners' equity (deficit) at December
  31, 1996.............................   (22,501)    (22,501)     (9,001)
108,121       54,118
Net earnings for the year..............    15,745      15,745       6,298
592,044      629,832
                                         --------    --------    --------
- ---------    ---------
Partners' equity (deficit) at December
  31, 1997.............................  $ (6,756)   $ (6,756)   $ (2,703)   $
700,165    $ 683,950
                                         ========    ========    ========
=========    =========
</Table>

                       See notes to financial statements
                                      F-442
   637

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

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

<Table>
<Caption>
                                                            1995         1996
     1997
                                                          ---------    ---------
   ---------
                                                                 
   
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings............................................  $ 170,527    $ 233,755
   $ 629,832
Adjustments to reconcile net earnings to net cash
  provided by operating activities:
Depreciation and amortization...........................    330,913      340,166
     136,497
Changes in assets and liabilities:
(Increase) decrease in:
Subscribers and other receivables.......................      4,573
(12,093)     (16,529)
Prepaid expenses........................................     (3,378)
(9,468)     (46,019)
Increase (decrease) in accounts payable and accrued
  expenses..............................................    (66,424)      69,262
     (15,117)
                                                          ---------    ---------
   ---------
Net cash provided by operating activities...............    436,211      621,622
     688,664
                                                          ---------    ---------
   ---------
CASH FLOWS FOR INVESTING ACTIVITIES
Purchases of equipment..................................   (116,794)
(74,879)    (118,043)
                                                          ---------    ---------
   ---------
CASH FLOWS FOR FINANCING ACTIVITIES
Repayment of long-term debt.............................   (239,250)
(260,750)    (284,000)
Distributions to partners...............................    (63,830)
                                                          ---------    ---------
   ---------
Net cash used by financing activities...................   (303,080)
(260,750)    (284,000)
                                                          ---------    ---------
   ---------
Net increase in cash and cash equivalents...............     16,337      285,993
     286,621
Cash and cash equivalents, beginning of year............    172,967      189,304
     475,297
                                                          ---------    ---------
   ---------
Cash and cash equivalents, end of year..................  $ 189,304    $ 475,297
   $ 761,918
                                                          =========    =========
   =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest................................................  $ 133,540    $  94,038
   $  73,124
                                                          =========    =========
   =========
</Table>

                       See notes to financial statements
                                      F-443
   638

                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                         NOTES TO FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

1. SUMMARY OF BUSINESS ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES:

     This summary of significant accounting policies of Amrac Clear View, a
Limited Partnership (the "Partnership"), is presented to assist in understanding
the Partnership's financial statements. The financial statements and notes are
representations of the Partnership's management, which is responsible for their
integrity and objectivity. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.

     Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Actual results could vary from the estimates that were used.

  Operations:

     The Partnership provides cable television service to the residents of the
towns of Hadley and Belchertown in western Massachusetts.

  Credit concentrations:

     The Partnership maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. At various times during the year the Partnership's
cash balances exceeded the federally insured limits.

     Concentration of credit risk with respect to subscriber receivables are
limited due to the large number of subscribers comprising the Partnership's
customer base.

  Property and equipment/depreciation:

     Property and equipment are carried at cost. Minor additions and renewals
are expensed in the year incurred. Major additions and renewals are capitalized.
Depreciation is computed using the straight-line method over the estimated
useful lives of the respective assets. Total depreciation for the years ended
December 31, 1995, 1996 and 1997 was $321,872, $331,707 and $122,637,
respectively.

  Other assets/amortization:

     Amortizable assets are recorded at cost. The Partnership amortizes
intangible assets using the straight-line method over the useful lives of the
various items. Total amortization for the years ended December 31, 1995, 1996
and 1997 was $9,041, $8,459 and $13,860, respectively.

  Cash equivalents:

     For purposes of the statements of cash flows, the Partnership considers all
short-term instruments purchased with a maturity of three months or less to be
cash equivalents. There were no cash equivalents at December 31, 1995 and 1997.
Cash equivalents at December 31, 1996, amounted to $300,000.

  Advertising:

     The Partnership follows the policy of charging the costs of advertising to
expense as incurred. Advertising expense was $1,681, $1,781 and $2,865 for the
years ended December 31, 1995, 1996 and 1997, respectively.

  Income taxes:

     The Partnership does not incur a liability for federal or state income
taxes. The current income or loss of the Partnership is included in the taxable
income of the partners, and therefore, no provision for income taxes is
reflected in the financial statements.

                                      F-444
   639
                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

  Revenues:

     The principal sources of revenues are the monthly charges for basic and
premium cable television services and installation charges in connection
therewith.

  Allocation of profits and losses and distributions of cash flow:

     Partnership profits and losses, (other than those arising from capital
transactions, described below), and distributions of cash flow are allocated 94%
to the Investor Limited Partners, 2.5% to the Class A Limited Partner, 1% to the
Class B Limited Partner and 2.5% to the General Partner until Payout (as defined
in the Partnership Agreement) and after Payout, 65% to the Investor Limited
Partners, 15% to the Class A Limited Partner, 5% to the Class B Limited Partner
and 15% to the General Partner.

     Partnership profits from capital transactions are allocated first, in
proportion to the partners' respective capital accounts until their respective
account balances are zero and second, in proportion to any distributed cash
proceeds resulting from the capital transaction and third, any remaining profit,
if any, is allocated 65% to the Investor Limited Partners, 15% to the Class A
Limited Partner, 5% to the Class B Limited Partner, and 15% to the General
Partner.

     Partnership losses from capital transactions are allocated first, in
proportion to the partners' respective capital accounts until their respective
account balances are zero and, second, any remaining loss, if any, is allocated
65% to the Investor Limited Partners, 15% to the Class A Limited Partner, 5% to
the Class B Limited Partner, and 15% to the General Partner.

2. PROPERTY AND EQUIPMENT:

     Property and equipment consists of the following at December 31:

<Table>
<Caption>
                                                         1996          1997
                                                      ----------    ----------
                                                              
Cable plant and equipment...........................  $3,274,684    $3,391,750
Office furniture and equipment......................      63,373        64,350
Vehicles............................................      27,825        27,825
                                                      ----------    ----------
                                                      $3,365,882    $3,483,925
                                                      ==========    ==========
</Table>

     Depreciation is provided over the estimated useful lives of the above items
as follows:

<Table>
                                                           
Cable plant and equipment...................................    10 years
Office furniture and equipment..............................  5-10 years
Vehicles....................................................     6 years
</Table>

3. LONG-TERM DEBT:

     The Partnership's term loan, due to a bank, is payable in increasing
quarterly installments through June 30, 1999. Interest on the loan is paid
monthly and accrues at the bank's prime rate plus 2% (10.5% at December 31,
1997). The loan is collateralized by substantially all of the assets of the
Partnership and a pledge of all partnership interests. The total principal
outstanding at December 31, 1997 was $560,500.

     Annual maturities are as follows:

<Table>
                                                           
1998........................................................  $397,500
1999........................................................   163,000
                                                              --------
                                                              $560,500
                                                              ========
</Table>

     The loan agreement contains covenants including, but not limited to,
maintenance of certain debt ratios as well as restrictions on capital
expenditures and investments, additional indebtedness, partner distributions and
payment of management fees. The Partnership was in compliance with all covenants
at December 31,

                                      F-445
   640
                    AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

1996 and 1997. In 1995, the Partnership obtained, from the bank, unconditional
waivers of the following covenant violations: (1) to make a one-time cash
distribution of $63,830, (2) to increase the capital expenditure limit to
$125,000, and (3) to waive certain other debt ratio and investment restrictions,
which were violated during the year.

4. COMMITMENTS AND CONTINGENCIES:

     The Partnership rents poles from utility companies in its operations. These
rentals amounted to approximately $31,000, $39,500 and $49,000 for the years
ended December 31, 1995, 1996 and 1997, respectively. While rental agreements
are generally short-term, the Partnership anticipates such rentals will continue
in the future.

     The Partnership leases a motor vehicle under an operating lease that
expires in December 1998. The minimum lease cost for 1998 is approximately
$6,000.

5. RELATED-PARTY TRANSACTIONS:

     The General Partner provides management services to the Partnership for
which it receives a management fee of 5% of revenue. The General Partner also
allocates, in accordance with a management agreement, certain general,
administrative and payroll costs to the Partnership. For the years ended
December 31, 1995, 1996 and 1997, management fees totaled $87,800, $90,242 and
$95,040, respectively and allocated general, administrative and payroll costs
totaled $7,200, $7,450 and $8,700, respectively. During each year the
Partnership also incurred tap audit fees payable to the General Partner totaling
$4,000. At December 31, 1996, the balance due from the General Partner was
$12,263. The balance due to Amrac Telecommunications at December 31, 1997 was
$4,795.

6. SUBSEQUENT EVENTS:

     On October 7, 1997, the Partnership entered into an agreement with another
cable television service provider to sell all of its assets for $7,500,000. The
Partnership received, in escrow, $250,000, which shall be released as
liquidating damages if the closing fails to occur solely as a result of a breach
of the agreement. As of December 31, 1997, the Partnership incurred $53,402 in
legal costs associated with the sale which are included in prepaid expenses.
Subject to certain regulatory approvals, it is anticipated that the transaction
will be consummated in the Spring of 1998.

     On January 15, 1998, the Partnership paid, prior to the maturity date, its
outstanding term loan due to a bank as described in Note 3.

                                      F-446
   641

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers of
Avalon Cable of New England LLC

     In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, changes in stockholder's deficit and cash
flows present fairly, in all material respects, the financial position of the
Combined Operations of Pegasus Cable Television of Connecticut, Inc. and the
Massachusetts Operations of Pegasus Cable Television, Inc. at December 31, 1996
and 1997 and June 30, 1998, and the results of their operations, changes in
stockholder's deficit and their cash flows for each of the three years in the
period ended December 31, 1997 and for the six months ended June 30, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

                                            /s/ PRICEWATERHOUSECOOPERS LLP

Philadelphia, Pennsylvania
March 30, 1999

                                      F-447
   642

    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

                            COMBINED BALANCE SHEETS

<Table>
<Caption>
                                                             DECEMBER 31,
                                                      --------------------------
    JUNE 30,
                                                         1996           1997
      1998
                                                      -----------    -----------
   -----------
                                                               
   
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...........................  $   389,097    $ 1,092,084
   $ 1,708,549
Accounts receivable, less allowance for doubtful
  accounts at December 31, 1996 and 1997 and June
  30, 1998 of $11,174, $3,072 and $0,
  respectively......................................      140,603        116,112
       144,653
Prepaid expenses and other..........................       62,556         90,500
        92,648
                                                      -----------    -----------
   -----------
Total current assets................................      592,256      1,298,696
     1,945,850
Property and equipment, net.........................    4,164,545      3,565,597
     3,005,045
Intangible assets, net..............................    2,174,084      2,096,773
     1,939,904
Accounts receivable, affiliates.....................    4,216,682      5,243,384
     5,692,013
Deposits and other..................................      436,382        456,135
       406,135
                                                      -----------    -----------
   -----------
Total assets........................................  $11,583,949    $12,660,585
   $12,988,947
                                                      ===========    ===========
   ===========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt...................  $    71,744    $    34,272
   $14,993,581
Accounts payable....................................      786,284        803,573
       764,588
Accrued incentive compensation......................      117,692        149,823
       220,724
Accrued franchise fees..............................      193,369        173,735
        86,332
Accrued pole rental.................................       83,910         78,345
        52,954
Accrued expenses....................................      383,572        203,561
        42,038
                                                      -----------    -----------
   -----------
Total current liabilities...........................    1,636,571      1,443,309
    16,160,217
Long-term debt, net.................................   15,043,763     15,018,099
            --
Accrued interest....................................    2,811,297      4,685,494
     5,622,593
Other...............................................      299,030        299,030
       299,030
                                                      -----------    -----------
   -----------
Total liabilities...................................   19,790,661     21,445,932
    22,081,840
Commitments and contingent liabilities..............           --             --
            --
STOCKHOLDER'S DEFICIT:
Common stock-par value $1 per share; 10,000 shares
  authorized; 7,673 shares issued and outstanding...        7,673          7,673
         7,673
Accumulated deficit.................................   (8,214,385)
(8,793,020)    (9,100,566)
                                                      -----------    -----------
   -----------
Total stockholder's deficit.........................   (8,206,712)
(8,785,347)    (9,092,893)
                                                      -----------    -----------
   -----------
Total liabilities and stockholder's deficit.........  $11,583,949    $12,660,585
   $12,988,947
                                                      ===========    ===========
   ===========
</Table>

            See accompanying notes to combined financial statements
                                      F-448
   643

THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC. AND THE
           MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

                       COMBINED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                YEARS ENDED DECEMBER 31,
     SIX MONTHS

- -----------------------------------------        ENDED
                                           1995           1996           1997
    JUNE 30, 1998
                                        -----------    -----------
- -----------    -------------
                                                             
    
REVENUES:
Basic and satellite service...........  $ 4,371,736    $ 4,965,377    $
5,353,735     $2,841,711
Premium services......................      619,035        640,641
686,513        348,628
Other.................................      144,300        169,125
150,714         86,659
                                        -----------    -----------
- -----------     ----------
Total revenues........................    5,135,071      5,775,143
6,190,962      3,276,998
OPERATING EXPENSES:
Programming...........................    1,119,540      1,392,247
1,612,458        876,588
General and administrative............      701,420        811,795
829,977        391,278
Technical and operations..............      713,239        702,375
633,384        341,249
Marketing and selling.................       20,825         15,345
19,532         12,041
Incentive compensation................       48,794        101,945
94,600         70,900
Management fees.......................      368,085        348,912
242,267         97,714
Depreciation and amortization.........    1,658,455      1,669,107
1,565,068        834,913
                                        -----------    -----------
- -----------     ----------
Income from operations................      504,713        733,417
1,193,676        652,315
Interest expense......................   (1,745,635)    (1,888,976)
(1,884,039)      (937,662)
Interest income.......................          956          2,067
93,060             29
Other income (expense), net...........          794         (2,645)
(27,800)       (17,228)
                                        -----------    -----------
- -----------     ----------
Loss before state income taxes........   (1,239,172)    (1,156,137)
(625,103)      (302,546)
Provision for state income taxes......       20,000         25,000
16,000          5,000
                                        -----------    -----------
- -----------     ----------
Net loss..............................  $(1,259,172)   $(1,181,137)   $
(641,103)    $ (307,546)
                                        ===========    ===========
===========     ==========
</Table>

            See accompanying notes to combined financial statements
                                      F-449
   644

    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

            COMBINED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT

<Table>
<Caption>
                                                  COMMON STOCK
                                               -------------------
        TOTAL
                                               NUMBER OF     PAR
ACCUMULATED    STOCKHOLDER'S
                                                SHARES      VALUE       DEFICIT
       DEFICIT
                                               ---------    ------
- -----------    -------------
                                                             
    
Balances at January 1, 1995..................    7,673      $7,673
$(5,774,076)    $(5,766,403)
Net loss.....................................       --          --
(1,259,172)     (1,259,172)
                                                 -----      ------
- -----------     -----------
Balances at December 31, 1995................    7,673       7,673
(7,033,248)     (7,025,575)
Net loss.....................................       --          --
(1,181,137)     (1,181,137)
                                                 -----      ------
- -----------     -----------
Balances at December 31, 1996................    7,673       7,673
(8,214,385)     (8,206,712)
Net loss.....................................       --          --
(641,103)       (641,103)
Stock incentive compensation.................       --          --
62,468          62,468
                                                 -----      ------
- -----------     -----------
Balances at December 31, 1997................    7,673       7,673
(8,793,020)     (8,785,347)
Net loss.....................................       --          --
(307,546)       (307,546)
                                                 -----      ------
- -----------     -----------
Balances at June 30, 1998....................    7,673      $7,673
$(9,100,566)    $(9,092,893)
                                                 =====      ======
===========     ===========
</Table>

            See accompanying notes to combined financial statements
                                      F-450
   645

    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

                       COMBINED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                     YEARS ENDED DECEMBER 31,
        SIX MONTHS

- ---------------------------------------       ENDED
                                                 1995          1996
1997       JUNE 30, 1998
                                              -----------   -----------
- -----------   -------------
                                                                 
       
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................  $(1,259,172)  $(1,181,137)  $
(641,103)   $ (307,546)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
Depreciation and amortization...............    1,658,455     1,669,107
1,565,068       834,913
Bad debt expense............................       26,558        48,566
45,839        36,074
Change in assets and liabilities:
Accounts receivable.........................      (75,263)      (88,379)
(21,348)      (64,615)
Prepaid expenses and other..................     (403,212)       75,208
(27,944)       (2,148)
Accounts payable and accrued expenses.......      239,207       981,496
(93,322)      221,219
Accrued interest............................      902,006     1,874,198
1,874,197       937,099
Deposits and other..........................       83,431            --
(19,753)       50,000
                                              -----------   -----------
- -----------    ----------
Net cash provided by operating activities...    1,172,010     3,379,059
2,681,634     1,704,996
                                              -----------   -----------
- -----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................     (163,588)   (1,174,562)
(691,269)     (114,221)
Purchase of intangible assets...............     (127,340)      (72,753)
(197,540)       (3,271)
                                              -----------   -----------
- -----------    ----------
Net cash used for investing activities......     (290,928)   (1,247,315)
(888,809)     (117,492)
                                              -----------   -----------
- -----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt................       37,331            --
  --            --
Repayments of long-term debt................      (13,764)           --
  --       (10,837)
Capital lease repayments....................      (19,764)      (52,721)
(63,136)      (47,952)
Advances to affiliates, net.................     (404,576)   (2,562,295)
(1,026,702)     (912,250)
                                              -----------   -----------
- -----------    ----------
Net cash used by financing activities.......     (400,773)   (2,615,016)
(1,089,838)     (971,039)
                                              -----------   -----------
- -----------    ----------
Net increase in cash and cash equivalents...      480,309      (483,272)
702,987       616,465
Cash and cash equivalents, beginning of
  year......................................      392,060       872,369
389,097     1,092,084
                                              -----------   -----------
- -----------    ----------
Cash and cash equivalents, end of year......  $   872,369   $   389,097   $
1,092,084    $1,708,549
                                              ===========   ===========
===========    ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for interest......  $   843,629   $    14,778   $
9,842    $      563
Cash paid during the year for income
  taxes.....................................           --            --   $
9,796    $   25,600
Supplemental Non-Cash Investing and
  Financing Activities:
Capital contribution and related accrued
  incentive compensation....................           --            --   $
62,468            --
Acquisition of plant under capital leases...  $   298,250   $    48,438
  --            --
</Table>

            See accompanying notes to combined financial statements
                                      F-451
   646

    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

                     NOTES TO COMBINED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

     These financial statements reflect the results of operations and financial
position of Pegasus Cable Television of Connecticut, Inc. ("PCT-CT"), a wholly
owned subsidiary of Pegasus Cable Television, Inc. ("PCT"), and the
Massachusetts Operations of Pegasus Cable Television, Inc. ("PCT-MA" or the
"Massachusetts Operations") (referred herein as the "Combined Operations"). PCT
is a wholly owned subsidiary of Pegasus Media & Communications, Inc. ("PM&C").
PM&C is a wholly owned subsidiary of Pegasus Communications Corporation ("PCC").

     On July 21, 1998, PCT sold the assets of its Combined Operations to Avalon
Cable of New England, LLC. for $30.1 million. In January 1997, PCT sold the
assets of its only other operating division, a cable television system that
provided service to individual and commercial subscribers in New Hampshire (the
"New Hampshire Operations") for $7.1 million.

