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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the year ended December 31, 2004 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Transition Period From  to . Commission File Numbers: RENAISSANCE MEDIA GROUP LLC*333-56679
RENAISSANCE MEDIA (LOUISIANA) LLC*333-56679-02
RENAISSANCE MEDIA (TENNESSEE) LLC*333-56679-01
RENAISSANCE MEDIA CAPITAL CORPORATION*333-56679-03 
  Delaware
    
    14-1803051Delaware
    
    14-1801165Delaware
    
    14-1801164Delaware
    
    14-1803049(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)12405 Powerscourt DriveSt. Louis, Missouri 63131
    
    (314) 965-0555(Address of principal executive offices including zip code)
    
    (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark
whether the registrants (1) have filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrants were required to file such reports), and (2) have
been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ Indicate by checkmark whether the registrants are accelerated filers (as defined in Rule 12b-2
of the Exchange Act). Yes o No þ The aggregate market value of the voting and non-voting common equity securities held by
non-affiliates at June 30, 2004 was $0. All of the limited liability company membership
interests of Renaissance Media (Louisiana) LLC and Renaissance Media (Tennessee) LLC are held by
Renaissance Media Group LLC. All of the issued and outstanding shares of capital stock of
Renaissance Media Capital Corporation are held by Renaissance Media Group LLC. All of the limited
liability company membership interests of Renaissance Media Group LLC are held by Charter
Communications, LLC (and indirectly by Charter Communications Holdings, LLC, a reporting company
under the Exchange Act). There is no public trading market for any of the aforementioned limited
liability company membership interests or shares of capital stock. Documents Incorporated By Reference
The following documents are incorporated into this Report by reference: None




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RENAISSANCE MEDIA GROUP LLC
RENAISSANCE MEDIA (LOUISIANA) LLC
RENAISSANCE MEDIA (TENNESSEE) LLC
RENAISSANCE MEDIA CAPITAL CORPORATION FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004 TABLE OF CONTENTS Page No.Part IItem 1. Business
    
    
    4Item 2. Properties
    
    
    5Item 3. Legal Proceedings
    
    
    5Part IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    10Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    24Item 8. Financial Statements and Supplementary Data
    
    
    24Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    24Item 9A. Controls and Procedures
    
    
    24Item 9B. Other Information
    
    
    25Part IVItem 14. Principal Accounting Fees and Services
    
    
    26Item 15. Exhibits and Financial Statement Schedules
    
    
    26Signatures
    
    
    31Description of Long-Term Incentive ProgramCertificationCertificationCertificationCertificationCertificationCertification
  This annual report on Form 10-K is for the year ended December 31, 2004. The Securities and
Exchange Commission (SEC) allows us to incorporate by reference information that we file with
the SEC, which means that we can disclose important information to you by referring you directly to
those documents. Information incorporated by reference is considered to be part of this annual
report. In addition, information that we file with the SEC in the future will automatically update
and supersede information contained in this annual report. In this annual report, we, us and
our refer to Renaissance Media Group LLC and its wholly owned finance subsidiaries, Renaissance
Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital Corporation
unless the context requires otherwise. 2




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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: This annual report includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act), regarding, among other things, our plans,
strategies and prospects, both business and financial, including, without limitation, the
forward-looking statements set forth in the Focus for 2005 section under Part I, Item 1.
Business, Overview of Operations and the Liquidity and Capital Resources sections under Part
II, Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
in this annual report. 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, including, without limitation, the
factors described under Certain Trends and Uncertainties under Part II, Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations in this annual report.
Many of the forward-looking statements contained in this annual report may be identified by the use
of forward-looking words such as believe, expect, anticipate, should, planned, will,
may, intend, estimated and potential, among others. Important factors that could cause
actual results to differ materially from the forward-looking statements we make in this annual
report are set forth in this annual report and in other reports or documents that we file from time
to time with the United States Securities and Exchange Commission, or SEC, and include, but are not
limited to:  
    our ability to sustain and grow revenues and cash flows from operating activities by
offering video, high-speed data, telephony and other services and to maintain a stable
customer base, particularly in the face of increasingly aggressive competition from other
service providers;
    the availability of funds to meet interest payment obligations under our and our
indirect parent companies debt and to fund our operations and necessary capital
expenditures, either through cash flows from operating activities, further borrowings or
other sources;
    our ability to comply with all covenants in our indenture, any violation of which would
result in a violation of the indenture and could trigger a default of other obligations of
our affiliates under cross-default provisions;
    our and our indirect parent companies ability to pay or refinance debt as it becomes
due;
    the results of the pending grand jury investigation by the United States Attorneys
Office for the Eastern District of Missouri, and the ability to reach a final approved
settlement with respect to the putative class action, the unconsolidated class action, and
derivative shareholders litigation against Charter Communications, Inc., our indirect
parent, on the terms of the stipulations of settlement described herein;
    our ability to obtain programming at reasonable prices or to pass programming cost
increases on to our customers;
    general business conditions, economic uncertainty or slowdown; and
    the effects of governmental regulation, including but not limited to local franchise
taxing authorities, on our business. All forward-looking statements attributable to us or any person acting on our behalf are expressly
qualified in their entirety by this cautionary statement. We are under no duty or obligation to
update any of the forward-looking statements after the date of this annual report. 3




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PART I 
 Item 1.Business. Introduction Renaissance Media Group LLC (Renaissance Media Group), through its subsidiaries, is the owner and
operator of cable systems. We are a wholly owned subsidiary of CCO NR Holdings, LLC (CCO NR),
from which we receive funding as needed. As of December 31, 2004, we own and operate cable systems
serving approximately 142,400 analog video customers. Through our broadband network of coaxial and
fiber optic cable, we offer our customers traditional cable video programming (analog and digital,
which we refer to as video service), high-speed cable Internet access (which we refer to as
high-speed data service) and advanced broadband cable services (such as video on demand (VOD)). Renaissance Media Capital Corporation (Capital) was formed as a wholly owned subsidiary of
Renaissance Media Group for the sole purpose of being a co-issuer of debt instruments to be offered
and sold to the public. Renaissance Media (Louisiana) LLC (Louisiana) and Renaissance Media
(Tennessee) LLC (Tennessee) are both wholly owned subsidiaries of Renaissance Media Group, and
hold a 76% interest and 24% interest, respectively, in Renaissance Media LLC (Media). Media owns
and operates cable systems in Louisiana, Tennessee and Mississippi and commenced active operations
in April 1998. Renaissance Media Group, Capital, Louisiana and Tennessee do not, and will not,
conduct any operations, and their only assets are the equity interests in one another as described
above. At December 31, 2004, our investment in cable properties, long-term debt and total members equity
were $365.9 million, $115.8 million and $197.3 million, respectively. Our debt-to-equity ratio and
working capital deficit were 0.6 to 1 and $50.0 million at December 31, 2004, respectively. For
the year ended December 31, 2004, our revenues and net loss were approximately $115.7 million and
$31.8 million, respectively. We are managed by Charter Communications, Inc. (Charter) and Charter Communications Holding
Company, LLC (Charter Holdco) and pay a fee for their management services. See also Note 13 to
our consolidated financial statements contained in Item 8. Financial Statements and Supplementary
Data. Our principal executive offices are located at Charter Plaza, 12405 Powerscourt Drive, St.
Louis Missouri 63131. Our telephone number is (314) 965-0555 and information regarding us is
available on Charters website accessible at www.charter.com. Since January 1, 2002, our annual
reports, quarterly reports and current reports on Form 8-K, and all amendments thereto, have been
made available on Charters website free of charge as soon as reasonably practicable after they have been
filed. The information posted on Charters website is not incorporated into this annual report. Recent Events On January 17, 2005, Robert P. May was appointed as Interim President and Chief Executive Officer
of Charter, replacing Carl E. Vogel who, effective on the same date, resigned his position as
President, Chief Executive Officer and a member of the board of directors of Charter and each of
Charters subsidiaries for which Mr. Vogel served as a director and officer. Additionally, Mr. May
was appointed to the Executive Committee of Charters board of directors and will continue to serve
on the boards Strategic Planning Committee. He was also appointed as an officer and director of
Charters subsidiaries for which Mr. Vogel was an officer and director. Charters board of
directors has formed an Executive Search Committee to oversee Charters search for a permanent
President and Chief Executive Officer. Derek Chang, Charters Executive Vice President of Finance and Strategy and Interim co-Chief
Financial Officer, has informed Charter of his intention to resign effective April 15, 2005. Focus for 2005 Our principal financial goal is to maximize our return on invested capital. To do so, we will
focus on increasing revenues, growing our customer base, improving customer retention and enhancing
customer satisfaction by 4




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providing reliable, high-quality service offerings, superior customer service and attractive
bundled offerings. Specifically, in the near term, we are focusing on:  
    generating improvements in the overall customer experience in such critical areas as
service delivery, customer care, and new product offerings;
    developing more sophisticated customer management capabilities through investment in our
customer care and marketing infrastructure, including targeted marketing capabilities;
    executing growth strategies for new services, including digital simulcast, VOD, and
digital video recorder service (DVR); and
    managing our operating costs by exercising discipline in capital and operational
spending. We have begun an internal operational improvement initiative aimed at helping us gain new customers
and retain existing customers, which is focused on customer care, technical operations and sales.
We intend to increase efforts to focus management attention on instilling a customer service
oriented culture throughout the company and to give those areas of our operations increased
priority of resources for staffing levels, training budgets and financial incentives for employee
performance in those areas. We believe that our high-speed data service will continue to provide a substantial portion of our
revenue growth in the near future. We also plan to continue to expand our marketing of high-speed
data service to the business community, which we believe has shown an increasing interest in
high-speed data service and private network services. We believe we offer our customers an excellent choice of services through a variety of bundled
packages, particularly with respect to our digital video and high-speed data services. Our digital
platform enables us to offer a significant number and variety of channels, and we offer customers
the opportunity to choose among groups of channel offerings, including premium channels, and to
combine selected programming with other services such as high-speed data, high definition
television (in selected markets) and VOD (in selected markets). 
 Item 2.Properties. Our principal physical assets consist of cable distribution plant and equipment, including signal
receiving, encoding and decoding devices, headend reception facilities, distribution systems and
customer drop equipment for each of our cable systems. Our cable plant and related equipment are generally attached to utility poles under pole rental
agreements with local public utilities and telephone companies, and in certain locations are buried
in underground ducts or trenches. We own or lease real property for signal reception sites and own
most of our service vehicles. The physical components of our cable systems require maintenance as well as periodic upgrades to
support the new services and products we introduce. We believe that our properties are generally
in good operating condition and are suitable for our business operations. 
 Item 3.Legal Proceedings. Securities Class Actions and Derivative Suits Fourteen putative federal class action lawsuits (the Federal Class Actions) were filed against
Charter and certain of its former and present officers and
directors in various jurisdictions allegedly on behalf of all purchasers of Charters securities
during the period from either November 8 or November 9, 1999 through July 17 or July 18, 2002.
Unspecified damages were sought by the plaintiffs. In general, the lawsuits alleged that Charter
utilized misleading accounting practices and failed to disclose these accounting practices and/or
issued false and misleading financial statements and press releases concerning Charters operations
and prospects. 5




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The Federal Class Actions were specifically and individually identified in public filings made by
Charter prior to the date of this annual report. In October 2002, Charter filed a motion with the Judicial Panel on Multidistrict Litigation (the
Panel) to transfer the Federal Class Actions to the Eastern District of Missouri. On March 12,
2003, the Panel transferred the six Federal Class Actions not filed in the Eastern District of
Missouri to that district for coordinated or consolidated pretrial proceedings with the eight
Federal Class Actions already pending there. The Panels transfer order assigned the Federal Class
Actions to Judge Charles A. Shaw. By virtue of a prior court order, StoneRidge Investment Partners
LLC became lead plaintiff upon entry of the Panels transfer order. StoneRidge subsequently filed
a Consolidated Amended Complaint. The Court subsequently consolidated the Federal Class Actions
into a single action (the Consolidated Federal Class Action) for pretrial purposes. On June 19,
2003, following a status and scheduling conference with the parties, the Court issued a Case
Management Order setting forth a schedule for the pretrial phase of the Consolidated Federal Class
Action. Motions to dismiss the Consolidated Amended Complaint were filed. On February 10, 2004,
in response to a joint motion made by StoneRidge and defendants Charter, Vogel and Allen, the court
entered an order providing, among other things, that: (1) the parties who filed such motion engage
in a mediation within ninety (90) days; and (2) all proceedings in the Consolidated Federal Class
Actions were stayed until May 10, 2004. On May 11, 2004, the Court extended the stay in the
Consolidated Federal Class Action for an additional sixty (60) days. On July 12, 2004, the parties
submitted a joint motion to again extend the stay, this time until September 10, 2004. The Court
granted that extension on July 20, 2004. On August 5, 2004, Stoneridge, Charter and the individual
defendants who were the subject of the suit entered into a Memorandum of Understanding setting
forth agreements in principle to settle the Consolidated Federal Class Action. These parties
subsequently entered into Stipulations of Settlement dated as of January 24, 2005 (described more
fully below) which incorporate the terms of the August 5, 2004 Memorandum of Understanding. The Consolidated Federal Class Action is entitled:  
    In re Charter Communications, Inc. Securities Litigation, MDL Docket No. 1506 (All Cases),
StoneRidge Investments Partners, LLC, Individually and On Behalf of All Others Similarly
Situated, v. Charter Communications, Inc., Paul Allen, Jerald L. Kent, Carl E. Vogel, Kent
Kalkwarf, David G. Barford, Paul E. Martin, David L. McCall, Bill Shreffler, Chris Fenger,
James H. Smith, III, Scientific-Atlanta, Inc., Motorola, Inc. and Arthur Andersen, LLP,
Consolidated Case No. 4:02-CV-1186-CAS. On September 12, 2002, a shareholders derivative suit (the State Derivative Action) was filed in
the Circuit Court of the City of St. Louis, State of Missouri (the Missouri State Court), against
Charter and its then current directors, as well as its former auditors. A substantively identical
derivative action was later filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their fiduciary duties by failing to
establish and maintain adequate internal controls and procedures. Unspecified damages, allegedly
on Charters behalf, are sought by the plaintiffs. The consolidated State Derivative Action is entitled:  
    Kenneth Stacey, Derivatively on behalf of Nominal Defendant Charter Communications, Inc.,
v. Ronald L. Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman, William Savoy, John
H. Tory, Carl E. Vogel, Larry W. Wangberg, Arthur Andersen, LLP and Charter Communications,
Inc. On March 12, 2004, an action substantively identical to the State Derivative Action was filed in
the Missouri State Court, against Charter and certain of its current and former directors, as well
as its former auditors. The plaintiffs in that case alleged that the individual defendants
breached their fiduciary duties by failing to establish and maintain adequate internal controls and
procedures. Unspecified damages, allegedly on Charters behalf, were sought by plaintiffs. On
July 14, 2004, the Court consolidated this case with the State Derivative Action. This action is entitled:  
    Thomas Schimmel, Derivatively on behalf on Nominal Defendant Charter Communications, Inc.,
v. Ronald L. Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman, William D. Savoy,
John H. Tory, Carl E. Vogel, Larry W. Wangberg, and Arthur Andersen, LLP, and Charter
Communications, Inc. 6




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Separately, on February 12, 2003, a shareholders derivative suit (the Federal Derivative Action),
was filed against Charter and its then current directors in the United States District Court for
the Eastern District of Missouri. The plaintiff in that suit alleged that the individual
defendants breached their fiduciary duties and grossly mismanaged Charter by failing to establish
and maintain adequate internal controls and procedures. Unspecified damages, allegedly on
Charters behalf, were sought by the plaintiffs. The Federal Derivative Action is entitled:  
    Arthur Cohn, Derivatively on behalf of Nominal Defendant Charter Communications, Inc., v.
Ronald L. Nelson, Paul G. Allen, Marc B. Nathanson, Nancy B. Peretsman, William Savoy, John H.
Tory, Carl E. Vogel, Larry W. Wangberg, and Charter Communications, Inc. As noted above, Charter entered into Memoranda of Understanding on August 5, 2004 setting forth
agreements in principle regarding settlement of the Consolidated Federal Class Action, the State
Derivative Action(s) and the Federal Derivative Action (the Actions). Charter and various other
defendants in those actions subsequently entered into Stipulations of Settlement dated as of
January 24, 2005, setting forth a settlement of the Actions in a manner consistent with the terms
of the Memoranda of Understanding. The Stipulations of Settlement, along with various supporting
documentation, were filed with the Court on February 2, 2005. The Stipulations of Settlement
provide that, in exchange for a release of all claims by plaintiffs against Charter and its former
and present officers and directors named in the Actions, Charter will pay to the plaintiffs a
combination of cash and equity collectively valued at $144.0 million, which will include the fees
and expenses of plaintiffs counsel. Of this amount, $64.0 million will be paid in cash (by
Charters insurance carriers) and the balance will be paid in shares of Charter Class A common
stock having an aggregate value of $40.0 million and ten-year warrants to purchase shares of
Charter Class A common stock having an aggregate warrant value of $40.0 million, with such values
in each case being determined pursuant to formulas set forth in the Stipulations of Settlement.
The warrants would have an exercise price equal to 150% of the fair market value (as defined) of
Charter Class A common stock as of the date of the entry of the order of final judgment approving
the settlement. In addition, Charter expects to issue additional shares of its Class A common
stock to its insurance carrier having an aggregate value of $5.0 million. In the event that the
valuation formula in the Stipulations provides for a per share value of less than $2.25, Charter
may elect to terminate the settlement. As part of the settlements, Charter will also commit to a
variety of corporate governance changes, internal practices and public disclosures, some of which
have already been undertaken and none of which are inconsistent with measures Charter is taking in
connection with the recent conclusion of the SEC investigation described below. Documents related
to the settlement of the Actions have now been executed and filed. On February 15, 2005, the
United States District Court for the Eastern District of Missouri gave preliminary approval to the
settlement of the Actions. The settlement of each of the lawsuits remains conditioned upon, among
other things, final judicial approval of the settlements following notice to the class, and
dismissal with prejudice of the consolidated derivative actions now pending in Missouri State
Court, which are related to the Federal Derivative Action. In addition to the Federal Class Actions, the State Derivative Action(s), the new Missouri State
Court derivative action and the Federal Derivative Action, six putative class action lawsuits were
filed against Charter and certain of its then current directors and officers in the Court of
Chancery of the State of Delaware (the Delaware Class Actions). The lawsuits were filed after
the filing of a Schedule 13D amendment by Mr. Allen indicating that he was exploring a number of
possible alternatives with respect to restructuring or expanding his ownership interest in Charter.
We believe the plaintiffs speculated that Mr. Allen might have been contemplating an unfair bid
for shares of Charter or some other sort of going private transaction on unfair terms and generally
alleged that the defendants breached their fiduciary duties by participating in or acquiescing to
such a transaction. The lawsuits, which are substantively identical, were brought on behalf of
Charters securities holders as of July 29, 2002, and sought unspecified damages and possible
injunctive relief. However, no such transaction by Mr. Allen has been presented. On April 30,
2004, orders of dismissal without prejudice were entered in each of the Delaware Class Actions. The Delaware Class Actions consist of:  
    Eleanor Leonard, v. Paul G. Allen, Larry W. Wangberg, John H.
Tory, Carl E. Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald
L. Nelson, William Savoy, and Charter Communications, Inc., filed
on August 12, 7




