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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM      10-Q**

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*(Mark      One)*

**[X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934 **

**For      the quarterly period ended September 30, 2005 **

**or      **

**[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934 **

**For      the transition period from ________to _________ **

| **Commission                  file number:   ** | **333-111423**             |
|----------------------------------------------------------------|----------------------------|
|                                                           | **333-11142301**** ** |

**CCH      II, LLC ***

**CCH      II Capital Corp. ***

*(Exact      name of registrants as specified in their charters)*

|                  **Delaware**                                                                         |   | **03-0511293**                                                          |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|
| **Delaware**                                                                                               |   | **13-4257703**                                                          |
|  *(State                or other jurisdiction of incorporation or                organization) * |   | *(I.R.S.                Employer Identification                Number)* |

**12405      Powerscourt Drive **

**St.      Louis, Missouri   63131 **

*(Address      of principal executive offices including zip code)*

**(314)      965-0555 **

*(Registrants’      telephone number, including area code)*

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Table          of Contents

**CCH      II, LLC**

**CCH      II Capital Corp. **

**Quarterly      Report on Form 10-Q for the Period ended September**
**30,      2005**

**Table      of Contents**

| PART                I. FINANCIAL INFORMATION                                                                                                    | **Page**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                                                            |           |
| Item                1. Financial                Statements - CCH II, LLC and Subsidiaries                                                  |           |
| Condensed                Consolidated Balance Sheets as of September                30, 2005                                                    |           |
| and                December 31, 2004                                                                                                            | 4              |
| Condensed                Consolidated Statements of Operations for the three                and nine                                            |           |
| months                ended September                30, 2005 and                2004                                                           | 5              |
| Condensed                Consolidated Statements of Cash Flows for the                                                                          |           |
| nine                months ended September                30, 2005                and 2004                                                      | 6              |
| Notes                to Condensed Consolidated Financial                Statements                                                              | 7              |
|                                                                                                                                            |           |
| Item                2. Management's                Discussion and Analysis of Financial Condition and Results of                Operations | 27             |
|                                                                                                                                            |           |
| Item                4. Controls                and Procedures                                                                              | 45             |
|                                                                                                                                            |           |
| PART                II. OTHER INFORMATION                                                                                                       |           |
|                                                                                                                                            |           |
| Item                1.  Legal                Proceedings                                                                                   | 46             |
|                                                                                                                                            |           |
| Item                5. Other Information                                                                                                        | 48             |
|                                                                                                                                            |           |
| Item                6. Exhibits                                                                                                            | 48             |
|                                                                                                                                            |           |
| SIGNATURES                                                                                                                                      | 49             |
|                                                                                                                                            |           |
| EXHIBIT                INDEX                                                                                                                    | 50             |

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Table          of Contents

**CAUTIONARY      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:**

|   | · | the                availability, in general, of funds to meet interest payment obligations                under our and our parent companies’ debt and to fund our operations and                necessary capital expenditures, either through cash flows from operating                activities, further borrowings or other sources and, in particular,                our                ability to be able to provide under applicable debt instruments such                funds                (by dividend, investment or otherwise) to the applicable obligor                of such                debt; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                ability to sustain and grow revenues and cash flows from operating                activities by offering video, high-speed Internet, telephone and                other                services and to maintain and grow a stable customer base, particularly                in                the face of increasingly aggressive competition from other service                providers; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                and our parent companies’ ability to comply with all covenants in our and                our parent companies’ indentures, the Bridge Loan and credit facilities,                any violation of which would result in a violation of the applicable                facility or indenture and could trigger a default of other obligations                under cross-default provisions; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                and our parent companies’ ability to pay or refinance debt prior to or                when it becomes due and/or to take advantage of market opportunities                and                market windows to refinance that debt in the capital markets through                new                issuances, exchange offers or otherwise, including restructuring                our and                our parent companies’ balance sheet and leverage                position; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 authorities, on our business. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**PART      I. FINANCIAL INFORMATION.**

**Item      1.**
**Financial      Statements.**

**CCH      II, LLC AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS **

**(**
**DOLLARS      IN MILLIONS**
**)      **

|                                                                        |   | **September** **30****,** |   | **December                31,** |   |
|-----------------------------------------------------------------------------|--------|--------------------------------|--------|---------------------------------|--------|
|                                                                        |   | **2005**                       |   | **2004**                        |   |
|                                                                        |   | **(Unaudited)**                |   |                            |   |
| **ASSETS**                                                                  |   |                           |   |                            |   |
| CURRENT                ASSETS:                                              |   |                           |   |                            |   |   |   |
| Cash                and cash equivalents                                    |   | $                              | 9      |                            | $      | 546 |   |
| Accounts                receivable, less allowance for doubtful accounts of |   |                           |   |                            |   |   |   |
| $15                and $15, respectively                                    |   |                           | 185    |                            |   | 175 |   |
| Prepaid                expenses and other current assets                    |   |                           | 23     |                            |   | 20 |   |
| Total                current assets                                         |   |                           | 217    |                            |   | 741 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| INVESTMENT                IN CABLE PROPERTIES:                              |   |                           |   |                            |   |   |   |
| Property,                plant and equipment, net of accumulated            |   |                           |   |                            |   |   |   |
| depreciation                of $6,357 and $5,142, respectively              |   |                           | 5,895  |                            |   | 6,110 |   |
| Franchises,                net                                              |   |                           | 9,830  |                            |   | 9,878 |   |
| Total                investment in cable properties, net                    |   |                           | 15,725 |                            |   | 15,988 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| OTHER                NONCURRENT ASSETS                                      |   |                           | 240    |                            |   | 250 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| Total                assets                                                 |   | $                              | 16,182 |                            | $      | 16,979 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| **LIABILITIES                AND MEMBER’S EQUITY**                    |   |                           |   |                            |   |   |   |
| CURRENT                LIABILITIES:                                         |   |                           |   |                            |   |   |   |
| Accounts                payable and accrued expenses                        |   | $                              | 940    |                            | $      | 949 |   |
| Payables                to related party                                    |   |                           | 113    |                            |   | 30 |   |
| Total                current liabilities                                    |   |                           | 1,053  |                            |   | 979 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| LONG-TERM                DEBT                                               |   |                           | 10,406 |                            |   | 9,895 |   |
| LOANS                PAYABLE - RELATED PARTY                                |   |                           | 57     |                            |   | 29 |   |
| DEFERRED                MANAGEMENT FEES - RELATED PARTY                     |   |                           | 14     |                            |   | 14 |   |
| OTHER                LONG-TERM LIABILITIES                                  |   |                           | 434    |                            |   | 493 |   |
| MINORITY                INTEREST                                            |   |                           | 665    |                            |   | 656 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| MEMBER’S                EQUITY:                                       |   |                           |   |                            |   |   |   |
| Member’s                equity                                        |   |                           | 3,553  |                            |   | 4,928 |   |
| Accumulated                other comprehensive loss                         |   |                           | --     |                            |   | (15 | ) |
|                                                                        |   |                           |   |                            |   |   |   |
| Total                member’s equity                                  |   |                           | 3,553  |                            |   | 4,913 |   |
|                                                                        |   |                           |   |                            |   |   |   |
| Total                liabilities and member’s equity                  |   | $                              | 16,182 |                            | $      | 16,979 |   |