     In presenting the historical financial position, results of operations and
cash flows of the Combined Operations, it has been necessary to eliminate the
results and financial position of the New Hampshire Operations. Many items are
identifiable as relating to the New Hampshire or Massachusetts divisions as PCT
has historically separated results of operations as well as billing and
collection activity. However, in certain areas, assumptions and estimates have
been required in order to eliminate the New Hampshire Operations for periods
prior to its sale. For purposes of eliminating the following balances: Prepaid
expenses and other; Deposits and other; Accounts payable; and Accrued expenses,
balances have been apportioned between the New Hampshire Operations and the
Massachusetts Operations on the basis of subscriber counts. Amounts due to and
due from affiliates have been allocated to PCT-MA and are included in these
financial statements.

     Prior to October 1996, BDI Associates, L.P. provided substantial support
services such as finance, accounting and human resources to PCT. Since October
1996, these services have been provided by PCC. All non-accounting costs of PCC
are allocated on the basis of average time spent servicing the divisions, while
the costs of the accounting function are allocated on the basis of revenue. In
the opinion of management, the methods used in allocating costs from PCC are
reasonable; however, the costs of these services as allocated are not
necessarily indicative of the costs that would have been incurred by the
Combined Operations on a stand-alone basis.

     The financial information included herein may not necessarily reflect the
results of operations, financial position and cash flows of the Combined
Operations in the future or what they would have been had it been a separate,
stand-alone entity during the periods presented.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

  Use of Estimates in the Preparation of Financial Statements:

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

  Property and Equipment:

     Property and equipment are stated at cost. The cost and related accumulated
depreciation of assets sold, retired, or otherwise disposed of are removed from
the respective accounts, and any resulting gains or losses are included in the
statement of operations. Initial subscriber installation costs, including
material, labor and overhead costs of the hookup, are capitalized as part of the
distribution facilities. The costs of disconnection and reconnection are charged
to expense.

                                      F-452
   647
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation is computed for financial reporting purposes using the
straight-line method based upon the following lives:

<Table>
                                                           
Reception and distribution facilities.......................   7 to 11 years
Building and improvements...................................  12 to 39 years
Equipment, furniture and fixtures...........................   5 to 10 years
Vehicles....................................................    3 to 5 years
</Table>

  Intangible Assets:

     Intangible assets are stated at cost and amortized by the straight-line
method. Costs of successful franchise applications are capitalized and amortized
over the lives of the related franchise agreements, while unsuccessful franchise
applications and abandoned franchises are charged to expense. Financing costs
incurred in obtaining long-term financing are amortized over the term of the
applicable loan. Intangible assets are reviewed periodically for impairment or
whenever events or circumstances provide evidence that suggest that the carrying
amounts may not be recoverable. The Company assesses the recoverability of its
intangible assets by determining whether the amortization of the respective
intangible asset balance can be recovered through projected undiscounted future
cash flows.

     Amortization of intangible assets is computed for financial reporting
purposes using the straight-line method based upon the following lives:

<Table>
                                                           
Organization costs..........................................   5 years
Other intangibles...........................................   5 years
Deferred franchise costs....................................  15 years
</Table>

  Revenue:

     The Combined Operations recognize revenue when video and audio services are
provided.

  Advertising Costs:

     Advertising costs are charged to operations as incurred and totaled
$20,998, $12,768, $14,706 and $8,460 for the years ended December 31, 1995, 1996
and 1997 and for the six months ended June 30, 1998, respectively.

  Cash and Cash Equivalents:

     Cash and cash equivalents include highly liquid investments purchased with
an initial maturity of three months or less. The Combined Operations have cash
balances in excess of the federally insured limits at various banks.

  Income Taxes:

     The Combined Operations is not a separate tax paying entity. Accordingly,
its results of operations have been included in the tax returns filed by PCC.
The accompanying financial statements include tax computations assuming the
Combined Operations filed separate returns and reflect the application of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109").

  Concentration of Credit Risk:

     Financial instruments which potentially subject the Combined Operations to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Combined Operation's customer
base.

                                      F-453
   648
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT:

     Property and equipment consist of the following:

<Table>
<Caption>
                                              DECEMBER 31,    DECEMBER 31,
JUNE 30,
                                                  1996            1997
1998
                                              ------------    ------------
- -----------
                                                        

Land........................................  $     8,000     $     8,000     $
   8,000
Reception and distribution facilities.......    8,233,341       9,009,179
9,123,402
Building and improvements...................      242,369         250,891
 250,891
Equipment, furniture and fixtures...........      307,844         312,143
 312,143
Vehicles....................................      259,503         287,504
 287,504
Other equipment.............................      139,408          79,004
  79,004
                                              -----------     -----------
- -----------
                                                9,190,465       9,946,721
10,060,944
Accumulated depreciation....................   (5,025,920)     (6,381,124)
(7,055,899)
                                              -----------     -----------
- -----------
Net property and equipment..................  $ 4,164,545     $ 3,565,597     $
3,005,045
                                              ===========     ===========
===========
</Table>

     Depreciation expense amounted to $1,059,260, $1,267,831, $1,290,217 and
$674,775 for the years ended December 31, 1995, 1996 and 1997 and for the six
months ended June 30, 1998, respectively.

4. INTANGIBLES:

     Intangible assets consist of the following:

<Table>
<Caption>
                                                DECEMBER 31,    DECEMBER 31,
JUNE 30,
                                                    1996            1997
  1998
                                                ------------    ------------
- ----------
                                                          

Deferred franchise costs......................   $4,367,594     $  4,486,016
$4,486,333
Deferred financing costs......................    1,042,079        1,156,075
1,159,027
Organization and other costs..................      439,188          389,187
  389,187
                                                 ----------     ------------
- ----------
                                                  5,848,861        6,031,278
6,034,547
                                                 ----------     ------------
- ----------
Accumulated amortization......................   (3,674,777)      (3,934,505)
(4,094,643)
                                                 ----------     ------------
- ----------
Net intangible assets.........................   $2,174,084     $  2,096,773
$1,939,904
                                                 ==========     ============
==========
</Table>

     Amortization expense amounted to $599,195, $401,276, $274,851 and $160,138
for the years ended December 31, 1995, 1996 and 1997 and for the six months
ended June 30, 1998, respectively.

                                      F-454
   649
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. LONG-TERM DEBT:

     Long-term debt consists of the following at:

<Table>
<Caption>
                                                  DECEMBER 31,   DECEMBER 31,
JUNE 30,
                                                      1996           1997
  1998
                                                  ------------   ------------
- -----------
                                                           

Note payable to PM&C, payable by PCT, interest
  is payable quarterly at an annual rate of
  12.5%. Principal is due on July 1, 2005. The
  note is collateralized by substantially all of
  the assets of the Combined Operations and
  imposes certain restrictive covenants.........  $14,993,581    $14,993,581
$14,993,581
Capital lease obligations.......................      121,926         58,790
        --
                                                  -----------    -----------
- -----------
                                                   15,115,507     15,052,371
14,993,581
Less current maturities.........................       71,744         34,272
14,993,581
                                                  -----------    -----------
- -----------
Long-term debt..................................  $15,043,763    $15,018,099
$        --
                                                  ===========    ===========
===========
</Table>

6. LEASES:

     The Combined Operations lease utility pole attachments and occupancy of
underground conduits. Rent expense for the years ended December 31, 1995, 1996
and 1997 and for the six months ended June 30, 1998 was $184,386, $185,638,
$173,930 and $90,471, respectively. The Combined Operations lease equipment
under long-term leases and have the option to purchase the equipment for a
nominal cost at the termination of the leases. The related obligations are
included in long-term debt. There are no future minimum lease payments on
capital leases at June 30, 1998. Property and equipment that was leased include
the following amounts that have been capitalized:

<Table>
<Caption>
                                                     DECEMBER 31,    DECEMBER
31,
                                                         1996            1997
                                                     ------------
- ------------
                                                               
Billing and phone systems..........................    $ 56,675       $  56,675
Vehicles...........................................     166,801         129,227
                                                       --------       ---------
                                                        223,476         185,902
Accumulated depreciation...........................     (69,638)       (101,397)
                                                       --------       ---------
Total..............................................    $153,838       $  84,505
                                                       ========       =========
</Table>

7. RELATED PARTY TRANSACTIONS:

     The Combined Operations pay management fees to various related parties. The
management fees are for certain administrative and accounting services, billing
and programming services, and the reimbursement of expenses incurred therewith.
For the years ended December 31, 1995, 1996 and 1997 and for the six months
ended June 30, 1998, the fees and expenses were $368,085, $348,912, $242,267 and
$97,714, respectively.

     As described in Note 5, PCT has an outstanding loan from its parent
company. This loan has been allocated to PCT-MA and is included in these
financial statements. Interest expense on that loan was $916,274, $1,874,198,
$1,874,195 and $937,098 for the years ended December 31, 1995, 1996 and 1997 and
for the six months ended June 30, 1998 respectively. Other related party
transaction balances at December 31, 1996 and 1997 and June 30, 1998 included
$4,216,682, $5,243,384 and $5,692,013 in accounts receivable, affiliates;
$581,632, $6,433 and $331,374 in accounts payable; and $299,030, $299,030 and
$299,030 in other liabilities, respectively. These related party balances arose
primarily as a result of financing capital expenditures, interest payments,
programming and other operating expenses.
                                      F-455
   650
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES:

     The deferred income tax assets and liabilities recorded in the balance
sheet are as follows:

<Table>
<Caption>
                                                      DECEMBER 31,    DECEMBER
31,     JUNE 30,
                                                          1996            1997
        1998
                                                      ------------
- ------------    -----------
                                                                
     
ASSETS:
Excess of tax basis over book basis from tax gain
  recognized upon incorporation of PCT And PCT-CT...  $   707,546     $
707,546     $   707,546
Loss carryforwards..................................    1,324,236
1,039,849         957,318
Other...............................................        6,997
11,856          11,856
                                                      -----------
- -----------     -----------
Total deferred tax assets...........................    2,038,779
1,759,251       1,676,720
                                                      -----------
- -----------     -----------
LIABILITIES:
Excess of book basis over tax basis of property,
  plant and equipment and intangible asset..........     (258,311)
(294,934)       (335,014)
Other...............................................     (118,086)
(134,859)       (135,267)
                                                      -----------
- -----------     -----------
Total deferred tax liabilities......................     (376,397)
(429,793)       (470,281)
                                                      -----------
- -----------     -----------
Net deferred tax assets.............................    1,662,382
1,329,458       1,206,439
Valuation allowance.................................   (1,662,382)
(1,329,458)     (1,206,439)
                                                      -----------
- -----------     -----------
Net deferred tax liabilities........................  $        --     $
- --     $        --
                                                      ===========
===========     ===========
</Table>

     The Combined Operations have recorded a valuation allowance to reflect the
estimated amount of deferred tax assets which may not be realized due to the
expiration of deferred tax assets related to the incorporation of PCT and PCT-CT
and the expiration of net operating loss carryforwards.

9. EMPLOYEE BENEFIT PLANS:

     The Company employees participate in PCC's stock option plan that awards
restricted stock (the "Restricted Stock Plan") to eligible employees of the
Company.

  Restricted Stock Plan

     The Restricted Stock Plan provides for the granting of restricted stock
awards representing a maximum of 270,000 shares (subject to adjustment to
reflect stock dividends, stock splits, recapitalizations and similar changes in
the capitalization of PCC) of Class A Common Stock of the Company to eligible
employees who have completed at least one year of service. Restricted stock
received under the Restricted Stock Plan vests over four years. The Plan
terminates in September 2006. The expense for this plan amounted to $82,425,
$80,154 and $63,533 in 1996 and 1997 and for the six months ended June 30, 1998,
respectively.

  401(k) Plans

     Effective January 1, 1996, PM&C adopted the Pegasus Communications Savings
Plan (the "US 401(k) Plan") for eligible employees of PM&C and its domestic
subsidiaries. Substantially all Company employees who, as of the enrollment date
under the 401(k) Plans, have completed at least one year of service with the
Company are eligible to participate in one of the 401(k) Plans. Participants may
make salary deferral contributions of 2% to 6% of their salary to the 401(k)
Plans. The expense for this plan amounted to $19,520, $14,446 and $7,367 in 1996
and 1997 and for the six months ended June 30, 1998, respectively.

                                      F-456
   651
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.

             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

     All employee contributions to the 401(k) Plans are fully vested at all
times and all Company contributions, if any, vest 34% after two years of service
with the Company (including years before the 401(k) Plans were established), 67%
after three years of service and 100% after four years of service. A participant
also becomes fully vested in Company contributions to the 401(k) Plans upon
attaining age 65 or upon his or her death or disability.

10. COMMITMENTS AND CONTINGENT LIABILITIES:

  Legal Matters:

     The operations of PCT-CT and PCT-MA are subject to regulation by the
Federal Communications Commission ("FCC") and other franchising authorities.

     From time to time the Combined Operations are also involved with claims
that arise in the normal course of business. In the opinion of management, the
ultimate liability with respect to these claims will not have a material adverse
effect on the operations, cash flows or financial position of the Combined
Operations.

                                      F-457
   652

                          INDEPENDENT AUDITORS' REPORT

The Common Member and Manager
BRESNAN COMMUNICATIONS GROUP LLC:

     We have audited the accompanying consolidated balance sheets of Bresnan
Communications Group LLC and its subsidiaries as of December 31, 1998 and 1999,
and the related consolidated statements of operations and members' equity
(deficit) and cash flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Bresnan Communications Group LLC'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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bresnan
Communications Group LLC, as of December 31, 1998 and 1999, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.

                                          /s/ KPMG LLP

Denver, Colorado
January 28, 2000, except as to Note 8,
which is as of February 14, 2000

                                      F-458
   653

                        BRESNAN COMMUNICATIONS GROUP LLC

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1999

<Table>
<Caption>
                                                                  1998
1999
                                                                ---------
- ---------
                                                                (AMOUNTS IN
THOUSANDS)
                                                                       
ASSETS
Cash and cash equivalents...................................    $  6,636     $
5,995
Restricted cash (note 3)....................................      47,199
 290
Trade and other receivables, net............................       8,874
9,006
Property and equipment, at cost:
  Land and buildings........................................       4,123
6,879
  Distribution systems......................................     443,114
534,812
  Support equipment.........................................      50,178
62,283
                                                                --------
- --------
                                                                 497,415
603,974
  Less accumulated depreciation.............................     190,752
228,868
                                                                --------
- --------
                                                                 306,663
375,106
Franchise costs, net........................................     291,103
328,068
Other assets, net of amortization...........................       3,961
19,038
                                                                --------
- --------
     Total assets...........................................    $664,436
$737,503
                                                                ========
========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Accounts payable............................................    $  3,193     $
18,900
Accrued expenses............................................      13,395
35,613
Accrued interest............................................      21,835
11,748
Debt........................................................     232,617
895,607
Other liabilities...........................................      11,648
10,020
                                                                --------
- --------
     Total Liabilities......................................     282,688
971,888
Members' equity (deficit)...................................     381,748
(234,385)
                                                                --------
- --------
Commitments and contingencies
     Total liabilities and members' equity (deficit)........    $664,436
$737,503
                                                                ========
========
</Table>

See accompanying notes to consolidated financial statements.

                                      F-459
   654

                        BRESNAN COMMUNICATIONS GROUP LLC

      CONSOLIDATED STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<Table>
<Caption>
                                                             1997        1998
     1999
                                                           --------    ---------
   ---------
                                                                 (AMOUNTS IN
THOUSANDS)
                                                                 
   
REVENUE................................................    $247,108    $ 261,964
   $ 283,574
Operating costs and expenses:
  Programming (note 6).................................      53,857       63,686
      72,355
  Operating............................................      31,906       28,496
      31,624
  Selling, general and administrative (note 6).........      50,572       56,634
      67,351
  Organizational and divestiture costs.................          --        1,934
       5,281
  Depreciation and amortization........................      53,249       54,308
      59,752
                                                           --------    ---------
   ---------
                                                            189,584      205,058
     236,363
                                                           --------    ---------
   ---------
       Operating income................................      57,524       56,906
      47,211
OTHER INCOME (EXPENSE):
  Interest expense:
     Related party (note 4)............................      (1,892)
(1,872)        (152)
     Other.............................................     (16,823)
(16,424)     (67,139)
  Gain on sale of cable television systems.............          --       27,027
         556
  Other, net...........................................        (978)
(273)        (900)
                                                           --------    ---------
   ---------
                                                            (19,693)       8,458
     (67,635)
                                                           --------    ---------
   ---------
       Net earnings (loss).............................      37,831       65,364
     (20,424)
MEMBERS' EQUITY (DEFICIT):
  Beginning of year....................................     347,188      359,098
     381,748
  Operating expense allocations and charges (notes 4
     and 6)............................................      60,389       71,648
          --
  Net assets of acquired system (note 3)...............      33,635           --
          --
  Capital contributions by members.....................          --           --
     136,500
  Capital distributions to members.....................          --           --
    (732,209)
  Cash transfers, net..................................    (119,945)
(114,362)          --
                                                           --------    ---------
   ---------
  End of year..........................................    $359,098    $ 381,748
   $(234,385)
                                                           ========    =========
   =========
</Table>

See accompanying notes to consolidated financial statements.

                                      F-460
   655

                        BRESNAN COMMUNICATIONS GROUP LLC

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

<Table>
<Caption>
                                                                 1997
1998          1999
                                                               --------
- --------      ---------
                                                                      (AMOUNTS
IN THOUSANDS)
                                                                       
          
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings (loss)......................................    $ 37,831      $
65,364      $ (20,424)
  Adjustments to reconcile net earnings to net cash
     provided by operating activities:
     Depreciation and amortization.........................      53,249
54,308         59,752
     Amortization of debt discount and deferred financing
       costs...............................................       1,629
 534         18,683
     Gain on sale of cable television systems..............          --
(27,027)          (556)
     Other noncash charges.................................       2,141
 452             --
     Changes in operating assets and liabilities, net of
       effects of acquisitions:
       Change in receivables...............................      (3,413)
2,826            621
       Change in other assets..............................         164
  --            429
       Change in accounts payable, accrued expenses,
          accrued interest and other liabilities...........       2,305
6,141         25,457
       Other, net..........................................      (1,358)
(237)            --
                                                               --------
- --------      ---------
          Net cash provided by operating Activities........      92,548
102,361         83,962
                                                               --------
- --------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expended for property and equipment and for
     franchise costs.......................................     (35,282)
(58,728)       (90,879)
  Cash paid in acquisitions................................          --
(30,298)       (78,680)
  Cash received in disposals...............................       1,179
58,949          4,956
Change in restricted cash..................................          --
(47,199)        46,999
                                                               --------
- --------      ---------
          Net cash used in investing activities............     (34,103)
(77,276)      (117,604)
                                                               --------
- --------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under note agreement..........................      31,300
49,400        597,530
  Proceeds from Senior Notes...............................          --
  --        170,000
  Proceeds from Senior Discount Notes......................          --
  --        175,021
  Repayments under note agreement..........................     (24,364)
(30,953)      (294,672)
  Deferred finance costs paid..............................      (2,121)
(1,139)       (19,169)
  Contributions by members.................................          --
  --        136,500
  Distributions to members.................................     (59,556)
(42,714)      (732,209)
                                                               --------
- --------      ---------
          Net cash provided by (used in) financing
            activities.....................................     (54,741)
(25,406)        33,001
                                                               --------
- --------      ---------
          Net increase (decrease) in cash..................       3,704
(321)          (641)
CASH AND CASH EQUIVALENTS:
  Beginning of year........................................       3,253
6,957          6,636
                                                               --------
- --------      ---------
  End of year..............................................    $  6,957      $
6,636      $   5,995
                                                               ========
========      =========
Supplemental disclosure of cash flow information --
  Cash paid during the year for interest...................    $ 16,971      $
16,792      $  58,695
                                                               ========
========      =========
</Table>

See accompanying notes to consolidated financial statements.