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2002;  
    Helene Giarraputo, on behalf of herself and all others similarly
situated, v. Paul G. Allen, Carl E. Vogel, Marc B. Nathanson,
Ronald L. Nelson, Nancy B. Peretsman, William Savoy, John H. Tory,
Larry W. Wangberg, and Charter Communications, Inc., filed on
August 13, 2002;  
    Ronald D. Wells, Whitney Counsil and Manny Varghese, on behalf of
themselves and all others similarly situated, v. Charter
Communications, Inc., Ronald L. Nelson, Paul G. Allen, Marc B.
Nathanson, Nancy B. Peretsman, William Savoy, John H. Tory, Carl
E. Vogel, Larry W. Wangberg, filed on August 13, 2002;  
    Gilbert Herman, on behalf of himself and all others similarly
situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl
E. Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
William Savoy, and Charter Communications, Inc., filed on August
14, 2002;  
    Stephen Noteboom, on behalf of himself and all others similarly
situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl
E. Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
William Savoy, and Charter Communications, Inc., filed on August
16, 2002; and  
    John Fillmore on behalf of himself and all others similarly
situated, v. Paul G. Allen, Larry W. Wangberg, John H. Tory, Carl
E. Vogel, Marc B. Nathanson, Nancy B. Peretsman, Ronald L. Nelson,
William Savoy, and Charter Communications, Inc., filed on October
18, 2002. Government Investigations In August 2002, Charter became aware of a grand jury investigation being conducted by the U.S.
Attorneys Office for the Eastern District of Missouri into certain of its accounting and reporting
practices, focusing on how Charter reported customer numbers, and its reporting of amounts received
from digital set-top terminal suppliers for advertising. The U.S. Attorneys Office has publicly
stated that Charter is not a target of the investigation. Charter was also advised by the U.S.
Attorneys Office that no current officer or member of its board of directors is a target of the
investigation. On July 24, 2003, a federal grand jury charged four former officers of Charter with
conspiracy and mail and wire fraud, alleging improper accounting and reporting practices focusing
on revenue from digital set-top terminal suppliers and inflated customer account numbers. Each of
the indicted former officers pled guilty to single conspiracy counts related to the original mail
and wire fraud charges and are awaiting sentencing. Charter has informed us that it is fully
cooperating with the investigation. On November 4, 2002, Charter received an informal, non-public inquiry from the staff of the SEC.
The SEC issued a formal order of investigation dated January 23, 2003, and subsequently served
document and testimony subpoenas on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charters prior reports with respect to its
determination of the number of customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings with certain vendors, including
programmers and digital set-top terminal suppliers. On July 27, 2004, the SEC and Charter reached
a final agreement to settle the investigation. In the Settlement Agreement and Cease and Desist
Order, Charter agreed to entry of an administrative order prohibiting any future violations of
United States securities laws and requiring certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine
against Charter. Indemnification Charter is generally required to indemnify each of the named individual defendants in connection
with the matters described above pursuant to the terms of its bylaws and (where applicable) such
individual defendants employment agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC investigation and the above
described lawsuits, some of Charters current and former directors and current and former officers
have been advanced certain costs and expenses incurred in connection with their defense. On
February 22, 2005, Charter filed suit against four of its former officers who were indicted in the
course of the grand jury investigation. These suits seek to recover the legal fees and other
related expenses advanced to these individuals by Charter for the grand jury investigation, SEC
investigation and class action and related lawsuits. Other Litigation In October 2001, two customers, Nikki Nicholls and Geraldine M. Barber, filed a class action suit
against Charter Holdco in South Carolina Court of Common Pleas (the South Carolina Class Action),
purportedly on behalf of a 8




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class of Charter Holdcos customers, alleging that Charter Holdco improperly charged them a wire
maintenance fee without request or permission. They also claimed that Charter Holdco improperly
required them to rent analog and/or digital set-top terminals even though their television sets
were cable ready. A substantively identical case was filed in the Superior Court of Athens 
Clarke County, Georgia by Emma S. Tobar on March 26, 2002 (the Georgia Class Action), alleging a
nationwide class for these claims. Charter Holdco removed the South Carolina Class Action to the
United States District Court for the District of South Carolina in November 2001, and moved to
dismiss the suit in December 2001. The federal judge remanded the case to the South Carolina Court
of Common Pleas in August 2002 without ruling on the motion to dismiss. The plaintiffs
subsequently moved for a default judgment, arguing that upon return to state court, Charter Holdco
should have, but did not file a new motion to dismiss. The state court judge granted the
plaintiffs motion over Charter Holdcos objection in September 2002. Charter Holdco immediately
appealed that decision to the South Carolina Court of Appeals and the South Carolina Supreme Court,
but those courts ruled that until a final judgment was entered against Charter Holdco, they lacked
jurisdiction to hear the appeal. In January 2003, the Court of Common Pleas granted the plaintiffs motion for class certification.
In October and November 2003, Charter Holdco filed motions (a) asking that court to set aside the
default judgment, and (b) seeking dismissal of plaintiffs suit for failure to state a claim. In
January 2004, the Court of Common Pleas granted in part and denied in part Charter Holdcos motion
to dismiss for failure to state a claim. It also took under advisement Charter Holdcos motion to
set aside the default judgment. In April 2004, the parties to both the Georgia and South Carolina
Class Actions participated in a mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the mediators proposal and reached a tentative
settlement, subject to final documentation and court approval. As a result of the tentative
settlement, we recorded a special charge of $0.2 million in our consolidated statement of
operations in the first quarter of 2004. On July 8, 2004, the Superior Court of Athens  Clarke
County, Georgia granted a motion to amend the Tobar complaint to add Nicholls, Barber and April
Jones as plaintiffs in the Georgia Class Action and to add any potential class members in South
Carolina. The court also granted preliminary approval of the proposed settlement on that date. On
August 2, 2004, the parties submitted a joint request to the South Carolina Court of Common Pleas
to stay the South Carolina Class Action pending final approval of the settlement and on August 17,
2004, that court granted the parties request. On November 10, 2004, the court granted final
approval of the settlement, rejecting positions advanced by two objectors to the settlement. On
December 13, 2004 the court entered a written order formally approving that settlement. On January
11, 2005, certain class members appealed the order entered by the Georgia court. Those objectors
voluntarily dismissed their appeal with prejudice on February 8, 2005. On February 9, 2005, the
South Carolina Court of Common Pleas entered a court order of dismissal for the South Carolina
Class Action. Additionally, one of the objectors to this settlement recently filed a similar, but
not identical, lawsuit. The South Carolina Class Action was entitled:  
    Nikki Nicholls and Geraldine M. Barber, on behalf of
themselves and all others similarly situated v.
Charter Communications Holding Company, LLC and City
of Spartanburg filed on October 29, 2001. The Georgia Class Action was entitled:  
    Emma S. Tobar, Nikki Nicholls, Geraldine M. Barber and
April Jones, on behalf of themselves and all others
similarly situated v. Charter Communications Holding
Company, LLC, et al, originally filed on March 26,
2002. Outcome In addition to the matters set forth above, Charter is also party to other lawsuits and claims that
arose in the ordinary course of conducting its business. In the opinion of management, after
taking into account recorded liabilities, the outcome of these other lawsuits and claims are not
expected to have a material adverse effect on our consolidated financial condition, results of
operations or our liquidity. 9




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##### Table of Contents



PART II 
 Item 5.Market for Registrants Common Equity and Related Stockholder Matters. (A) Market Information There is no established trading market for the equity interests of Renaissance Media Group,
Capital, Louisiana or Tennessee.(B) Holders Charter Holdings owns indirectly all of the limited liability company membership interests of the
registrants.(C) Dividends We record distributions when management fees charged to us exceed expenses incurred on our behalf.
We did not pay distributions for the years ended December 31, 2004 and 2003. Our ability to pay
distributions is limited under the terms of covenants in the indenture governing our outstanding
senior discount notes. (D) Recent Sales of Unregistered Securities No unregistered equity securities of Renaissance Media Group, Capital, Louisiana or Tennessee were
sold by such entities during the fourth quarter of the year ended December 31, 2004. 
 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations. Reference is made to Certain Trends and Uncertainties of this section and Cautionary Statement
Regarding Forward-Looking Statements, which describes important factors that could cause actual
results to differ from expectations and non-historical information contained herein. In addition,
the following discussion should be read in conjunction with the audited consolidated financial
statements of Charter Communications, Inc. and subsidiaries as of and for the years ended December
31, 2004, 2003 and 2002, and the annual report on Form 10-K of Charter Holdings for the year ended
December 31, 2004. Introduction The industrys and our most significant operational challenges in 2004 included competition from
DBS providers and DSL service providers. We believe that competition from DBS has resulted in net
analog video customer losses and decreased growth rates for digital video customers. Competition
from DSL providers combined with limited opportunities to expand our customer base has resulted in
decreased growth rates for high-speed data customers. In the recent past, we have grown revenues
by offsetting video customer losses with price increases and sales of incremental advanced services
such as high-speed data, video on demand, digital video recorders and high definition television.
We expect to continue to grow revenues through continued growth in high-speed data and incremental
new services including VOIP telephony, high definition television, VOD and DVR service. For the year ended December 31, 2004, our loss from operations, which includes depreciation and
amortization expense and impairment of franchises but excludes
interest expense, was $15.0 million.
For the year ended December 31, 2003, our income from operations was $11.2 million. We had a
negative operating margin (defined as income (loss) from
operations divided by revenues) of 13% for
the year ended December 31, 2004. For the year ended December 31, 2003, we had an operating margin
of 10%. The decline in income from operations and operating margins from 2003 to 2004 was
principally due to the impairment of franchises of $21.0 million recorded in the third quarter of
2004. Operating margins for the year ended December 31, 2004 compared to the year ended December
31, 2003 were also negatively impacted by increases in programming and service costs. Our outstanding public notes require us to pay cash interest each April and October and mature in
2008. We expect that we will rely on loans and capital contributions from our indirect parent
companies to repay our public notes at 10




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##### Table of Contents



maturity. However, there can be no assurance that our indirect parent companies will have
sufficient liquidity to provide funds to us to satisfy this payment when due. Results of Operations The following table sets forth the percentages of revenues that items in the accompanying
consolidated statements of operations constitute for the indicated periods (dollars in thousands): Year Ended December 31,2004
    
    
    2003Revenues
    
    $
    115,711
    
    
    
    100
    %
    
    $
    107,474
    
    
    
    100
    %Costs and Expenses:Operating (excluding depreciation and
amortization)
    
    
    48,776
    
    
    
    42
    %
    
    
    44,019
    
    
    
    41
    %Selling, general and administrative
    
    
    22,967
    
    
    
    20
    %
    
    
    19,590
    
    
    
    18
    %Depreciation and amortization
    
    
    35,456
    
    
    
    31
    %
    
    
    32,467
    
    
    
    30
    %Impairment of franchises
    
    
    21,014
    
    
    
    18
    %
    
    
    
    
    
    
    Acquisition liability settlements
    
    
    
    
    
    
    
    
    
    
    (402
    )
    
    
    Loss on sale of fixed assets, net
    
    
    296
    
    
    
    
    
    
    
    642
    
    
    
    1
    %Special charges, net
    
    
    2,248
    
    
    
    2
    %
    
    
    
    
    
    
    130,757
    
    
    
    113
    %
    
    
    96,316
    
    
    
    90
    %Income (loss) from operations
    
    
    (15,046
    )
    
    
    (13
    )%
    
    
    11,158
    
    
    
    10
    %Other income and expenses:Interest expense, net
    
    
    (11,024
    )
    
    
    
    
    
    
    (10,835
    )Income (loss) before cumulative effect of
accounting change
    
    
    (26,070
    )
    
    
    
    
    
    
    323Cumulative effect of accounting change
    
    
    (5,744
    )
    
    
    
    
    
    
    Net income (loss)
    
    $
    (31,814
    )
    
    
    
    
    
    $
    323
 Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 Revenues.Revenues increased by $8.2 million, or 8%, from $107.5 million for the year ended
December 31, 2003 to $115.7 million for the year ended December 31, 2004. This increase is
principally the result of increases in the number of digital video and high-speed data customers as
well as price increases for video and high-speed data services, and is offset partially by a
decrease in analog video customers. Our goal is to increase revenues by improving customer service
which we believe will stabilize our analog video customer base, implementing price increases on
certain services and packages and increasing the number of our customers who purchase high-speed
data services, digital video and advanced products and services such as VOIP telephony, VOD, high
definition television and DVR service. 11




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Revenues by service offering were as follows (dollars in thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2004 over 2003%of
    
    
    
    
    
    % of
    
    
    
    
    
    %Revenues
    
    
    Revenues
    
    Revenues
    
    
    Revenues
    
    Change
    
    
    ChangeVideo
    
    $
    83,934
    
    
    
    73
    %
    
    $
    81,967
    
    
    
    77
    %
    
    $
    1,967
    
    
    
    2
    %High-speed data
    
    
    14,415
    
    
    
    12
    %
    
    
    9,895
    
    
    
    9
    %
    
    
    4,520
    
    
    
    46
    %Advertising sales
    
    
    5,805
    
    
    
    5
    %
    
    
    5,504
    
    
    
    5
    %
    
    
    301
    
    
    
    5
    %Commercial
    
    
    3,017
    
    
    
    3
    %
    
    
    2,355
    
    
    
    2
    %
    
    
    662
    
    
    
    28
    %Other
    
    
    8,540
    
    
    
    7
    %
    
    
    7,753
    
    
    
    7
    %
    
    
    787
    
    
    
    10
    %$
    115,711
    
    
    
    100
    %
    
    $
    107,474
    
    
    
    100
    %
    
    $
    8,237
    
    
    
    8
    %
 Video revenues consist primarily of revenues from analog and digital video services provided to our
non-commercial customers. Video revenues increased by $2.0 million, or 2%, for the year ended
December 31, 2004 as compared to the year ended December 31, 2003. The increase was primarily the
result of price increases and an increase in digital video customers, partially offset by a decline
in analog video customers. Revenues from high-speed data services provided to our non-commercial customers increased $4.5
million, or 46%, from $9.9 million for the year ended December 31, 2003 to $14.4 million for the
year ended December 31, 2004. The increase was primarily the result of an increase in the average
number of customers receiving high-speed data services and increase in average price of the
service. Advertising sales revenues consist primarily of revenues from commercial advertising customers,
programmers and other vendors. Advertising sales increased $0.3 million, or 5%, from $5.5 million
for the year ended December 31, 2003 to $5.8 million for the year ended December 31, 2004,
primarily as a result of an increase in national advertising campaigns and election related
advertising. For the years ended December 31, 2004 and 2003, we received $0.3 million and $0.3
million, respectively, in advertising revenue from vendors. Commercial revenues consist primarily of revenues from cable video and high-speed data services to
our commercial customers. Commercial revenues increased $0.7 million, or 28%, from $2.4 million
for the year ended December 31, 2003 to $3.0 million for the year ended December 31, 2004,
primarily as a result of an increase in commercial high-speed data revenues. Other revenues consist of revenues from franchise fees, equipment rental, customer installations,
home shopping, late payment fees, wire maintenance fees and other miscellaneous revenues. Other
revenues increased $0.8 million, or 10%, from $7.8 million for the year ended December 31, 2003 to
$8.5 million for the year ended December 31, 2004. The increase was primarily the result of an
increase in home shopping and infomercial revenue and franchises fees. Operating expenses. Operating expenses increased by $4.8 million, or 11%, from $44.0 million for
the year ended December 31, 2003 to $48.8 million for the year ended December 31, 2004.
Programming costs included in the accompanying consolidated statements of operations were $30.9
million and $27.5 million, representing 63% and 63% of total operating expenses for the years ended
December 31, 2004 and 2003, respectively. Key expense components as a percentage of revenues were
as follows (dollars in thousands): 12