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Table          of Contents

**CCH      II, LLC AND SUBSIDIARIES**

**CONDENSED**
**CONSOLIDATED      STATEMENTS OF OPERATIONS **

**(DOLLARS      IN MILLIONS)**

**Unaudited**

|                                                                                                                 |   | **Three                Months Ended September****30****,** |   | **Nine                Months Ended September****30****,** |   |
|----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                                                                 |   | **2005**                                                   |   | **2004**                                                  |   | **2005** |   | **2004** |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |
| REVENUES                                                                                                             |   | $                                                          | 1,318  |                                                      | $      | 1,248 |   | $ | 3,912 |   | $ | 3,701 |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| COSTS                AND EXPENSES:                                                                                   |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Operating                (excluding depreciation and amortization)                                                   |   |                                                       | 586    |                                                      |   | 525 |   |   | 1,714 |   |   | 1,552 |   |
| Selling,                general and administrative                                                                   |   |                                                       | 269    |                                                      |   | 252 |   |   | 762 |   |   | 735 |   |
| Depreciation                and amortization                                                                         |   |                                                       | 375    |                                                      |   | 371 |   |   | 1,134 |   |   | 1,105 |   |
| Impairment                of franchises                                                                              |   |                                                       | --     |                                                      |   | 2,433 |   |   | -- |   |   | 2,433 |   |
| Asset                impairment charges                                                                              |   |                                                       | --     |                                                      |   | -- |   |   | 39 |   |   | -- |   |
| (Gain)                loss on sale of assets, net                                                                    |   |                                                       | 1      |                                                      |   | -- |   |   | 5 |   |   | (104 | ) |
| Option                compensation expense, net                                                                      |   |                                                       | 3      |                                                      |   | 8 |   |   | 11 |   |   | 34 |   |
| Hurricane                asset retirement loss                                                                       |   |                                                       | 19     |                                                      |   | -- |   |   | 19 |   |   | -- |   |
| Special                charges, net                                                                                  |   |                                                       | 2      |                                                      |   | 3 |   |   | 4 |   |   | 100 |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                                                       | 1,255  |                                                      |   | 3,592 |   |   | 3,688 |   |   | 5,855 |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Income                (loss) from operations                                                                         |   |                                                       | 63     |                                                      |   | (2,344 | ) |   | 224 |   |   | (2,154 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| OTHER                INCOME AND EXPENSES:                                                                            |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Interest                expense, net                                                                                 |   |                                                       | (219   | )                                                         |   | (189 | ) |   | (627 | ) |   | (531 | ) |
| Gain                (loss) on derivative instruments and hedging activities,                net                      |   |                                                       | 17     |                                                      |   | (8 | ) |   | 43 |   |   | 48 |   |
| Loss                on extinguishment of debt                                                                        |   |                                                       | --     |                                                      |   | -- |   |   | (6 | ) |   | (21 | ) |
| Gain                on investments                                                                                   |   |                                                       | --     |                                                      |   | -- |   |   | 21 |   |   | -- |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                                                       | (202   | )                                                         |   | (197 | ) |   | (569 | ) |   | (504 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Loss                before minority interest, income taxes and cumulative effect of accounting                change |   |                                                       | (139   | )                                                         |   | (2,541 | ) |   | (345 | ) |   | (2,658 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| MINORITY                INTEREST                                                                                     |   |                                                       | (3     | )                                                         |   | 34 |   |   | (9 | ) |   | 25 |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes and cumulative effect of accounting                change                    |   |                                                       | (142   | )                                                         |   | (2,507 | ) |   | (354 | ) |   | (2,633 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| INCOME                TAX BENEFIT (EXPENSE)                                                                          |   |                                                       | (2     | )                                                         |   | 45 |   |   | (10 | ) |   | 41 |   |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Loss                before cumulative effect of accounting change                                                    |   |                                                       | (144   | )                                                         |   | (2,462 | ) |   | (364 | ) |   | (2,592 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| CUMULATIVE                EFFECT OF ACCOUNTING CHANGE, NET OF TAX                                                    |   |                                                       | --     |                                                      |   | (840 | ) |   | -- |   |   | (840 | ) |
|                                                                                                                 |   |                                                       |   |                                                      |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                              |   | $                                                          | (144   | )                                                         | $      | (3,302 | ) | $ | (364 | ) | $ | (3,432 | ) |

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Table          of Contents

**CCH      II, LLC AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH      FLOWS**

**(DOLLARS      IN MILLIONS)**

**Unaudited**

|                                                                                                             |   | **Nine                Months Ended****September                30,** |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                                                             |   | **2005**                                                             |   | **2004** |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                             |   |                                                                 |   |   |   |   |   |
| Net                loss                                                                                          |   | $                                                                    | (364   | ) | $ | (3,432 | ) |
| Adjustments                to reconcile net loss to net cash flows from                operating activities:     |   |                                                                 |   |   |   |   |   |
| Minority                interest                                                                                 |   |                                                                 | 9      |   |   | (25 | ) |
| Depreciation                and amortization                                                                     |   |                                                                 | 1,134  |   |   | 1,105 |   |
| Asset                impairment charges                                                                          |   |                                                                 | 39     |   |   | -- |   |
| Impairment                of franchises                                                                          |   |                                                                 | --     |   |   | 2,433 |   |
| Option                compensation expense, net                                                                  |   |                                                                 | 11     |   |   | 25 |   |
| Hurricane                asset retirement loss                                                                   |   |                                                                 | 19     |   |   | -- |   |
| Special                charges, net                                                                              |   |                                                                 | --     |   |   | 85 |   |
| Noncash                interest expense                                                                          |   |                                                                 | 23     |   |   | 15 |   |
| Gain                on derivative instruments and hedging activities,                net                         |   |                                                                 | (43    | ) |   | (48 | ) |
| (Gain)                loss on sale of assets, net                                                                |   |                                                                 | 5      |   |   | (104 | ) |
| Loss                on extinguishment of debt                                                                    |   |                                                                 | --     |   |   | 18 |   |
| Gain                on investments                                                                               |   |                                                                 | (21    | ) |   | -- |   |
| Deferred                income taxes                                                                             |   |                                                                 | 6      |   |   | (44 | ) |
| Cumulative                effect of accounting change, net of                tax                                 |   |                                                                 | --     |   |   | 840 |   |
| Other,                net                                                                                        |   |                                                                 | --     |   |   | (1 | ) |
| Changes                in operating assets and liabilities, net of effects                from dispositions:     |   |                                                                 |   |   |   |   |   |
| Accounts                receivable                                                                               |   |                                                                 | (15    | ) |   | (1 | ) |
| Prepaid                expenses and other assets                                                                 |   |                                                                 | (7     | ) |   | (3 | ) |
| Accounts                payable, accrued expenses and                other                                       |   |                                                                 | (69    | ) |   | (149 | ) |
| Receivables                from and payables to related party, including                deferred management fees |   |                                                                 | (68    | ) |   | (65 | ) |
| Net                cash flows from operating activities                                                          |   |                                                                 | 659    |   |   | 649 |   |
|                                                                                                             |   |                                                                 |   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                             |   |                                                                 |   |   |   |   |   |
| Purchases                of property, plant and equipment                                                        |   |                                                                 | (815   | ) |   | (616 | ) |
| Change                in accrued expenses related to capital                expenditures                         |   |                                                                 | 39     |   |   | (11 | ) |
| Proceeds                from sale of assets                                                                      |   |                                                                 | 38     |   |   | 727 |   |
| Purchases                of investments                                                                          |   |                                                                 | (1     | ) |   | (4 | ) |
| Proceeds                from investments                                                                         |   |                                                                 | 16     |   |   | -- |   |
| Other,                net                                                                                        |   |                                                                 | (2     | ) |   | (2 | ) |
| Net                cash flows from investing activities                                                          |   |                                                                 | (725   | ) |   | 94 |   |
|                                                                                                             |   |                                                                 |   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                             |   |                                                                 |   |   |   |   |   |
| Borrowings                of long-term debt                                                                      |   |                                                                 | 897    |   |   | 2,873 |   |
| Borrowings                from related parties                                                                   |   |                                                                 | 140    |   |   | -- |   |
| Repayments                of long-term debt                                                                      |   |                                                                 | (1,014 | ) |   | (4,707 | ) |
| Repayments                to related parties                                                                     |   |                                                                 | (112   | ) |   | -- |   |
| Proceeds                from issuance of debt                                                                    |   |                                                                 | 294    |   |   | 1,500 |   |
| Payments                for debt issuance costs                                                                  |   |                                                                 | (8     | ) |   | (97 | ) |
| Distributions                                                                                                    |   |                                                                 | (668   | ) |   | (306 | ) |
| Net                cash flows from financing activities                                                          |   |                                                                 | (471   | ) |   | (737 | ) |
|                                                                                                             |   |                                                                 |   |   |   |   |   |
| NET                INCREASE (DECREASE) IN CASH AND CASH                EQUIVALENTS                               |   |                                                                 | (537   | ) |   | 6 |   |
| CASH                AND CASH EQUIVALENTS, beginning of                period                                     |   |                                                                 | 546    |   |   | 85 |   |
| CASH                AND CASH EQUIVALENTS, end of period                                                          |   | $                                                                    | 9      |   | $ | 91 |   |
| CASH                PAID FOR INTEREST                                                                            |   | $                                                                    | 579    |   | $ | 499 |   |
| NONCASH                TRANSACTIONS:                                                                             |   |                                                                 |   |   |   |   |   |
| Issuance                of debt by Charter Communications Operating,                LLC                          |   | $                                                                    | 333    |   | $ | -- |   |
| Distribution                of Charter Communications Holdings, LLC notes and                accrued interest    |   | $                                                                    | (343   | ) | $ | -- |   |
| Transfer                of property, plant and equipment from parent                company                      |   | $                                                                    | 139    |   | $ | -- |   |