                                      F-461
   656

                        BRESNAN COMMUNICATIONS GROUP LLC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1998 AND 1999

                             (AMOUNTS IN THOUSANDS)

(1) BASIS OF PRESENTATION

     Bresnan Communications Group LLC and its subsidiaries ("BCG" or the
"Company") are wholly owned by Bresnan Communications Company Limited
Partnership, a Michigan limited partnership ("BCCLP"). BCG is a Delaware limited
liability corporation formed on August 5, 1998 for the purpose of acting as
co-issuer with its wholly-owned subsidiary, Bresnan Capital Corporation ("BCC"),
of $170,000 aggregate principal amount at maturity of 8% Senior Notes and
$275,000 aggregate principal amount at maturity of 9.25% Senior Discount Notes,
both due in 2009 (collectively the "Notes"). Also, at this time, BTC borrowed
approximately $508,000 of $650,000 available under a new credit facility (the
"Senior Credit Facility"). (See Note 4, Debt.) Prior to the issuance of the
Notes on February 2, 1999, BCCLP completed the terms of a contribution agreement
dated June 3, 1998, as amended, whereby certain affiliates of AT&T Broadband and
Internet Services, formerly Tele-Communications, Inc. ("TCI"), contributed
certain cable television systems along with assumed TCI debt of approximately
$708,854 to BCCLP which was repaid with the proceeds of the Notes and the Senior
Credit Facility. In addition, Blackstone BC Capital Partners L.P. ("Blackstone")
and affiliates contributed $136,500 to BCCLP. Upon completion of the Notes
offering on February 2, 1999 BCCLP contributed all of its assets and liabilities
to BCG, which formed a wholly owned subsidiary, Bresnan Telecommunications
Company LLC ("BTC"), into which it contributed all of its assets and certain
liabilities. The above noted contributed assets and liabilities were accounted
for at predecessor cost because of the common ownership and control of TCI and
have been reflected in the accompanying financial statements in a manner similar
to a pooling of interests.

     The consolidated financial statements include the accounts of BCG and those
of its wholly owned subsidiary, BTC, subsequent to the aforementioned formation
transaction.

     The Company owns and operates cable television systems in small- and
medium-sized communities in the midwestern United States.

     Prior to the transactions noted above, TCI and William J. Bresnan and
certain entities which he controls (collectively, the "Bresnan Entities"), held
78.4% and 21.6% interests, respectively, in BCCLP. As of February 2, 1999, TCI,
Blackstone and the Bresnan Entities held 50.00%, 39.79% and 10.21% interests,
respectively. Subsequent to December 31, 1999, these interests were sold to
Charter Communications Holding Company, LLC. (See Note 8, Sale of the Company.)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) CASH EQUIVALENTS

     Cash equivalents consist of investments which are readily convertible into
cash and have maturities of three months or less at the time of acquisition.

     (B) TRADE AND OTHER RECEIVABLES

     Receivables are reflected net of an allowance for doubtful accounts. Such
allowance at December 31, 1998 and 1999 was not significant.

     (C) PROPERTY AND EQUIPMENT

     Property and equipment is stated at cost, including acquisition costs
allocated to tangible assets acquired. Construction costs, including interest
during construction and applicable overhead, are capitalized. During 1997, 1998
and 1999, interest capitalized was $324,000, $47,000 and $1,027,000
respectively.

                                      F-462
   657
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Depreciation is computed on a straight-line basis using estimated useful
lives of 3 to 15 years for distribution systems and 3 to 40 years for support
equipment and buildings.

     Repairs and maintenance are charged to operations, and renewals and
additions are capitalized. At the time of ordinary retirements, sales or other
dispositions of property, the original cost and cost of removal of such property
are charged to accumulated depreciation, and salvage, if any, is credited
thereto. Gains or losses are only recognized in connection with the sales of
properties in their entirety.

     (D) FRANCHISE COSTS

     Franchise costs represent the difference between the cost of acquiring
cable television systems and amounts allocated to their tangible assets. Such
amounts are generally amortized on a straight-line basis over 40 years. Costs
incurred in negotiating and renewing franchise agreements are amortized on a
straight-line basis over the life of the franchise, generally 10 to 20 years.

     (E) IMPAIRMENT OF LONG-LIVED ASSETS

     Management periodically reviews the carrying amounts of property and
equipment and identifiable intangible assets to determine whether current events
or circumstances warrant adjustments to such carrying amounts. If an impairment
adjustment is deemed necessary, such loss is measured by the amount that the
carrying value of such assets exceeds their fair value. Considerable management
judgment is necessary to estimate the fair value of assets. Accordingly, actual
results could vary significantly from such estimates. Assets to be disposed of
are carried at the lower of their financial statement carrying amount or fair
value less costs to sell.

     (F) FINANCIAL INSTRUMENTS

     The Company has entered into fixed interest rate exchange agreements
("Interest Rate Swaps") which are used to manage interest rate risk arising from
its financial liabilities. Such Interest Rate Swaps are accounted for as a
hedge; accordingly, amounts receivable or payable under the Interest Rate Swaps
are recognized as adjustments to interest expense. These instruments are not
used for trading purposes.

     The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which is effective for all fiscal years
beginning after June 15, 2000. SFAS 133 establishes accounting and reporting
standards for derivative instruments and hedging activities by requiring that
all derivative instruments be reported as assets or liabilities and measured at
their fair values. Under SFAS 133, changes in the fair values of derivative
instruments are recognized immediately in earnings unless those instruments
qualify as hedges of the (1) fair values of existing assets, liabilities, or
firm commitments, (2) variability of cash flows of forecasted transactions, or
(3) foreign currency exposures of net investments in foreign operations.
Although management has not completed its assessment of the impact of SFAS 133
on its combined results of operations and financial position, management
estimates that the impact of SFAS 133 will not be material.

     (G) INCOME TAXES

     The majority of BCG's net assets were historically held in partnerships. In
addition, BCG has been formed as a limited liability company, to be treated for
tax purposes as a flow-through entity. Accordingly, no provision has been made
for income tax expense or benefit in the accompanying combined financial
statements as the earnings or losses of Bresnan Communications Group LLC will be
reported in the respective tax returns of BCG's members. (See Note 5, Income
Taxes).

                                      F-463
   658
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     (H) REVENUE RECOGNITION

     Cable revenue for customer fees, equipment rental, advertising,
pay-per-view programming and revenue sharing agreements is recognized in the
period that services are delivered. Installation revenue is recognized in the
period the installation services are provided to the extent of direct selling
and installation costs. Any remaining amount is deferred and recognized over the
estimated average period that customers are expected to remain connected to the
cable distribution system.

     (I) STATEMENT OF CASH FLOWS

     Except for acquisition transactions described in Note 3, transactions
effected through Members' equity (deficit) have been considered constructive
cash receipts and payments for purposes of the statement of cash flows.

     (J) ADVERTISING COSTS

     All advertising costs are expensed as incurred.

     (K) RECLASSIFICATIONS

     Certain of the prior year comparative figures have been reclassified to
conform to the presentation adopted in the current year.

     (L) ESTIMATES

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

(3) ACQUISITIONS AND SYSTEM DISPOSITIONS

     In 1998, the Company acquired two cable systems which were accounted for
under the purchase method. The purchase prices were allocated to the assets
acquired in relation to their fair values as increases in property and equipment
of $7,099 and franchise costs of $21,651.

     During 1998, the Company also disposed of two cable systems for gross
proceeds of $58,949, which resulted in gain on sale of cable television systems
of $27,027. In connection with one of the dispositions, a third party
intermediary received $47,199 of cash that was designated to be reinvested in
certain identified assets for income tax purposes and accordingly recognized as
restricted cash on the Company's Consolidated Balance Sheet at December 31, 1998
and 1999.

     In 1999, BCG acquired three cable systems that were accounted for under the
purchase method. The purchase prices were allocated to the assets acquired in
relation to their fair values as increases to property and equipment of $24,098
and franchise costs of $54,582. In connection with two of the acquisitions, the
aforementioned third party intermediary disbursed $46,999 of cash to complete
the reinvestment in certain identified assets for income tax purposes.

     Finally, in 1999, BCG disposed of cable systems for gross proceeds of
$4,956, which resulted in a gain of $556.

     The results of operations of these cable television systems have been
included in the accompanying combined statements of operations from their dates
of acquisition or their disposition, as applicable. Pro forma

                                      F-464
   659
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

information on the acquisitions and dispositions has not been presented because
the effects were not significant.

(4) DEBT

     Debt is summarized as follows:

<Table>
<Caption>
                                                                     DECEMBER
31,

- ----------------------
                                                                  1998
1999
                                                                ---------
- ---------
                                                                (AMOUNTS IN
THOUSANDS)
                                                                       
Senior Credit Facility(a)...................................    $     --
$534,200
Senior Notes Payable(b).....................................          --
170,000
Senior Discount Notes Payable(b)............................          --
190,132
Notes payable to banks(c)...................................     209,000
  --
Note payable to partner(d)..................................      22,100
  --
Other debt..................................................       1,517
1,275
                                                                --------
- --------
                                                                $232,617
$895,607
                                                                ========
========
</Table>

- ---------------
(a) The Senior Credit Facility represents borrowings under a $650,000 senior
    reducing revolving credit and term loan facility as documented in the loan
    agreement as of February 2, 1999. The Senior Credit Facility has a current
    available commitment of $650,000 of which $534,200 is outstanding at
    December 31, 1999. The Senior Credit Facility provides for three tranches, a
    revolving loan tranche for $150,000 (the "Revolving Loan"), a term loan
    tranche of $328,000 (the "A Term Loan" and together with the Revolving Loan,
    "Facility A") and a term loan tranche of $172,000 (the "Facility B").

    The commitments under the Senior Credit Facility will reduce commencing with
    the quarter ending March 31, 2002. Facility A permanently reduces in
    quarterly amounts ranging from 2.5% to 7.5% of the Facility A amount
    starting March 31, 2002 and matures approximately eight and one half years
    after February 2, 1999. Facility B is also to be repaid in quarterly
    installments of .25% of the Facility B amount beginning in March 2002 and
    matures approximately nine years after February 2, 1999, on which date all
    remaining amounts of Facility B will be due and payable. Additional
    reductions of the Senior Credit Facility will also be required upon certain
    asset sales, subject to the right of the Company and its subsidiaries to
    reinvest asset sale proceeds under certain circumstances. The interest rate
    options include a LIBOR option and a Prime Rate option plus applicable
    margin rates based on the Company's total leverage ratio, as defined. The
    rate applicable to balances outstanding at December 31, 1999 ranged from
    7.57% to 9.00%. Covenants of the Senior Credit Facility require, among other
    conditions, the maintenance of specific levels of the ratio of cash flows to
    future debt and interest expense and certain limitations on additional
    investments, indebtedness, capital expenditures, asset sales and affiliate
    transactions. In addition, the Company is required to pay a commitment fee
    on the unused revolver portion of Facility A which will accrue at a rate
    ranging from .25% to .375% per annum, depending on the Company's total
    leverage ratio, as defined.

(b) On February 2, 1999, the Company issued $170,000 aggregate principal amount
    senior notes payable (the "Senior Notes"). In addition, on the same date,
    the Company issued $275,000 aggregate principal amount at maturity of senior
    discount notes, (the "Senior Discount Notes") for approximately $175,021
    gross proceeds (collectively the "Notes").

    The Senior Notes are unsecured and will mature on February 1, 2009. The
    Senior Notes bear interest at 8% per annum payable semi-annually on February
    1 and August 1 of each year, commencing August 1, 1999.

                                      F-465
   660
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

    The Senior Discount Notes are unsecured and will mature on February 1, 2009.
    The Senior Discount Notes were issued at a discount to their aggregate
    principal amount at maturity and will accrete at a rate of approximately
    9.25% per annum, compounded semi-annually, to an aggregate principal amount
    of $275,000 on February 1, 2004. Subsequent to February 1, 2004, the Senior
    Discount Notes will bear interest at a rate of 9.25% per annum payable
    semi-annually in arrears on February 1 and August 1 of each year, commencing
    August 1, 2004.

    The Company may elect, upon not less than 60 days prior notice, to commence
    the accrual of interest on all outstanding Senior Discount Notes on or after
    February 1, 2002, in which case the outstanding principal amount at maturity
    of each Senior Discount Note will on such commencement date be reduced to
    the accreted value of such Senior Discount Note as of such date and interest
    shall be payable with respect to the Senior Discount Notes on each February
    and August 1 thereafter.

    The Company may not redeem the Notes prior to February 1, 2004 except that
    prior to February 1, 2002, the Company may redeem up to 35% of the Senior
    Notes and Senior Discount Notes at redemption prices equal to 108% and
    109.25% of the applicable principal amount and accreted value, respectively,
    with proceeds of an equity offering. Subsequent to February 1, 2004, the
    Company may redeem the Notes at redemption prices declining annually from
    approximately 104% of the principal amount or accreted value.

    Bresnan Communications Group LLC and its wholly owned subsidiary Bresnan
    Capital Corporation are the sole obligors of the Senior Notes and Senior
    Discount Notes. Bresnan Communications Group LLC has no other assets or
    liabilities other than its investment in its wholly owned subsidiary Bresnan
    Telecommunications Company LLC. Bresnan Capital Corporation has no other
    assets or liabilities.

    Upon change of control of the Company, the holders of the notes have the
    right to require the Company to purchase the outstanding notes at a price
    equal to 101% of the principal amount or accreted value plus accrued and
    unpaid interest. (See Note 8 "Sale of the Company").

(c) The notes payable to banks represented borrowings under a $250,000 senior
    unsecured reducing revolving credit and term loan facility (the "Bank
    Facility") as documented in the loan agreement as amended and restated as of
    August 5, 1998. The Bank Facility called for a current available commitment
    of $250,000 of which $209,000 was outstanding at December 31, 1998. The
    rates applicable to balances outstanding at December 31, 1998 ranged from
    6.815% to 8.000%. The Bank Facility was repaid on February 2, 1999. (See
    Note 1, Basis of Presentation.)

(d) The note payable to a partner was comprised of a $25,000 subordinated note
    of which $22,100 was outstanding at December 31, 1998. The note, dated May
    12, 1988, was junior and subordinate to the Bank Facility. Interest was
    provided for at the prime rate (as defined) and was payable quarterly, to
    the extent allowed under the bank subordination agreement, or at the
    maturity date of the note, which was the earlier of April 30, 2001 or the
    first business day following the full repayment of the entire amount due
    under the notes payable to banks. The interest rate at December 31, 1998 was
    7.75%. This note was repaid on February 2, 1999. (See Note 1, Basis of
    Presentation.)

     The Company entered into interest rate swap agreements to effectively fix
     or set maximum interest rates on a portion of its floating rate long-term
     debt. The Company is exposed to credit loss in the event of nonperformance
     by the counterparties to the interest rate swap agreements.

     At December 31, 1999, such interest rate swap agreements effectively fixed
     or set a maximum LIBOR base interest rates between 8.0% and 8.02% on an
     aggregate notional principal amount of $50,000, which rates would become
     effective upon the occurrence of certain events. The effect of the interest
     rate swap on interest expense for the twelve months ended December 31, 1999
     was not significant. The expiration dates of the interest rate swaps ranges
     from April 1, 2000 to April 3, 2000. The difference between the fair
                                      F-466
   661
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     market value and book value of long-term debt and the interest rate swaps
     at December 31, 1998 and 1999 is not significant.

(5) INCOME TAXES

     Taxable earnings differ from those reported in the accompanying
consolidated statements of operations due primarily to differences in
depreciation and amortization methods and estimated useful lives under
regulations prescribed by the Internal Revenue Service. At December 31, 1999,
the financial statement carrying amount of the Company's assets exceeded its tax
basis by approximately $431 million.

(6) TRANSACTIONS WITH RELATED PARTIES

     BCG and its predecessor purchased, at TCI's cost, substantially all of its
pay television and other programming from affiliates of TCI. Charges for such
programming were $48,588, $58,562 and $62,502 for the years ended December 31,
1997, 1998 and 1999, respectively, and are included in programming expenses in
the accompanying consolidated financial statements.

     Prior to February 2, 1999, certain affiliates of the partners of BCCLP
provided administrative services to BCG and assumed managerial responsibility of
BCG's cable television system operations and construction. As compensation for
these services, BCG paid a monthly fee calculated pursuant to certain agreed
upon formulas. Subsequent to the TCI Transaction on February 2, 1999, certain
affiliates of a partner of BCCLP provide administrative services and have
assumed managerial responsibilities of BCG. As compensation for these services
BCG pays a quarterly fee equal to approximately 3% of gross revenues. Such
aggregate charges totaled $11,801, $13,086 and $10,498 and have been included in
selling, general and administrative expenses for years ended December 31, 1997,
1998 and 1999, respectively.

(7) COMMITMENTS AND CONTINGENCIES

     The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") imposed certain rate regulations on the cable television
industry. Under the 1992 Cable Act, all cable systems are subject to rate
regulation, unless they face "effective competition," as defined by the 1992
Cable Act and expanded in the Telecommunications Act of 1996 (the "1996 Act"),
in their local franchise area.

     Although the Federal Communications Commission (the "FCC") has established
regulations required by the 1992 Cable Act, local government units (commonly
referred to as local franchising authorities) are primarily responsible for
administering the regulation of a cable system's basic service tier ("BST"). The
FCC itself directly administered rate regulation of any cable programming
service tier ("CPST"). The FCC's authority to regulate CPST rates expired on
March 31, 1999. The FCC has taken the position that it will still adjudicate
CPST complaints filed after this sunset date (but no later than 180 days after
the last CPST rate increase imposed prior to March 31, 1999), and will strictly
limit its review (and possible refund orders) to the time period predating the
sunset date.

     Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price structure that allows for the recovery
of inflation and certain associated costs, as well as providing some incentive
for expanding channel carriage. Operators also have the opportunity to bypass
this "benchmark" regulatory structure in favor of the traditional
"cost-of-service" regulation in cases where the latter methodology appears
favorable. Premium cable service offered on a per-channel or per-program basis
remain unregulated, as do affirmatively marketed packages consisting entirely of
new programming product.

     The management of BCG believes that it has complied in all material
respects with the provisions of the 1992 Cable Act and the 1996 Act, including
its rate setting provisions. If, as a result of the review process, a system
cannot substantiate its rates, it could be required to retroactively reduce its
rates to the appropriate

                                      F-467
   662
                        BRESNAN COMMUNICATIONS GROUP LLC

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

benchmark and refund the excess portion of rates received. Any refunds of the
excess portion of CPST rates would be retroactive to the date of complaint. Any
refunds of the excess portion of BST or equipment rates would be retroactive to
one year prior to the implementation of the rate reductions.

     Certain plaintiffs have filed or threatened separate class action
complaints against certain of the systems of BCG, alleging that the systems'
practice of assessing an administrative fee to the subscribers whose payments
are delinquent constitutes an invalid liquidated damage provision and a breach
of contract, and violates local consumer protection statutes. Plaintiffs seek
recovery of all late fees paid to the subject systems as a class purporting to
consist of all subscribers who were assessed such fees during the applicable
limitation period, plus attorney fees and costs.