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##### Table of Contents



Year Ended December 31,2004
    
    
    2003
    
    
    2004 over 2003% of
    
    
    
    
    
    % ofExpenses
    
    
    Revenues
    
    Expenses
    
    
    Revenues
    
    Change
    
    
    % ChangeProgramming
    
    $
    30,874
    
    
    
    27
    %
    
    $
    27,540
    
    
    
    26
    %
    
    $
    3,334
    
    
    
    12
    %Advertising sales
    
    
    2,361
    
    
    
    2
    %
    
    
    2,504
    
    
    
    2
    %
    
    
    (143
    )
    
    
    (6
    %)Service
    
    
    15,541
    
    
    
    13
    %
    
    
    13,975
    
    
    
    13
    %
    
    
    1,566
    
    
    
    11
    %$
    48,776
    
    
    
    42
    %
    
    $
    44,019
    
    
    
    41
    %
    
    $
    4,757
    
    
    
    11
    %
 Programming costs consist primarily of costs paid to programmers for analog, premium and digital
channels and pay-per-view programming. The increase in programming costs of $3.3 million, or 12%,
was a result of price increases, particularly in sports programming, an increased number of
channels carried on our systems and an increase in digital video customers, partially offset by a
decrease in analog video customers. Programming costs were offset by the amortization of payments
received from programmers in support of launches of new channels of $1.7 million and $1.8 million
for the years ended December 31, 2004 and 2003, respectively. In every year we have operated, our cable programming costs have increased in excess of the U.S.
inflation and cost-of-living increases, and we expect them to continue to increase because of a
variety of factors, including inflationary or negotiated annual increases, additional programming
being provided to customers, and increased costs to purchase or produce programming. Our
increasing programming costs will result in declining operating margins for our video services to
the extent we are unable to pass on cost increases to our customers. We expect to partially offset
any resulting margin compression from our traditional video services with revenue from advanced
video services, increased high-speed data revenues, advertising revenues and commercial service
revenues. Advertising sales expenses consist of costs related to traditional advertising services provided to
advertising customers, including salaries, benefits and commissions. Advertising sales expenses
remained virtually unchanged for the year ended December 31, 2004 compared to the year ended
December 31, 2003. Service costs consist primarily of service personnel salaries and benefits,
franchise fees, system utilities, Internet service provider fees, maintenance and pole rental
expense. The increase in service costs of $1.6 million, or 11%, resulted primarily from additional
activity associated with ongoing infrastructure maintenance. Selling, general and administrative expenses. Selling, general and administrative expenses
increased by $3.4 million, or 17%, from $19.6 million for
the year ended December 31, 2003 to $23.0
million for the year ended December 31, 2004. Key components of expense as a percentage of
revenues were as follows (dollars in thousands): Year ended December 31,2004
    
    
    2003
    
    
    2004 over 2003% of
    
    
    
    
    
    % ofExpenses
    
    
    Revenues
    
    Expenses
    
    
    Revenues
    
    Change
    
    
    % ChangeGeneral and
administrative
    
    $
    20,619
    
    
    
    18
    %
    
    $
    18,145
    
    
    
    17
    %
    
    $
    2,474
    
    
    
    14
    %Marketing
    
    
    2,348
    
    
    
    2
    %
    
    
    1,445
    
    
    
    1
    %
    
    
    903
    
    
    
    62
    %$
    22,967
    
    
    
    20
    %
    
    $
    19,590
    
    
    
    18
    %
    
    $
    3,377
    
    
    
    17
    %
 General and administrative expenses consist primarily of salaries and benefits, rent expense,
billing costs, call center costs, internal network costs, bad debt expense and property taxes. The
increase in general and administrative expenses of $2.5 million, or 14%, resulted primarily from
increases in call center costs of $2.3 million and bad debt
expense of $0.9 million offset by
decreases in costs associated with salaries and benefits of $1.0 million. 13




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##### Table of Contents



Marketing expenses increased $0.9 million, or 62%, as a result of an increased investment in
marketing and branding campaigns. Depreciation and amortization.Depreciation and amortization expense increased by $3.0 million, or
9%, from $32.5 million for the year ended December 31, 2003 to $35.5 million for the year ended
December 31, 2004. The increase in depreciation related to an increase in capital expenditures. Impairment of
franchises.We performed an impairment assessment
during the third quarter of 2004. The
use of lower projected growth rates and the resulting revised estimates of future cash flows in our
valuation, primarily as a result of increased competition, led to the recognition of a $21.0
million impairment charge for the year ended December 31, 2004. Acquisition liability settlements.Acquisition liability settlements of $0.4 million for the year
ended December 31, 2003 represents the reversal of estimated liabilities recorded in connection
with prior business combinations, which, based on an evaluation of current facts and circumstances,
are no longer required. Loss on sale of
fixed assets,net. Loss on sale of fixed assets
of $0.3 million and $0.6 million for the years ended December 31, 2004 and 2003, respectively,
represents the losses realized on the disposition of fixed assets. Special charges, net.Special charges of $2.2 million for the year ended December 31, 2004
represents approximately $2.1 million of aggregate value of the Charter Class A common stock and
warrants to purchase Charter Class A common stock contemplated to be issued as part of a settlement
of the consolidated federal class actions, state derivative actions and federal derivative action
lawsuits and approximately $0.1 million of litigation costs related to the tentative settlement of
a South Carolina national class action suit, all of which settlements are subject to final
documentation and court approval. We expect to continue to record additional special charges in
2005 related to the continued reorganization of our operations. Interest expense, net. Net interest expense increased $0.2 million from $10.8 million to $11.0
million, or 2%, in 2004 compared to 2003. This increase is the result of the accretion and cash
interest associated with our senior discount notes. Cumulative effect of accounting change.Cumulative effect of accounting change of $5.7 million in
2004 represents the impairment charge recorded as a result of our adoption of EITF Topic D-108, Use
of the Residual Method to Value Acquired Assets Other than Goodwill. Net income
(loss). Net loss increased $32.1 million from net income of $0.3 million to net loss of
$31.8 million for the year ended December 31, 2004 compared to 2003, as a result of the combination
of factors described above. The impact to net loss in 2004 of the impairment of franchises and the
cumulative effect of accounting change was to increase net loss by $26.8 million in 2004. The
impact of the acquisition liability settlements was to increase net income by $0.4 million in 2003. Liquidity and Capital Resources Introduction This section contains a discussion of our liquidity and capital resources, including a discussion
of our cash position, sources and uses of cash, access to credit facilities and other financing
sources, historical financing activities, cash needs, capital expenditures and outstanding debt. Overview Our business requires significant cash to fund debt service costs, distributions to our parent
companies, capital expenditures and ongoing operations. We have historically funded these
requirements through cash flows from 14




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##### Table of Contents



operating activities and capital contributions from our indirect parent companies. The mix of
funding sources changes from period to period. For the year ended December 31, 2004, we generated
$19.5 million of net cash flows from operating activities. During 2005, we expect to fund our
liquidity and capital requirements primarily through cash flows from operating activities. The following table summarizes our payment obligations as of December 31, 2004 under our long-term
debt and certain other contractual obligations and commitments (dollars in thousands). Payment by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsContractual ObligationsLong-Term Debt (1)
    
    $
    114,413
    
    
    $
    
    
    
    $
    
    
    
    $
    114,413
    
    
    $
    Long-Term Debt Interest
Payments (2)
    
    
    40,045
    
    
    
    11,441
    
    
    
    22,883
    
    
    
    5,721
    
    
    
    Operating Lease Obligations (1)
    
    
    1,151
    
    
    
    162
    
    
    
    291
    
    
    
    247
    
    
    
    451Total
    
    $
    155,609
    
    
    $
    11,603
    
    
    $
    23,174
    
    
    $
    120,381
    
    
    $
    451
   (1)
    The table presents maturities of long-term debt outstanding as of December 31, 2004. Refer
to notes 8 and 14 to our consolidated financial statements contained in Item 8. Financial
Statements and Supplementary Data for a description of our long-term debt and other
contractual obligations and commitments.(2)
    Interest payments on variable debt are estimated using amounts outstanding at December 31,
2004 and the average implied forward London Interbank Offering Rate (LIBOR) rates applicable
for the quarter during the interest rate reset based on the yield curve in effect at December
31, 2004. Actual interest payments will differ based on actual LIBOR rates and actual amounts
outstanding for applicable periods. The following items are not included in the contractual obligations table because the obligations
are not fixed and/or determinable due to various factors discussed below. However, we incur these
costs as part of our operations:  
    We rent utility poles used in our operations. Generally, pole rentals are cancelable on
short notice, but we anticipate that such rentals will recur. Rent expense incurred for
pole rental attachments for the years ended December 31, 2004, 2003 and 2002, was
approximately $1.3 million, $1.2 million and $1.1 million, respectively.
    We pay franchise fees under multi-year franchise agreements based on a percentage of
revenues earned from video service per year. We also pay other franchise related costs,
such as public education grants, under multi-year agreements. Franchise fees and other
franchise related costs included in the accompanying statement of operations were
approximately $4.2 million, $4.0 million and $3.8 million for the years ended December 31,
2004, 2003 and 2002, respectively.
    Our parent companies negotiate and enter into programming agreements covering all of
their subsidiaries, including us. We pay programming fees under these multi-year contracts
ranging from three to six years typically based on a flat fee per customer, which may be
fixed for the term or may in some cases, escalate over the term. Programming costs
included in the accompanying statements of operations were $30.9 million, $27.5 million and
$25.2 million for the years ended December 31, 2004, 2003 and 2002, respectively. The principal amount of our senior notes was $114.4 million as of December 31, 2004. There was no
payment of any interest in respect of the notes prior to October 15, 2003. Since October 15, 2003,
interest on the notes is payable semi-annually in arrears in cash at a rate of 10% per year. On
April 15, 2003, the notes became redeemable at the option of the issuers thereof, in whole or in
part, initially at 105% of their principal amount at maturity, plus accrued interest, declining to
100% of the principal amount at maturity, plus accrued interest, on or after April 15, 2006.
Renaissance Media Group has fully and unconditionally guaranteed the notes. The fair market value of the senior notes was $117.8 million and $118.5 million as of December 31,
2004 and 2003, 15




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##### Table of Contents



respectively. The fair market value of the senior notes is based on quoted market prices. We expect to remain in compliance with the covenants under our indenture. We expect that cash
flows from operating activities will be sufficient to satisfy our liquidity needs until maturity of
the public notes. However, if cash flows from operating activities are not sufficient, there can
be no assurance that we will have access to sufficient capital to repay our public notes when they
mature in 2008. Cash flows from operating activities may not be sufficient, on their own, to
permit us to satisfy these obligations. Traditionally, we have relied on our indirect parent
companies ability to access the public debt and equity markets, as well as borrowings under our
indirect parent companies credit facilities, as a source of capital. There can be no assurance
that our indirect parent companies will have sufficient liquidity to provide funds to us to satisfy
this payment when due. In addition, a default under the covenants governing our indenture could
result in the acceleration of our payment obligations under our debt and, under certain
circumstances, in cross-defaults under our affiliates debt obligations, which could adversely
affect our indirect parent companies ability to provide us with funding. Increased funding requirements from customer demand for digital video and high-speed data services,
or the need to offer other advanced services in certain of our markets in order to compete
effectively could make us further reliant on our indirect parent companies ability to make loans
and capital contributions to us. If we are unable to receive adequate financing to fund
operations, our financial condition and results of operations could suffer materially. No assurances can be given that we will not experience liquidity problems because of adverse market
conditions, increased competition or other unfavorable events, or if we do not obtain sufficient
additional financing on a timely basis as our debt becomes due. If, at any time, additional
capital or borrowing capacity is required beyond amounts internally generated or available through
our indirect parent companies existing credit facilities or in traditional debt or equity
financings, we would consider:  
    further reducing our expenses and capital expenditures, which would likely impair our
ability to increase revenue;
    selling assets; or
    seeking funding from our indirect parent companies, including from, the issuance of debt
or equity by our indirect parent companies, including Charter, Charter Holdings, CCH II,
LLC, CCO Holdings, LLC or Charter Communications Operating, LLC, the proceeds of which
could be loaned or contributed to us. If the above strategies are not successful, ultimately, we could be forced to restructure our
obligations or seek protection under the bankruptcy laws. In addition, if we need to raise
additional capital through the issuance of equity or find it necessary to engage in a
recapitalization or other similar transaction, our noteholders might not receive all principal and
interest payments to which they are contractually entitled. Although, Paul G. Allen, Charters principal shareholder, and his affiliates have purchased equity
from Charter and Charter Holdco in the past, there is no obligation for Mr. Allen or his affiliates
to purchase equity or contribute or lend funds to us or to our indirect parent companies or
subsidiaries in the future. See  Certain Trends and Uncertainties. Historical Operating, Financing and Investing Activities We held $0.2 million and $0.3 million in cash and cash equivalents as of December 31, 2004 and
2003, respectively. Operating Activities.Net cash provided by operating activities for the years ended December 31,
2004 and 2003 was $19.5 million and $14.2 million, respectively. Net cash flows from operating
activities provided $5.2 million more cash in 2004 than in 2003 primarily as a result of changes in
operating assets and liabilities that used $8.7 million less cash during the year ended December
31, 2004 compared to the corresponding period in 2004 partially offset by an increase in cash
interest expense of $3.3 million. Investing Activities.Net cash used in investing activities for the years ended December 31, 2004
and 2003 was $19.5 million and $14.0 million, respectively. Investing activities used $5.5 million
more cash during the year ended December 31, 2004 than the corresponding period in 2003 primarily
as a result of an increase in purchases of property, plant and
equipment of approximately $9.0 million, partially offset by an increase of approximately $2.3 16




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million in our change in accrued expenses related to capital expenditures. Capital Expenditures We have significant ongoing capital expenditure requirements. However, we experienced a
significant decline in such requirements starting in 2003. This decline was primarily the result
of a substantial reduction in rebuild costs as our network had been largely upgraded and rebuilt in
prior years. Capital expenditures, excluding acquisitions of cable systems, were $19.8 million and
$10.9 million for the years ended December 31, 2004 and 2003, respectively. The majority of the
capital expenditures in 2004 and 2003 related to our customer premise equipment costs. Upgrading our cable systems has enabled us to offer digital television, high-speed data services,
VOD, interactive services, additional channels and tiers, and expanded pay-per-view options to a
larger customer base. Our capital expenditures are funded primarily from cash flows from operating
activities. In addition, during the years ended December 31, 2004 and 2003, our liabilities
related to capital expenditures increased $0.3 million and decreased $2.0 million, respectively. Capital expenditures are expected to increase in 2005 compared to 2004 as a result of the
deployment of advanced digital boxes. We expect that the nature of these expenditures will
continue to be composed primarily of purchases of customer premise equipment and for scalable
infrastructure costs. We expect to fund capital expenditures for 2005 primarily from cash flows
from operating activities. Indenture Restrictions and Covenants The following description is a summary of certain material provisions of our public notes.
The summary does not restate the terms of the public notes in their entirety, nor does it describe
all terms of the public notes. The instruments governing the public notes are complicated and you
should consult such instruments for more detailed information regarding our public notes. Our
public notes are listed as exhibits to this annual report. Generally, these restrictions apply to
us and to our restricted subsidiaries, which are currently all of our subsidiaries. Change of Control.In the event of a specified change of control, we must offer to repurchase any
then outstanding public notes at 101% of their principal amount or accreted value, as applicable,
plus accrued and unpaid interest, if any. See -Certain Trends and Uncertainties  Long-Term
Indebtedness  Change of Control Payments. Limitation on Indebtedness.The indenture contains a number of significant covenants that could
adversely impact our business. In particular, our indenture restricts our and our subsidiaries
ability to:  
    incur additional debt;
    pay dividends on equity or repurchase equity;
    make investments;
    sell all or substantially all of our assets or merge with or into other companies;
    sell assets;
    enter into sale-leasebacks;
    in the case of restricted subsidiaries, create or permit to exist dividend or payment
restrictions with respect to the bond issuers, guarantee the bond issuers debt, or issue
specified equity interests;
    engage in certain transactions with affiliates; and
    grant liens. The limitations on incurrence of debt permit us and our restricted subsidiaries to incur additional
debt, so long as we are not in default under the indenture:  
    if, after giving effect to the incurrence, we could meet a leverage ratio (ratio of
consolidated debt to four times consolidated EBITDA from the most recent quarter) of 6.75
to 1.0, and, regardless of whether the leverage ratio could be met,
    up to the greater of $200 million or 4.5 times our consolidated annualized EBITDA, as defined,
    up to an amount equal to 5% of our consolidated total assets to finance the purchase of new assets, 17