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

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Table          of Contents

**CCH            II, LLC AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**(dollars            in millions, except where indicated)**

| **1.** | **Organization                and Basis of                Presentation** |
|--------|--------------------------------------------------------------------------|

CCH      II, LLC ("CCH II") is a holding company whose principal assets at      September 30, 2005 are equity interests in its operating subsidiaries. CCH      II is      a subsidiary of CCH I, LLC ("CCH I"). CCH I is a subsidiary of CCH I Holdings,      LLC ("CIH") which is a subsidiary of Charter Communications Holdings, LLC      ("Charter Holdings"). Charter Holdings is a subsidiary of CCHC, LLC ("CCHC")      which is a subsidiary of Charter Communications Holding Company, LLC ("Charter      Holdco"). Charter Holdco is a subsidiary of Charter Communications, Inc.      ("Charter"). CCH II is the sole owner of CCO Holdings, LLC ("CCO Holdings"),      which in turn is sole owner of Charter Communications Operating, LLC ("Charter      Operating"). The condensed consolidated financial statements include the      accounts of CCH II and all of its direct and indirect subsidiaries where the      underlying operations reside, collectively referred to herein as the "Company."      All significant intercompany accounts and transactions among consolidated      entities have been eliminated. The Company is a broadband communications company      operating in the United States. The Company offers its customers traditional      cable video programming (analog and digital video) as well as high-speed      Internet services and, in some areas, advanced broadband services such as high      definition television, video on demand and telephone. The Company sells its      cable video programming, high-speed Internet and advanced broadband services      on      a subscription basis. The Company also sells local advertising on      satellite-delivered networks.

The      accompanying condensed consolidated financial statements of the Company have      been prepared in accordance with accounting principles generally accepted in      the      United States for interim financial information and the rules and regulations      of      the Securities and Exchange Commission (the "SEC"). Accordingly, certain      information and footnote disclosures typically included in CCH II's Annual      Report on Form 10-K have been condensed or omitted for this quarterly report.      The accompanying condensed consolidated financial statements are unaudited      and      are subject to review by regulatory authorities. However, in the opinion of      management, such financial statements include all adjustments, which consist      of      only normal recurring adjustments, necessary for a fair presentation of the      results for the periods presented. Interim results are not necessarily      indicative of results for a full year. 

*Reclassifications*

| **2.** | **Liquidity                and Capital                Resources** |
|--------|-------------------------------------------------------------------|

The      Company incurred net loss of $144 million and $364 million for      the three and nine months ended September 30, 2005 and $3.3 billion and $3.4      billion for the three and nine months ended September 30, 2004, respectively.      The Company’s net cash flows from operating activities were $659 million and      $649 million for the nine months ended September 30, 2005 and 2004,      respectively. 

The      Company's long-term financing as of September 30, 2005 consists      of $5.5 billion of credit facility debt and $4.9 billion accreted value of      high-yield notes. For the remainder of 2005, $7 million of the Company’s debt      matures, and in 2006, an additional $30 million of the Company’s debt matures.      In 2007 and beyond, significant additional amounts will become due under the      Company’s remaining long-term debt obligations.

The      Company has historically required significant cash to fund debt      service costs, capital expenditures and ongoing operations. Historically, the      Company has funded these requirements through cash flows from operating      activities, borrowings under its credit facilities, equity contributions from      its parent companies, sales of assets, issuances of debt securities and from      cash on hand. However, the mix of funding sources changes from period to period.      For the nine 

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Table          of Contents

**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

In      October 2005, CCO Holdings and CCO Holdings Capital Corp., as      guarantor thereunder, entered into a senior bridge loan agreement (the "Bridge      Loan") with JPMorgan Chase Bank, N.A., Credit Suisse, Cayman Islands Branch      and      Deutsche Bank AG Cayman Islands Branch (the "Lenders") whereby the Lenders      have      committed to make loans to CCO Holdings in an aggregate amount of $600 million.      CCO Holdings may draw upon the facility between January 2, 2006 and September      29, 2006 and the loans will mature on the sixth anniversary of the first      borrowing under the Bridge Loan. 

The      Company expects that cash on hand, cash flows from operating      activities and the amounts available under its credit facilities and Bridge      Loan      will be adequate to meet its and its parent companies’ cash needs for the      remainder of 2005 and 2006. Cash flows from operating activities and amounts      available under the Company’s credit facilities and Bridge Loan may not be      sufficient to fund the Company’s operations and satisfy its and its parent      companies’ interest payment obligations in 2007. It is likely that the Company      and its parent companies’ will require additional funding to satisfy their debt      repayment obligations in 2007. The Company believes that cash flows from      operating activities and amounts available under its credit facilities and      Bridge Loan will not be sufficient to fund its operations and satisfy its and      its parent companies’ interest and principal repayment obligations      thereafter.

The      Company has been advised that Charter is working with its      financial advisors to address its and the Company’s funding requirements.      However, there can be no assurance that such funding will be available to the      Company. Although Paul G. Allen, Charter’s Chairman and controlling shareholder,      and his affiliates have purchased equity from Charter and Charter Holdco in      the      past, Mr. Allen and his affiliates are not obligated to purchase equity from,      contribute to or loan funds to Charter, Charter Holdco or the Company in the      future.