     BCG has additional contingent liabilities related to legal proceedings and
other matters arising in the ordinary course of business. Although it is
possible that BCG may incur losses upon conclusion of these matters and the
matters referred to above, an estimate of any loss or range of loss cannot
presently be made. Based upon the facts available, management believes that,
although no assurance can be given as to the outcome of these actions, the
ultimate disposition should not have material adverse effect upon the combined
financial condition of BCG.

     On January 12, 2000, the Company also purchased two cable systems from one
operator. The system in Wisconsin was a stock purchase and the system in
Minnesota was an asset purchase. The total purchase price of these transactions
was approximately $36,232, funded by cash flow from operations and additional
borrowings.

     The Company also entered into a letter of intent with a cable operator
pursuant to which the Company acquires a small cable television system in
Minnesota. The transaction would result in a net cost of approximately $13,000
and will be funded by cash flow from operations and additional borrowings.

     BCG leases business offices, has entered into pole attachment agreements
and uses certain equipment under lease arrangements. Rental expense under such
arrangements amounted to $3,221, $2,833 and $3,547 during the years ended
December 31, 1997, 1998 and 1999, respectively.

     Future minimum lease payments under noncancelable operating leases are
estimated to approximate $2,240 per year for each of the next five years.

     It is expected that, in the normal course of business, expiring leases will
be renewed or replaced by leases on the same or similar properties.

(8) SALE OF THE COMPANY

     In June 1999, the Partners of BCCLP entered into an agreement to sell all
of their partnership interests in BCCLP to Charter Communications Holding
Company, LLC for a purchase price of approximately $3.1 billion in cash and
equity instruments of Charter and its subsidiaries (including the Company) which
will be reduced by the assumption of BCCLP's debt at closing. In conjunction
with the sale of the partnership interests, Charter assumed the Company's
outstanding indebtedness under the Senior Credit Facility (See Note 4, Debt.)
The accompanying financial statements do not reflect the effect of the
adjustments, if any, resulting from the sale of the partnership's interests.

                                      F-468
   663

                          INDEPENDENT AUDITORS' REPORT

The Common Member and Manager
Bresnan Communications Group LLC:

     We have audited the accompanying consolidated balance sheets of Bresnan
Communications Group LLC and its subsidiaries as of December 31, 1999 and
February 14, 2000, and the related consolidated statements of operations and
members' equity (deficit) and cash flows for the year ended December 31, 1999
and for the period ended February 14, 2000. These consolidated financial
statements are the responsibility of the Bresnan Communications Group LLC'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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bresnan
Communications Group LLC, as of December 31, 1999 and February 14, 2000, and the
results of their operations and their cash flows for the year ended December 31,
1999 and the period ended February 14, 2000, in conformity with generally
accepted accounting principles.

                                          /s/ KPMG LLP

Denver, Colorado
April 20, 2000

                                      F-469
   664

                        BRESNAN COMMUNICATIONS GROUP LLC

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 31,
FEBRUARY 14,
                                                                  1999
 2000
                                                              ------------
- ------------
                                                                 (AMOUNTS IN
THOUSANDS)
                                                           

ASSETS
Cash and cash equivalents...................................   $   5,995       $
      --
Restricted cash (note 3)....................................         290
     301
Trade and other receivables, net............................       9,006
   9,062
Property and equipment, at cost:
  Land and buildings........................................       6,879
   7,271
  Distribution systems......................................     534,812
 546,939
  Support equipment.........................................      62,283
  60,747
                                                               ---------
- ----------
                                                                 603,974
 614,957
  Less accumulated depreciation.............................     228,868
 233,810
                                                               ---------
- ----------
                                                                 375,106
 381,147
Franchise costs, net........................................     328,068
 354,887
Other assets, net of amortization...........................      19,038
  18,746
                                                               ---------
- ----------
          Total assets......................................   $ 737,503       $
 764,143
                                                               =========
==========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Bank overdraft..............................................   $      --       $
   1,542
Accounts payable............................................      18,900
  20,776
Accrued expenses............................................      35,613
   8,240
Accrued interest............................................      11,748
   1,459
Debt (note 4)...............................................     895,607
 963,292
Other liabilities...........................................      10,020
  10,604
                                                               ---------
- ----------
          Total Liabilities.................................     971,888
1,005,913
Members' deficit............................................    (234,385)
(241,770)
                                                               ---------
- ----------
Commitments and contingencies
          Total liabilities and members' deficit............   $ 737,503       $
 764,143
                                                               =========
==========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-470
   665

                        BRESNAN COMMUNICATIONS GROUP LLC

      CONSOLIDATED STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY (DEFICIT)

<Table>
<Caption>

PERIOD FROM

JANUARY 1,
                                                               YEAR ENDED
2000 TO
                                                              DECEMBER 31,
FEBRUARY 14,
                                                                  1999
 2000
                                                              ------------
- ------------
                                                                 (AMOUNTS IN
THOUSANDS)
                                                           

REVENUE.....................................................   $ 283,574       $
 37,102
Operating costs and expenses:
  Programming (note 6)......................................      72,355
 10,178
  Operating.................................................      31,624
  4,857
  Selling, general and administrative (note 6)..............      67,351
 10,414
  Organizational and divestiture costs......................       5,281
    865
  Depreciation and amortization.............................      59,752
  8,095
                                                               ---------
- ---------
                                                                 236,363
 34,409
                                                               ---------
- ---------
     Operating income.......................................      47,211
  2,693

OTHER INCOME (EXPENSE):
  Interest expense:
     Related party (note 4).................................        (152)
     --
     Other..................................................     (67,139)
 (9,522)
  Gain (loss) on sale of cable television systems...........         556
     --
  Other, net................................................        (900)
   (106)
                                                               ---------
- ---------
                                                                 (67,635)
 (9,628)
                                                               ---------
- ---------
Net earnings (loss).........................................     (20,424)
 (6,935)

MEMBERS' EQUITY (DEFICIT):
  Beginning of period.......................................     381,748
(234,385)
  Capital contributions by members..........................     136,500
     --
  Capital distributions to members..........................    (732,209)
   (450)
                                                               ---------
- ---------
  End of period.............................................   $(234,385)
$(241,770)
                                                               =========
=========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-471
   666

                        BRESNAN COMMUNICATIONS GROUP LLC

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>

PERIOD FROM

JANUARY 1,
                                                               YEAR ENDED
2000 TO
                                                              DECEMBER 31,
FEBRUARY 14,
                                                                  1999
 2000
                                                              ------------
- ------------
                                                                 (AMOUNTS IN
THOUSANDS)
                                                           

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................   $ (20,424)
$ (6,935)
  Adjustments to reconcile net earnings to net cash provided
     by operating activities:
     Depreciation and amortization..........................      59,752
  8,095
     Amortization of debt discount and deferred financing
      costs.................................................      18,683
  2,345
     Gain on sale of cable television systems...............        (556)
     --
     Other, net.............................................          --
    689
     Changes in operating assets and liabilities, net of
      effects of acquisitions:
       Change in receivables................................         621
    (56)
       Change in other assets...............................         429
     37
       Change in accounts payable, accrued expenses, accrued
        interest and other liabilities......................      25,457
(34,227)
                                                               ---------
- --------
          Net cash provided by (used in) operating
            activities......................................      83,962
(30,052)
                                                               ---------
- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expended for property and equipment and for
     franchise costs........................................     (90,879)
 (6,642)
  Cash paid in acquisitions.................................     (78,680)
(36,177)
  Cash received in disposals................................       4,956
    200
  Change in restricted cash.................................      46,999
    (11)
                                                               ---------
- --------
          Net cash used in investing activities.............    (117,604)
(42,630)
                                                               ---------
- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Change in bank overdraft..................................          --
  1,542
  Borrowings under note agreement...........................     597,530
 67,000
  Proceeds from Senior Notes................................     170,000
     --
  Proceeds from Senior Discount Notes.......................     175,021
     --
  Repayments under note agreement...........................    (294,672)
 (1,405)
  Deferred finance costs paid...............................     (19,169)
     --
  Contributions by members..................................     136,500
     --
  Distributions to members..................................    (732,209)
   (450)
                                                               ---------
- --------
          Net cash provided by financing activities.........      33,001
 66,687
                                                               ---------
- --------
          Net decrease in cash..............................        (641)
 (5,995)
CASH AND CASH EQUIVALENTS:
  Beginning of period.......................................       6,636
  5,995
                                                               ---------
- --------
  End of period.............................................   $   5,995
$     --
                                                               =========
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION --
  Cash paid during the period for interest..................   $  58,695
$ 17,603
                                                               =========
========
</Table>

          See accompanying notes to consolidated financial statements.
                                      F-472
   667

                        BRESNAN COMMUNICATIONS GROUP LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    DECEMBER 31, 1999 AND FEBRUARY 14, 2000
                             (AMOUNTS IN THOUSANDS)

(1) BASIS OF PRESENTATION

     Bresnan Communications Group LLC and its subsidiaries ("BCG" or the
"Company") are wholly owned by Bresnan Communications Company Limited
Partnership, a Michigan limited partnership ("BCCLP"). BCG is a Delaware limited
liability company formed on August 5, 1998 for the purpose of acting as
co-issuer with its wholly-owned subsidiary, Bresnan Capital Corporation ("BCC"),
of $170,000 aggregate principal amount at maturity of 8% Senior Notes and
$275,000 aggregate principal amount at maturity of 9.25% Senior Discount Notes,
both due in 2009 (collectively the "Notes"). Also, at this time, BTC borrowed
approximately $508,000 of $650,000 available under a new credit facility (the
"Senior Credit Facility"). (See Note 4, Debt.) Prior to the issuance of the
Notes on February 2, 1999, BCCLP completed the terms of a contribution agreement
dated June 3, 1998, as amended, whereby certain affiliates of AT&T Broadband and
Internet Services, formerly Tele-Communications, Inc. ("TCI"), contributed
certain cable television systems along with assumed TCI debt of approximately
$708,854 to BCCLP which was repaid with the proceeds of the Notes and the Senior
Credit Facility. In addition, Blackstone BC Capital Partners L.P. ("Blackstone")
and affiliates contributed $136,500 to BCCLP. Upon completion of the Notes
offering on February 2, 1999 BCCLP contributed all of its assets and liabilities
to BCG, which formed a wholly owned subsidiary, Bresnan Telecommunications
Company LLC ("BTC"), into which it contributed all of its assets and certain
liabilities. The above noted contributed assets and liabilities were accounted
for at predecessor cost because of the common ownership and control of TCI and
have been reflected in the accompanying financial statements in a manner similar
to a pooling of interests.

     The consolidated financial statements include the accounts of BCG and those
of its wholly owned subsidiary, BTC, subsequent to the aforementioned formation
transaction.

     The Company owns and operates cable television systems in small- and
medium-sized communities in the midwestern United States.

     Prior to the transactions noted above, TCI and William J. Bresnan and
certain entities which he controls (collectively, the "Bresnan Entities"), held
78.4% and 21.6% interests, respectively, in BCCLP. As of February 2, 1999, TCI,
Blackstone and the Bresnan Entities held 50.00%, 39.79% and 10.21% interests,
respectively. On February 14, 2000, these interests were sold to Charter
Communications Holding Company, LLC. (See Note 8, Sale of the Company.)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a) Cash Equivalents

     Cash equivalents consist of investments which are readily convertible into
cash and have maturities of three months or less at the time of acquisition.

  (b) Trade and Other Receivables

     Receivables are reflected net of an allowance for doubtful accounts. Such
allowance at December 31, 1999 and February 14, 2000 was not significant.

  (c) Property and Equipment

     Property and equipment is stated at cost, including acquisition costs
allocated to tangible assets acquired. Construction costs, including interest
during construction and applicable overhead, are capitalized. During the year
ended December 31, 1999 and the period ended February 14, 2000, interest
capitalized was $1,027 and $137, respectively.

                                      F-473
   668
                        BRESNAN COMMUNICATIONS GROUP LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    DECEMBER 31, 1999 AND FEBRUARY 14, 2000
                     (AMOUNTS IN THOUSANDS) -- (CONTINUED)

     Depreciation is computed on a straight-line basis using estimated useful
lives of 3 to 15 years for distribution systems and 3 to 40 years for support
equipment and buildings.

     Repairs and maintenance are charged to operations, and renewals and
additions are capitalized. At the time of ordinary retirements, sales or other
dispositions of property, the original cost and cost of removal of such property
are charged to accumulated depreciation, and salvage, if any, is credited
thereto. Gains or losses are only recognized in connection with the sales of
properties in their entirety.

  (d) Franchise Costs

     Franchise costs represent the difference between the cost of acquiring
cable television systems and amounts allocated to their tangible assets. Such
amounts are generally amortized on a straight-line basis over 40 years. Costs
incurred in negotiating and renewing franchise agreements are amortized on a
straight-line basis over the life of the franchise, generally 10 to 20 years.

  (e) Impairment of Long-Lived Assets

     Management periodically reviews the carrying amounts of property and
equipment and identifiable intangible assets to determine whether current events
or circumstances warrant adjustments to such carrying amounts. If an impairment
adjustment is deemed necessary, such loss is measured by the amount that the
carrying value of such assets exceeds their fair value. Considerable management
judgment is necessary to estimate the fair value of assets. Accordingly, actual
results could vary significantly from such estimates. Assets to be disposed of
are carried at the lower of their financial statement carrying amount or fair
value less costs to sell.

  (f) Financial Instruments

     The Company has entered into fixed interest rate exchange agreements
("Interest Rate Swaps") which are used to manage interest rate risk arising from
its financial liabilities. Such Interest Rate Swaps are accounted for as a
hedge; accordingly, amounts receivable or payable under the Interest Rate Swaps
are recognized as adjustments to interest expense. These instruments are not
used for trading purposes.

     The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which is effective for all fiscal years
beginning after June 15, 2000. SFAS 133 establishes accounting and reporting
standards for derivative instruments and hedging activities by requiring that
all derivative instruments be reported as assets or liabilities and measured at
their fair values. Under SFAS 133, changes in the fair values of derivative
instruments are recognized immediately in earnings unless those instruments
qualify as hedges of the (1) fair values of existing assets, liabilities, or
firm commitments, (2) variability of cash flows of forecasted transactions, or
(3) foreign currency exposures of net investments in foreign operations.
Although management has not completed its assessment of the impact of SFAS 133
on its combined results of operations and financial position, management
estimates that the impact of SFAS 133 will not be material.

  (g) Income Taxes

     The majority of BCG's net assets were historically held in partnerships. In
addition, BCG has been formed as a limited liability company, to be treated for
tax purposes as a flow-through entity. Accordingly, no provision has been made
for income tax expense or benefit in the accompanying combined financial
statements as the earnings or losses of Bresnan Communications Group LLC will be
reported in the respective tax returns of BCG's members. (See Note 5, Income
Taxes).

                                      F-474
   669

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

                                 $1,943,000,000

                               OFFER TO EXCHANGE

                         9.625% SENIOR NOTES DUE 2009,
                       10.000% SENIOR NOTES DUE 2011, AND
                    11.750% SENIOR DISCOUNT NOTES DUE 2011,

                          FOR ANY AND ALL OUTSTANDING
                         9.625% SENIOR NOTES DUE 2009,
                       10.000% SENIOR NOTES DUE 2011, AND
                    11.750% SENIOR DISCOUNT NOTES DUE 2011,

                                RESPECTIVELY, OF

                             CHARTER COMMUNICATIONS

                                 HOLDINGS, LLC

                                      AND

                             CHARTER COMMUNICATIONS

                          HOLDINGS CAPITAL CORPORATION

     NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO ISSUE ONLY THE NEW NOTES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   670

                                    PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

INDEMNIFICATION UNDER THE LIMITED LIABILITY COMPANY AGREEMENT OF CHARTER
HOLDINGS.

     The limited liability company agreement of Charter Holdings provides that
the members, the manager, the directors, their affiliates or any person who at
any time serves or has served as a director, officer, employee or other agent of
any member or any such affiliate, and who, in such capacity, engages or has
engaged in activities on behalf of Charter Holdings, shall be indemnified and
held harmless by Charter Holdings to the fullest extent permitted by law from
and against any losses, damages, expenses, including attorneys' fees, judgments
and amounts paid in settlement actually and reasonably incurred by or in
connection with any claim, action, suit or proceeding arising out of or
incidental to such indemnifiable person's conduct or activities on behalf of
Charter Holdings. Notwithstanding the foregoing, no indemnification is available
under the limited liability company agreement in respect of any such claim
adjudged to be primarily the result of bad faith, willful misconduct or fraud of
an indemnifiable person. Payment of these indemnification obligations shall be
made from the assets of Charter Holdings and the members shall not be personally
liable to an indemnifiable person for payment of indemnification.

INDEMNIFICATION UNDER THE DELAWARE LIMITED LIABILITY COMPANY ACT.

     Section 18-108 of the Delaware Limited Liability Company Act authorizes a
limited liability company to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever,
subject to such standards and restrictions, if any, as are set forth in its
limited liability company agreement.

INDEMNIFICATION UNDER THE BY-LAWS OF CHARTER CAPITAL.

     The by-laws of Charter Capital provide that Charter Capital, to the
broadest and maximum extent permitted by applicable law, will indemnify each
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 such
person is or was a director or officer of Charter Capital, or is or was serving
at the request of Charter Capital 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 such person in connection with
such action, suit or proceeding. To the extent that a director, officer,
employee or agent of Charter Capital has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in the
preceding paragraph, or in defense of any claim, issue or matter, such person
will be indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by such person. Expenses, including attorneys' fees,
incurred by a director or officer in defending any civil or criminal action,
suit or proceeding may be paid by Charter Capital in advance of the final
disposition of such action, suit or proceeding, as authorized by the board of
directors of Charter Capital, upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that such director or officer was not entitled to be indemnified by
Charter Capital as authorized in the by-laws of Charter Capital. The
indemnification and advancement of expenses provided by, or granted pursuant to,
the by-laws of Charter Capital will not be deemed exclusive and are declared
expressly to be non-exclusive of any other rights to which those seeking
indemnification or advancements of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity

                                       II-1
   671

while holding an office, and, unless otherwise provided when authorized or
ratified, will continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.

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 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 stockholders 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 stockholders,

     (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.

ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

EXHIBITS

<Table>
           
 2.1          Merger Agreement, dated March 31, 1999, by and between
              Charter Communications Holdings, LLC and Marcus Cable
              Holdings, LLC (Incorporated by reference 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))
</Table>

                                       II-2
   672
<Table>
           
 2.2(a)       Membership Purchase Agreement, dated as of January 1, 1999,
              by and between ACEC Holding Company, LLC and Charter
              Communications, Inc. (now called Charter Investment, Inc.)
              (Incorporated by reference 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))
 2.2(b)       Assignment of Membership Purchase Agreement, dated as of
              February 23, 1999, by and between Charter Communications,
              Inc. (now called Charter Investment, Inc.) and Charter
              Communications Entertainment II, LLC (Incorporated by
              reference 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))
 2.3(a)       Asset Purchase Agreement, dated as of February 17, 1999,
              among Greater Media, Inc., Greater Media Cablevision, Inc.
              and Charter Communications, Inc. (now called Charter
              Investment, Inc.) (Incorporated by reference 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))
 2.3(b)       Assignment of Asset Purchase Agreement, dated as of February
              23, 1999, by and between Charter Communications, Inc. (now
              called Charter Investment, Inc.) and Charter Communications
              Entertainment I, LLC (Incorporated by reference 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))
 2.4          Purchase Agreement, dated as of February 23, 1999, by and
              among Charter Communications, Inc. (now called Charter
              Investment, Inc.), Charter Communications, LLC, Renaissance
              Media Holdings LLC and Renaissance Media Group LLC
              (Incorporated by reference to the report on Form 8-K of
              Renaissance Media Group LLC filed on March 1, 1999 (File No.
              333-56679))
 2.5          Purchase Agreement, dated as of March 22, 1999, among
              Charter Communications, Inc. (now called Charter Investment,
              Inc.), Charter Communications, LLC, Charter Helicon, LLC,
              Helicon Partners I, L.P., Baum Investments, Inc. and the
              limited partners of Helicon Partners I, L.P. (Incorporated
              by reference 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))
 2.6(a)       Asset and Stock Purchase Agreement, dated April 20, 1999,
              between InterMedia Partners of West Tennessee, L.P. and
              Charter Communications, LLC (Incorporated by reference 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))
 2.6(b)       Stock Purchase Agreement, dated April 20, 1999, between TCID
              1P-V, Inc. and Charter Communications, LLC (Incorporated by
              reference 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))
 2.6(c)       RMG Purchase Agreement, dated as of April 20, 1999, between
              Robin Media Group, Inc., InterMedia Partners of West
              Tennessee, L.P. and Charter RMG, LLC (Incorporated by
              reference 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))
 2.6(d)       Asset Exchange Agreement, dated April 20, 1999, among
              InterMedia Partners Southeast, Charter Communications, LLC,
              Charter Communications Properties, LLC, and Marcus Cable
              Associates, L.L.C. (Incorporated by reference 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))
</Table>

                                       II-3
   673
<Table>
           
 2.6(d)(i)    Amendment to Asset Exchange Agreement, made as of October 1,
              1999, by and among InterMedia Partners Southeast and Charter
              Communications, LLC, Charter Communications Properties, LLC
              and Marcus Cable Associates, L.L.C. (Incorporated by
              reference 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))
 2.6(e)       Asset Exchange Agreement, dated April 20, 1999, among
              InterMedia Partners, a California Limited Partnership,
              Brenmor Cable Partners, L.P. and Robin Media Group, Inc.
              (Incorporated by reference 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))
 2.6(f)       Common Agreement, dated April 20, 1999, between InterMedia
              Partners, InterMedia Partners Southeast, InterMedia Partners
              of West Tennessee, L.P., InterMedia Capital Partners IV,
              L.P., InterMedia Partners IV, L.P., Brenmor Cable Partners,
              L.P., TCID IP-V, Inc., Charter Communications, LLC, Charter
              Communications Properties, LLC, Marcus Cable Associates,
              L.L.C. and Charter RMG, LLC (Incorporated by reference to
              Amendment No. 3 to the registration statement on Form S-4 of
              Charter Communications Holdings, LLC and Charter
              Communications Holdings Capital Corporation filed on July 2,
              1999 (File No. 333-77499)) (Portions of this exhibit have
              been omitted pursuant to a request for confidential
              treatment.)
 2.7(a)       Purchase and Sale Agreement, dated as of April 26, 1999, by
              and among InterLink Communications Partners, LLLP, the
              sellers listed therein and Charter Communications, Inc. (now
              called Charter Investment, Inc.) (Incorporated by reference
              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))
 2.7(b)       Purchase and Sale Agreement, dated as of April 26, 1999, by
              and among Rifkin Acquisition Partners, L.L.L.P., the sellers
              listed therein and Charter Communications, Inc. (now called
              Charter Investment, Inc.) (Incorporated by reference 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))
 2.7(c)       RAP Indemnity Agreement, dated April 26, 1999, by and among
              the sellers listed therein and Charter Communications, Inc.
              (now called Charter Investment, Inc.) (Incorporated by
              reference 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))
 2.7(d)       Assignment of Purchase Agreement with InterLink
              Communications Partners, LLLP, dated as of June 30, 1999, by
              and between Charter Communications, Inc. (now called Charter
              Investment, Inc.) and Charter Communications Operating, LLC
              (Incorporated by reference 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))
 2.7(e)       Assignment of Purchase Agreement with Rifkin Acquisition
              Partners L.L.L.P., dated as of June 30, 1999, by and between
              Charter Communications, Inc. (now called Charter Investment,
              Inc.) and Charter Communications Operating, LLC
              (Incorporated by reference 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))
 2.7(f)       Assignment of RAP Indemnity Agreement, dated as of June 30,
              1999, by and between Charter Communications, Inc. (now
              called Charter Investment, Inc.) and Charter Communications
              Operating, LLC (Incorporated by reference 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))
</Table>

                                       II-4
   674
<Table>
           
 2.7(g)       Amendment to the Purchase Agreement with InterLink
              Communications Partners, LLLP, dated June 29, 1999
              (Incorporated by reference 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))
 2.7(h)       Contribution Agreement, dated as of September 14, 1999, by
              and among Charter Communications Operating, LLC, Charter
              Communications Holding Company, LLC, Charter Communications,
              Inc., Paul G. Allen and the certain other individuals and
              entities listed on the signature pages thereto (Incorporated
              by reference 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))
 2.7(i)       Form of First Amendment to the Contribution Agreement dated
              as of September 14, 1999, by and among Charter
              Communications Operating, LLC, Charter Communications
              Holding Company, LLC, Charter Communications, Inc. and Paul
              G. Allen (Incorporated by reference to Amendment No. 5 to
              the registration statement on Form S-1 of Charter
              Communications, Inc. filed on November 4, 1999 (File No.
              333-83887))
 2.8          Contribution and Sale Agreement dated as of December 30,
              1999, by and among Charter Communications Holding Company,
              LLC, CC VII Holdings, LLC and Charter Communications VII,
              LLC (Incorporated by reference to the report on Form 8-K of
              Charter Communications Holdings, LLC and Charter
              Communications Holdings Capital Corporation filed on January
              18, 2000 (File No. 333-77499))
 2.9          Contribution and Sale Agreement dated as of December 30,
              1999, by and among Charter Communications Holding Company,
              LLC and Charter Communications Holdings, LLC (Incorporated
              by reference to the report on Form 8-K of Charter
              Communications Holdings, LLC and Charter Communications
              Holdings Capital Corporation filed on January 18, 2000 (File
              No. 333-77499))
 2.10(a)      Securities Purchase Agreement, dated May 13, 1999, by and
              between Avalon Cable Holdings LLC, Avalon Investors, L.L.C.,
              Avalon Cable of Michigan Holdings, Inc. and Avalon Cable LLC
              and Charter Communications Holdings LLC and Charter
              Communications, Inc. (now called Charter Investment, Inc.)
              (Incorporated by reference to Amendment No. 1 to the
              registration statement on Form S-4 of Avalon Cable of
              Michigan LLC, Avalon Cable of Michigan Inc., Avalon Cable of
              New England LLC and Avalon Cable Finance Inc. filed on May
              28, 1999 (File No. 333-75453))
 2.10(b)      Assignment and Contribution Agreement, entered into as of
              October 11, 1999 by and between Charter Communications
              Holding Company, LLC and Charter Communications, Inc.
              (Incorporated by reference 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))
 2.10(c)      Assignment Agreement effective as of June 16, 1999, by and
              among Charter Communications, Inc., Charter Communications
              Holdings LLC, Charter Communications Holding Company, LLC,
              Avalon Cable Holdings LLC, Avalon Investors, L.L.C., Avalon
              Cable of Michigan Holdings, Inc. and Avalon Cable LLC
              (Incorporated by reference 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))
 2.11(a)      Purchase and Contribution Agreement, dated as of May 26,
              1999, by and among Falcon Communications, L.P., Falcon
              Holding Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable
              Trust, Falcon Holding Group, Inc. and DHN Inc. and Charter
              Communications, Inc. (now called Charter Investment,
              Inc.) (Incorporated by reference 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))
</Table>

                                       II-5
   675

<Table>
           
 2.11(b)      First Amendment to Purchase and Contribution Agreement,
              dated as of June 22, 1999, by and among Charter
              Communications, Inc., Charter Communications Holding
              Company, LLC, Falcon Communications, L.P., Falcon Holding
              Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
              Falcon Holding Group, Inc. and DHN Inc. (Incorporated by
              reference to the quarterly report on Form 10-Q filed by
              Falcon Communications, L.P. and Falcon Funding Corporation
              on August 13, 1999 (File Nos. 333-60776 and 333-55755))
 2.11(c)      Form of Second Amendment to Purchase And Contribution
              Agreement, dated as of October 27, 1999, by and among
              Charter Investment, Inc., Charter Communications Holding
              Company, LLC, Falcon Communications, L.P., Falcon Holding
              Group, L.P., TCI Falcon Holdings, LLC, Falcon Holding Group,
              Inc. and DHN Inc. (Incorporated by reference to Amendment
              No. 5 to the registration statement on Form S-1 of Charter
              Communications, Inc. filed on November 4, 1999 (File No.
              333-83887))
 2.11(d)      Third Amendment to Purchase and Contribution Agreement dated
              as of November 12, 1999, by and among Charter
              Communications, Inc., Falcon Communications L.P., Falcon
              Holdings Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable
              Trust, Falcon Holding Group, Inc. and DHN Inc. (Incorporated
              by reference to the report on Form 8-K of CC VII Holdings,
              LLC and Falcon Funding Corporation filed on November 26,
              1999 (File No. 033-60776))
 2.12(a)      Purchase Agreement, dated as of May 21, 1999, among
              Blackstone TWF Capital Partners, L.P., Blackstone TWF
              Capital Partners A L.P., Blackstone TWF Capital Partners B
              L.P., Blackstone TWF Family Investment Partnership, L.P.,
              RCF Carry, LLC, Fanch Management Partners, Inc., PBW Carried
              Interest, Inc., RCF Indiana Management Corp, The Robert C.
              Fanch Revocable Trust, A. Dean Windry, Thomas Binning, Jack
              Pottle, SDG/Michigan Communications Joint Venture, Fanch-JV2
              Master Limited Partnership, Cooney Cable Associates of Ohio,
              Limited Partnership, North Texas Cablevision, LTD., Post
              Cablevision of Texas, Limited Partnership, Spring Green
              Communications, L.P., Fanch-Narragansett CSI Limited
              Partnership, and Fanch Cablevision of Kansas General
              Partnership and Charter Communications, Inc. (now called
              Charter Investment, Inc.) (Incorporated by reference 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))
 2.12(b)      Assignment of Purchase Agreement by and between Charter
              Investment, Inc. and Charter Communications Holding Company,
              LLC, effective as of September 21, 1999 (Incorporated by
              reference 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))
 2.13         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 (now
              called Charter Investment, Inc.) (Incorporated by reference
              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))
 2.14(a)(1)   Asset Purchase Agreement, dated as of February 26, 2001,
              among Marcus Cable of Alabama, L.L.C., on the one hand, and
              TCI of Selma, Inc., TCI of Lee County, Inc., TCI Cablevision
              of Alabama, Inc., Alabama T.V. Cable, Inc. and TCI
              Southeast, Inc., on the other hand (Incorporated by
              reference to the annual report on Form 10-K filed by Charter
              Communications, Inc. on March 6, 2001 (File No. 000-27927))
 2.14(a)(2)   First Amendment to Asset Purchase Agreement, dated as of
              June 30, 2001, between Marcus Cable of Alabama, L.L.C., on
              the one hand, and TCI of Selma, Inc., TCI of Lee County,
              Inc., TCI Cablevision of Alabama, Inc., Alabama T.V. Cable,
              Inc. and TCI Southeast, Inc., on the other*
</Table>


                                       II-6
   676

<Table>
           
 2.14(b)(1)   Reorganization Agreement, dated as of February 26, 2001,
              among Charter Communications, Inc., on the one hand, and TCI
              TKR of Alabama, Inc. and TCI Southeast, Inc., on the other
              hand (Incorporated by reference to the annual report on Form
              10-K filed by Charter Communications, Inc. on March 6, 2001
              (File No. 000-27927))
 2.14(b)(2)   First Amendment to Reorganization Agreement, dated as of
              June 30, 2001, between Charter Communications, Inc. and
              Marcus Cable of Alabama, L.L.C., on the one hand, and TCI
              TKR of Alabama, Inc. and TCI Southeast on the other*
 2.14(c)(1)   Asset Purchase Agreement, dated as of February 26, 2001,
              among Falcon Cable Systems Company II, L.P., on the one
              hand, and AT&T Broadband, LLC, Communication Services, Inc.,
              Ohio Cablevision Network, Inc., TCI Cablevision of
              California, Inc. and TCI Washington Associates, L.P., on the
              other hand (Incorporated by reference to the annual report
              on Form 10-K filed by Charter Communications, Inc. on March
              6, 2001 (File No. 000-27927))
 2.14(c)(2)   First Amendment to Asset Purchase Agreement, dated as of
              June 30, 2001, between Falcon Cable Systems Company II,
              L.P., on the one hand and AT&T Broadband, LLC,
              Communications Services, Inc., Ohio Cablevision Network,
              Inc., TCI Cablevision of California, Inc. and TCI Washington
              Associates, L.P., on the other*
 2.14(d)(1)   Reorganization Agreement, dated as of February 26, 2001,
              among Charter Communications, Inc., on the one hand, and TCI
              Cablevision of Nevada, Inc. and TCI West, Inc., on the other
              hand (Incorporated by reference to the annual report on Form
              10-K filed by Charter Communications, Inc. on March 6, 2001
              (File No. 000-27927))
 2.14(d)(2)   First Amendment to Reorganization Agreement, dated as of
              June 30, 2001, between Charter Communications, Inc., on the
              one hand, and TCI Cablevision of Nevada, Inc. and TCI West,
              Inc., on the other*
 2.14(e)(1)   Asset Purchase Agreement, dated as of February 26, 2001,
              among Charter Communications, Inc., Interlink Communications
              Partners, LLC, Charter Communications, LLC and Falcon Cable
              Media, on the one hand, and TCI Cable Partners of St. Louis,
              L.P. and TCI Cablevision of Missouri, Inc., on the other
              hand (Incorporated by reference to the annual report on Form
              10-K filed by Charter Communications, Inc. on March 6, 2001
              (File No. 000-27927))
 2.14(e)(2)   First Amendment to Asset Purchase Agreement, dated as of
              June 30, 2001, between Charter Communications, Inc.,
              Interlink Communications Partners, LLC, Charter
              Communications, LLC and Falcon Cable Media, on the one hand,
              and TCI Cable Partners of St. Louis, L.P. and TCI
              Cablevision of Missouri, Inc., on the other*
 2.14(f)(1)   Asset Purchase Agreement, dated as of February 26, 2001,
              among Charter Communications Entertainment I, LLC, on the
              one hand, and St. Louis Telecommunications, Inc., TCI Cable
              Partners of St. Louis, L.P., TCI Cablevision of Missouri,
              Inc., TCI of Illinois, Inc., TCI TKR of Central Florida,
              Inc. and TCI Holdings, Inc., on the other hand (Incorporated
              by reference to the annual report on Form 10-K filed by
              Charter Communications, Inc. on March 6, 2001 (File No.
              000-27927))
 2.14(f)(2)   First Amendment to Asset Purchase Agreement, dated as of
              June 30, 2001, between Charter Communications Entertainment
              I, LLC, on the one hand, and St. Louis Telecommunications,
              Inc., TCI Cable Partners of St. Louis, L.P., TCI Cablevision
              of Missouri, Inc., TCI of Illinois, Inc., TCI TKR of Central
              Florida, Inc. and TCI Holdings, Inc., on the other*
</Table>


                                       II-7
   677

<Table>
           
 2.14(g)(1)   Agreement Regarding Closing Matters, dated as of February
              26, 2001, among Charter Communications, Inc., on behalf of
              itself, Marcus Cable of Alabama, L.L.C., Falcon Cable
              Systems Company II, L.P., Interlink Communications Partners,
              LLC, Charter Communications, LLC, Falcon Cable Media, and
              Charter Communications Entertainment I, LLC, on the one hand
              and AT&T Broadband, LLC, on behalf of itself, TCI TKR of
              Alabama, Inc., TCI of Selma, Inc., TCI of Lee County, TCI
              Cablevision of Alabama, Inc. and Alabama T.V. Cable, Inc.,
              TCI Southeast, Inc., TCI Cablevision of Nevada, Inc., TCI
              West, Inc., Communication Services, Inc., Ohio Cablevision
              Network, Inc., TCI Cablevision of California, Inc., TCI
              Washington Associates, L.P., TCI of Illinois, Inc., TCI
              Cablevision of Missouri, Inc., St. Louis
              Tele-Communications, Inc., TCI Cable Partners of St. Louis,
              L.P., TCI TKR of Central Florida, Inc. and TCI Holdings,
              Inc., on the other hand (Incorporated by reference to the
              annual report on Form 10-K filed by Charter Communications,
              Inc. on March 6, 2001 (File No. 000-27927))
 2.14(g)(2)   First Amendment to Agreement Regarding Closing Matters,
              dated as of June 30, 2001, among Charter Communications,
              Inc., on behalf of the Charter Entities, and AT&T Broadband,
              LLC, on behalf of the AT&T Entities*
 2.14(h)      Assignment Letter Agreement, dated as of June 30, 2001,
              between Charter Communications, Inc. and Marcus Cable of
              Alabama, L.L.C.*
 2.14(i)      Assignment Letter Agreement, dated as of June 30, 2001,
              between Charter Communications, Inc. and Falcon Cable
              Systems Company II, L.P.*
 3.1          Certificate of Formation of Charter Communications Holdings,
              LLC (Incorporated by reference 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))
 3.2          Limited Liability Company Agreement of Charter
              Communications Holdings, LLC (Incorporated by reference 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))
 3.3          Certificate of Incorporation of Charter Communications
              Holdings Capital Corporation (Incorporated by reference 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))
 3.4          By-Laws of Charter Communications Holdings Capital
              Corporation (Incorporated by reference 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))
 4.1(a)(1)    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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
 4.1(a)(2)    Exchange and Registration Rights Agreement relating to
              9.625% Senior Notes due 2009, dated as of May 15, 2001,
              among Charter Communications Holding Company, LLC, Charter
              Communications Capital Corporation, Goldman, Sachs & Co.,
              Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
</Table>


                                       II-8
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<Table>
           
 4.1(b)(1)    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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
 4.1(b)(2)    Exchange and Registration Rights Agreement relating to
              10.000% Senior Notes due 2011, dated as of May 15, 2001,
              among Charter Communications Holding Company, LLC, Charter
              Communications Capital Corporation, Goldman, Sachs & Co.,
              Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
 4.1(c)(1)    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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
 4.1(c)(2)    Exchange and Registration Rights Agreement relating to
              11.750% Senior Discount Notes due 2011, dated as of May 15,
              2001, among Charter Communications Holding Company, LLC,
              Charter Communications Capital Corporation, Goldman, Sachs &
              Co., Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
 5.1          Opinion of Paul, Hastings, Janofsky & Walker LLP regarding
              legality*
 8.1          Opinion of Paul, Hastings, Janofsky & Walker LLP regarding
              tax matters*
10.1          Credit Agreement, dated as of March 18, 1999, between
              Charter Communications Operating, LLC, and certain lenders
              and agents named therein (Incorporated by reference 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))
10.1(a)       First Amendment to Credit Agreement dated as of June 28,
              1999 between Charter Communications Operating, LLC, Charter
              Communications Holdings LLC and certain lenders and agents
              named therein (Incorporated by reference 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))
10.1(b)       Second Amendment to Credit Agreement dated as of December
              14, 1999 between Charter Communications Operating, LLC,
              Charter Communications Holdings LLC and certain lenders and
              agents named therein (Incorporated by reference 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))
10.1(c)       Third Amendment to Credit Agreement dated as of March 18,
              2000, between Charter Communications Operating, LLC, Charter
              Communications, LLC and certain lenders and agents named
              therein (Incorporated by reference to the annual report on
              Form 10-K filed by Charter Communications, Inc. on March 30,
              2000 (File No. 333-83887))
</Table>