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
    up to two times the sum of (a) the net cash proceeds of new equity issuances and capital
contributions, and (b) 80% of the fair market value of property received by us or an issuer
as a capital contribution, in each case received after the issue date of our notes and not
allocated to make restricted payments, and
    other items of indebtedness for specific purposes such as intercompany debt, refinancing
of existing debt and interest rate swaps to provide protection against fluctuation in
interest rates.  The indenture permits us to incur debt under one of the categories above, and reclassify the debt
into a different category.Under the indenture governing our notes, we and our restricted subsidiaries are permitted to pay
dividends on equity interests, repurchase interests, make restricted investments, or make other
specified restricted payments only if we could incur $1.00 of additional debt under the debt
incurrence test, which requires that, after giving effect to the transaction, we meet the 6.75 to
1.0 leverage ratio of the indebtedness covenant and that no default exists or would occur as a
consequence thereof. If those conditions are met, we and our restricted subsidiaries are permitted
to make restricted payments in a total amount not to exceed the result of 100% of our consolidated
EBITDA, as defined, minus 130% of our consolidated interest expense, plus 100% of new cash equity
proceeds received by us and not allocated to the indebtedness covenant, plus returns on certain
investments, all cumulatively from June 1998. We and our restricted subsidiaries may make
permitted investments up to $2 million in related businesses and other specified permitted
investments, restricted payments up to $10 million, dividends up to 6% each year of the net cash
proceeds of public equity offerings, and other specified restricted payments without meeting the
foregoing test.We and our restricted subsidiaries are not permitted to grant liens on their assets other than
specified permitted liens, unless corresponding liens are granted to secure our notes. Permitted
liens include liens securing debt permitted to be incurred under credit facilities, liens securing
debt incurred under the incurrence of indebtedness test, in amounts up to the greater of $200
million or 4.5 times our consolidated EBITDA, as defined, liens as deposits for acquisitions up to
10% of the estimated purchase price, liens securing permitted financings of new assets, liens
securing debt permitted to be incurred by restricted subsidiaries, and specified liens incurred in
the ordinary course of business.We and the issuers of our notes are generally not permitted to sell or otherwise dispose of all or
substantially all of our assets or merge with or into other companies unless our consolidated net
worth after any such transaction would be no greater than our consolidated net worth immediately
prior to the transaction, or unless we could incur $1.00 of additional debt under the debt
incurrence test, which would require us to meet a leverage ratio of 6.75 to 1.00 after giving
effect to the transaction.We and our subsidiaries may generally not otherwise sell assets or, in the case of subsidiaries,
equity interests, unless we receive consideration at least equal to the fair market value of the
assets, consisting of at least 75% cash, temporary cash investments or assumption of debt. Charter
Holdings and its restricted subsidiaries (including us) are then required within 12 months after
any asset sale either to commit to use the net cash proceeds over a specified threshold either to
acquire assets used in their own or related businesses or use the net cash proceeds to repay debt,
or to offer to repurchase our notes with any remaining proceeds.We and our restricted subsidiaries may generally not engage in sale and leaseback transactions
unless the lease term does not exceed three years or the proceeds are applied in accordance with
the covenant limiting asset sales.Our restricted subsidiaries may generally not enter into restrictions on our abilities to make
dividends or distributions or transfer assets to us except those not more restrictive than is
customary in comparable financings.Our restricted subsidiaries are not permitted to guarantee or pledge assets to secure our debt or
the debt of our restricted subsidiaries, unless the guarantying subsidiary issues a guarantee of
our notes of comparable priority and tenor, and waives any rights of reimbursement, indemnity or
subrogation arising from the guarantee transaction.We and our restricted subsidiaries are generally not permitted to issue or sell equity interests in
restricted subsidiaries, except sales of common stock of restricted subsidiaries so long as the
proceeds of the sale are applied in accordance with the asset sale covenant, and issuances as a
result of which the restricted subsidiary is no longer a restricted subsidiary and any remaining
investment in that subsidiary is permitted by the covenant limiting restricted 18




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payments.The indenture governing our notes also restricts our ability and the ability of our restricted
subsidiaries to enter into certain transactions with affiliates involving consideration in excess
of $2 million without a determination by the disinterested members of the board of directors that
the transaction is on terms no less favorable than arms length, or transactions with affiliates
involving over $4 million with affiliates without receiving an independent opinion as to the
fairness of the transaction to us.All of these covenants are subject to additional specified exceptions.Our indenture includes various events of default. Under these provisions, a failure by us or any
of our restricted subsidiaries to pay any indebtedness (other than under our notes) having a
principal amount of $10 million or more (or any other default under any such indebtedness resulting
in its acceleration) would result in an event of default under the indenture governing our public
notes. See  Certain Trends and Uncertainties  Restrictive Covenants.Certain Trends and UncertaintiesThe following discussion highlights a number of trends and uncertainties, in addition to those
discussed elsewhere in this annual report and in other documents that we file with the SEC, that
could materially impact our business, results of operations and financial condition.Restrictive Covenants.The indenture governing our publicly held notes contains a number of
significant covenants that could adversely impact our business. In particular, our indenture
restricts our and our subsidiaries ability to:  
    incur additional debt;
    pay dividends on equity or repurchase equity;
    make investments;
    sell all or substantially all of our assets or merge with or into other companies;
    sell assets;
    enter into sale-leasebacks;
    in the case of restricted subsidiaries, create or permit to exist dividend or payment
restrictions with respect to the bond issuers, guarantee the bond issuers debt, or issue
specified equity interests;
    engage in certain transactions with affiliates; and
    grant liens. Our 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 indenture governing our
publicly held notes, which could result in acceleration of such notes and in certain cases, could
result in cross-defaults under our affiliates debt obligations. Any default under our indenture
might adversely affect our growth, our financial condition and our results of operations and the
ability to make payments on our publicly held notes. For more information, see the section above
entitled Liquidity and Capital Resources. Liquidity. Our business requires significant cash to fund capital expenditures, debt service costs
and ongoing operations. Our ongoing operations will depend on our ability to generate cash and to
secure financing in the future. We have historically funded liquidity and capital requirements
through cash flows from operating activities and capital contributions from our indirect parent
companies. As the principal amounts of our public notes become due in 2008, it is unclear whether we will have
access to sufficient capital to satisfy these principal repayment obligations. Cash flows from
operating activities and other existing sources of funds may not be sufficient, on their own, to
permit us to satisfy these obligations. If our business does not generate sufficient cash flow from operating activities, and sufficient
future contributions are not available to us from other sources of financing, we may not be able to
repay our debt, grow our business, respond to competitive challenges, or fund our other liquidity
and capital needs. 19




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If we need to seek alternative sources of financing, there can be no assurance that we will be able
to obtain the requisite financing or that such financing, if available, would not have terms that
are materially disadvantageous to our existing debt holders. Although Mr. Allen and his affiliates
have purchased equity from Charter and Charter Holdco in the past, there is no obligation for Mr.
Allen or his affiliates to purchase equity or contribute or lend funds to us or to our indirect
parent companies or subsidiaries in the future. If we or our indirect parent companies are unable to raise needed capital, ultimately, we could be
forced to restructure our obligations or seek protection under the bankruptcy laws. In addition,
if we find it necessary to engage in a recapitalization or other similar transaction, our
noteholders might not receive all principal and interest payments to which they are contractually
entitled. For more information, see the section above entitled Liquidity and Capital Resources. Parent Company Liquidity Concerns. Our long-term financing as of December 31, 2004 consists of
$114.4 million principal amount of senior discount notes which become due in 2008. We expect to
rely on capital contributions from our indirect parent companies to repay the principal amount of
our public notes at maturity. However, there can be no assurances that our indirect parent
companies will have sufficient liquidity to satisfy this payment when due. Our parent companies
have a significant amount of debt and may incur additional debt in the future. In 2005 and 2006,
$30.0 million and $185.9 million, respectively, of our indirect parent companies debt will mature.
Cash flows from operating activities and amounts available under the Charter Operating credit
facilities may not be sufficient to fund our and our parent companies operations and satisfy
our parent companies principal repayment obligations that come due in 2006 and, we believe, will
not be sufficient to fund our parent companies operations and satisfy such repayment obligations
thereafter. Each of our indirect parent companies debt has
certain covenants which may restrict their ability to make
distributions to their respective direct parent companies to satisfy
future principal repayment obligations. Because Charter is our manager, any financial or liquidity problems of Charter could cause serious
disruption to our business and have a material adverse effect on our business and results of
operations. Any such event could adversely impact our own credit rating, and our relations with
customers and suppliers, which could in turn further impair our ability to obtain financing and
operate our business. Further, to the extent that any such event results in a change of control of
Charter (whether through a bankruptcy, receivership or other reorganization of Charter and/or
Charter Holdco, or otherwise), it could result in an event of default under the Charter Operating
credit facilities and would require a change of control repurchase offer under our outstanding
notes. Securities Litigation and Government Investigations.A number of putative federal class action
lawsuits have been filed in the U.S. District Court for the Eastern
District of Missouri against Charter and certain of its former and present officers and
directors alleging violations of securities laws, which have been consolidated for pretrial
purposes. In addition, a number of shareholder derivative lawsuits
have been filed against Charter in the same and other
jurisdictions. A shareholders derivative suit was filed in the U.S. District Court for the Eastern
District of Missouri against
Charter and its then current directors. Also, three shareholders derivative suits
were filed in Missouri state court against Charter, its then current directors and its former
independent auditor. These state court actions have been consolidated. The federal shareholders derivative
suit and the consolidated derivative suit each alleged that the
defendants breached their fiduciary duties. Charter recently entered into Stipulations of Settlement setting forth proposed terms of settlement
for the above described Delaware class actions and derivative suits. The settlement of each of the
lawsuits remains conditioned upon, among other things, final judicial approval of the settlements
following notice to the class, and dismissal with prejudice of the consolidated derivative actions
now pending in Missouri state court, which are related to the Federal Derivative Action.
Additionally, a portion of the settlement is to be paid in shares of Charters Class A common stock
with a value of $45.0 million (includes shares issuable to insurance carriers) and warrants to
purchase Charters Class A common stock valued at $40.0 million, with such values in each case
determined by formulas set forth in the Stipulations of Settlement. If the price of Charters
common stock declines, additional shares will be required in order to fulfill this commitment.
Charter has the right but not the obligation to terminate the settlements if the value of its
common stock (under the above-described formula) is less than $2.25. For more information, see
Item 3  Legal Proceedings. 20




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In August 2002, Charter became aware of a grand jury investigation being conducted by the U.S.
Attorneys Office for the Eastern District of Missouri into certain of its accounting and reporting
practices focusing on how it reported customer numbers, and its reporting of amounts received from
digital set-top terminal suppliers for advertising. The U.S. Attorneys Office has publicly stated
that Charter is not a target of the investigation. Charter was also advised by the U.S. Attorneys
Office that no current officer or member of its board of directors is a target of the investigation. On July 24, 2003, a federal grand jury charged four
former officers of Charter with conspiracy and mail and wire fraud, alleging improper accounting
and reporting practices focusing on revenue from digital set-top terminal suppliers and inflated
customer account numbers. Each of the indicted former officers pled guilty to single conspiracy
counts related to the original mail and wire fraud charges and are awaiting sentencing. Charter
has informed us that it is fully cooperating with the investigation. On November 4, 2002, Charter received an informal, non-public inquiry from the staff of the SEC.
The SEC issued a formal order of investigation dated January 23, 2003, and subsequently served
document and testimony subpoenas on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charters prior reports with respect to its
determination of the number of customers and various of its accounting policies and practices
including its capitalization of certain expenses and dealings with certain vendors, including
programmers and digital set-top terminal suppliers. On July 27, 2004, the SEC and Charter reached
a final agreement to settle the investigation. In the Settlement Agreement and Cease and Desist
Order, Charter agreed to entry of an administrative order prohibiting any future violations of
United States securities laws and requiring certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine
against Charter. Moreover, due to the inherent uncertainties of litigation and investigations, and due to the
remaining conditions to the finalization of our anticipated settlements, Charter cannot predict
with certainty the ultimate outcome of these proceedings. An unfavorable outcome in the lawsuits
or the government investigation described above could result in substantial potential liabilities
and have a material adverse effect on our consolidated financial condition and results of
operations or our liquidity. Further, these proceedings, and Charters actions in response to
these proceedings, could result in substantial additional defense costs and the diversion of
managements attention, and could adversely affect our ability to execute our business and
financial strategies. Competition.The industry in which we operate is highly competitive, and has become more so in
recent years. In some instances, we compete against companies with fewer regulatory burdens,
easier access to financing, greater personnel resources, greater brand name recognition and
long-established relationships with regulatory authorities and customers. Increasing consolidation
in the cable industry and the repeal of certain ownership rules may provide additional benefits to
certain of our competitors, either through access to financing, resources or efficiencies of scale. Our principal competitor for video services throughout our territory is direct broadcast satellite
television services, also known as DBS. Competition from DBS, including intensive marketing
efforts, aggressive pricing, and the ability of DBS to provide certain services that we are in the
process of developing, has had an adverse impact on our ability to retain customers. DBS has grown rapidly over the last several years and continues to do so. The cable industry,
including Charter, has lost a significant number of subscribers to DBS competition, and we face
serious challenges in this area in the future. We believe that competition from DBS service
providers may present greater challenges in areas of lower population density, and that our systems
may service a higher concentration of such areas than those of other major cable service providers. Local telephone companies and electric utilities can offer video and other services in competition
with us, and they increasingly may do so in the future. Certain telephone companies have begun
more extensive deployment of fiber in their networks that will enable them to begin providing video
services, as well as telephony and high-bandwidth Internet access services, to residential and
business customers. Some of these telephone companies have obtained, and are now seeking,
franchises that are less burdensome than existing Charter franchises. The subscription television
industry also faces competition from free broadcast television and from other communications and
entertainment media. Further loss of customers to DBS or other alternative video and data services
could have a material negative impact on the value of our business and its performance. 21




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With respect to our Internet access services, we face competition, including intensive marketing
efforts and aggressive pricing, from telephone companies and other providers of dial-up and
digital subscriber line technology, also known as DSL. DSL service is competitive with high-speed
data service over cable systems. Telephone companies (which already have telephone lines into the
household, an existing customer base and other operational functions in place) and other companies
offer DSL service. In addition, DBS providers have entered into joint marketing arrangements with
Internet access providers to offer bundled video and Internet service, which competes with our
ability to provide bundled services to our customers. In order to attract new customers, from time to time we make promotional offers, including offers
of temporarily reduced-price or free service. These promotional programs result in significant
advertising, programming and operating expenses, and also require us to make capital expenditures
to acquire additional digital set-top terminals. Customers who subscribe to our services as a
result of these offerings may not remain customers for any significant period of time following the
end of the promotional period. A failure to retain existing customers and customers added through
promotional offerings or to collect the amounts they owe us could have an adverse effect on our
business and financial results. Mergers, joint ventures and alliances among franchised, wireless or private cable operators,
satellite television providers, local exchange carriers and others, and the repeal of certain
ownership rules may provide additional benefits to some of our competitors, either through access
to financing, resources or efficiencies of scale, or the ability to provide multiple services in
direct competition with us. Long-Term Indebtedness -Change of Control Payments.We may not have the ability to raise the funds
necessary to fulfill our obligations under our public notes following a change of control. A
change of control under our public notes would require us to make an offer to repurchase our
outstanding public notes. However, a failure by us to make or complete a change of control offer
would place us in default of these agreements. Streamlining of Operations.In the past, Charter (our manager) experienced rapid growth from
acquisitions of a number of smaller cable operators and the rapid rebuild and rollout of advanced
services. Our future success will depend in part on Charters ability to standardize and
streamline our operations. The failure to implement a consistent corporate culture and management,
operating or financial systems or procedures necessary to standardize and streamline our operations
and effectively operate our enterprise could have a material adverse effect on our business,
results of operations and financial condition. In addition, Charters ability to properly manage
our operations will be impacted by Charters ability to attract, retain and incentivize
experienced, qualified, professional management. Services.We expect that a substantial portion of our near-term growth will be achieved through
revenues from high-speed data services, digital video, bundled service packages, and to a lesser
extent various commercial services that take advantage of cables broadband capacity. We may not
be able to offer these advanced services successfully to our customers or provide adequate customer
service and these advanced services may not generate adequate revenues. Also, if the vendors we
use for these services are not financially viable over time, we may experience disruption of
service and incur costs to find alternative vendors. In addition, the technology involved in our
product and service offerings generally requires that we have permission to use intellectual
property and that such property not infringe on rights claimed by others. If it is determined that
the product or service being utilized infringes on the rights of others, we may be sued or be
precluded from using the technology. Increasing Programming Costs.Programming has been, and is expected to continue to be, our largest
operating expense item. In recent years, the cable industry has experienced a rapid escalation in
the cost of programming, particularly sports programming. We expect programming costs to continue
to increase because of a variety of factors, including inflationary or negotiated annual increases,
additional programming being provided to customers and increased costs to purchase or produce
programming. The inability to fully pass these programming cost increases on to our customers
would have an adverse impact on our cash flow and operating margins. As measured by programming
costs, and excluding premium services (substantially all of which were renegotiated and renewed in
2003), as of December 31, 2004, approximately 10% of Charters current programming contracts were
expired and approximately another 34% are scheduled to expire by the end of 2005. There can be no
assurance that these agreements will be renewed on favorable or comparable terms. To the extent
that we are unable to reach agreement 22