***Credit      Facilities and Covenants***

The      Company’s ability to operate depends upon, among other things, its continued      access to capital, including credit under the Charter Operating credit      facilities. These credit facilities, along with the Company’s indentures and      Bridge Loan, contain certain restrictive covenants, some of which require the      Company to maintain specified financial ratios and meet financial tests and      to      provide audited financial statements with an unqualified opinion from the      Company’s independent auditors. As of September 30, 2005, the Company is in      compliance with the covenants under its indentures and credit facilities and      the      Company expects to remain in compliance with those covenants and the Bridge      Loan      covenants for the next twelve months. The      Company’s total potential borrowing availability under the current credit      facilities totaled $786 million as of September 30, 2005, although the      actual availability at that time was only $648 million because of limits imposed      by covenant restrictions.      In      addition, effective January 2, 2006, the Company will have additional borrowing      availability of $600 million as a result of the Bridge Loan. Continued      access to the Company’s credit facilities and Bridge Loan is subject to the      Company remaining in compliance with the covenants of these credit facilities      and Bridge Loan, including covenants tied to the Company’s operating      performance. If the Company’s operating performance results in non-compliance      with these covenants, or if any of certain other events of non-compliance under      these credit facilities, Bridge Loan or indentures governing the Company’s debt      occur, funding under the credit facilities and Bridge Loan may not be available      and defaults on some or potentially all of the Company’s debt obligations could      occur. An event of default under the covenants governing any of the Company’s      debt instruments could result in the acceleration of its payment obligations      under that debt and, under certain circumstances, in cross-defaults under its      other debt obligations, which could have a material adverse effect on the      Company’s consolidated financial condition or results of      operations.

***Parent      Company Debt Obligations***

Any      financial or liquidity problems of the Company’s parent companies      could cause serious disruption to the Company's business and have a material      adverse effect on the Company’s business and results of operations. A failure by      Charter Holdings, CIH or CCH I to satisfy their debt payment obligations or      a      bankruptcy filing with respect to 

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Table          of Contents

**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

As      of      September 30, 2005, Charter had approximately $888 million principal amount      of      senior convertible notes outstanding with approximately $25 million and $863      million maturing in 2006 and 2009, respectively. During      the nine months ended September 30, 2005, the      Company distributed $668 million to Charter Holdings of which $60 million was      subsequently distributed to Charter Holdco.      As of      September 30, 2005, Charter Holdco was owed $57 million in intercompany loans      from its subsidiaries, which amount was available to pay interest and principal      on Charter's convertible senior notes. In addition, Charter      has $123 million of governmental securities pledged as security for the next      five semi-annual interest payments on Charter’s 5.875% convertible senior      notes.

As      of      September 30, 2005, Charter Holdings, CIH and CCH I had approximately $7.8      billion principal amount of high-yield notes outstanding with approximately      $105      million, $684 million and $7.0 billion maturing in 2007, 2009 and thereafter,      respectively. Charter, Charter Holdings, CIH and CCH I will need to raise      additional capital or receive distributions or payments from the Company in      order to satisfy their debt obligations. However, because of their significant      indebtedness, the ability of the parent companies to raise additional capital      at      reasonable rates is uncertain. 

Distributions      by CCH II and its subsidiaries to a parent company (including Charter, Charter      Holdco, CCHC, Charter Holdings, CIH and CCH I) for      payment of principal on parent company notes are      restricted by the Bridge Loan and the indentures governing the CCH II notes,      CCO      Holdings notes and Charter Operating notes, unless      under their respective indentures there is no default and a specified leverage      ratio test is met at the time of such event. For the quarter ended September      30,      2005, there was no default under any of the aforementioned indentures. However,      CCO Holdings did not meet its leverage ratio test of 4.5 to 1.0 based on      September 30, 2005 financial results. As a result, distributions from CCO      Holdings to CCH II, CCH I, CIH, Charter Holdings, CCHC, Charter Holdco or      Charter for payment of principal of the respective parent company’s debt are      currently restricted and will continue to be restricted until that test is      met.      However distributions for payment of the respective parent company’s interest      are permitted.

In      September 2005, Charter Holdings and its wholly owned      subsidiaries, CCH I and CIH, completed the exchange of approximately $6.8      billion total principal amount of outstanding debt securities of Charter      Holdings in a private placement for new debt securities. Holders of Charter      Holdings notes due in 2009 and 2010 exchanged $3.4 billion principal amount      of      notes for $2.9 billion principal amount of new 11% CCH I senior secured notes      due 2015. Holders of Charter Holdings notes due 2011 and 2012 exchanged $845      million principal amount of notes for $662 million principal amount of 11%      CCH I      senior secured notes due 2015. In addition, holders of Charter Holdings notes      due 2011 and 2012 exchanged $2.5 billion principal amount of notes for $2.5      billion principal amount of various series of new CIH notes. Each series of      new      CIH notes has the same stated interest rate and provisions for payment of cash      interest as the series of old Charter Holdings notes for which such CIH notes      were exchanged. In addition, the maturities for each series were extended three      years.

***Specific      Limitations*****at Charter Holdings**

The      indentures governing the Charter Holdings notes permit Charter Holdings to      make      distributions to Charter Holdco for payment of interest or principal on the      convertible senior notes, only if, after giving effect to the distribution,      Charter Holdings can incur additional debt under the leverage ratio of 8.75      to      1.0, there is no default under Charter Holdings' indentures and other specified      tests are met. For the quarter ended September      30,      2005,      there was no default under Charter Holdings' indentures and other specified      tests were met. However, Charter Holdings did not meet the leverage ratio of      8.75 to 1.0 based on September      30,      2005financial      results. As a result, distributions from Charter Holdings to Charter, Charter      Holdco or CCHC for payment of interest or principal are currently      restricted and will continue to be restricted until that test is met. During      this restriction period,      the      indentures governing the Charter Holdings notes permit Charter Holdings and      its      subsidiaries to make specified investments in Charter Holdco or Charter, up      to      an amount determined by a formula, as long as there is no default under the      indentures.  

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Table          of Contents

**CCH            II, LLC AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL            STATEMENTS**

**(UNAUDITED)**

**(dollars            in millions, except where            indicated)**

| **3.** | **Sale                of                Assets** |
|--------|--------------------------------------------------|

In      July      2005, the Company closed the sale of certain cable systems in Texas and West      Virginia and closed the sale of an additional cable system in Nebraska in      October 2005, representing a total of approximately 33,000 customers. During      the      nine months ended September 30, 2005, those cable systems met the criteria      for      assets held for sale under Statement of Financial Accounting Standards ("SFAS")      No. 144, *Accounting      for the Impairment or Disposal of Long-Lived Assets*.      As      such, the assets were written down to fair value less estimated costs to sell      resulting in asset impairment charges during the nine months ended September      30,      2005 of approximately $39 million. At September 30, 2005 assets held for sale,      included in investment in cable properties, are approximately $7      million.

In      March 2004, the Company closed the sale of certain cable systems      in Florida, Pennsylvania, Maryland, Delaware and West Virginia to Atlantic      Broadband Finance, LLC. The Company closed the sale of an additional cable      system in New York to Atlantic Broadband Finance, LLC in April 2004. These      transactions resulted in a $106 million pretax gain recorded as a gain on sale      of assets in the Company’s consolidated statements of operations. The total net      proceeds from the sale of all of these systems were approximately $735 million.      The proceeds were used to repay a portion of amounts outstanding under the      Company’s revolving credit facility.

Gain      on      investments for the nine months ended September      30,      2005      primarily represents a      gain      realized on an exchange of the Company’s interest in an equity investee for an      investment in a larger enterprise.

| **4.** | **Franchises                and Goodwill** |
|--------|--------------------------------------------|

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 SFAS No. 142, *Goodwill      and Other Intangible Assets*.      Franchises      that qualify for indefinite-life treatment under SFAS No. 142 are tested      for impairment annually each October 1 based on valuations, or more frequently      as warranted by events or changes in circumstances. Such test resulted in a      total franchise impairment of approximately $3.3 billion during the third      quarter of 2004. The October 1, 2005 annual impairment test will be finalized      in      the fourth quarter of 2005 and any impairment resulting from such test will      be      recorded in the fourth quarter. 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 telephone 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. 