                                       II-9
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<Table>
           
10.2(a)(1)    Form of Second Amended Management Agreement, dated as of
              November 9, 1999, by and among Charter Investment, Inc.,
              Charter Communications, Inc. and Charter Communications
              Operating, LLC (Incorporated by reference 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))
10.2(b)       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 the registration statement on Form S-4 of
              Charter Communications Holdings, LLC filed on February 2,
              2001 (File No. 333-54902))
10.2(c)       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 Amendment No. 3 to the registration statement on Form S-1
              of Charter Communications, Inc. filed on October 18, 1999
              (File No. 333-83887))
10.2(d)       Management Agreement, dated as of November 12, 1999, by and
              between CC VI Operating Company, LLC and Charter
              Communications, Inc. (Incorporated by reference 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))
10.2(e)       Management Agreement, dated as of November 12, 1999 by and
              between Falcon Cable Communications, LLC and Charter
              Communications, Inc. (Incorporated by reference 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))
10.2(f)       Management Agreement dated as of February 14, 2000, by and
              between CC VIII Operating, LLC, certain subsidiaries of CC
              VIII Operating, LLC and Charter Communications, Inc.
              (Incorporated by reference to the annual report on Form 10-K
              filed by Charter Communications, Inc. on March 30, 2000
              (File No. 333-83887))
10.3          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
              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))
10.4          Charter Communications Holdings, LLC 1999 Option Plan
              (Incorporated by reference 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))
10.4(a)       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 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))
10.4(b)       Form of Amendment No. 1 to the Charter Communications
              Holdings, LLC 1999 Option Plan (Incorporated by reference 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))
10.4(c)       Amendment No. 2 to the Charter Communications Holdings, LLC
              1999 Option Plan (Incorporated by reference to the annual
              report on Form 10-K filed by Charter Communications, Inc. on
              March 30, 2000 (File No. 333-83887))
</Table>

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10.5          Membership Interests Purchase Agreement, dated July 22,
              1999, by and between Charter Communications Holding Company,
              LLC and Paul G. Allen (Incorporated by reference 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))
10.6          Employment Agreement, dated as of August 28, 1998, between
              Jerald L. Kent and Paul G. Allen (Incorporated by reference
              to Amendment No. 5 to the registration statement on Form S-4
              of Charter Communications Holdings, LLC and Charter
              Communications Holdings Capital Corporation filed on August
              10, 1999 (File No. 333-77499))
10.7          Assignment of Employment Agreements, dated as of December
              23, 1998, between Paul G. Allen and Charter Communications,
              Inc. (now called Charter Investment, Inc.) (Incorporated by
              reference 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))
10.8(a)       Option Agreement, dated as of February 9, 1999, between
              Jerald L. Kent and Charter Communications Holdings, LLC
              (Incorporated by reference 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))
10.8(b)       Amendment to the Option Agreement, dated as of August 23,
              1999, between Jerald L. Kent and Charter Communications
              Holding Company, LLC (Incorporated by reference 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))
10.8(c)       Form of Amendment to the Option Agreement, dated as of
              November 8, 1999, by and among Jerald L. Kent, Charter
              Communications Holding Company, LLC and Charter
              Communications, Inc. (Incorporated by reference 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))
10.9          Letter Agreement, dated as of July 22, 1999 between Charter
              Communications Holding Company, LLC and Charter
              Communications Holdings, LLC (Incorporated by reference to
              Amendment No. 5 to the registration statement on Form S-4 of
              Charter Communications Holdings, LLC and Charter
              Communications Holdings Capital Corporation filed on August
              10, 1999 (File No. 333-77499))
10.10         Amendment to Membership Interests Purchase Agreement, dated
              as of August 10, 1999, by and among Charter Communications
              Holding Company, LLC, Vulcan Cable III Inc. and Paul G.
              Allen (Incorporated by reference 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))
10.11         Form of Assignment and Assumption Agreement, dated as of
              November 4, 1999, by and between Charter Investment, Inc.
              and Charter Communications, Inc. (Incorporated by reference
              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))
10.12         Form of Registration Rights Agreement, dated as of November
              12, 1999, by and among Charter Communications, Inc., Charter
              Investment, Inc., Vulcan Cable III Inc., Mr. Paul G. Allen,
              Mr. Jerald L. Kent, Mr. Howard L. Wood and Mr. Barry L.
              Babcock (Incorporated by reference 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))
10.13         Form of Consulting Agreement, dated as of November 1, 1999,
              by and between Howard L. Wood and Charter Communications,
              Inc. (Incorporated by reference 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))
</Table>

                                      II-11
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10.14         Form of Termination of Employment Agreement, dated as of
              November 1, 1999, by and between Howard L. Wood and Charter
              Investment, Inc., Communications, Inc. and Charter
              Communications Holding Company, LLC (Incorporated by
              reference 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))
10.15         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 Amendment No. 3
              to the registration statement on Form S-1 of Charter
              Communications, Inc. filed on October 18, 1999 (File No.
              333-83887))
10.16         Second Amended and Restated Credit Agreement dated as of
              February 2, 1999, as Amended and Restated as of January 2,
              2001 by and among CC VIII Operating, LLC, as borrower, CC
              VIII Holdings, LLC, as guarantor, and several financial
              institutions or entities named therein (Incorporated by
              reference to the annual report on Form 10-K filed by Charter
              Communications, Inc. on March 30, 2000 (File No. 333-83887))
10.17         Form of Credit Agreement, dated as of June 30, 1998, as
              Amended and Restated as of November 12, 1999, among Falcon
              Cable Communications, LLC, certain guarantors and several
              financial institutions or entities named therein
              (Incorporated by reference 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))
10.18         Credit Agreement, dated as of November 12, 1999, among CC VI
              Holdings, LLC, CC VI Operating Company, LLC and several
              financial institutions or entities named therein
              (Incorporated by reference to the report on Form 8-K of
              Charter Communications, Inc. filed on November 29, 1999
              (File No. 333-83887))
10.19         Amended and Restated Limited Liability Company Agreement for
              Charter Communications Holding Company, LLC, dated January
              1, 2001 (Incorporated by reference to the current report on
              Form 8-K of Charter Communications, Inc. filed on May 23,
              2001 (File No. 000-27927))
10.20         Letter Agreement, dated May 25, 1999, between Charter
              Communications, Inc. and Marc Nathanson (Incorporated by
              reference 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))
10.21         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 the current report on Form 8-K
              of Charter Communications, Inc. filed on February 29, 2000
              (File No. 333-83887))
10.22         Form of Exchange Agreement, dated as of November 12, 1999 by
              and among Charter Investments, Inc., Charter Communications,
              Inc., Vulcan Cable III Inc. and Paul G. Allen (Incorporated
              by reference 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))
10.23(a)      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 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))
10.23(b)      Form of 10.00% Senior Note due 2010 (included in Exhibit No.
              4.1(a)) (Incorporated by reference 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))
</Table>

                                      II-12
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<Table>
           
10.23(c)      Exchange and Registration Rights Agreement, dated January
              12, 2000, by and among Charter Communications Holdings, LLC,
              Charter Communications Holdings Capital Corporation,
              Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
              Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
              Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
              Securities (USA) Inc., First Union Securities, Inc., PNC
              Capital Markets, Inc. and SunTrust Equitable Securities
              Corporation, relating to the 10.00% Senior Notes due 2009
              (Incorporated by reference 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))
10.24(a)      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 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))
10.24(b)      Form of 10.25% Senior Note due 2010 (included in Exhibit No.
              4.2(a)) (Incorporated by reference 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))
10.24(c)      Exchange and Registration Rights Agreement, dated January
              12, 2000, by and among Charter Communications Holdings, LLC,
              Charter Communications Holdings Capital Corporation,
              Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
              Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
              Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
              Securities (USA) Inc., First Union Securities, Inc., PNC
              Capital Markets, Inc. and SunTrust Equitable Securities
              Corporation, relating to the 10.25% Senior Notes due 2010
              (Incorporated by reference 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))
10.25(a)      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 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))
10.25(b)      Form of 11.75% Senior Discount Note due 2010 (included in
              Exhibit No. 4.3(a)) (Incorporated by reference 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))
10.25(c)      Exchange and Registration Rights Agreement, dated January
              12, 2000, by and among Charter Communications Holdings, LLC,
              Charter Communications Holdings Capital Corporation,
              Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
              Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
              Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
              Securities (USA) Inc., First Union Securities, Inc., PNC
              Capital Markets, Inc. and SunTrust Equitable Securities
              Corporation, relating to the 11.75% Senior Discount Notes
              due 2010 (Incorporated by reference 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))
</Table>

                                      II-13
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<Table>
           
10.26(a)      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 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))
10.26(b)      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 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))
10.26(c)      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 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))
10.27         Indenture, dated as of April 9, 1998, by and among
              Renaissance Media (Louisiana) LLC, Renaissance Media
              (Tennessee) LLC, Renaissance Media Capital Corporation,
              Renaissance Media Group LLC and United States Trust Company
              of New York, as trustee (Incorporated by reference to the
              registration statement on Forms S-4 of Renaissance Media
              Group LLC, Renaissance Media (Tennessee) LLC, Renaissance
              Media (Louisiana) LLC and Renaissance Media Capital
              Corporation filed on June 12, 1998 (File No. 333-56679))
10.28         Indenture, dated January 15, 1996, by and among Rifkin
              Acquisition Partners, L.L.L.P., Rifkin Acquisition Capital
              Corp., as issuers, Cable Equities of Colorado Management
              Corp., FNI Management Corp., Cable Equities of Colorado,
              Ltd., Cable Equities, Inc. and Rifkin/Tennessee, Ltd., as
              Subsidiary Guarantors, and Marine Midland Bank, as trustee
              (Incorporated by reference to the registration statement on
              Form S-1 of Rifkin Acquisition Capital Corp. and Rifkin
              Acquisition Partners, L.L.P. filed on April 2, 1996 (File
              No. 333-3084))
10.29(a)      Indenture, dated as of December 10, 1998, by and among
              Avalon Cable of Michigan Holdings, Inc., Avalon Cable LLC
              and Avalon Cable Holdings Finance, Inc., as issuers and The
              Bank of New York, as trustee for the Notes (Incorporated by
              reference 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))
10.29(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 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))
10.30         Indenture relating to 5.75% Convertible Senior Notes due
              2005, dated as of October 25, 2000, among Charter
              Communications, Inc. and BNY Midwest Trust Company as
              trustee (Incorporated by reference to the quarterly report
              on Form 10-Q filed by Charter Communications, Inc. on
              November 14, 2000 (File No. 000-27927))
</Table>

                                      II-14
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<Table>
           
10.31         Registration Rights Agreement relating to 5.75% Convertible
              Senior Notes due 2005, dated as of October 30, 2000, among
              Charter Communications, Inc., Goldman, Sachs & Co., Morgan
              Stanley & Co. Incorporated, Bear, Stearns & Co., and Merrill
              Lynch Pierce, Fenner & Smith Incorporated (Incorporated by
              reference to the quarterly report on Form 10-Q filed by
              Charter Communications, Inc. on November 14, 2000 (File No.
              000-27927))
10.32(a)(1)   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 3/4% convertible senior notes due
              2009 (Incorporated by reference to the registration
              statement on Form S-4 filed by Charter Communications
              Holdings, LLC on February 2, 2001 (File No. 333-54902))
10.32(a)(2)   Exchange and Registration Rights Agreement, dated as of
              January 10, 2001, by and among Charter Communications
              Holdings, LLC, Charter Communications Holdings Capital
              Corporation, Morgan Stanley & Co., Incorporated, Goldman,
              Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
              Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
              Securities Corporation, relating to the 10 3/4% convertible
              senior notes due 2009 (Incorporated by reference to
              Amendment No. 1 to the registration statement on Form S-4
              filed by Charter Communications Holdings, LLC on February 8,
              2001 (File No. 333-54902))
10.32(b)(1)   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 1/8% convertible senior notes due
              2011 (Incorporated by reference to the registration
              statement on Form S-4 filed by Charter Communications
              Holdings, LLC on February 2, 2001 (File No. 333-54902))
10.32(b)(2)   Exchange and Registration Rights Agreement, dated as of
              January 10, 2001, by and among Charter Communications
              Holdings, LLC, Charter Communications Holdings Capital
              Corporation, Morgan Stanley & Co., Incorporated, Goldman,
              Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
              Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
              Securities Corporation, relating to the 11 1/8% convertible
              senior notes due 2011 (Incorporated by reference to
              Amendment No. 1 to the registration statement on Form S-4
              filed by Charter Communications Holdings, LLC on February 8,
              2001 (File No. 333-54902))
10.32(c)(1)   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 1/2% convertible senior discount
              notes due 2011 (Incorporated by reference to the
              registration statement on Form S-4 filed by Charter
              Communications Holdings, LLC on February 2, 2001 (File No.
              333-54902))
10.32(c)(2)   Exchange and Registration Rights Agreement, dated as of
              January 10, 2001, by and among Charter Communications
              Holdings, LLC, Charter Communications Holdings Capital
              Corporation, Morgan Stanley & Co., Incorporated, Goldman,
              Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
              Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
              Securities Corporation, relating to the 13 1/2% convertible
              senior discount notes due 2011 (Incorporated by reference to
              Amendment No. 1 to the registration statement on Form S-4
              filed by Charter Communications Holdings, LLC on February 8,
              2001 (File No. 333-54902))
10.33(a)(1)   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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
</Table>

                                      II-15
   685

<Table>
           
10.33(a)(2)   Exchange and Registration Rights Agreement relating to
              9.625% Senior Notes due 2009, dated as of May 15, 2001,
              among Charter Communications Holding Company, LLC, Charter
              Communications Capital Corporation, Goldman, Sachs & Co.,
              Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
10.34(a)(1)   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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
10.34(a)(2)   Exchange and Registration Rights Agreement relating to
              10.000% Senior Notes due 2011, dated as of May 15, 2001,
              among Charter Communications Holding Company, LLC, Charter
              Communications Capital Corporation, Goldman, Sachs & Co.,
              Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
10.35(a)(1)   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 the report on Form 8-K filed
              by Charter Communications, Inc. on May 30, 2001 (File No.
              000-27927))
10.35(a)(2)   Exchange and Registration Rights Agreement relating to
              11.750% Senior Discount Notes due 2011, dated as of May 15,
              2001, among Charter Communications Holding Company, LLC,
              Charter Communications Capital Corporation, Goldman, Sachs &
              Co., Morgan Stanley & Co. Incorporated, Banc of America
              Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
              Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
              Inc., JP Morgan, a Division of Chase Securities Inc., Credit
              Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
              Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
              Securities LLC (Incorporated by reference to the report on
              Form 8-K filed by Charter Communications, Inc. on May 30,
              2001 (File No. 000-27927))
10.36         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 the report on Form 8-K filed by Charter
              Communications, Inc. on May 30, 2001 (File No. 000-27927))
12.1          Statement Regarding Ratio of Earnings to Fixed Charges*
21.1          Subsidiaries of Charter Communications Holdings, LLC*
23.1          Consent of Paul, Hastings, Janofsky & Walker LLP (contained
              in Exhibit No. 5.1)*
23.2          Consent of Arthur Andersen LLP
23.3          Consent of KPMG LLP
23.4          Consent of Ernst & Young LLP
23.5          Consent of Ernst & Young LLP
23.6          Consent of KPMG LLP
23.7          Consent of PricewaterhouseCoopers LLP
</Table>


                                      II-16
   686

<Table>
           
23.8          Consent of PricewaterhouseCoopers LLP
23.9          Consent of Ernst & Young LLP
23.10         Consent of PricewaterhouseCoopers LLP
23.11         Consent of PricewaterhouseCoopers LLP
23.12         Consent of Greenfield, Altman, Brown, Berger & Katz, P.C.
23.13         Consent of PricewaterhouseCoopers LLP
23.14         Consent of Ernst & Young LLP
23.15         Consent of KPMG LLP
23.16         Consent of KPMG LLP
23.17         Consent of Ernst & Young LLP
23.18         Consent of Ernst & Young LLP
23.19         Consent of Ernst & Young LLP
23.20         Consent of Shields & Co.
25.1          Statement of eligibility of trustee*
</Table>


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

* Previously filed.


FINANCIAL STATEMENT SCHEDULES

     Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.

ITEM 22.  UNDERTAKINGS.

     The undersigned registrants hereby undertake that:

          (1) Prior to any public reoffering of the securities registered
     hereunder through use of a prospectus which is a part of this registration
     statement, by any person or party who is deemed to be an underwriter within
     the meaning of Rule 145(c), the issuer undertakes that such reoffering
     prospectus will contain the information called for by the applicable
     registration form with respect to the reofferings by persons who may be
     deemed underwriters, in addition to the information called for by the other
     items of the applicable form.

          (2) Every prospectus: (i) that is filed pursuant to the immediately
     preceding paragraph or (ii) that purports to meet the requirements of
     Section 10(a)(3) of the Securities Act and is used in connection with an
     offering of securities subject to Rule 415, will be filed as a part of an
     amendment to the registration statement and will not be used until such
     amendment is effective, and that, for purposes of determining any liability
     under the Securities Act, each such post-effective amendment 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.

     The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

     The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-17
   687

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrants
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 registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

                                      II-18
   688

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933, Charter
Communications Holdings, LLC has duly caused this Amendment No. 1 to
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri on the 31st day of July 2001.


                                   CHARTER COMMUNICATIONS HOLDINGS, LLC:
                                   a registrant

                                   By: CHARTER COMMUNICATIONS HOLDING
                                       COMPANY, LLC, its sole member

                                   By: CHARTER COMMUNICATIONS, INC., its member
                                       and manager, and the manager of Charter
                                       Communications Holdings, LLC

                                   By: /s/ CURTIS S. SHAW
                                      ------------------------------------------
                                       Name: Curtis S. Shaw
                                       Title:   Senior Vice President, General
                                                Counsel and Secretary


     Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 1 to registration statement has been signed by the following persons in the
capacities and on the dates indicated.



<Table>
<Caption>
                                                CAPACITY WITH CHARTER
COMMUNICATIONS, INC.,
                                                              THE MANAGER OF
                                                   CHARTER COMMUNICATIONS
HOLDINGS, LLC
                                                            AND THE MANAGER OF
                                                          CHARTER COMMUNICATIONS
                                                           HOLDING COMPANY, LLC,
                                                            THE SOLE MEMBER OF
                SIGNATURE                          CHARTER COMMUNICATIONS
HOLDINGS, LLC              DATE
                ---------
- -------------------------------------------          ----
                                         
                

*                                           Director
                July 31, 2001
- ------------------------------------------
William D. Savoy

*                                           President, Chief Executive Officer
and Director      July 31, 2001
- ------------------------------------------  (Principal Executive Officer)
Jerald L. Kent

*                                           Director
                July 31, 2001
- ------------------------------------------
Nancy B. Peretsman

*                                           Director
                July 31, 2001
- ------------------------------------------
Marc B. Nathanson

*                                           Director
                July 31, 2001
- ------------------------------------------
Ronald L. Nelson

*                                           Director
                July 31, 2001
- ------------------------------------------
Howard L. Wood

*                                           Executive Vice President and Chief
Financial         July 31, 2001
- ------------------------------------------  Officer (Principal Financial Officer
and Principal
Kent D. Kalkwarf                            Accounting Officer)
</Table>


*By: /s/ CURTIS S. SHAW
     --------------------------
     Curtis S. Shaw,
     Attorney-in-Fact

                                      II-19
   689

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933, Charter
Communications Holdings Capital Corporation has duly caused this Amendment No. 1
to Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri on the 31st day of July 2001.