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with certain programmers on terms that we believe are reasonable we may be forced to remove such
programming channels from our line-up, which could result in a further loss of customers. In
addition, our inability to fully pass these programming cost increases on to our customers would
have an adverse impact on our cash flow and operating margins. Notes Price Volatility.The market price of our and our indirect parent companies publicly traded
notes has been and is likely to continue to be highly volatile. We expect that the price of these
securities may fluctuate in response to various factors, including the factors described in this
section and various other factors, which may be beyond our control. These factors beyond our
control could include: financial forecasts by securities analysts; new conditions or trends in the
cable or telecommunications industry; general economic and market conditions and specifically,
conditions related to the cable or telecommunications industry; any change in our debt ratings; the
development of improved or competitive technologies; the use of new products or promotions by us or
our competitors; changes in accounting rules or interpretations; and new regulatory legislation
adopted in the United States. In addition, the securities market in general, and the market for cable industry securities in
particular, have experienced significant price fluctuations. Volatility in the market price for
companies may often be unrelated or disproportionate to the operating performance of those
companies. These broad market and industry factors may seriously harm the market price of our
notes, regardless of our operating performance. In the past, securities litigation has often
commenced following periods of volatility in the market price of a companys securities, and
several purported class action lawsuits were filed against Charter in 2001 and 2002, following a
decline in its stock price. See Item 3. Legal Proceedings. Economic Slowdown; Global Conflict. It is difficult to assess the impact that the general economic
slowdown and global conflict will have on future operations. However, the economic slowdown has
resulted and could continue to result in reduced spending by customers and advertisers, which could
reduce our revenues, and also could affect our ability to collect accounts receivable and maintain
customers. Reductions in operating revenues would likely negatively affect our ability to make
expected capital expenditures and could also result in our inability to meet our obligations under
our financing agreements. These developments could also have a negative impact on our financing
and variable interest rate agreements through disruptions in the market or negative market
conditions. Regulation and Legislation.Cable system operations are extensively regulated at the federal,
state, and local level, including rate regulation of basic service and equipment and municipal
approval of franchise agreements and their terms, such as franchise requirements to upgrade cable
plant and meet specified customer service standards. Additional legislation and regulation is
always possible. There have been recent calls to impose indecency restrictions on cable networks. Cable operators also face significant regulation of their channel carriage. They currently can be
required to devote substantial capacity to the carriage of programming that they would not carry
voluntarily, including certain local broadcast signals, local public, educational and government
access programming, and unaffiliated commercial leased access programming. This carriage burden
could increase in the future, particularly if cable systems were required to carry both the analog
and digital versions of local broadcast signals (dual carriage) or to carry multiple program
streams included with a single digital broadcast transmission (multicast carriage). Additional
government mandated broadcast carriage obligations could disrupt existing programming commitments,
interfere with our preferred use of limited channel capacity and limit our ability to offer
services that would maximize customer appeal and revenue potential. Although the FCC issued a
decision on February 10, 2005, confirming an earlier ruling against mandating either dual carriage
or multicast carriage, that decision could be appealed or Congress could legislate additional
carriage obligations. 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 regulated access to cable plant. 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 open access obligations could
adversely impact our profitability and discourage system upgrades and the introduction of new
products and services. The United States Court of Appeals for the Ninth Circuit recently vacated
in part an FCC ruling defining cable modem service as an information service and remanded for
further proceedings. The Ninth Circuit held that cable modem service is not cable service but is
part telecommunications service and part 23




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information service. The decision has been appealed to the United States Supreme Court.
However, if it is not reversed, the decision may lead to our having to contribute to the federal
governments universal service fund, to comply with open access requirements, and to subject our
high-speed data operations generally to other common carrier regulations. As we offer other
advanced services over our cable system, we are likely to face additional calls for regulation of
our capacity and operation. These regulations, if adopted, could adversely affect our operations. Recently Issued Accounting Standards In December 2004, the Financial Accounting Standards Board issued the revised SFAS No. 123,
Share-Based Payment, which addresses the accounting for share-based payment transactions in which a
company receives employee services in exchange for (a) equity instruments of that company or (b)
liabilities that are based on the fair value of the companys equity instruments or that may be
settled by the issuance of such equity instruments. This statement will be effective for us
beginning July 1, 2005. Because we adopted the fair value recognition provisions of SFAS No. 123
on January 1, 2003, we do not expect this revised standard to have a material impact on our
financial statements. We do not believe that any other recently issued, but not yet effective accounting pronouncements,
if adopted, would have a material effect on our accompanying financial statements. 
 Item 7A.Quantitative and Qualitative Disclosure About Market Risk. Not Applicable. 
 Item 8.Financial Statements and Supplementary Data. Our consolidated financial statements, the related notes thereto, and the reports of independent
auditors are included in this annual report beginning on page F-1. Separate financial statements for Capital have not been presented as Capital had no operations and
substantially no assets or equity. Accordingly, management has determined that such financial
statements are not material. 
 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 
 Item 9A.Controls and Procedures. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures As of the end of the period covered by this report, management, including our Interim Chief
Executive Officer and Interim Co-Chief Financial Officers, evaluated the effectiveness of the
design and operation of our disclosure controls and procedures with respect to the information
generated for use in this annual report. The evaluation was based in part upon reports and
affidavits provided by a number of executives. Based upon, and as of the date of that evaluation,
our Interim Chief Executive Officer and Interim Co-Chief Financial Officers concluded that the
disclosure controls and procedures were effective to provide reasonable assurances that information
required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods specified in the
Commissions rules and forms. There was no change in our internal control over financial reporting during 2004 that has
materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting. In designing and evaluating the disclosure controls and procedures, our management recognized that
any controls and procedures, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance of achieving the desired control objectives and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures. Based upon the above evaluation, Charters management believes that its controls do
provide such reasonable assurance. 24




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Item 9B.Other Information. None. 25




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PART IV 
 Item 14.Principal Accounting Fees and Services. Audit Fees During the years ended December 31, 2004 and 2003, we incurred fees and related expenses for
professional services rendered by KPMG LLP (KPMG) for the audits of our financial statements for
the applicable year and for the review of our interim financial statements totaling approximately
$67,000 and $50,000, respectively. We have derived these fees by allocating the KPMG fees
associated with the audit of Charter and its subsidiaries, including us. The allocation is based
on a ratio of our analog video customers to the total analog video customers of Charter. Charters Audit Committee appoints, retains, compensates and oversees the registered public
accountants (subject, if applicable, to board of director and/or shareholder ratification), and
approves in advance all fees and terms for the audit engagement and non-audit engagements where
non-audit services are not prohibited by Section 10A of the Securities Exchange Act of 1934, as
amended, with registered public accountants. Pre-approvals of non-audit services are sometimes
delegated to a single member of Charters Audit Committee. However, any pre-approvals made by
Charters Audit Committees designee are presented at Charters Audit Committees next regularly
scheduled meeting. Charters Audit Committee has an obligation to consult with management on these
matters. Charters Audit Committee approved 100% of the KPMG fees for the years ended December 31,
2004 and 2003. Each year, including 2004, with respect to the proposed audit engagement, Charters
Audit Committee reviews the proposed risk assessment process in establishing the scope of
examination and the reports to be rendered. In its capacity as a committee of Charters Board, Charters Audit Committee oversees the work of
the registered public accounting firm (including resolution of disagreements between management and
the public accounting firm regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services. The registered public
accounting firm reports directly to Charters Audit Committee. In performing its functions,
Charters Audit Committee undertakes those tasks and responsibilities that, in its judgment, most
effectively contribute to and implement the purposes of Charters Audit Committee charter. For
more detail of Charters Audit Committees authority and responsibilities, see Charters Audit
Committee charter set forth in Appendix A of its 2004 Proxy Statement filed with the SEC on June
25, 2004. 
 Item 15.Exhibits and Financial Statement Schedules.  (a)
    The following documents are filed as part of this annual report:  (1)
    Financial Statements.A listing of the financial statements, notes and reports of independent public accountants
required by Item 8 begins on page F-1 of this annual report.(2)
    Financial Statement Schedules.No financial statement schedules are required to be filed by Items 8 and 15(d) because they
are not required or are not applicable, or the required information is set forth in the
applicable financial statements or notes thereto.(3)
    Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation
S-K): ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of Renaissance Media Capital Corporation and all amendments thereto
(incorporated by reference to the Exhibit 3.1 of the Registration Statement of Renaissance Media Group LLC,
Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital
 26




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ExhibitNumber
    
    DescriptionCorporation on Form S-4 filed on June 12, 1998 (File No. 333-56679)).3.2
    
    By-laws of Renaissance Media Capital Corporation (incorporated by reference to the Exhibit 3.2
of the Registration Statement of Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC,
Renaissance Media (Tennessee) LLC and Renaissance Media Capital Corporation on Form S-4 filed on June 12, 1998
(File No. 333-56679)).3.3
    
    Certificate of Formation of Renaissance Media (Louisiana) LLC (incorporated by reference to the Exhibit 3.3 of
the
Registration Statement of Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Capital Corporation on Form S-4 filed on June 12, 1998 (File No. 333-
56679)).3.4
    
    Certificate of Formation of Renaissance Media (Tennessee) LLC (incorporated by reference to the Exhibit 3.5 of
the
Registration Statement of Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Capital Corporation on Form S-4 filed on June 12, 1998 (File No. 333-
56679)).3.5
    
    Certificate of Formation of Renaissance Media Group LLC (incorporated by reference to the Exhibit 3.7 of the
Registration Statement of Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Capital Corporation on Form S-4 filed on June 12, 1998 (File No. 333-
56679)).3.6
    
    Amended and Restated Limited Liability Agreement of Renaissance Media Group LLC, dated April 29, 1999
(incorporated by reference to Exhibit 3.9 of the Quarterly Report on Form 10-Q of Renaissance Media Group LLC,
Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital
Corporation filed on May 17, 1999 (File No. 333-56679)).3.7
    
    Amended and Restated Limited Liability Agreement of Renaissance Media (Louisiana) LLC, dated April 29, 1999
(incorporated by reference to Exhibit 3.10 of the Quarterly Report on Form 10-Q of Renaissance Media Group LLC,
Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital
Corporation filed on May 17, 1999 (File No. 333-56679)).3.8
    
    Amended and Restated Limited Liability Agreement of Renaissance Media (Tennessee) LLC, dated April 29, 1999
(incorporated by reference to Exhibit 3.11 of the Quarterly Report on Form 10-Q of Renaissance Media Group LLC,
Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital
Corporation filed on May 17, 1999 (File No. 333-56679)).3.9
    
    Amended and Restated Limited Liability Agreement of Renaissance Media LLC, dated April 30, 1999 (incorporated
by reference to Exhibit 3.12 of the Quarterly Report on Form 10-Q of Renaissance Media Group LLC, Renaissance
Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and Renaissance Media Capital Corporation filed on
May 17, 1999 (File No. 333-56679)).3.10
    
    Certificate of Formation of Renaissance Media LLC (incorporated by reference to Exhibit 3.4 of the annual report
on Form 10-K of Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) and Renaissance Media Capital Corporation filed March 30, 2000 (File No. 333-56679)).4.1
    
    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 Exhibit 4.1 of the Registration Statement of
Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and
Renaissance Media Capital Corporation on Form S-4 filed on June 12, 1998 (File No. 333-56679)).10.1(a)+
    
    Charter Communications Holdings, LLC 1999 Option Plan (incorporated by reference to Exhibit 10.4 to Amendment
No. 4 to the registration statement on Form S-4 of Charter Communications Holdings, LLC and Charter
 27




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##### Table of Contents



ExhibitNumber
    
    DescriptionCommunications Holdings Capital Corporation filed on July 22, 1999 (File No. 333-77499)).10.1(b)+
    
    Assumption Agreement regarding Option Plan, dated as of May 25, 1999, by and between Charter Communications
Holdings, LLC and Charter Communications Holding Company, LLC (incorporated by reference to Exhibit 10.13 to
Amendment No. 6 to the registration statement on Form S-4 of Charter Communications Holdings, LLC and Charter
Communications Holdings Capital Corporation filed on August 27, 1999 (File No. 333-77499)).10.1(c)+
    
    Form of Amendment No. 1 to the Charter Communications Holdings, LLC 1999 Option Plan (incorporated by
reference to Exhibit 10.10(c) to Amendment No. 4 to the registration statement on Form S-1 of Charter
Communications, Inc. filed on November 1, 1999 (File No. 333-83887)).10.1(d)+
    
    Amendment No. 2 to the Charter Communications Holdings, LLC 1999 Option Plan (incorporated by reference to
Exhibit 10.4(c) to the annual report on Form 10-K filed by Charter Communications, Inc. on March 30, 2000 (File
No. 000-27927)).10.1(e)+
    
    Amendment No. 3 to the Charter Communications 1999 Option Plan (incorporated by reference to Exhibit 10.14(e)
to the annual report of Form 10-K of Charter Communications, Inc. filed on March 29, 2002 (File No. 000-27927)).10.1(f)+
    
    Amendment No. 4 to the Charter Communications 1999 Option Plan (incorporated by reference to Exhibit 10.10(f)
to the annual report on Form 10-K of Charter Communications, Inc. filed on April 15, 2003 (File No. 000-27927)).10.2(a)+
    
    Charter Communications, Inc. 2001 Stock Incentive Plan (incorporated by reference to Exhibit 10.25 to the
quarterly
report on Form 10-Q filed by Charter Communications, Inc. on May 15, 2001 (File No. 000-27927)).10.2(b)+
    
    Amendment No. 1 to the Charter Communications, Inc. 2001 Stock Incentive Plan (incorporated by reference to
Exhibit 10.11(b) to the annual report on Form 10-K of Charter Communications, Inc. filed on April 15, 2003 (File
No. 000-27927)).10.2(c)+
    
    Amendment No. 2 to the Charter Communications, Inc. 2001 Stock Incentive Plan (incorporated by reference to
Exhibit 10.10 to the quarterly report on Form 10-Q filed by Charter Communications, Inc. on November 14, 2001
(File No. 000-27927)).10.2(d)+
    
    Amendment No. 3 to the Charter Communications, Inc. 2001 Stock Incentive Plan effective January 2, 2002
(incorporated by reference to Exhibit 10.15(c) to the annual report of Form 10-K of Charter Communications, Inc.
filed on March 29, 2002 (File No. 000-27927)).10.2(e)+
    
    Amendment No. 4 to the Charter Communications, Inc. 2001 Stock Incentive Plan (incorporated by reference to
Exhibit 10.11(e) to the annual report on Form 10-K of Charter Communications, Inc. filed on April 15, 2003 (File
No. 000-27927)).10.2(f)+
    
    Amendment No. 5 to the Charter Communications, Inc. 2001 Stock Incentive Plan (incorporated by reference to
Exhibit 10.11(f) to the annual report on Form 10-K of Charter Communications, Inc. filed on April 15, 2003 (File
No. 000-27927)).10.2(g)+*
    
    Description of Long-Term Incentive Program to the Charter Communications, Inc. 2001 Stock Incentive Plan.10.3(a)+
    
    Letter Agreement, dated May 25, 1999, between Charter Communications, Inc. and Marc Nathanson (incorporated
by reference to Exhibit 10.36 to the registration statement on Form S-4 of Charter Communications Holdings, LLC
and Charter Communications Holdings Capital Corporation filed on January 25, 2000 (File No. 333-95351)).10.3(b)+
    
    Letter Agreement, dated March 27, 2000, between CC VII Holdings, LLC and Marc Nathanson, amending the Letter
Agreement dated May 25, 1999 (incorporated by reference to Exhibit 10.13(b) to the annual report on Form 10-K of
Charter Communications, Inc. filed on April 15, 2003 (File No. 000-27927)).
 28




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##### Table of Contents



ExhibitNumber
    
    Description10.4(a)+
    
    Employment Offer Letter, dated December 2, 2003 by and between Charter Communications, Inc. and Derek
Chang (incorporated by reference to Exhibit 10.24 to the annual
report on Form 10-K of Charter Communications,
Inc. filed on March 15, 2004 (File No. 000-27927)).10.4(b)+
    
    Amendment to Employment Offer Letter, dated January 27, 2005, by and between Charter Communications, Inc. and
Derek Chang (incorporated by reference to Exhibit 99.1 to the current report on Form 8-K of Charter
Communications, Inc. filed January 28, 2005 (File No. 000-27927)).10.5+
    
    Separation Agreement and Release for Margaret A. Bellville, dated as of September 16, 2004 (incorporated by 4,
reference to Exhibit 10.1 to the quarterly report on Form 10-Q filed by Charter Communications, Inc. on November
2004 (File No. 000-27927)).10.6+
    
    Executive Services Agreement, dated as of January 17, 2005, between Charter Communications, Inc. and Robert P.
May (incorporated by reference to Exhibit 99.1 to the current report on Form 8-K of Charter Communications, Inc.
filed on January 21, 2005 (File No. 000-27927)).10.7+
    
    Separation Agreement and Release for Steven A. Schumm, dated as of February 8, 2005 (incorporated by reference
to Exhibit 99.1 to the current report on Form 8-K filed by Charter Communications, Inc. on February 11, 2005
(File
No. 000-27927)).10.8+
    
    Separation Agreement and Release for Carl E. Vogel, dated as of February 17, 2005 (incorporated by reference to
Exhibit 99.1 to the current report on Form 8-K filed by Charter Communications, Inc. on February 22, 2005 (File
No.
000-27927)).10.9+
    
    Separation Agreement and Release for Thomas A. Cullen, dated as of March 15, 2005 (incorporated by reference to
Exhibit 99.1 to the current report on Form 8-K filed by Charter Communications, Inc. on March 17, 2005 (File No.
000-27927)).10.10+
    
    Description of Charter Communications, Inc. 2005 Executive Bonus Plan (incorporated by reference to Exhibit 10.51
to the annual report on Form 10-K filed by Charter Communications, Inc. on march 3, 2005 (File No. 000-27927)).14.1
    
    Code of Conduct adopted January 28, 2003 (incorporated by reference to Exhibit 14.1 to the annual report on Form
10-K of Charter Communications, Inc. filed on April 15, 2003 (File No. 000-27927)).31.1*
    
    Certificate of Interim Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities
Exchange Act of 1934.31.2*
    
    Certificate of Interim co-Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities.
Exchange Act of 1934.31.3*
    
    Certificate of Interim co-Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities
Exchange Act of 1934.32.1*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Interim Chief Executive Officer).32.2*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Interim co-Chief Financial Officer).32.3*
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Interim co-Chief Financial Officer).
 29




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##### Table of Contents



*
    
    Documents attached.+
    
    Management compensatory plan or arrangement. We agree to furnish to the SEC, upon request, copies of any long-term debt instruments that
authorize an amount of securities constituting 10% or less of the total assets of the respective
registrants on a consolidated basis. SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. No annual reports or proxy materials were sent to the registrants security holders during the year
ended December 31, 2004. 30




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrants have duly caused this annual report to be signed on their behalf by the undersigned,
thereunto duly authorized. RENAISSANCE MEDIA GROUP LLCRENAISSANCE MEDIA (LOUISIANA)RENAISSANCE MEDIA (TENNESSEE) LLCRegistrantsBy: CHARTER COMMUNICATIONS, INC., Registrants ManagerDate: March 31, 2005
    
    By:
    
    /s/ Robert P. MayRobert P. MayInterim President and Chief Executive Officer
 RENAISSANCE MEDIA CAPITAL CORPORATION
RegistrantDate: March 31, 2005
    By:
    /s/ Robert P. MayRobert P. MayInterim President and Chief Executive Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of Charter Communications, Inc. and in the capacities and
on the dates indicated. Signature
    
    Title
    
    Date/s/ Paul G. Allen
    
    Chairman of the Board of Directors,
    
    March 31, 2005Paul G. Allen
    
    Charter Communications, Inc./s/ Robert P. May
    
    Interim President, Chief Executive Officer,
    
    March 31, 2005Robert P. May
    
    Director (Principal Executive Officer)Charter Communications, Inc.,Charter Communications Holdings Capital Corporation/s/ Derek Chang
    
    Executive Vice President and Interim
    
    March 31, 2005Derek Chang
    
    Co-Chief Financial Officer(Co-Principal Financial Officer)/s/ Paul E. Martin
    
    Interim Co-Chief Financial Officer,Senior Vice President
    
    March 31, 2005Paul E. Martin
    
    and Corporate Controller (Co-Principal Financial Officerand Principal Accounting Officer)/s/
W. Lance Conn
    
    Director, Charter Communications, Inc.
    