The      Company follows the guidance of Emerging Issues Task Force (“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 telephone to these customers. The present value of these      after-tax cash flows yields 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 

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Table          of Contents

**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

In      September 2004, the SEC staff issued EITF Topic D-108 which      requires the direct method of separately valuing all intangible assets and      does      not permit goodwill to be included in franchise assets. The Company adopted      Topic D-108 in its impairment assessment as of September 30, 2004 that resulted      in a total franchise impairment of approximately $3.3 billion. The Company      recorded a cumulative effect of accounting change of $840 million (approximately      $875 million before tax effects of $16 million and minority interest effects      of      $19 million) for the nine months ended September 30, 2004 representing the      portion of the Company's total franchise impairment attributable to no longer      including goodwill with franchise assets. The remaining $2.4 billion 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 nine months ended      September 30, 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 Internet 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. 

As      of September 30, 2005 and December 31, 2004, indefinite-lived      and finite-lived intangible assets are presented in the following      table:

|                                                                  |   | **September                30, 2005** |   | **December 31,                2004** |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------------|--------|
|                                                                  |   | **Gross****Carrying****Amount**       |   | **Accumulated****Amortization**           |   | **Net****Carrying****Amount** |   | **Gross****Carrying****Amount** |   | **Accumulated                Amortization** |   | **Net****Carrying****Amount** |   |
| **Indefinite-lived                intangible                assets:** |   |                                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchises                with indefinite lives                       |   | $                                     | 9,797  |                                      | $      | -- |   | $ | 9,797 |   | $ | 9,845 |   | $ | -- |   | $ | 9,845 |   |
| Goodwill                                                              |   |                                  | 52     |                                      |   | -- |   |   | 52 |   |   | 52 |   |   | -- |   |   | 52 |   |
|                                                                  |   |                                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                                     | 9,849  |                                      | $      | -- |   | $ | 9,849 |   | $ | 9,897 |   | $ | -- |   | $ | 9,897 |   |
| **Finite-lived                intangible assets:**                    |   |                                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchises                with finite lives                           |   | $                                     | 40     |                                      | $      | 7 |   | $ | 33 |   | $ | 37 |   | $ | 4 |   | $ | 33 |   |

Franchises      with indefinite lives decreased $39 million as a result of      the asset impairment charges recorded related to three cable asset sales and      $9      million as a result of the closing of two of the cable asset sales in July      2005      (see Note 3). Franchise amortization expense for the three and nine months      ended      September 30, 2005 and 2004 was $1 million and $3 million, respectively, which      represents the amortization relating to franchises that did not qualify for      indefinite-life treatment under SFAS No. 142, including costs associated with      franchise renewals. The Company expects that amortization expense on franchise      assets will be approximately $3 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. 

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**CCH            II, LLC AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL            STATEMENTS**

**(UNAUDITED)**

**(dollars            in millions, except where            indicated)**

| **5.** | **Accounts                Payable and Accrued                Expenses** |
|--------|-------------------------------------------------------------------------|

Accounts      payable and accrued expenses consist of the following as of September      30,      2005      and December 31, 2004:

|                                        |   | **September                30,****2005** |   | **December 31,****2004** |   |
|---------------------------------------------|--------|------------------------------------------|--------|-------------------------------|--------|
|                                        |   |                                     |   |                          |   |
| Accounts                payable - trade     |   | $                                        | 62     |                          | $      | 138 |   |
| Accrued                capital expenditures |   |                                     | 99     |                          |   | 60 |   |
| Accrued                expenses:            |   |                                     |   |                          |   |   |   |
| Interest                                    |   |                                     | 179    |                          |   | 149 |   |
| Programming                costs            |   |                                     | 287    |                          |   | 278 |   |
| Franchise-related                fees       |   |                                     | 56     |                          |   | 67 |   |
| Compensation                                |   |                                     | 57     |                          |   | 47 |   |
| Other                                       |   |                                     | 200    |                          |   | 210 |   |
|                                        |   |                                     |   |                          |   |   |   |
|                                        |   | $                                        | 940    |                          | $      | 949 |   |

| **6.** | **Long-Term                Debt** |
|--------|-----------------------------------|

Long-term      debt consists of the following as of September      30, 2005 and      December 31, 2004:

|                                                    |   | **September** **30,                2005** |                                      | **December                31, 2004** |   |
|---------------------------------------------------------|--------|------------------------------------------------|-------------------------------------------|--------------------------------------|--------|
|                                                    |   |                                           | **Principal                Amount**  |                                 |   | **Accreted                Value** |   |   | **Principal****Amount** |   |   | **Accreted                Value** |   |
|                                                    |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| **Long-Term                Debt**                       |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| CCH                II, LLC:                             |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| 10.250%                senior notes due 2010            |   | $                                              | 1,601                                     |                                 | $      | 1,601 |   | $ | 1,601 |   | $ | 1,601 |   |
| CCO                Holdings, LLC:                       |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| 83⁄4%                senior notes due 2013           |   |                                           | 800                                       |                                 |   | 794 |   |   | 500 |   |   | 500 |   |
| Senior                floating rate notes due 2010      |   |                                           | 550                                       |                                 |   | 550 |   |   | 550 |   |   | 550 |   |
| Charter                Communications Operating, LLC:   |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| 8%                senior second lien notes due 2012     |   |                                           | 1,100                                     |                                 |   | 1,100 |   |   | 1,100 |   |   | 1,100 |   |
| 8                3/8% senior second lien notes due 2014 |   |                                           | 733                                       |                                 |   | 733 |   |   | 400 |   |   | 400 |   |
| Renaissance                Media Group LLC:             |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| 10.000%                senior discount notes due 2008   |   |                                           | 114                                       |                                 |   | 115 |   |   | 114 |   |   | 116 |   |
| CC                V Holdings, LLC:                      |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| 11.875%                senior discount notes due 2008   |   |                                           | --                                        |                                 |   | -- |   |   | 113 |   |   | 113 |   |
| **Credit                Facilities**                    |   |                                           |                                      |                                 |   |   |   |   |   |   |   |   |   |
| Charter                Operating                        |   |                                           | 5,513                                     |                                 |   | 5,513 |   |   | 5,515 |   |   | 5,515 |   |
|                                                    |   | $                                              | 10,411                                    |                                 | $      | 10,406 |   | $ | 9,893 |   | $ | 9,895 |   |

The      accreted values presented above represent the principal amount of      the notes less the original issue discount at the time of sale plus the      accretion to the balance sheet date. 

In      October 2005, CCO Holdings and CCO Holdings Capital Corp., as      guarantor thereunder, entered into the Bridge Loan with the Lenders whereby      the      Lenders have committed to make loans to CCO Holdings in an aggregate amount      of      $600 million. CCO Holdings may draw upon the facility between January 2, 2006      and September 29, 2006 and the loans will mature on the sixth anniversary of      the      first borrowing under the Bridge Loan. Each loan will accrue interest at a      rate      equal to an adjusted LIBOR rate plus a spread. The spread will initially be      450      basis points and will increase (a) by an additional 25 basis points at the      end      of the six-month period following the date of the first 

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Table          of Contents

**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

In      August 2005, CCO Holdings issued $300 million in debt securities,      the proceeds of which were used for general corporate purposes, including the      payment of distributions to its parent companies, including Charter Holdings,      to      pay interest expense. 