                                      CHARTER COMMUNICATIONS HOLDINGS CAPITAL
                                      CORPORATION, a registrant

                                      By: /s/ CURTIS S. SHAW
                                         ---------------------------------------
                                          Name: Curtis S. Shaw
                                          Title:   Senior Vice President,
                                                   General Counsel and Secretary


     Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 1 to registration statement has been signed by the following persons in the
capacities and on the dates indicated.



<Table>
<Caption>
               SIGNATURE                                      CAPACITY
                 DATE
               ---------                                      --------
                 ----
                                       
           

*                                         President, Chief Executive Officer and
Director   July 31, 2001
- ------------------------------------      (Principal Executive Officer)
Jerald L. Kent

*                                         Executive Vice President and Chief
Financial      July 31, 2001
- ------------------------------------      Officer (Principal Financial Officer
and
Kent D. Kalkwarf                          Principal Accounting Officer)
</Table>


*By: /s/ CURTIS S. SHAW
     ------------------------------------
     Curtis S. Shaw, Attorney-in-Fact

                                      II-20
   690

                                 EXHIBIT INDEX

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.1         Merger Agreement, dated March 31, 1999, by and between
             Charter Communications Holdings, LLC and Marcus Cable
             Holdings, LLC (Incorporated by reference 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))
 2.2(a)      Membership Purchase Agreement, dated as of January 1, 1999,
             by and between ACEC Holding Company, LLC and Charter
             Communications, Inc. (now called Charter Investment, Inc.)
             (Incorporated by reference 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))
 2.2(b)      Assignment of Membership Purchase Agreement, dated as of
             February 23, 1999, by and between Charter Communications,
             Inc. (now called Charter Investment, Inc.) and Charter
             Communications Entertainment II, LLC (Incorporated by
             reference 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))
 2.3(a)      Asset Purchase Agreement, dated as of February 17, 1999,
             among Greater Media, Inc., Greater Media Cablevision, Inc.
             and Charter Communications, Inc. (now called Charter
             Investment, Inc.) (Incorporated by reference 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))
 2.3(b)      Assignment of Asset Purchase Agreement, dated as of February
             23, 1999, by and between Charter Communications, Inc. (now
             called Charter Investment, Inc.) and Charter Communications
             Entertainment I, LLC (Incorporated by reference 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))
 2.4         Purchase Agreement, dated as of February 23, 1999, by and
             among Charter Communications, Inc. (now called Charter
             Investment, Inc.), Charter Communications, LLC, Renaissance
             Media Holdings LLC and Renaissance Media Group LLC
             (Incorporated by reference to the report on Form 8-K of
             Renaissance Media Group LLC filed on March 1, 1999 (File No.
             333-56679))
 2.5         Purchase Agreement, dated as of March 22, 1999, among
             Charter Communications, Inc. (now called Charter Investment,
             Inc.), Charter Communications, LLC, Charter Helicon, LLC,
             Helicon Partners I, L.P., Baum Investments, Inc. and the
             limited partners of Helicon Partners I, L.P. (Incorporated
             by reference 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))
 2.6(a)      Asset and Stock Purchase Agreement, dated April 20, 1999,
             between InterMedia Partners of West Tennessee, L.P. and
             Charter Communications, LLC (Incorporated by reference 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))
</Table>
   691

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.6(b)      Stock Purchase Agreement, dated April 20, 1999, between TCID
             1P-V, Inc. and Charter Communications, LLC (Incorporated by
             reference 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))
 2.6(c)      RMG Purchase Agreement, dated as of April 20, 1999, between
             Robin Media Group, Inc., InterMedia Partners of West
             Tennessee, L.P. and Charter RMG, LLC (Incorporated by
             reference 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))
 2.6(d)      Asset Exchange Agreement, dated April 20, 1999, among
             InterMedia Partners Southeast, Charter Communications, LLC,
             Charter Communications Properties, LLC, and Marcus Cable
             Associates, L.L.C. (Incorporated by reference 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))
 2.6(d)(i)   Amendment to Asset Exchange Agreement, made as of October 1,
             1999, by and among InterMedia Partners Southeast and Charter
             Communications, LLC, Charter Communications Properties, LLC
             and Marcus Cable Associates, L.L.C. (Incorporated by
             reference 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))
 2.6(e)      Asset Exchange Agreement, dated April 20, 1999, among
             InterMedia Partners, a California Limited Partnership,
             Brenmor Cable Partners, L.P. and Robin Media Group, Inc.
             (Incorporated by reference 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))
 2.6(f)      Common Agreement, dated April 20, 1999, between InterMedia
             Partners, InterMedia Partners Southeast, InterMedia Partners
             of West Tennessee, L.P., InterMedia Capital Partners IV,
             L.P., InterMedia Partners IV, L.P., Brenmor Cable Partners,
             L.P., TCID IP-V, Inc., Charter Communications, LLC, Charter
             Communications Properties, LLC, Marcus Cable Associates,
             L.L.C. and Charter RMG, LLC (Incorporated by reference to
             Amendment No. 3 to the registration statement on Form S-4 of
             Charter Communications Holdings, LLC and Charter
             Communications Holdings Capital Corporation filed on July 2,
             1999 (File No. 333-77499)) (Portions of this exhibit have
             been omitted pursuant to a request for confidential
             treatment.)
 2.7(a)      Purchase and Sale Agreement, dated as of April 26, 1999, by
             and among InterLink Communications Partners, LLLP, the
             sellers listed therein and Charter Communications, Inc. (now
             called Charter Investment, Inc.) (Incorporated by reference
             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))
 2.7(b)      Purchase and Sale Agreement, dated as of April 26, 1999, by
             and among Rifkin Acquisition Partners, L.L.L.P., the sellers
             listed therein and Charter Communications, Inc. (now called
             Charter Investment, Inc.) (Incorporated by reference 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))
</Table>
   692

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.7(c)      RAP Indemnity Agreement, dated April 26, 1999, by and among
             the sellers listed therein and Charter Communications, Inc.
             (now called Charter Investment, Inc.) (Incorporated by
             reference 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))
 2.7(d)      Assignment of Purchase Agreement with InterLink
             Communications Partners, LLLP, dated as of June 30, 1999, by
             and between Charter Communications, Inc. (now called Charter
             Investment, Inc.) and Charter Communications Operating, LLC
             (Incorporated by reference 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))
 2.7(e)      Assignment of Purchase Agreement with Rifkin Acquisition
             Partners L.L.L.P., dated as of June 30, 1999, by and between
             Charter Communications, Inc. (now called Charter Investment,
             Inc.) and Charter Communications Operating, LLC
             (Incorporated by reference 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))
 2.7(f)      Assignment of RAP Indemnity Agreement, dated as of June 30,
             1999, by and between Charter Communications, Inc. (now
             called Charter Investment, Inc.) and Charter Communications
             Operating, LLC (Incorporated by reference 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))
 2.7(g)      Amendment to the Purchase Agreement with InterLink
             Communications Partners, LLLP, dated June 29, 1999
             (Incorporated by reference 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))
 2.7(h)      Contribution Agreement, dated as of September 14, 1999, by
             and among Charter Communications Operating, LLC, Charter
             Communications Holding Company, LLC, Charter Communications,
             Inc., Paul G. Allen and the certain other individuals and
             entities listed on the signature pages thereto (Incorporated
             by reference 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))
 2.7(i)      Form of First Amendment to the Contribution Agreement dated
             as of September 14, 1999, by and among Charter
             Communications Operating, LLC, Charter Communications
             Holding Company, LLC, Charter Communications, Inc. and Paul
             G. Allen (Incorporated by reference to Amendment No. 5 to
             the registration statement on Form S-1 of Charter
             Communications, Inc. filed on November 4, 1999 (File No.
             333-83887))
 2.8         Contribution and Sale Agreement dated as of December 30,
             1999, by and among Charter Communications Holding Company,
             LLC, CC VII Holdings, LLC and Charter Communications VII,
             LLC (Incorporated by reference to the report on Form 8-K of
             Charter Communications Holdings, LLC and Charter
             Communications Holdings Capital Corporation filed on January
             18, 2000 (File No. 333-77499))
 2.9         Contribution and Sale Agreement dated as of December 30,
             1999, by and among Charter Communications Holding Company,
             LLC and Charter Communications Holdings, LLC (Incorporated
             by reference to the report on Form 8-K of Charter
             Communications Holdings, LLC and Charter Communications
             Holdings Capital Corporation filed on January 18, 2000 (File
             No. 333-77499))
</Table>
   693

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.10(a)     Securities Purchase Agreement, dated May 13, 1999, by and
             between Avalon Cable Holdings LLC, Avalon Investors, L.L.C.,
             Avalon Cable of Michigan Holdings, Inc. and Avalon Cable LLC
             and Charter Communications Holdings LLC and Charter
             Communications, Inc. (now called Charter Investment, Inc.)
             (Incorporated by reference to Amendment No. 1 to the
             registration statement on Form S-4 of Avalon Cable of
             Michigan LLC, Avalon Cable of Michigan Inc., Avalon Cable of
             New England LLC and Avalon Cable Finance Inc. filed on May
             28, 1999 (File No. 333-75453))
 2.10(b)     Assignment and Contribution Agreement, entered into as of
             October 11, 1999 by and between Charter Communications
             Holding Company, LLC and Charter Communications, Inc.
             (Incorporated by reference 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))
 2.10(c)     Assignment Agreement effective as of June 16, 1999, by and
             among Charter Communications, Inc., Charter Communications
             Holdings LLC, Charter Communications Holding Company, LLC,
             Avalon Cable Holdings LLC, Avalon Investors, L.L.C., Avalon
             Cable of Michigan Holdings, Inc. and Avalon Cable LLC
             (Incorporated by reference 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))
 2.11(a)     Purchase and Contribution Agreement, dated as of May 26,
             1999, by and among Falcon Communications, L.P., Falcon
             Holding Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable
             Trust, Falcon Holding Group, Inc. and DHN Inc. and Charter
             Communications, Inc. (now called Charter Investment,
             Inc.) (Incorporated by reference 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))
 2.11(b)     First Amendment to Purchase and Contribution Agreement,
             dated as of June 22, 1999, by and among Charter
             Communications, Inc., Charter Communications Holding
             Company, LLC, Falcon Communications, L.P., Falcon Holding
             Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable Trust,
             Falcon Holding Group, Inc. and DHN Inc. (Incorporated by
             reference to the quarterly report on Form 10-Q filed by
             Falcon Communications, L.P. and Falcon Funding Corporation
             on August 13, 1999 (File Nos. 333-60776 and 333-55755))
 2.11(c)     Form of Second Amendment to Purchase And Contribution
             Agreement, dated as of October 27, 1999, by and among
             Charter Investment, Inc., Charter Communications Holding
             Company, LLC, Falcon Communications, L.P., Falcon Holding
             Group, L.P., TCI Falcon Holdings, LLC, Falcon Holding Group,
             Inc. and DHN Inc. (Incorporated by reference to Amendment
             No. 5 to the registration statement on Form S-1 of Charter
             Communications, Inc. filed on November 4, 1999 (File No.
             333-83887))
 2.11(d)     Third Amendment to Purchase and Contribution Agreement dated
             as of November 12, 1999, by and among Charter
             Communications, Inc., Falcon Communications L.P., Falcon
             Holdings Group, L.P., TCI Falcon Holdings, LLC, Falcon Cable
             Trust, Falcon Holding Group, Inc. and DHN Inc. (Incorporated
             by reference to the report on Form 8-K of CC VII Holdings,
             LLC and Falcon Funding Corporation filed on November 26,
             1999 (File No. 033-60776))
</Table>
   694


<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.12(a)     Purchase Agreement, dated as of May 21, 1999, among
             Blackstone TWF Capital Partners, L.P., Blackstone TWF
             Capital Partners A L.P., Blackstone TWF Capital Partners B
             L.P., Blackstone TWF Family Investment Partnership, L.P.,
             RCF Carry, LLC, Fanch Management Partners, Inc., PBW Carried
             Interest, Inc., RCF Indiana Management Corp, The Robert C.
             Fanch Revocable Trust, A. Dean Windry, Thomas Binning, Jack
             Pottle, SDG/Michigan Communications Joint Venture, Fanch-JV2
             Master Limited Partnership, Cooney Cable Associates of Ohio,
             Limited Partnership, North Texas Cablevision, LTD., Post
             Cablevision of Texas, Limited Partnership, Spring Green
             Communications, L.P., Fanch-Narragansett CSI Limited
             Partnership, and Fanch Cablevision of Kansas General
             Partnership and Charter Communications, Inc. (now called
             Charter Investment, Inc.) (Incorporated by reference 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))
 2.12(b)     Assignment of Purchase Agreement by and between Charter
             Investment, Inc. and Charter Communications Holding Company,
             LLC, effective as of September 21, 1999 (Incorporated by
             reference 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))
 2.13        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 (now
             called Charter Investment, Inc.) (Incorporated by reference
             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))
 2.14(a)(1)  Asset Purchase Agreement, dated as of February 26, 2001,
             among Marcus Cable of Alabama, L.L.C., on the one hand, and
             TCI of Selma, Inc., TCI of Lee County, Inc., TCI Cablevision
             of Alabama, Inc., Alabama T.V. Cable, Inc. and TCI
             Southeast, Inc., on the other hand (Incorporated by
             reference to the annual report on Form 10-K filed by Charter
             Communications, Inc. on March 6, 2001 (File No. 000-27927))
 2.14(a)(2)  First Amendment to Asset Purchase Agreement, dated as of
             June 30, 2001, between Marcus Cable of Alabama, L.L.C., on
             the one hand, and TCI of Selma, Inc., TCI of Lee County,
             Inc., TCI Cablevision of Alabama, Inc., Alabama T.V. Cable,
             Inc. and TCI Southeast, Inc., on the other
 2.14(b)(1)  Reorganization Agreement, dated as of February 26, 2001,
             among Charter Communications, Inc., on the one hand, and TCI
             TKR of Alabama, Inc. and TCI Southeast, Inc., on the other
             hand (Incorporated by reference to the annual report on Form
             10-K filed by Charter Communications, Inc. on March 6, 2001
             (File No. 000-27927))
 2.14(b)(2)  First Amendment to Reorganization Agreement, dated as of
             June 30, 2001, between Charter Communications, Inc. and
             Marcus Cable of Alabama, L.L.C., on the one hand, and TCI
             TKR of Alabama, Inc. and TCI Southeast on the other
 2.14(c)(1)  Asset Purchase Agreement, dated as of February 26, 2001,
             among Falcon Cable Systems Company II, L.P., on the one
             hand, and AT&T Broadband, LLC, Communication Services, Inc.,
             Ohio Cablevision Network, Inc., TCI Cablevision of
             California, Inc. and TCI Washington Associates, L.P., on the
             other hand (Incorporated by reference to the annual report
             on Form 10-K filed by Charter Communications, Inc. on March
             6, 2001 (File No. 000-27927))
 2.14(c)(2)  First Amendment to Asset Purchase Agreement, dated as of
             June 30, 2001, between Falcon Cable Systems Company II,
             L.P., on the one hand and AT&T Broadband, LLC,
             Communications Services, Inc., Ohio Cablevision Network,
             Inc., TCI Cablevision of California, Inc. and TCI Washington
             Associates, L.P., on the other*
</Table>

   695


<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 2.14(d)(1)  Reorganization Agreement, dated as of February 26, 2001,
             among Charter Communications, Inc., on the one hand, and TCI
             Cablevision of Nevada, Inc. and TCI West, Inc., on the other
             hand (Incorporated by reference to the annual report on Form
             10-K filed by Charter Communications, Inc. on March 6, 2001
             (File No. 000-27927))
 2.14(d)(2)  First Amendment to Reorganization Agreement, dated as of
             June 30, 2001, between Charter Communications, Inc., on the
             one hand, and TCI Cablevision of Nevada, Inc. and TCI West,
             Inc., on the other*
 2.14(e)(1)  Asset Purchase Agreement, dated as of February 26, 2001,
             among Charter Communications, Inc., Interlink Communications
             Partners, LLC, Charter Communications, LLC and Falcon Cable
             Media, on the one hand, and TCI Cable Partners of St. Louis,
             L.P. and TCI Cablevision of Missouri, Inc., on the other
             hand (Incorporated by reference to the annual report on Form
             10-K filed by Charter Communications, Inc. on March 6, 2001
             (File No. 000-27927))
 2.14(e)(2)  First Amendment to Asset Purchase Agreement, dated as of
             June 30, 2001, between Charter Communications, Inc.,
             Interlink Communications Partners, LLC, Charter
             Communications, LLC and Falcon Cable Media, on the one hand,
             and TCI Cable Partners of St. Louis, L.P. and TCI
             Cablevision of Missouri, Inc., on the other*
 2.14(f)(1)  Asset Purchase Agreement, dated as of February 26, 2001,
             among Charter Communications Entertainment I, LLC, on the
             one hand, and St. Louis Telecommunications, Inc., TCI Cable
             Partners of St. Louis, L.P., TCI Cablevision of Missouri,
             Inc., TCI of Illinois, Inc., TCI TKR of Central Florida,
             Inc. and TCI Holdings, Inc., on the other hand (Incorporated
             by reference to the annual report on Form 10-K filed by
             Charter Communications, Inc. on March 6, 2001 (File No.
             000-27927))
 2.14(f)(2)  First Amendment to Asset Purchase Agreement, dated as of
             June 30, 2001, between Charter Communications Entertainment
             I, LLC, on the one hand, and St. Louis Telecommunications,
             Inc., TCI Cable Partners of St. Louis, L.P., TCI Cablevision
             of Missouri, Inc., TCI of Illinois, Inc., TCI TKR of Central
             Florida, Inc. and TCI Holdings, Inc., on the other*
 2.14(g)(1)  Agreement Regarding Closing Matters, dated as of February
             26, 2001, among Charter Communications, Inc., on behalf of
             itself, Marcus Cable of Alabama, L.L.C., Falcon Cable
             Systems Company II, L.P., Interlink Communications Partners,
             LLC, Charter Communications, LLC, Falcon Cable Media, and
             Charter Communications Entertainment I, LLC, on the one hand
             and AT&T Broadband, LLC, on behalf of itself, TCI TKR of
             Alabama, Inc., TCI of Selma, Inc., TCI of Lee County, TCI
             Cablevision of Alabama, Inc. and Alabama T.V. Cable, Inc.,
             TCI Southeast, Inc., TCI Cablevision of Nevada, Inc., TCI
             West, Inc., Communication Services, Inc., Ohio Cablevision
             Network, Inc., TCI Cablevision of California, Inc., TCI
             Washington Associates, L.P., TCI of Illinois, Inc., TCI
             Cablevision of Missouri, Inc., St. Louis
             Tele-Communications, Inc., TCI Cable Partners of St. Louis,
             L.P., TCI TKR of Central Florida, Inc. and TCI Holdings,
             Inc., on the other hand (Incorporated by reference to the
             annual report on Form 10-K filed by Charter Communications,
             Inc. on March 6, 2001 (File No. 000-27927))
 2.14(g)(2)  First Amendment to Agreement Regarding Closing Matters,
             dated as of June 30, 2001, among Charter Communications,
             Inc., on behalf of the Charter Entities, and AT&T Broadband,
             LLC, on behalf of the AT&T Entities*
 2.14(h)     Assignment Letter Agreement, dated as of June 30, 2001,
             between Charter Communications, Inc. and Marcus Cable of
             Alabama, L.L.C.*
 2.14(i)     Assignment Letter Agreement, dated as of June 30, 2001,
             between Charter Communications, Inc. and Falcon Cable
             Systems Company II, L.P.*
</Table>