    March 31, 2005W. Lance Conn/s/ Jonathan L. Dolgen
    
    Director, Charter Communications, Inc.
    
    March 31, 2005Jonathan L. Dolgen/s/ David C. Merritt
    
    Director, Charter Communications, Inc.
    
    March 31, 2005David C. Merritt/s/
Marc B. Nathanson
    
    Director, Charter Communications, Inc.
    
    March 31, 2005Marc B. Nathanson/s/ Jo Allen Patton
    
    Director, Charter Communications, Inc.
    
    March 31, 2005Jo Allen Patton/s/ John H. Tory
    
    Director, Charter Communications, Inc.
    
    March 31, 2005John H. Tory
 31




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##### Table of Contents



Signature
    
    Title
    
    Date/s/ Larry W. Wangberg
    
    Director, Charter Communications, Inc.
    
    March 31, 2005Larry W. Wangberg
 32




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS PageRENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIESAudited Financial StatementsReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    F-3Consolidated Statements of Operations for the Years Ended December 31, 2004, 2003 and 2002
    
    F-4Consolidated Statements of Changes in Members Equity for the Years Ended December 31, 2004, 2003 and 2002
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002
    
    F-6Notes to Consolidated Financial Statements
    
    F-7




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##### Table of Contents



Report of Independent Registered Public Accounting Firm The Board of Directors
Renaissance Media Group LLC: We have audited the accompanying consolidated balance sheets of Renaissance Media Group LLC and
subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated
statements of operations, changes in members equity, and cash flows for each of the years in the
three-year period ended December 31, 2004. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Renaissance Media Group LLC and subsidiaries as of
December 31, 2004 and 2003, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 2004, in conformity with U.S. generally
accepted accounting principles. As discussed in note 3 to the consolidated financial statements, effective January 1, 2002, the
Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets. As discussed in note 6 to the consolidated financial statements, effective September 30, 2004, the
Company adopted EITF Topic D-108, Use of the Residual Method to Value Acquired Assets Other than
Goodwill. /s/ KPMG LLP St. Louis, Missouri
March 1, 2005 F-2




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 December 31,2004
    
    
    2003ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    228
    
    
    $
    257Accounts receivable, less allowance for doubtful accounts of
$234 and $172, respectively
    
    
    1,764
    
    
    
    1,600Prepaid expenses and other current assets
    
    
    155
    
    
    
    155Total current assets
    
    
    2,147
    
    
    
    2,012INVESTMENT IN CABLE PROPERTIES:Property, plant and equipment, net of accumulated depreciation
of $120,986 and $87,480, respectively
    
    
    140,406
    
    
    
    154,540Franchises
    
    
    225,445
    
    
    
    252,335Total investment in cable properties, net
    
    
    365,851
    
    
    
    406,875OTHER NONCURRENT ASSETS
    
    
    26
    
    
    
    2Total assets
    
    $
    368,024
    
    
    $
    408,889LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    14,923
    
    
    $
    16,284Payables to manager of cable systems  related party
    
    
    37,254
    
    
    
    44,089Total current liabilities
    
    
    52,177
    
    
    
    60,373LONG-TERM DEBT
    
    
    115,805
    
    
    
    116,223OTHER LONG-TERM LIABILITIES
    
    
    2,792
    
    
    
    3,229MEMBERS EQUITY
    
    
    197,250
    
    
    
    229,064Total liabilities and members equity
    
    $
    368,024
    
    
    $
    408,889
 The accompanying notes are an integral part of these consolidated financial statements F-3




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (dollars in thousands)
 Year Ended December 31,2004
    
    
    2003
    
    
    2002REVENUES
    
    $
    115,711
    
    
    $
    107,474
    
    
    $
    100,703COSTS AND EXPENSES:Operating (excluding depreciation and
amortization)
    
    
    48,776
    
    
    
    44,019
    
    
    
    39,168Selling, general and administrative
    
    
    22,967
    
    
    
    19,590
    
    
    
    19,031Depreciation and amortization
    
    
    35,456
    
    
    
    32,467
    
    
    
    19,826Impairment of franchises
    
    
    21,014
    
    
    
    
    
    
    
    96,551Acquisition liability settlements
    
    
    
    
    
    
    (402
    )
    
    
    (Gain) loss on sale of fixed assets
    
    
    296
    
    
    
    642
    
    
    
    (13
    )Special charges, net
    
    
    2,248
    
    
    
    
    
    
    
    130,757
    
    
    
    96,316
    
    
    
    174,563Income (loss) from operations
    
    
    (15,046
    )
    
    
    11,158
    
    
    
    (73,860
    )OTHER INCOME AND EXPENSES:Interest expense, net
    
    
    (11,024
    )
    
    
    (10,835
    )
    
    
    (9,927
    )Other, net
    
    
    
    
    
    
    
    
    
    
    140Income (loss) before cumulative effect
accounting change
    
    
    (26,070
    )
    
    
    323
    
    
    
    (83,647
    )Cumulative effect of accounting change
    
    
    (5,744
    )
    
    
    
    
    
    
    Net income (loss)
    
    $
    (31,814
    )
    
    $
    323
    
    
    $
    (83,647
    )
 The accompanying notes are an integral part of these consolidated financial statements F-4




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS EQUITY
 (dollars in thousands)
 BALANCE, December 31, 2001
    
    $
    312,388Net loss
    
    
    (83,647
    )BALANCE, December 31, 2002
    
    
    228,741Net income
    
    
    323BALANCE, December 31, 2003
    
    
    229,064Net loss
    
    
    (31,814
    )BALANCE, December 31, 2004
    
    $
    197,250
 The accompanying notes are an integral part of these consolidated financial statements F-5




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Year Ended December 31,2004
    
    
    2003
    
    
    2002CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (31,814
    )
    
    $
    323
    
    
    $
    (83,647
    )Adjustments to reconcile net income (loss) to net cash
flows from operating activities:Depreciation and amortization
    
    
    35,456
    
    
    
    32,467
    
    
    
    19,826Impairment of franchises
    
    
    21,014
    
    
    
    
    
    
    
    96,551Special charges, net
    
    
    1,991
    
    
    
    
    
    
    
    Noncash interest expense
    
    
    (418
    )
    
    
    2,731
    
    
    
    9,927(Gain) loss on sale of fixed assets, net
    
    
    296
    
    
    
    642
    
    
    
    (13
    )Cumulative effect of accounting change
    
    
    5,744
    
    
    
    
    
    
    
    Acquisition liability settlements
    
    
    
    
    
    
    (402
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (164
    )
    
    
    821
    
    
    
    (977
    )Prepaid expenses and other assets
    
    
    (34
    )
    
    
    (39
    )
    
    
    (80
    )Accounts payable, accrued expenses and other
    
    
    (2,063
    )
    
    
    2,092
    
    
    
    (368
    )Payables to related party
    
    
    (10,554
    )
    
    
    (24,412
    )
    
    
    (8,877
    )Net cash flows from operating activities
    
    
    19,454
    
    
    
    14,223
    
    
    
    32,342CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property, plant and equipment
    
    
    (19,831
    )
    
    
    (10,863
    )
    
    
    (31,557
    )Change in accrued expenses related to capital expenditures
    
    
    348
    
    
    
    (1,984
    )
    
    
    (682
    )Other, net
    
    
    
    
    
    
    (1,119
    )
    
    
    (103
    )Net cash flows from investing activities
    
    
    (19,483
    )
    
    
    (13,966
    )
    
    
    (32,342
    )NET CHANGE IN CASH
    
    
    (29
    )
    
    
    257
    
    
    
    CASH, beginning of period
    
    
    257
    
    
    
    
    
    
    
    CASH, end of period
    
    $
    228
    
    
    $
    257
    
    
    $
    CASH PAID FOR INTEREST
    
    $
    11,442
    
    
    $
    5,270
    
    
    $
    
 The accompanying notes are an integral part of these consolidated financial statements F-6




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##### Table of Contents



RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES 
 NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in thousands, except where indicated)
 1. Organization and Basis of Presentation The accompanying consolidated financial statements of Renaissance Media Group LLC (the Company)
include the accounts of the Company and its wholly-owned finance subsidiaries, Renaissance Media
(Louisiana) LLC (Renaissance Louisiana), Renaissance Media (Tennessee) LLC (Renaissance
Tennessee) and Renaissance Media Capital Corporation (Capital Corporation). Renaissance Media
LLC (Media) is owned 76% and 24% by Renaissance Louisiana and Renaissance Tennessee,
respectively, and owns all of the operating assets of the consolidated group. All significant
intercompany transactions and balances have been eliminated in consolidation. The Company is an indirect wholly owned subsidiary of Charter Communications Operating, LLC
(Charter Operating), which provides funding to the Company as needed. Charter
Operating is an indirect subsidiary of Charter Communications
Holdings, LLC, which is an indirect subsidiary of Charter
Communications, Inc. (Charter). The Company offers its
customers traditional cable video programming (analog and digital video) as well as high-speed data
services and, in some areas, advanced broadband services such as high definition television, video
on demand and telephony. The Company sells its cable video programming, high-speed data and
advanced broadband services on a subscription basis. The Company also sells local advertising on
satellite-delivered networks. The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Areas involving significant judgments and estimates include capitalization of labor and
overhead costs; depreciation and amortization costs; impairments of property, plant and equipment;
franchises; and contingencies. Actual results could differ from those estimates. Reclassifications. Certain prior year amounts have been reclassified to conform with the 2004
presentation. 2. Liquidity and Capital Resources The Company incurred losses from operations of
$15.0 million and $73.9 million in 2004 and 2002,
respectively, and recognized income from operations of $11.2 million in 2003. The Companys net
cash flows from operating activities were $19.5 million, $14.2 million and $32.3 million for the
years ending December 31, 2004, 2003 and 2002, respectively. The Company has historically required significant cash to fund capital expenditures and debt
service costs. Historically, the Company has funded these requirements through cash flows from
operating activities. However, the mix of funding sources changes from period to period. For the
year ended December 31, 2004, the Company generated $19.5 million of net cash flows from operating
activities, after paying cash interest of $11.4 million. The Company expects that cash on hand and
cash flows from operating activities will be adequate to meet its cash needs in 2005. The Companys long-term financing as of December 31, 2004 consists of $114.4 million principal
amount of senior discount notes which become due in 2008. The Company expects that it will rely on
capital contributions from its indirect parent companies to repay the principal amount of its
public notes at maturity. However, there can be no assurances that its indirect parent companies
will have sufficient liquidity to satisfy this payment when due. The Companys parent companies
have a significant amount of debt and may incur additional debt in the future. In 2005 and
2006, $30.0 million  and $185.9 million, respectively, of the Companys indirect parent companies debt will mature. Cash flows from
operating activities and amounts available under the Charter Operating credit facilities may not be
sufficient to fund the Companys and its parent companies operations and satisfy its parent
companies principal repayment obligations that come due in 2006 and, the Company believes, will
not be sufficient to fund its parent companies operations and satisfy such repayment obligations
thereafter. Each of the Companys indirect parent companies
debt has certain covenants which may restrict their ability to make
distributions to their respective direct parent companies to satisfy
future principal repayment obligations. Because Charter is the Companys manager, any financial or liquidity problems of Charter could
cause serious disruption to the Companys business and have a material adverse effect on its
business and results of operations. Any such event could adversely impact the Companys own credit
rating, and its relations with customers and suppliers, which could in turn further impair the
Companys ability to obtain financing and operate its business. F-7




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) Further, to the extent that any such event results in a change of control of Charter (whether
through a bankruptcy, receivership or other reorganization of Charter and/or Charter Holdco, or
otherwise), it could result in an event of default under the Charter Operating credit facilities
and would require a change of control repurchase offer under the Companys outstanding notes. 3. Summary of Significant Accounting Policies Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or
less to be cash equivalents. These investments are carried at cost, which approximates market
value. Property, Plant and Equipment Property, plant and equipment are recorded at cost, including all material, labor and certain
indirect costs associated with the construction of cable transmission and distribution facilities.
Costs associated with initial customer installations and the additions of network equipment
necessary to enable advanced services are capitalized. Costs capitalized as part of initial
customer installations include materials, labor, and certain indirect costs. Indirect costs are
associated with the activities of the Companys personnel who assist in connecting and activating
the new service and consist of compensation and indirect costs associated with these support
functions. Indirect costs primarily include employee benefits and payroll taxes, direct variable
costs associated with capitalizable activities, consisting primarily of installation and
construction vehicle costs, the cost of dispatch personnel and indirect costs directly attributable
to capitalizable activities. The costs of disconnecting service at a customers dwelling or
reconnecting service to a previously installed dwelling are charged to operating expense in the
period incurred. Costs for repairs and maintenance are charged to operating expense as incurred,
while plant and equipment replacement and betterments, including replacement of cable drops from
the pole to the dwelling, are capitalized. Depreciation is recorded using the straight-line composite method over managements estimate of the
useful lives of the related assets as follows: Cable distribution systems
    
    7-20 yearsCustomer equipment and installations
    
    3-5 yearsVehicles and equipment
    
    1-5 yearsBuildings and leasehold improvements
    
    5-15 yearsFurniture and fixtures
    
    5 years
 Franchises Franchise rights represent the value attributed to agreements with local authorities that allow
access to homes in cable service areas acquired through the purchase of cable systems. Management
estimates the fair value of franchise rights at the date of acquisition and determines if the
franchise has a finite life or an indefinite life as defined by Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. Effective January 1, 2002, all
franchises that qualify for indefinite-life treatment under SFAS No. 142 are no longer amortized
against earnings but instead are tested for impairment annually as of October 1, or more frequently
as warranted by events or changes in circumstances (see Note 6). The Company concluded that 99% of
its franchises qualify for indefinite-life treatment; however, certain franchises did not qualify
for indefinite-life treatment due to technological or operational factors that limit their lives.
These franchise costs are amortized on a straight-line basis over 10 years. Costs incurred in
renewing cable franchises are deferred and amortized over 10 years. Valuation of Property, Plant and Equipment The Company evaluates the recoverability of property, plant and equipment for impairment when
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Such events or changes in circumstances could include such factors as impairment of
the Companys indefinite life franchise under SFAS No. 142, changes in technological advances,
fluctuations in the fair value of such assets, adverse changes in relationships F-8