In      March and June 2005, Charter Operating consummated exchange      transactions with a small number of institutional holders of Charter Holdings      8.25% senior notes due 2007 pursuant to which Charter Operating issued, in      private placements, approximately $333 million principal amount of new notes      with terms identical to Charter Operating's 8.375% senior second lien notes      due      2014 in exchange for approximately $346 million of the Charter Holdings 8.25%      senior notes due 2007. The Charter Holdings notes received in the exchange      were      thereafter distributed to Charter Holdings and cancelled.

***Loss        on extinguishment of debt***

In      March      2005, CCH II’s subsidiary, CC V Holdings, LLC, redeemed all of its 11.875% notes      due 2008, at 103.958% of principal amount, plus accrued and unpaid interest      to      the date of redemption. The total cost of redemption was approximately $122      million and was funded through borrowings under the Charter Operating credit      facilities. The redemption resulted in a loss on extinguishment of debt for      the      nine months ended September      30,      2005      of approximately $5 million. Following      such redemption, CC V Holdings, LLC and its subsidiaries (other than      non-guarantor subsidiaries) guaranteed the Charter Operating credit facilities      and granted a lien on all of their assets as to which a lien can be perfected      under the Uniform Commercial Code by the filing of a financing      statement.

| **7.** | **Minority                Interest** |
|--------|--------------------------------------|

Minority      interest on the Company’s consolidated balance sheets as of September 30, 2005      and December 31, 2004 primarily represents preferred membership interests in      CC      VIII, LLC ("CC VIII"), an indirect subsidiary of CCH II, of $665 million and      $656 million, respectively. As      more      fully described in Note 18, this preferred interest arises from the      approximately $630 million of preferred membership units issued by CC      VIII      in connection with an acquisition in February 2000 and was the subject of a      dispute between Charter and Mr. Allen, Charter’s Chairman and controlling      shareholder that was settled October 31, 2005. The Company is currently      determining the impact of the settlement to be recorded in the fourth quarter      of      2005. Due      to      the uncertainties that existed prior to October 31, 2005 related to the ultimate      resolution of the dispute, effective January 1, 2005, the Company ceased      recognizing minority interest in earnings or losses of CC VIII for financial      reporting purposes until such time as the resolution of the matter was      determinable or other events occurred. For the three and nine months ended      September 30, 2005, the Company’s results include income of $8 million and $25      million, respectively, attributable to CC VIII.      Subsequent to recording the impact of the settlement in the fourth quarter      of      2005, approximately 6% of CC VIII’s income will be allocated to minority      interest.

| **8.** | **Comprehensive                Loss** |
|--------|---------------------------------------|

Certain      marketable equity securities are classified as available-for-sale and reported      at market value with unrealized gains and losses recorded as accumulated other      comprehensive loss on the accompanying condensed consolidated balance sheets.      Additionally, the Company reports changes in the fair value of interest rate      agreements designated as hedging the variability of cash flows associated with      floating-rate debt obligations, that meet the effectiveness criteria of SFAS      No. 133, *Accounting      for Derivative Instruments and Hedging Activities*,      in      accumulated other comprehensive loss. Comprehensive loss for the three months      ended September 30, 2005 and 2004 was $139 million and $3.3 billion,      respectively, and was $349 million and $3.4 billion for the nine months ended      September 30, 2005 and 2004, respectively. 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

 

| **9.** | **Accounting                for Derivative Instruments and Hedging                Activities** |
|--------|------------------------------------------------------------------------------------------------|

The      Company uses interest rate risk management derivative      instruments, such as interest rate swap agreements and interest rate collar      agreements (collectively referred to herein as interest rate agreements) to      manage its interest costs. The Company’s policy is to manage interest costs      using a mix of fixed and variable rate debt. Using interest rate swap      agreements, the Company has agreed to exchange, at specified intervals through      2007, the difference between fixed and variable interest amounts calculated      by      reference to an agreed-upon notional principal amount. Interest rate collar      agreements are used to limit the Company’s exposure to and benefits from      interest rate fluctuations on variable rate debt to within a certain range      of      rates. 

The      Company does not hold or issue derivative instruments for trading      purposes. The Company does, however, have certain interest rate derivative      instruments that have been designated as cash flow hedging instruments. Such      instruments effectively convert variable interest payments on certain debt      instruments into fixed payments. For qualifying hedges, SFAS No. 133      allows      derivative gains and losses to offset related results on hedged items in the      consolidated statement of operations. The Company has formally documented,      designated and assessed the effectiveness of transactions that receive hedge      accounting. For the three months ended September 30, 2005 and 2004, net gain      (loss) on derivative instruments and hedging activities includes gains of $1      million and $1 million, respectively, and for the nine months ended September      30, 2005 and 2004, net gain (loss) on derivative instruments and hedging      activities includes gains of $2 million and $3 million, respectively, which      represent cash flow hedge ineffectiveness on interest rate hedge agreements      arising from differences between the critical terms of the agreements and the      related hedged obligations. Changes in the fair value of interest rate      agreements designated as hedging instruments of the variability of cash flows      associated with floating-rate debt obligations that meet the effectiveness      criteria of SFAS No. 133 are reported in accumulated other comprehensive      loss. For the three months ended September 30, 2005 and 2004, a gain of $5      million and $2 million, respectively, and for the nine months ended September      30, 2005 and 2004, a gain of $14 million and $31 million, respectively, related      to derivative instruments designated as cash flow hedges, was recorded in      accumulated other comprehensive loss. The amounts are subsequently reclassified      into interest expense as a yield adjustment in the same period in which the      related interest on the floating-rate debt obligations affects earnings      (losses). 

Certain      interest rate derivative instruments are not designated as hedges as they do      not      meet the effectiveness criteria specified by SFAS No. 133. However,      management believes such instruments are closely correlated with the respective      debt, thus managing associated risk. Interest rate derivative instruments not      designated as hedges are marked to fair value, with the impact recorded as      gain      (loss) on derivative instruments and hedging activities in the Company’s      condensed consolidated statements of operations.      For the      three months ended September 30, 2005 and 2004, net      gain      (loss) on derivative instruments and hedging activities includes gains of $16      million and losses of $9 million, respectively, and for the nine months ended      September 30, 2005 and 2004, net gain (loss) on derivative instruments and      hedging activities includes gains of $41 million and $45 million, respectively,      for interest rate derivative instruments not designated as hedges.

As      of September 30, 2005 and December 31, 2004, the Company had      outstanding $2.1 billion and $2.7 billion and $20 million and $20 million,      respectively, in notional amounts of interest rate swaps and collars,      respectively. The notional amounts of interest rate instruments do not represent      amounts exchanged by the parties and, thus, are not a measure of exposure to      credit loss. The amounts exchanged are determined by reference to the notional      amount and the other terms of the contracts.