   696

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 3.1         Certificate of Formation of Charter Communications Holdings,
             LLC (Incorporated by reference 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))
 3.2         Limited Liability Company Agreement of Charter
             Communications Holdings, LLC (Incorporated by reference 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))
 3.3         Certificate of Incorporation of Charter Communications
             Holdings Capital Corporation (Incorporated by reference 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))
 3.4         By-Laws of Charter Communications Holdings Capital
             Corporation (Incorporated by reference 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))
 4.1(a)(1)   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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
 4.1(a)(2)   Exchange and Registration Rights Agreement relating to
             9.625% Senior Notes due 2009, dated as of May 15, 2001,
             among Charter Communications Holding Company, LLC, Charter
             Communications Capital Corporation, Goldman, Sachs & Co.,
             Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
 4.1(b)(1)   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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
 4.1(b)(2)   Exchange and Registration Rights Agreement relating to
             10.000% Senior Notes due 2011, dated as of May 15, 2001,
             among Charter Communications Holding Company, LLC, Charter
             Communications Capital Corporation, Goldman, Sachs & Co.,
             Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
 4.1(c)(1)   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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
</Table>
   697


<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
 4.1(c)(2)   Exchange and Registration Rights Agreement relating to
             11.750% Senior Discount Notes due 2011, dated as of May 15,
             2001, among Charter Communications Holding Company, LLC,
             Charter Communications Capital Corporation, Goldman, Sachs &
             Co., Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
 5.1         Opinion of Paul, Hastings, Janofsky & Walker LLP regarding
             legality*
 8.1         Opinion of Paul, Hastings, Janofsky & Walker LLP regarding
             tax matters*
10.1         Credit Agreement, dated as of March 18, 1999, between
             Charter Communications Operating, LLC, and certain lenders
             and agents named therein (Incorporated by reference 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))
10.1(a)      First Amendment to Credit Agreement dated as of June 28,
             1999 between Charter Communications Operating, LLC, Charter
             Communications Holdings LLC and certain lenders and agents
             named therein (Incorporated by reference 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))
10.1(b)      Second Amendment to Credit Agreement dated as of December
             14, 1999 between Charter Communications Operating, LLC,
             Charter Communications Holdings LLC and certain lenders and
             agents named therein (Incorporated by reference 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))
10.1(c)      Third Amendment to Credit Agreement dated as of March 18,
             2000, between Charter Communications Operating, LLC, Charter
             Communications, LLC and certain lenders and agents named
             therein (Incorporated by reference to the annual report on
             Form 10-K filed by Charter Communications, Inc. on March 30,
             2000 (File No. 333-83887))
10.2(a)(1)   Form of Second Amended Management Agreement, dated as of
             November 9, 1999, by and among Charter Investment, Inc.,
             Charter Communications, Inc. and Charter Communications
             Operating, LLC (Incorporated by reference 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))
10.2(b)      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 the registration statement on Form S-4 of
             Charter Communications Holdings, LLC filed on February 2,
             2001 (File No. 333-54902))
10.2(c)      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 Amendment No. 3 to the registration statement on Form S-1
             of Charter Communications, Inc. filed on October 18, 1999
             (File No. 333-83887))
10.2(d)      Management Agreement, dated as of November 12, 1999, by and
             between CC VI Operating Company, LLC and Charter
             Communications, Inc. (Incorporated by reference 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))
</Table>

   698

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.2(e)      Management Agreement, dated as of November 12, 1999 by and
             between Falcon Cable Communications, LLC and Charter
             Communications, Inc. (Incorporated by reference 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))
10.2(f)      Management Agreement dated as of February 14, 2000, by and
             between CC VIII Operating, LLC, certain subsidiaries of CC
             VIII Operating, LLC and Charter Communications, Inc.
             (Incorporated by reference to the annual report on Form 10-K
             filed by Charter Communications, Inc. on March 30, 2000
             (File No. 333-83887))
10.3         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
             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))
10.4         Charter Communications Holdings, LLC 1999 Option Plan
             (Incorporated by reference 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))
10.4(a)      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 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))
10.4(b)      Form of Amendment No. 1 to the Charter Communications
             Holdings, LLC 1999 Option Plan (Incorporated by reference 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))
10.4(c)      Amendment No. 2 to the Charter Communications Holdings, LLC
             1999 Option Plan (Incorporated by reference to the annual
             report on Form 10-K filed by Charter Communications, Inc. on
             March 30, 2000 (File No. 333-83887))
10.5         Membership Interests Purchase Agreement, dated July 22,
             1999, by and between Charter Communications Holding Company,
             LLC and Paul G. Allen (Incorporated by reference 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))
10.6         Employment Agreement, dated as of August 28, 1998, between
             Jerald L. Kent and Paul G. Allen (Incorporated by reference
             to Amendment No. 5 to the registration statement on Form S-4
             of Charter Communications Holdings, LLC and Charter
             Communications Holdings Capital Corporation filed on August
             10, 1999 (File No. 333-77499))
</Table>
   699

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.7         Assignment of Employment Agreements, dated as of December
             23, 1998, between Paul G. Allen and Charter Communications,
             Inc. (now called Charter Investment, Inc.) (Incorporated by
             reference 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))
10.8(a)      Option Agreement, dated as of February 9, 1999, between
             Jerald L. Kent and Charter Communications Holdings, LLC
             (Incorporated by reference 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))
10.8(b)      Amendment to the Option Agreement, dated as of August 23,
             1999, between Jerald L. Kent and Charter Communications
             Holding Company, LLC (Incorporated by reference 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))
10.8(c)      Form of Amendment to the Option Agreement, dated as of
             November 8, 1999, by and among Jerald L. Kent, Charter
             Communications Holding Company, LLC and Charter
             Communications, Inc. (Incorporated by reference 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))
10.9         Letter Agreement, dated as of July 22, 1999 between Charter
             Communications Holding Company, LLC and Charter
             Communications Holdings, LLC (Incorporated by reference to
             Amendment No. 5 to the registration statement on Form S-4 of
             Charter Communications Holdings, LLC and Charter
             Communications Holdings Capital Corporation filed on August
             10, 1999 (File No. 333-77499))
10.10        Amendment to Membership Interests Purchase Agreement, dated
             as of August 10, 1999, by and among Charter Communications
             Holding Company, LLC, Vulcan Cable III Inc. and Paul G.
             Allen (Incorporated by reference 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))
10.11        Form of Assignment and Assumption Agreement, dated as of
             November 4, 1999, by and between Charter Investment, Inc.
             and Charter Communications, Inc. (Incorporated by reference
             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))
10.12        Form of Registration Rights Agreement, dated as of November
             12, 1999, by and among Charter Communications, Inc., Charter
             Investment, Inc., Vulcan Cable III Inc., Mr. Paul G. Allen,
             Mr. Jerald L. Kent, Mr. Howard L. Wood and Mr. Barry L.
             Babcock (Incorporated by reference 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))
10.13        Form of Consulting Agreement, dated as of November 1, 1999,
             by and between Howard L. Wood and Charter Communications,
             Inc. (Incorporated by reference 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))
10.14        Form of Termination of Employment Agreement, dated as of
             November 1, 1999, by and between Howard L. Wood and Charter
             Investment, Inc., Communications, Inc. and Charter
             Communications Holding Company, LLC (Incorporated by
             reference 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))
</Table>
   700

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.15        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 Amendment No. 3
             to the registration statement on Form S-1 of Charter
             Communications, Inc. filed on October 18, 1999 (File No.
             333-83887))
10.16        Second Amended and Restated Credit Agreement dated as of
             February 2, 1999, as Amended and Restated as of January 2,
             2001 by and among CC VIII Operating, LLC, as borrower, CC
             VIII Holdings, LLC, as guarantor, and several financial
             institutions or entities named therein (Incorporated by
             reference to the annual report on Form 10-K filed by Charter
             Communications, Inc. on March 30, 2000 (File No. 333-83887))
10.17        Form of Credit Agreement, dated as of June 30, 1998, as
             Amended and Restated as of November 12, 1999, among Falcon
             Cable Communications, LLC, certain guarantors and several
             financial institutions or entities named therein
             (Incorporated by reference 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))
10.18        Credit Agreement, dated as of November 12, 1999, among CC VI
             Holdings, LLC, CC VI Operating Company, LLC and several
             financial institutions or entities named therein
             (Incorporated by reference to the report on Form 8-K of
             Charter Communications, Inc. filed on November 29, 1999
             (File No. 333-83887))
10.19        Amended and Restated Limited Liability Company Agreement for
             Charter Communications Holding Company, LLC, dated January
             1, 2001 (Incorporated by reference to the current report on
             Form 8-K of Charter Communications, Inc. filed on May 23,
             2001 (File No. 000-27927))
10.19(a)     First Amendment to the Amended and Restated Limited
             Liability Company Agreement for Charter Communications
             Holding Company, LLC, dated September 13, 2000 (Incorporated
             by reference to Amendment No. 1 to the registration
             statement on Form S-1 of Charter Communications, Inc. filed
             on September 22, 2000 (File No. 333-41486))
10.20        Letter Agreement, dated May 25, 1999, between Charter
             Communications, Inc. and Marc Nathanson (Incorporated by
             reference 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))
10.21        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 the current report on Form 8-K
             of Charter Communications, Inc. filed on February 29, 2000
             (File No. 333-83887))
10.22        Form of Exchange Agreement, dated as of November 12, 1999 by
             and among Charter Investments, Inc., Charter Communications,
             Inc., Vulcan Cable III Inc. and Paul G. Allen (Incorporated
             by reference 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))
10.23(a)     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 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))
</Table>
   701

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.23(b)     Form of 10.00% Senior Note due 2010 (included in Exhibit No.
             4.1(a)) (Incorporated by reference 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))
10.23(c)     Exchange and Registration Rights Agreement, dated January
             12, 2000, by and among Charter Communications Holdings, LLC,
             Charter Communications Holdings Capital Corporation,
             Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
             Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
             Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
             Securities (USA) Inc., First Union Securities, Inc., PNC
             Capital Markets, Inc. and SunTrust Equitable Securities
             Corporation, relating to the 10.00% Senior Notes due 2009
             (Incorporated by reference 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))
10.24(a)     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 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))
10.24(b)     Form of 10.25% Senior Note due 2010 (included in Exhibit No.
             4.2(a)) (Incorporated by reference 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))
10.24(c)     Exchange and Registration Rights Agreement, dated January
             12, 2000, by and among Charter Communications Holdings, LLC,
             Charter Communications Holdings Capital Corporation,
             Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
             Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
             Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
             Securities (USA) Inc., First Union Securities, Inc., PNC
             Capital Markets, Inc. and SunTrust Equitable Securities
             Corporation, relating to the 10.25% Senior Notes due 2010
             (Incorporated by reference 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))
10.25(a)     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 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))
10.25(b)     Form of 11.75% Senior Discount Note due 2010 (included in
             Exhibit No. 4.3(a)) (Incorporated by reference 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))
</Table>
   702

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.25(c)     Exchange and Registration Rights Agreement, dated January
             12, 2000, by and among Charter Communications Holdings, LLC,
             Charter Communications Holdings Capital Corporation,
             Goldman, Sachs & Co., Chase Securities Inc., FleetBoston
             Robertson Stephens Inc., Merrill Lynch, Pierce, Fenner &
             Smith Incorporated, Morgan Stanley & Co. Incorporated, TD
             Securities (USA) Inc., First Union Securities, Inc., PNC
             Capital Markets, Inc. and SunTrust Equitable Securities
             Corporation, relating to the 11.75% Senior Discount Notes
             due 2010 (Incorporated by reference 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))
10.26(a)     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 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))
10.26(b)     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 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))
10.26(c)     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 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))
10.27        Indenture, dated as of April 9, 1998, by and among
             Renaissance Media (Louisiana) LLC, Renaissance Media
             (Tennessee) LLC, Renaissance Media Capital Corporation,
             Renaissance Media Group LLC and United States Trust Company
             of New York, as trustee (Incorporated by reference to the
             registration statement on Forms S-4 of Renaissance Media
             Group LLC, Renaissance Media (Tennessee) LLC, Renaissance
             Media (Louisiana) LLC and Renaissance Media Capital
             Corporation filed on June 12, 1998 (File No. 333-56679))
10.28        Indenture, dated January 15, 1996, by and among Rifkin
             Acquisition Partners, L.L.L.P., Rifkin Acquisition Capital
             Corp., as issuers, Cable Equities of Colorado Management
             Corp., FNI Management Corp., Cable Equities of Colorado,
             Ltd., Cable Equities, Inc. and Rifkin/Tennessee, Ltd., as
             Subsidiary Guarantors, and Marine Midland Bank, as trustee
             (Incorporated by reference to the registration statement on
             Form S-1 of Rifkin Acquisition Capital Corp. and Rifkin
             Acquisition Partners, L.L.P. filed on April 2, 1996 (File
             No. 333-3084))
10.29(a)     Indenture, dated as of December 10, 1998, by and among
             Avalon Cable of Michigan Holdings, Inc., Avalon Cable LLC
             and Avalon Cable Holdings Finance, Inc., as issuers and The
             Bank of New York, as trustee for the Notes (Incorporated by
             reference 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))
</Table>
   703

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.29(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 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))
10.30        Indenture relating to 5.75% Convertible Senior Notes due
             2005, dated as of October 25, 2000, among Charter
             Communications, Inc. and BNY Midwest Trust Company as
             trustee (Incorporated by reference to the quarterly report
             on Form 10-Q filed by Charter Communications, Inc. on
             November 14, 2000 (File No. 000-27927))
10.31        Registration Rights Agreement relating to 5.75% Convertible
             Senior Notes due 2005, dated as of October 30, 2000, among
             Charter Communications, Inc., Goldman, Sachs & Co., Morgan
             Stanley & Co. Incorporated, Bear, Stearns & Co., and Merrill
             Lynch Pierce, Fenner & Smith Incorporated (Incorporated by
             reference to the quarterly report on Form 10-Q filed by
             Charter Communications, Inc. on November 14, 2000 (File No.
             000-27927))
10.32(a)(1)  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 3/4% convertible senior notes due
             2009 (Incorporated by reference to the registration
             statement on Form S-4 filed by Charter Communications
             Holdings, LLC on February 2, 2001 (File No. 333-54902))
10.32(a)(2)  Exchange and Registration Rights Agreement, dated as of
             January 10, 2001, by and among Charter Communications
             Holdings, LLC, Charter Communications Holdings Capital
             Corporation, Morgan Stanley & Co., Incorporated, Goldman,
             Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
             Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
             Securities Corporation, relating to the 10 3/4% convertible
             senior notes due 2009 (Incorporated by reference to
             Amendment No. 1 to the registration statement on Form S-4
             filed by Charter Communications Holdings, LLC on February 8,
             2001 (File No. 333-54902))
10.32(b)(1)  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 1/8% convertible senior notes due
             2011 (Incorporated by reference to the registration
             statement on Form S-4 filed by Charter Communications
             Holdings, LLC on February 2, 2001 (File No. 333-54902))
10.32(b)(2)  Exchange and Registration Rights Agreement, dated as of
             January 10, 2001, by and among Charter Communications
             Holdings, LLC, Charter Communications Holdings Capital
             Corporation, Morgan Stanley & Co., Incorporated, Goldman,
             Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
             Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
             Securities Corporation, relating to the 11 1/8% convertible
             senior notes due 2011 (Incorporated by reference to
             Amendment No. 1 to the registration statement on Form S-4
             filed by Charter Communications Holdings, LLC on February 8,
             2001 (File No. 333-54902))
10.32(c)(1)  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 1/2% convertible senior discount
             notes due 2011 (Incorporated by reference to the
             registration statement on Form S-4 filed by Charter
             Communications Holdings, LLC on February 2, 2001 (File No.
             333-54902))
</Table>
   704

<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.32(c)(2)  Exchange and Registration Rights Agreement, dated as of
             January 10, 2001, by and among Charter Communications
             Holdings, LLC, Charter Communications Holdings Capital
             Corporation, Morgan Stanley & Co., Incorporated, Goldman,
             Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
             Incorporated, Bear, Stearns & Co. Inc., and RBC Dominion
             Securities Corporation, relating to the 13 1/2% convertible
             senior discount notes due 2011 (Incorporated by reference to
             Amendment No. 1 to the registration statement on Form S-4
             filed by Charter Communications Holdings, LLC on February 8,
             2001 (File No. 333-54902))
10.33(a)(1)  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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
10.33(a)(2)  Exchange and Registration Rights Agreement relating to
             9.625% Senior Notes due 2009, dated as of May 15, 2001,
             among Charter Communications Holding Company, LLC, Charter
             Communications Capital Corporation, Goldman, Sachs & Co.,
             Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
10.34(a)(1)  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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
10.34(a)(2)  Exchange and Registration Rights Agreement relating to
             10.000% Senior Notes due 2011, dated as of May 15, 2001,
             among Charter Communications Holding Company, LLC, Charter
             Communications Capital Corporation, Goldman, Sachs & Co.,
             Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
10.35(a)(1)  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 the report on Form 8-K filed
             by Charter Communications, Inc. on May 30, 2001 (File No.
             000-27927))
10.35(a)(2)  Exchange and Registration Rights Agreement relating to
             11.750% Senior Discount Notes due 2011, dated as of May 15,
             2001, among Charter Communications Holding Company, LLC,
             Charter Communications Capital Corporation, Goldman, Sachs &
             Co., Morgan Stanley & Co. Incorporated, Banc of America
             Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch,
             Pierce, Fenner & Smith Incorporated, Salomon Smith Barney
             Inc., JP Morgan, a Division of Chase Securities Inc., Credit
             Lyonnais Securities (USA) Inc., Fleet Securities, Inc., BMO
             Nesbitt Burns Corp. and Dresdner Kleinwort Wasserstein
             Securities LLC (Incorporated by reference to the report on
             Form 8-K filed by Charter Communications, Inc. on May 30,
             2001 (File No. 000-27927))
</Table>
   705


<Table>
<Caption>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
          
10.36        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 the report on Form 8-K filed by Charter
             Communications, Inc. on May 30, 2001 (File No. 000-27927))
12.1         Statement Regarding Ratio of Earnings to Fixed Charges*
21.1         Subsidiaries of Charter Communications Holdings, LLC*
23.1         Consent of Paul, Hastings, Janofsky & Walker LLP (contained
             in Exhibit No. 5.1)*
23.2         Consent of Arthur Andersen LLP
23.3         Consent of KPMG LLP
23.4         Consent of Ernst & Young LLP
23.5         Consent of Ernst & Young LLP
23.6         Consent of KPMG LLP
23.7         Consent of PricewaterhouseCoopers LLP
23.8         Consent of PricewaterhouseCoopers LLP
23.9         Consent of Ernst & Young LLP
23.10        Consent of PricewaterhouseCoopers LLP
23.11        Consent of PricewaterhouseCoopers LLP
23.12        Consent of Greenfield, Altman, Brown, Berger & Katz, P.C.
23.13        Consent of PricewaterhouseCoopers LLP
23.14        Consent of Ernst & Young LLP
23.15        Consent of KPMG LLP
23.16        Consent of KPMG LLP
23.17        Consent of Ernst & Young LLP
23.18        Consent of Ernst & Young LLP
23.19        Consent of Ernst & Young LLP
23.20        Consent of Shields & Co.
25.1         Statement of eligibility of trustee*
</Table>


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


* Previously filed