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) with local franchise authorities, adverse changes in market conditions or poor operating results.
If a review indicates that the carrying value of such asset is not recoverable from estimated
undiscounted cash flows, the carrying value of such asset is reduced to its estimated fair value.
While the Company believes that its estimates of future cash flows are reasonable, different
assumptions regarding such cash flows could materially affect its evaluations of asset
recoverability. No impairment of property, plant and equipment occurred in 2004, 2003 and 2002. Revenue Recognition Revenues from residential and commercial video and high-speed data services are recognized when the
related services are provided. Advertising sales are recognized at estimated realizable values in
the period that the advertisements are broadcast. Local governmental authorities impose franchise
fees on the Company ranging up to a federally mandated maximum of 5% of gross revenues as defined
in the franchise agreement. Such fees are collected on a monthly basis from the Companys
customers and are periodically remitted to local franchise authorities. Franchise fees are
reported as revenues on a gross basis with a corresponding operating expense. Programming Costs The Companys parent companies negotiate and enter into programming agreements covering all of
their subsidiaries, including the Company. These contracts allow the Company to obtain analog,
digital and premium video programming from program suppliers whose compensation is typically based
on a flat fee per customer. The cost of the right to exhibit network programming under such
arrangements is recorded in operating expenses in the month the programming is available for
exhibition. Programming costs are paid each month based on calculations performed by the Company
and are subject to adjustment based on periodic audits performed by the programmers. Certain
programming contracts contain launch incentives to be paid by the programmers. The Company
receives these payments related to the activation of the programmers cable television channel and
recognizes the launch incentives on a straight-line basis over the life of the programming
agreement as a reduction of programming expense. This offset to programming expense was $1.7
million, $1.8 million and $1.5 million for the years ended December 31, 2004, 2003 and 2002,
respectively. Programming costs included in the accompanying statement of operations were $30.9
million, $27.5 million and $25.2 million for the years ended December 31, 2004, 2003 and 2002,
respectively. As of December 31, 2004 and 2003, the deferred amount of launch incentives, included
in other long-term liabilities, totaled $2.8 million and $3.2 million, respectively. Advertising Costs Advertising costs associated with marketing the Companys products and services are generally
expensed as costs are incurred. Such advertising expense was $1.6 million, $1.0 million and $0.9
million for the years ended December 31, 2004, 2003 and 2002, respectively. Acquisition Liability Settlements The Company recognized $0.4 million of benefit for the year ended December 31, 2003 as a result of
the reversal of estimated liabilities recorded in connection with prior business combinations,
which, based on an evaluation of current facts and circumstances, are no longer required. Income Taxes The Company is a single member limited liability company not subject to income tax. The Company
holds all operations through indirect subsidiaries. The majority of these indirect subsidiaries
are limited liability companies that are also not subject to income tax. A certain indirect
subsidiary is a corporation that is subject to income tax, but has no operations and has not
generated any taxable income since inception. Any taxable income that would be generated by the
Company would be the responsibility of the Companys equity owner. As such, the Company has not
provided for income taxes in the accompanying consolidated financial statements. F-9




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) Segments SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, established
standards for reporting information about operating segments in annual financial statements and in
interim financial reports issued to shareholders. Operating segments are defined as components of
an enterprise about which separate financial information is available that is evaluated on a
regular basis by the chief operating decision maker, or decision making group, in deciding how to
allocate resources to an individual segment and in assessing performance of the segment. The Companys operations are managed on the basis of geographic divisional operating segments. The
Company has evaluated the criteria for aggregation of the geographic operating segments under
paragraph 17 of SFAS No. 131 and believes it meets each of the respective criteria set forth. The
Company delivers similar products and services within each of its geographic divisional operations.
Each geographic and divisional service area utilizes similar means for delivering the programming
of the Companys services; have similarity in the type or class of customer receiving the products
and services; distributes the Companys services over a unified network; and operates within a
consistent regulatory environment. In addition, each of the geographic divisional operating
segments has similar economic characteristics. In light of the Companys similar services, means
for delivery, similarity in type of customers, the use of a unified network and other
considerations across its geographic divisional operating structure, management has determined that
the Company has one reportable segment, broadband services. 4. Allowance for Doubtful Accounts Activity in the allowance for doubtful accounts is summarized as follows for the years presented: Year Ended December 31,2004
    
    
    2003
    
    
    2002Balance, beginning of year
    
    $
    172
    
    
    $
    278
    
    
    $
    468Charged to expense
    
    
    2,179
    
    
    
    1,316
    
    
    
    2,718Uncollected balances written off, net of recoveries
    
    
    (2,117
    )
    
    
    (1,422
    )
    
    
    (2,908
    )Balance, end of year
    
    $
    234
    
    
    $
    172
    
    
    $
    278
 5. Property, Plant and Equipment Property, plant and equipment consists of the following as of December 31, 2004 and 2003: 2004
    
    
    2003Cable distribution systems
    
    $
    160,736
    
    
    $
    153,011Customer equipment and installations
    
    
    77,498
    
    
    
    66,882Vehicles and equipment
    
    
    7,129
    
    
    
    6,247Buildings and leasehold improvements
    
    
    13,720
    
    
    
    13,681Furniture and fixtures
    
    
    2,309
    
    
    
    2,199261,392
    
    
    
    242,020Less: accumulated depreciation
    
    
    (120,986
    )
    
    
    (87,480
    )$
    140,406
    
    
    $
    154,540
 The Company periodically evaluates the estimated useful lives used to depreciate its assets and the
estimated amount of assets that will be abandoned or have minimal use in the future. A significant
change in assumptions about the extent or timing of future asset retirements, or in the Companys
use of new technology and upgrade programs, could materially affect future depreciation expense. F-10




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) Depreciation expense for the years ended December 31, 2004, 2003 and 2002 was $35.3 million, $32.4
million and $19.8 million, respectively. 6. Franchises On January 1, 2002, the Company adopted SFAS No. 142, which eliminates the amortization of
indefinite-lived intangible assets. Accordingly, beginning January 1, 2002, all franchises that
qualify for indefinite-life treatment under SFAS No. 142 are no longer amortized against earnings
but instead are tested for impairment annually based on valuations, or more frequently as warranted
by events or changes in circumstances. Based on the guidance prescribed in Emerging Issues Task
Force (EITF) Issue No. 02-7, Unit of Accounting for Testing of Impairment of Indefinite-Lived
Intangible Assets, franchises are aggregated into essentially inseparable asset groups to conduct
the valuations. The asset groups generally represent geographic clustering of the Companys cable
systems into groups by which such systems are managed. Management believes such grouping
represents the highest and best use of those assets. The Companys valuations, which are based on the present value of projected after tax cash flows,
result in a value of property, plant and equipment, franchises, customer relationships and its
total entity value. The value of goodwill is the difference between the total entity value and
amounts assigned to the other assets. Franchises, for valuation purposes, are defined as the future economic benefits of the right to
solicit and service potential customers (customer marketing rights), and the right to deploy and
market new services such as interactivity and telephony to the potential customers (service
marketing rights). Fair value is determined based on estimated discounted future cash flows using
assumptions consistent with internal forecasts. The franchise after-tax cash flow is calculated as
the after-tax cash flow generated by the potential customers obtained and the new services added to
those customers in future periods. The sum of the present value of the franchises after-tax cash
flow in years 1 through 10 and the continuing value of the after-tax cash flow beyond year 10
yields the fair value of the franchise. Prior to the adoption of EITF Topic D-108, Use of the
Residual Method to Value Acquired Assets Other than Goodwill, discussed below, the Company followed
a residual method of valuing its franchise assets, which had the effect of including goodwill with
the franchise assets. The Company follows the guidance of EITF Issue 02-17, Recognition of Customer Relationship
Intangible Assets Acquired in a Business Combination,in valuing customer relationships. Customer
relationships, for valuation purposes, represent the value of the business relationship with
existing customers and are calculated by projecting future after-tax cash flows from these
customers including the right to deploy and market additional services such as interactivity and
telephony to these customers. The present value of these after-tax cash flows yield the fair value
of the customer relationships. Substantially all acquisitions occurred prior to January 1, 2002.
The Company did not record any value associated with the customer relationship intangibles related
to those acquisitions. For acquisitions subsequent to January 1, 2002 the Company did assign a
value to the customer relationship intangible, which is amortized over its estimated useful life. In
September 2004, EITF Topic D-108 was issued which requires the direct method of
separately valuing all intangible assets and does not permit goodwill to be included in franchise
assets. The Company performed an impairment assessment as of September 30, 2004, and adopted EITF Topic
D-108 in that assessment resulting in a total franchise impairment of approximately $26.7 million.
The Company recorded a cumulative effect of accounting change of $5.7 million for the year ended
December 31, 2004 representing the portion of the Companys total franchise impairment attributable
to no longer including goodwill with franchise assets. The remaining $21.0 million of the total
franchise impairment was attributable to the use of lower projected growth rates and the resulting
revised estimates of future cash flows in the Companys valuation, and was recorded as impairment
of franchises in the Companys accompanying consolidated statements of operations for the year
ended December 31, 2004. Sustained analog video customer losses by the Company in the third
quarter of 2004 primarily as a result of increased competition from direct broadcast satellite
providers and decreased growth rates in the Companys high-speed data customers in the third
quarter of 2004, in part, as a result of increased competition from digital subscriber line service
providers led to the lower projected growth rates and the revised estimates of future cash flows
from those used at October 1, 2003. F-11




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) The valuation completed at October 1, 2003 showed franchise values in excess of book value and thus
resulted in no impairment. The Companys annual impairment assessment as of October 1, 2002, based
on revised estimates from January 1, 2002 of future cash flows and projected long-term growth rates
in the Companys valuation, led to the recognition of a $96.6 million impairment charge in the
fourth quarter of 2002. Franchise amortization expense for the years ended December 31, 2004, 2003 and 2002 was $0.1
million, $0.1 million and $1, respectively, which represents the amortization relating to franchise
renewals. Franchise renewals are amortized on a straight-line basis over 10 years. The Company
expects that amortization expense on franchise assets will be approximately $0.1 million annually
for each of the next five years. Actual amortization expense in future periods could differ from
these estimates as a result of new intangible asset acquisitions or divestitures, changes in useful
lives and other relevant factors. 7. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following as of December 31, 2004 and 2003: 2004
    
    
    2003Accounts payable  trade
    
    $
    2,899
    
    
    $
    2,349Accrued capital expenditures
    
    
    577
    
    
    
    925Accrued expenses:Interest
    
    
    2,384
    
    
    
    2,384Programming costs
    
    
    1,116
    
    
    
    1,720Franchise-related fees
    
    
    2,677
    
    
    
    2,873State sales tax
    
    
    2,792
    
    
    
    3,630Personal property tax
    
    
    1,182
    
    
    
    1,172Other
    
    
    1,296
    
    
    
    1,231$
    14,923
    
    
    $
    16,284
 8. Long-Term Debt Long-term debt consists of the following as of December 31, 2004 and 2003: 2004
    
    
    200310% senior discount notes
    
    $
    114,413
    
    
    $
    114,413Unamortized net premium
    
    
    1,392
    
    
    
    1,810$
    115,805
    
    
    $
    116,223
 In 1998, Renaissance Louisiana, Renaissance Tennessee and Capital Corporation issued $163.2
million principal amount at maturity of 10.000% senior discount notes due April 15, 2008 (the
Notes) for proceeds of $100.0 million. Approximately $48.8 million was repurchased in May
1999. The Notes did not accrue cash interest until April 15, 2003. From and after April 15,
2003, the Notes bear interest, payable semi-annually in cash, at a rate of 10% per year on April
15 and October 15 of each year, commencing October 15, 2003. The Company has fully and
unconditionally guaranteed the Notes. The fair market value of the Notes was $117.8 million and $118.5 million as of December 31, 2004
and 2003, respectively. The fair market value of the Notes is based on quoted market prices. The indenture (Indenture), pursuant to which the Notes were issued, contains a number of
significant covenants that could adversely impact the Companys business. In particular, the
Indenture restricts the Company and its F-12




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) restricted subsidiaries ability to incur additional debt; pay dividends on equity or repurchase
equity; grant liens; make investments; sell all or substantially all of its assets or merge with or
into other companies; sell assets; enter into sale-leasebacks; in the case of restricted
subsidiaries, create or permit to exist dividend or payment restrictions with respect to the bond
issuers, guarantee the bond issuers debt, or issue specified equity interests; and engage in
certain transactions with affiliates. There are no significant restrictions on the ability of the Company to obtain funds from its
subsidiaries through dividends or loans, provided that the Company remains a guarantor under the
Indenture and that any loans are evidenced by promissory notes. Additionally, there are no
significant restrictions on the ability of Renaissance Louisiana and Renaissance Tennessee to
obtain funds from Media through dividends or loans provided that Media remains a restricted
subsidiary under the Indenture. Charter Operating holds the 100% member interest in the Company as collateral for the Charter
Operating credit facility. However, none of the Companys subsidiaries member interests have been
pledged as collateral to the Charter Operating credit facility. In addition, neither the Company
nor any of its subsidiaries has guaranteed the Charter Operating credit facility nor will such
entities be required to guarantee the Charter Operating credit facility, as long as the notes are
outstanding. 9. Revenues Revenues consist of the following for the years presented: Year Ended December 31,2004
    
    
    2003
    
    
    2002Video
    
    $
    83,934
    
    
    $
    81,967
    
    
    $
    79,224High-speed data
    
    
    14,415
    
    
    
    9,895
    
    
    
    5,556Advertising sales
    
    
    5,805
    
    
    
    5,504
    
    
    
    6,270Commercial
    
    
    3,017
    
    
    
    2,355
    
    
    
    1,863Other
    
    
    8,540
    
    
    
    7,753
    
    
    
    7,790$
    115,711
    
    
    $
    107,474
    
    
    $
    100,703
 10. Operating Expenses Operating expenses consist of the following for the years presented: Year Ended December 31,2004
    
    
    2003
    
    
    2002Programming
    
    $
    30,874
    
    
    $
    27,540
    
    
    $
    25,215Advertising sales
    
    
    2,361
    
    
    
    2,504
    
    
    
    2,358Service
    
    
    15,541
    
    
    
    13,975
    
    
    
    11,595$
    48,776
    
    
    $
    44,019
    
    
    $
    39,168
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) 11. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of the following for the years presented: Year Ended December 31,2004
    
    
    2003
    
    
    2002General and administrative
    
    $
    20,619
    
    
    $
    18,145
    
    
    $
    16,436Marketing
    
    
    2,348
    
    
    
    1,445
    
    
    
    2,595$
    22,967
    
    
    $
    19,590
    
    
    $
    19,031
 12. Comprehensive Loss Comprehensive loss is equal to net loss for the years ended December 31, 2004, 2003 and 2002. 13. Related Party Transactions The following sets forth certain transactions in which the Company and the directors, executive
officers and affiliates of the Company are involved. Unless otherwise disclosed, management
believes that each of the transactions described below was on terms no less favorable to the
Company than could have been obtained from independent third parties. For further information
regarding related party transactions of the Company and Charter, refer to the annual report of
Charter Holdings filed on Form 10-K with the SEC for the year ended December 31, 2004. Charter Communications Holding Company (Charter Holdco) and Charter, both entities controlled by
Paul G. Allen, provide management services for the cable systems owned or operated by the Company.
The management services include such services as 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. Costs associated
with providing these services are billed and charged directly to the Company and are included
within operating costs in the accompanying consolidated statements of operations. These costs are
generally allocated based on the number of analog video customers. These costs are allocated based
on the number of analog video customers. Such costs totaled $4.2 million, $4.2 million and $4.9
million for the years ended December 31, 2004, 2003 and 2002, respectively. All other costs
incurred by Charter Holdco and Charter on behalf of the Company are considered a part of the
management fee and are recorded as a component of selling, general and administrative expense, in
the accompanying consolidated financial statements. Management fees are stipulated in the
management agreements between Charter Holdco, Charter and the Company. To the extent management
fees charged to the Company are greater (less) than the expenses incurred by Charter Holdco and
Charter, the Company records distributions to (capital contributions from) Charter Holdco and
Charter. For the years ended December 31, 2004, 2003 and 2002, the management fee charged to the
Company approximated $2.1 million, $1.9 million and $1.8 million, respectively. The Company pays costs on behalf of Charter Holdco and Charter. These costs are reimbursed by
Charter Holdco and Charter and are recorded as receivables from related parties in the accompanying
consolidated financial statements. Mr. Allen, the controlling shareholder of Charter, and a number of his affiliates have interests in
various entities that provide services or programming to Charters subsidiaries. Given the diverse
nature of Mr. Allens investment activities and interests, and to avoid the possibility of future
disputes as to potential business, the Company may not, and may not allow its subsidiaries to,
engage in any business transaction outside the cable transmission business except for certain
existing approved investments. Should Charter, the Company or 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, the Company or their subsidiaries
engaging in the business transaction, they will be able to do so. The cable transmission business
means the business of transmitting video, audio, including telephony, and data F-14