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**CCH            II, LLC AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL            STATEMENTS**

**(UNAUDITED)**

**(dollars            in millions, except where            indicated)**

 

| **10.** | **Revenues** |
|---------|--------------|

Revenues      consist of the following for the three and nine months ended      September 30, 2005 and 2004:

|                               |   | **Three                Months****Ended                September** **30,** |   | **Nine                Months****Ended                September** **30,** |   |
|------------------------------------|--------|--------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|
|                               |   | **2005**                                                                       |   | **2004**                                                                      |   | **2005** |   | **2004** |   |
|                               |   |                                                                           |   |                                                                          |   |   |   |   |   |   |   |   |   |
| Video                              |   | $                                                                              | 848    |                                                                          | $      | 839 |   | $ | 2,551 |   | $ | 2,534 |   |
| High-speed                Internet |   |                                                                           | 230    |                                                                          |   | 189 |   |   | 671 |   |   | 538 |   |
| Advertising                sales   |   |                                                                           | 74     |                                                                          |   | 73 |   |   | 214 |   |   | 205 |   |
| Commercial                         |   |                                                                           | 71     |                                                                          |   | 61 |   |   | 205 |   |   | 175 |   |
| Other                              |   |                                                                           | 95     |                                                                          |   | 86 |   |   | 271 |   |   | 249 |   |
|                               |   |                                                                           |   |                                                                          |   |   |   |   |   |   |   |   |   |
|                               |   | $                                                                              | 1,318  |                                                                          | $      | 1,248 |   | $ | 3,912 |   | $ | 3,701 |   |

| **11.** | **Operating                Expenses** |
|---------|---------------------------------------|

Operating      expenses consist of the following for the three and nine      months ended September 30, 2005 and 2004:

|                             |   | **Three                Months****Ended                September** **30,** |   | **Nine                Months****Ended                September** **30,** |   |
|----------------------------------|--------|--------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|
|                             |   | **2005**                                                                       |   | **2004**                                                                      |   | **2005** |   | **2004** |   |
|                             |   |                                                                           |   |                                                                          |   |   |   |   |   |
| Programming                      |   | $                                                                              | 357    |                                                                          | $      | 328 |   | $ | 1,066 |   | $ | 991 |   |
| Service                          |   |                                                                           | 203    |                                                                          |   | 173 |   |   | 572 |   |   | 489 |   |
| Advertising                sales |   |                                                                           | 26     |                                                                          |   | 24 |   |   | 76 |   |   | 72 |   |
|                             |   |                                                                           |   |                                                                          |   |   |   |   |   |   |   |   |   |
|                             |   | $                                                                              | 586    |                                                                          | $      | 525 |   | $ | 1,714 |   | $ | 1,552 |   |

| **12.** | **Selling,                General and Administrative                Expenses** |
|---------|--------------------------------------------------------------------------------|

Selling,      general and administrative expenses consist of the following      for the three and nine months ended September 30, 2005 and 2004:

|                                      |   | **Three                Months****Ended                September** **30,** |   | **Nine                Months****Ended                September** **30,** |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|
|                                      |   | **2005**                                                                       |   | **2004**                                                                      |   | **2005** |   | **2004** |   |
|                                      |   |                                                                           |   |                                                                          |   |   |   |   |   |   |   |   |   |
| General                and administrative |   | $                                                                              | 231    |                                                                          | $      | 220 |   | $ | 658 |   | $ | 636 |   |
| Marketing                                 |   |                                                                           | 38     |                                                                          |   | 32 |   |   | 104 |   |   | 99 |   |
|                                      |   |                                                                           |   |                                                                          |   |   |   |   |   |   |   |   |   |
|                                      |   | $                                                                              | 269    |                                                                          | $      | 252 |   | $ | 762 |   | $ | 735 |   |

Components      of selling expense are included in general and      administrative and marketing expense.

**13.** **Hurricane      Asset Retirement Loss**

Certain      of the Company’s cable systems in Louisiana suffered      significant plant damage as a result of hurricanes Katrina and Rita. Based      on      preliminary evaluations, the Company wrote off $19 million of its plants’ net      book value. Insignificant amounts of other expenses were recorded related to      hurricanes Katrina and Rita. 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

The      Company has insurance coverage for both property and business      interruption. The Company has not recorded any potential insurance recoveries      as      it is still assessing the damage of its plant and the extent of insurance      coverage.

| **14.** | **Special                Charges** |
|---------|------------------------------------|

The      Company has recorded special charges as a result of reducing its      workforce, consolidating administrative offices and management realignment      in      2004 and 2005. The activity associated with this initiative is summarized in      the      table below.

|                                    |   | **Three                Months****Ended                September 30,** |   | **Nine                Months****Ended                September 30,** |   |
|-----------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                    |   | **2005**                                                              |   | **2004**                                                             |   | **2005** |   | **2004** |   |
|                                    |   |                                                                  |   |                                                                 |   |   |   |   |   |
| Beginning                Balance        |   | $                                                                     | 4      |                                                                 | $      | 6 |   | $ | 6 |   | $ | 14 |   |
|                                    |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |
| Special                Charges          |   |                                                                  | 1      |                                                                 |   | 6 |   |   | 5 |   |   | 9 |   |
| Payments                                |   |                                                                  | (1     | )                                                                    |   | (3 | ) |   | (7 | ) |   | (14 | ) |
|                                    |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |
| Balance                at September 30, |   | $                                                                     | 4      |                                                                 | $      | 9 |   | $ | 4 |   | $ | 9 |   |

For      the      three and nine months ended September 30, 2005, special charges also included      $1      million related to legal settlements. For the nine months ended September      30,      2005,      special charges were offset by approximately $2 million related to an agreed      upon discount in respect of the portion of the settlement consideration payable      under the Stipulations of Settlement of the consolidated Federal Class Action      and the Federal Derivative Action allocable to plaintiff’s attorney fees and      Charter’s insurance carrier as a result of the election to pay such fees in cash      (see Note 16).

For      the nine months ended September 30, 2004, special charges also      includes approximately $85 million as part of the terms set forth in memoranda      of understanding regarding settlement of the consolidated Federal Class Action      and Federal Derivative Action and approximately $9 million of litigation costs      related to the tentative settlement of the South Carolina national class action      suit, which were approved by the respective courts. For the three and nine      months ended September 30, 2004, the severance costs were offset by $3 million      received from a third party in settlement of a dispute.

| **15.** | **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 not subject to income tax.  However, certain      of the Company’s indirect subsidiaries are corporations that are subject to      income tax.  

As      ofSeptember      30,      2005      and December 31, 2004, the Company had net deferred income tax liabilities      of      approximately $214 million and $208 million, respectively.  The net      deferred income tax liabilities relate to certain of the Company’s indirect      subsidiaries, which file separate income tax returns.  

During      the three and nine months ended September 30, 2005, the      Company recorded $2 million and $10 million of income tax expense,      respectively.  The income tax expense is recognized through current      federal      and state income tax expense as well as increases to the deferred tax      liabilities of certain of the Company’s indirect corporate subsidiaries.       During the three and nine months ended September 30, 2004, the Company recorded      $61 million and $57 million of income tax benefit, respectively.  The      Company recorded the portion of the income tax benefit associated with the      adoption of Topic D-108 as a $16 million reduction of the cumulative effect      of      accounting change on the accompanying statement of operations for the three      and      nine months ended September 30, 2004.  The income tax benefits were      realized as a result of decreases in the deferred tax liabilities of certain      of      the Company’s indirect corporate subsidiaries.  