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) over cable systems owned, operated or managed by Charter, the Company or their subsidiaries from
time to time. Mr. Allen or his affiliates own or have owned equity interests or warrants to purchase equity
interests in various entities with which the Company does business or which provides it with
products, services or programming. Among these entities are TechTV L.L.C. (TechTV), Oxygen Media
Corporation (Oxygen Media), Digeo, Inc. (Digeo), Click2learn, Inc., Trail Blazer Inc., Action
Sports Cable Network (Action Sports) and Microsoft Corporation. In addition, Mr. Allen and
William Savoy, a former Charter director, were directors of USA Networks, Inc. (USA Networks),
who operates the USA Network, The Sci-Fi Channel, Trio, World News International and Home Shopping
Network, owning approximately 5% and less than 1%, respectively, of the common stock of USA
Networks. In 2002, Mr. Allen and Mr. Savoy sold their common stock and are no longer directors of
the USA Network. In May 2004, TechTV was sold to an unrelated third party. Mr. Allen owns 100% of
the equity of Vulcan Ventures Incorporated (Vulcan Ventures) and Vulcan Inc. and is the president
of Vulcan Ventures. Ms. Jo Allen Patton is a director and the President and Chief Executive
Officer of Vulcan Inc. and is a director and Vice President of Vulcan Ventures. Mr. Lance Conn is
Executive Vice President of Vulcan Inc. and Vulcan Ventures. Mr. Savoy was a vice president and a
director of Vulcan Ventures until his resignation in September 2003 and he resigned as a director
of Charter in April 2004. The various cable, media, Internet and telephony companies in which Mr.
Allen has invested may mutually benefit one another. The Company can give no assurance, nor should
you expect, that any of these business relationships will be successful, that the Company will
realize any benefits from these relationships or that the Company will enter into any business
relationships in the future with Mr. Allens affiliated companies. Mr. Allen and his affiliates have made, and in the future likely will make, numerous investments
outside of the Company and its business. The Company cannot assure that, in the event that the
Company or any of its subsidiaries enter into transactions in the future with any affiliate of
Mr. Allen, such transactions will be on terms as favorable to the Company as terms it might have
obtained from an unrelated third party. Also, conflicts could arise with respect to the
allocation of corporate opportunities between the Company and Mr. Allen and his affiliates. The
Company has not instituted any formal plan or arrangement to address potential conflicts of
interest. The Company receives or will receive programming for broadcast via its cable systems from TechTV
(now G4), USA Networks, Oxygen Media, Trail Blazers Inc. and Action Sports. The Company pays a fee
for the programming service generally based on the number of customers receiving the service. Such
fees for the years ended December 31, 2004, 2003 and 2002 were each less than 1% of total operating
expenses with the exception of USA Networks which was 2%, 2% and 2% of total operating expenses for
the years ended December 31, 2004, 2003 and 2002, respectively. In addition, the Company receives
commissions from USA Networks for home shopping sales generated by its customers. Such revenues
for the years ended December 31, 2004, 2003 and 2002 were less than 1% of total revenues. On
November 5, 2002, Action Sports announced that it was discontinuing its business. The Company
believes that the failure of Action Sports will not materially affect the Companys business or
results of operations. 14. Commitments and Contingencies Leases The Company leases certain facilities and equipment under noncancelable operating leases. Leases
and rental costs charged to expense for each of the years ended December 31, 2004, 2003 and 2002,
were approximately $0.1 million. As of December 31, 2004, future minimum lease payments are as
follows: Year ended December 31,
    
    Amount2005
    
    $
    1622006
    
    
    1432007
    
    
    1482008
    
    
    1472009
    
    
    100Thereafter
    
    
    451
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) The Company also rents utility poles used in its operations. Generally, pole rentals are
cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense
incurred for pole rental attachments for the years ended December 31, 2004, 2003 and 2002,
was approximately $1.3 million, $1.2 million and $1.1 million, respectively. The Company pays franchise fees under multi-year franchise agreements based on a percentage of
revenues earned from video service per year. The Company also pays other franchise related costs,
such as public education grants, under multi-year agreements. Franchise fees and other franchise
related costs included in the accompanying statement of operations were approximately $4.2 million,
$4.0 million and $3.8 million for the years ended December 31, 2004, 2003 and 2002, respectively. The Companys parent companies negotiate and enter into programming agreements covering all of
their subsidiaries, including the Company. The Company pays programming fees under multi-year
contracts ranging from three to six years typically based on a flat fee per customer, which may
be fixed for the term or may in some cases, escalate over the term. Programming costs included
in the accompanying statement of operations were $30.9 million, $27.5 million and $25.2 million
for the years ended December 31, 2004, 2003 and 2002, respectively. Litigation Fourteen putative federal class action lawsuits (the Federal Class Actions) were filed against
Charter and certain of its former and present officers and directors in various jurisdictions
allegedly on behalf of all purchasers of Charters securities during the period from either
November 8 or November 9, 1999 through July 17 or July 18, 2002. Unspecified damages were sought
by the plaintiffs. In general, the lawsuits alleged that Charter utilized misleading accounting
practices and failed to disclose these accounting practices and/or issued false and misleading
financial statements and press releases concerning Charters operations and prospects. The Federal
Class Actions were specifically and individually identified in public filings made by Charter prior
to the date of this annual report. In October 2002, Charter filed a motion with the Judicial Panel on Multidistrict Litigation (the
Panel) to transfer the Federal Class Actions to the Eastern District of Missouri. On March 12,
2003, the Panel transferred the six Federal Class Actions not filed in the Eastern District of
Missouri to that district for coordinated or consolidated pretrial proceedings with the eight
Federal Class Actions already pending there. The Panels transfer order assigned the Federal Class
Actions to Judge Charles A. Shaw. By virtue of a prior court order, StoneRidge Investment Partners
LLC became lead plaintiff upon entry of the Panels transfer order. StoneRidge subsequently filed
a Consolidated Amended Complaint. The Court subsequently consolidated the Federal Class Actions
into a single action (the Consolidated Federal Class Action) for pretrial purposes. On June
19, 2003, following a status and scheduling conference with the parties, the Court issued a Case
Management Order setting forth a schedule for the pretrial phase of the Consolidated Class Action.
Motions to dismiss the Consolidated Amended Complaint were filed. On February 10, 2004, in
response to a joint motion made by StoneRidge and defendants Charter, Vogel and Allen, the court
entered an order providing, among other things, that: (1) the parties who filed such motion, engage
in a mediation within ninety (90) days; and (2) all proceedings in the Consolidated Federal Class
Actions were stayed until May 10, 2004. On May 11, 2004, the Court extended the stay in the
Consolidated Federal Class Action for an additional sixty (60) days. On July 12, 2004, the parties
submitted a joint motion to again extend the stay, this time until September 10, 2004. The Court
granted that extension on July 20, 2004. On August 5, 2004, Stoneridge, Charter and the individual
defendants who were the subject of the suit entered into a Memorandum of Understanding setting
forth agreements in principle to settle the Consolidated Federal Class Action. These parties
subsequently entered into Stipulations of Settlement dated as of January 24, 2005 (described more
fully below) which incorporate the terms of the August 5, 2004 Memorandum of Understanding. On September 12, 2002, a shareholders derivative suit (the State Derivative Action) was filed in
the Circuit Court of the City of St. Louis, State of Missouri (the Missouri State Court) against
Charter and its then current directors, as well as its former auditors. A substantively identical
derivative action was later filed and consolidated into the State Derivative Action. The
plaintiffs allege that the individual defendants breached their fiduciary duties by failing to
establish and maintain adequate internal controls and procedures. Unspecified damages, allegedly
on F-16




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) Charters behalf, were sought by the plaintiffs. On March 12, 2004, an action substantively identical to the State Derivative Action was filed in
the Missouri State Court, against Charter and certain of its current and former directors, as well
as its former auditors. The plaintiffs in that case alleged that the individual defendants
breached their fiduciary duties by failing to establish and maintain adequate internal controls and
procedures. Unspecified damages, allegedly on Charters behalf, were sought by plaintiffs. On
July 14, 2004, the Court consolidated this case with the State Derivative Action. Separately, on February 12, 2003, a shareholders derivative suit (the Federal Derivative Action),
was filed against Charter and its then current directors in the United States District Court for
the Eastern District of Missouri. The plaintiff in that suit alleged that the individual
defendants breached their fiduciary duties and grossly mismanaged Charter by failing to establish
and maintain adequate internal controls and procedures. As noted above, Charter entered into Memoranda of Understanding on August 5, 2004 setting forth
agreements in principle regarding settlement of the Consolidated Federal Class Action, the State
Derivative Action(s) and the Federal Derivative Action (the Actions). Charter and various other
defendants in those actions subsequently entered into Stipulations of Settlement dated as of
January 24, 2005, setting forth a settlement of the Actions in a manner consistent with the terms
of the Memorandum of Understanding. The Stipulations of Settlement, along with the various
supporting documentation, were filed with the Court on February 2, 2005. The Settlements provide
that, in exchange for a release of all claims by plaintiffs against Charter and its former and
present officers and directors named in the Actions, Charter will pay to the plaintiffs a
combination of cash and equity collectively valued at $144.0 million, which will include the fees
and expenses of plaintiffs counsel. Of this amount, $64.0 million will be paid in cash (by
Charters insurance carriers) and the balance will be paid in shares of Charter Class A common
stock having an aggregate value of $40.0 million and ten-year warrants to purchase shares of
Charter Class A common stock having an aggregate warrant value of $40.0 million. The warrants
would have an exercise price equal to 150% of the fair market value (as defined) of Charter Class A
common stock as of the date of the entry of the order of final judgment approving the settlement.
In addition, Charter expects to issue additional shares of its Class A common stock to its
insurance carrier having an aggregate value of $5.0 million. As a result, in the second quarter of
2004, the Company recorded a $2.1 million special charge on its consolidated statement of
operations related to its portion of the expense allocation for the aggregate value of the Charter
Class A common stock and warrants to be issued. Additionally, as part of the settlements, Charter
will also commit to a variety of corporate governance changes, internal practices and public
disclosures, some of which have already been undertaken and none of which are inconsistent with
measures Charter is taking in connection with the recent conclusion of the SEC investigation
described below. Documents related to the settlement of the Actions have now been executed and
filed. On February 15, 2005, the United States District Court for the Eastern District of Missouri
gave preliminary approval to the settlement of the Actions. The settlement of each of the lawsuits
remains conditioned upon, among other things, final judicial approval of the settlements following
notice to the class, and dismissal, with prejudice, of the consolidated derivative actions now
pending in Missouri State Court, which are related to the Federal Derivative Action. In addition to the Federal Class Actions, the State Derivative Action(s), the new Missouri State
Court derivative action and the Federal Derivative Action, six putative class action lawsuits have
been filed against Charter and certain of its then current directors and officers in the Court of
Chancery of the State of Delaware (the Delaware Class Actions). The lawsuits were filed after
the filing of a Schedule 13D amendment by Mr. Allen indicating that he was exploring a number of
possible alternatives with respect to restructuring or expanding his ownership interest in Charter.
Charter believes the plaintiffs speculated that Mr. Allen might have been contemplating an unfair
bid for shares of Charter or some other sort of going private transaction on unfair terms and
generally alleged that the defendants breached their fiduciary duties by participating in or
acquiescing to such a transaction. The lawsuits, which are substantively identical, were brought
on behalf of Charters securities holders as of July 29, 2002, and sought unspecified damages and
possible injunctive relief. However, Charter has informed us that no such transaction by Mr. Allen
has been presented. On April 30, 2004, orders of dismissal without prejudice were entered in each
of the Delaware Class Actions. In August 2002, Charter became aware of a grand jury investigation being conducted by the U.S.
Attorneys Office for the Eastern District of Missouri into certain of its accounting and reporting
practices, focusing on how Charter F-17




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) reported customer numbers and its reporting of amounts received from digital set-top terminal
suppliers for advertising. The U.S. Attorneys Office has publicly stated that Charter is not a
target of the investigation. Charter was also advised by the U.S. Attorneys Office that no
current officer or member of its board of directors is a target of the investigation. On July 24,
2003, a federal grand jury charged four former officers of Charter with conspiracy and mail and
wire fraud, alleging improper accounting and reporting practices focusing on revenue from digital
set-top terminal suppliers and inflated customer account numbers. Each of the indicted former
officers pled guilty to single conspiracy counts related to the original mail and wire fraud
charges and are awaiting sentencing. Charter has advised the Company that it is fully
cooperating with the investigation. On November 4, 2002, Charter received an informal, non-public inquiry from the staff of the SEC.
The SEC issued a formal order of investigation dated January 23, 2003, and subsequently served
document and testimony subpoenas on Charter and a number of its former employees. The
investigation and subpoenas generally concerned Charters prior reports with respect to its
determination of the number of customers, and various of its accounting policies and practices
including its capitalization of certain expenses and dealings with certain vendors, including
programmers and digital set-top terminal suppliers. On July 27, 2004, the SEC and Charter reached
a final agreement to settle the investigation. In the Settlement Agreement and Cease and Desist
Order, Charter agreed to entry of an administrative order prohibiting any future violation of
United States securities laws and requiring certain other remedial internal practices and public
disclosures. Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine
against Charter. Charter is generally required to indemnify each of the named individual defendants in connection
with the matters described above pursuant to the terms of its bylaws and (where applicable) such
individual defendants employment agreements. In accordance with these documents, in connection
with the pending grand jury investigation, the now settled SEC investigation and the above
described lawsuits, some of Charters current and former directors and current and former officers
have been advanced certain costs and expenses incurred in connection with their defense. On
February 22, 2005, Charter filed suit against four of its former officers who were indicted in the
course of the grand jury investigation. These suits seek to recover the legal fees and other
related expenses advanced to these individuals by Charter for the grand jury investigation, SEC
investigation and class action and related lawsuits. In October 2001, two customers, Nikki Nicholls and Geraldine M. Barber, filed a class action suit
against Charter Holdco in South Carolina Court of Common Pleas (the South Carolina Class Action),
purportedly on behalf of a class of Charter Holdcos customers, alleging that Charter Holdco
improperly charged them a wire maintenance fee without request or permission. They also claimed
that Charter Holdco improperly required them to rent analog and/or digital set-top terminals even
though their television sets were cable ready. A substantively identical case was filed in the
Superior Court of Athens  Clarke County, Georgia by Emma S. Tobar on March 26, 2002 (the Georgia
Class Action), alleging a nationwide class for these claims. Charter Holdco removed the South
Carolina Class Action to the United States District Court for the District of South Carolina in
November 2001, and moved to dismiss the suit in December 2001. The federal judge remanded the case
to the South Carolina Court of Common Pleas in August 2002 without ruling on the motion to dismiss.
The plaintiffs subsequently moved for a default judgment, arguing that upon return to state court,
Charter Holdco should have, but did not file a new motion to dismiss. The state court judge
granted the plaintiffs motion over Charter Holdcos objection in September 2002. Charter Holdco
immediately appealed that decision to the South Carolina Court of Appeals and the South Carolina
Supreme Court, but those courts ruled that until a final judgment was entered against Charter
Holdco, they lacked jurisdiction to hear the appeal. In January 2003, the Court of Common Pleas granted the plaintiffs motion for class certification.
In October and November 2003, Charter Holdco filed motions (a) asking that court to set aside the
default judgment, and (b) seeking dismissal of plaintiffs suit for failure to state a claim. In
January 2004, the Court of Common Pleas granted in part and denied in part Charter Holdcos motion
to dismiss for failure to state a claim. It also took under advisement Charter Holdcos motion to
set aside the default judgment. In April 2004, the parties to both the Georgia and South Carolina
Class Actions participated in a mediation. The mediator made a proposal to the parties to settle
the lawsuits. In May 2004, the parties accepted the mediators proposal and reached a tentative
settlement, subject to final documentation and court approval. As a result of the tentative
settlement, the Company recorded a special charge of $0.2 million in its consolidated statement of
operations in the first quarter of 2004. On July 8, 2004, the Superior Court of Athens  Clarke
County, Georgia granted a motion to amend the Tobar complaint to F-18




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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except where indicated) add Nicholls, Barber and April Jones as plaintiffs in the Georgia Class Action and to add any
potential class members in South Carolina. The court also granted preliminary approval of the
proposed settlement on that date. On August 2, 2004, the parties submitted a joint request to the
South Carolina Court of Common Pleas to stay the South Carolina Class Action pending final approval
of the settlement and on August 17, 2004, that court granted the parties request. On November 10,
2004, the court granted final approval of the settlement, rejecting positions advanced by two
objectors to the settlement. On December 13, 2004 the court entered a written order formally
approving that settlement. On January 11, 2005, certain class members appealed the order entered
by the Georgia court. Those objectors voluntarily dismissed their appeal with prejudice on
February 8, 2005. On February 9, 2005, the South Carolina Court of Common Pleas entered a court
order of dismissal for the South Carolina Class Action. Additionally, one of the objectors to this
settlement recently filed a similar, but not identical, lawsuit. Furthermore, Charter is also party to other lawsuits and claims that arose in the ordinary course
of conducting its business. In the opinion of management, after taking into account recorded
liabilities, the outcome of these other lawsuits and claims are not expected to have a material
adverse effect on the Companys consolidated financial condition, results of operations or its
liquidity. Regulation in the Cable Industry The operation of a cable system is extensively regulated by the Federal Communications Commission
(FCC), some state governments and most local governments. The FCC has the authority to enforce
its regulations through the imposition of substantial fines, the issuance of cease and desist
orders and/or the imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities used in connection with cable
operations. The 1996 Telecom Act altered the regulatory structure governing the nations
communications providers. It removed barriers to competition in both the cable television market
and the local telephone market. Among other things, it reduced the scope of cable rate regulation
and encouraged additional competition in the video programming industry by allowing local telephone
companies to provide video programming in their own telephone service areas. The 1996 Telecom Act required the FCC to undertake a number of implementing rulemakings. Moreover,
Congress and the FCC have frequently revisited the subject of cable regulation. Future legislative
and regulatory changes could adversely affect the Companys operations. 15. Employee Benefit Plan The Companys employees may participate in the Charter Communications, Inc. 401(k) Plan. Employees
that qualify for participation can contribute up to 50% of their salary, on a pre-tax basis,
subject to a maximum contribution limit as determined by the Internal Revenue Service. The Company
matches 50% of the first 5% of participant contributions. The Company made contributions to the
401(k) plan totaling $0.1 million for each of the years ended December 31, 2004, 2003 and 2002. 16. Recently Issued Accounting Standards In December 2004, the Financial Accounting Standards Board issued the revised SFAS No. 123, Share 
Based Payment, which addresses the accounting for share-based payment transactions in which a
company receives employee services in exchange for (a) equity instruments of that company or (b)
liabilities that are based on the fair value of the companys equity instruments or that may be
settled by the issuance of such equity instruments. This statement will be effective for the
Company beginning July 1, 2005. The Company does not expect this revised standard to have a
material impact on its financial statements. The Company does not believe that any other recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the Companys accompanying financial
statements. F-19