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

Charter      Holdco is currently under examination by the Internal Revenue      Service for the tax years ending December 31, 2002 and 2003.  The results      of the Company (excluding the indirect corporate subsidiaries) for these years      are subject to this examination.  Management does not expect the results      of      this examination to have a material adverse effect on the Company’s financial      condition or results of operations.

| **16.** | **Contingencies** |
|---------|-------------------|

***Securities      Class Actions and Derivative      Suits***

Fourteen      putative federal class action lawsuits (the "Federal      Class Actions") were filed in 2002 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 quarterly report.      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 Court subsequently consolidated the Federal      Class Actions into a single action (the "Consolidated Federal      Class Action") for pretrial purposes. On August 5, 2004, the      plaintiffs’ representatives, 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) that 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. The plaintiffs      alleged that the individual defendants breached their fiduciary duties by      failing to establish and maintain adequate internal controls and procedures.      On      March 12, 2004, an action substantively identical to the State Derivative      Action was filed in Missouri State Court against Charter and certain of its      current and former directors, as well as its former auditors. 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 and the individual defendants entered into a Memorandum 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 various      supporting documentation, were filed with the Court on February 2, 2005.      On      May 23, 2005 the United States District Court for the Eastern District      of      Missouri conducted the final fairness hearing for the Actions, and on      June 30, 2005, the Court issued its final approval of the settlements.      Members of the class had 30 days from the issuance of the June 30 order      approving the settlement to file an appeal challenging the approval.Two      notices of appeal were filed relating to the settlement.      Those      appeals were directed to the amount of fees that the attorneys for the class      were to receive and to the fairness of the settlement. At the end of September      2005, Stipulations of Dismissal were filed with the Eighth Circuit Court of      Appeals resulting in the dismissal of both appeals with prejudice. Procedurally      therefore, the settlements are final. 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

As      amended, 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 would pay to the      plaintiffs a combination of cash and equity collectively valued at      $144 million, which will include the fees and expenses of plaintiffs’      counsel. Of this amount, $64 million would be paid in cash (by Charter’s      insurance carriers) and the $80 million balance was to be paid (subject      to      Charter’s right to substitute cash therefor as described below) in shares of      Charter Class A common stock having an aggregate value of $40 million      and ten-year warrants to purchase shares of Charter Class A common stock      having an aggregate warrant value of $40 million, with such values in      each      case being determined pursuant to formulas set forth in the Stipulations of      Settlement. However, Charter had the right, in its sole discretion, to      substitute cash for some or all of the aforementioned securities on a dollar      for      dollar basis. Pursuant to that right, Charter elected to fund the      $80 million obligation with 13.4 million shares of Charter      Class A common stock (having an aggregate value of approximately      $15 million pursuant to the formula set forth in the Stipulations of      Settlement) with the remaining balance (less an agreed upon $2 million      discount in respect of that portion allocable to plaintiffs’ attorneys’ fees) to      be paid in cash. In addition, Charter had agreed to issue additional shares      of      its Class A common stock to its insurance carrier having an aggregate      value      of $5 million; however, by agreement with its carrier, Charter paid      $4.5 million in cash in lieu of issuing such shares. Charter delivered      the      settlement consideration to the claims administrator on July 8, 2005,      and      it was held in escrow pending resolution of the appeals. Those appeals are      now      resolved. On July 14, 2005, the Circuit Court for the City of St. Louis      dismissed with prejudice the State Derivative Actions. The claims administrator      is responsible for disbursing the settlement consideration.

As      part of the settlements, Charter committed to a variety of      corporate governance changes, internal practices and public disclosures, all      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.

***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 publicly stated that Charter was 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 was 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 were sentenced April 22, 2005. Charter fully      cooperated with the investigation, and following the sentencings, the      U.S. Attorney’s Office for the Eastern District of Missouri announced that      its investigation was concluded and that no further indictments would      issue.

***Indemnification***

Charter      was generally required to indemnify, under certain      conditions, 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 grand jury investigation, a      now-settled SEC investigation and the above-described lawsuits, some of      Charter’s current and former directors and current and former officers were      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. One of these former officers has counterclaimed against      Charter alleging, among other things, that Charter owes him additional      indemnification for legal fees that Charter did not pay, and another of these      former officers has counterclaimed against Charter for accrued sick leave.      

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**CCH            II, LLC AND SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL            STATEMENTS**

**(UNAUDITED)**

**(dollars            in millions, except where            indicated)**

***Other      Litigation***

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.

**17.** **Stock      Compensation Plans**

Prior      to      January 1, 2003, the Company accounted for stock-based compensation in      accordance with Accounting Principles Board ("APB") Opinion No. 25,      *Accounting      for Stock Issued to Employees*,      and      related interpretations, as permitted by SFAS No. 123, *Accounting      for Stock-Based Compensation*.      On      January 1, 2003, the Company adopted the fair value measurement provisions      of SFAS No. 123 using the prospective method, under which the Company      recognizes compensation expense of a stock-based award to an employee over      the      vesting period based on the fair value of the award on the grant date consistent      with the method described in Financial Accounting Standards Board Interpretation      No. 28, *Accounting      for Stock Appreciation Rights and Other Variable Stock Option or Award      Plans*.      Adoption of these provisions resulted in utilizing a preferable accounting      method as the condensed consolidated financial statements will present the      estimated fair value of stock-based compensation in expense consistently with      other forms of compensation and other expense associated with goods and services      received for equity instruments. In accordance with SFAS No. 148, *Accounting      for Stock-Based Compensation - Transition and Disclosure,*the      fair      value method is being applied only to awards granted or modified after      January 1, 2003, whereas awards granted prior to such date will continue      to      be accounted for under APB No. 25, unless they are modified or settled      in      cash. The ongoing effect on consolidated results of operations or financial      condition will depend on future stock-based compensation awards granted by      the      Company. 

SFAS      No. 123 requires pro forma disclosure of the impact on      earnings as if the compensation expense for these plans had been determined      using the fair value method. The following table presents the Company’s net loss      as reported and the pro forma amounts that would have been reported using the      fair value method under SFAS No. 123 for the periods presented:

|                                                                                                                                                                      |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                                      |   | **2005**                                                              |   | **2004**                                                             |   | **2005** |   | **2004** |   |
|                                                                                                                                                                      |   |                                                                  |   |                                                                 |   |   |   |   |   |
| Net                loss                                                                                                                                                   |   | $                                                                     | (144   | )                                                                    | $      | (3,302 | ) | $ | (364 | ) | $ | (3,432 | ) |
| Add                back stock-based compensation expense related to stock                options                included in reported net loss                             |   |                                                                  | 3      |                                                                 |   | 8 |   |   | 11 |   |   | 34 |   |
| Less                employee stock-based compensation expense determined under                fair value                based method for all employee stock option awards |   |                                                                  | (3     | )                                                                    |   | (6 | ) |   | (11 | ) |   | (37 | ) |
| Effects                of unvested                options in stock                option exchange                                                                         |   |                                                                  | --     |                                                                 |   | -- |   |   | -- |   |   | 48 |   |
| Pro                forma                                                                                                                                                  |   | $                                                                     | (144   | )                                                                    | $      | (3,300 | ) | $ | (364 | ) | $ | (3,387 | ) |

In      January 2004, Charter began an option exchange program in which the Company      offered its employees the right to exchange all stock options (vested and      unvested) under the 1999 Charter Communications Option Plan and 2001 Stock      Incentive Plan that had an exercise price over $10 per share for shares of      restricted Charter Class A common stock or, in some instances, cash.Based      on      a sliding exchange ratio, which varied depending on the exercise price of an      employee’s outstanding options, if an employee would have received more than 400      shares of restricted stock in exchange for tendered options, Charter issued      to      that employee shares of restricted stock in the exchange. If, based on the      exchange ratios, an employee would have received 400 or fewer shares of      restricted stock in exchange for tendered options, Charter instead paid the      employee cash in an amount equal to the number of shares the employee would      have      received multiplied by $5.00.  The      offer      applied to options (vested and unvested) to purchase a total of 22,929,573      shares of Charter Class A common stock, or approximately 48% of Charter’s      47,882,365 total options (vested and unvested) issued and outstanding as of      December 31, 2003. Participation by employees was voluntary. Those

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

In      the      closing of the exchange offer on February 20, 2004, Charter      accepted      for cancellation eligible options to purchase approximately 18,137,664 shares      of      Charter Class A common stock. In exchange, Charter      granted      1,966,686 shares of restricted stock, including 460,777 performance shares      to      eligible employees of the rank of senior vice president and above, and paid      a      total cash amount of approximately $4 million (which amount includes applicable      withholding taxes) to those employees who received cash rather than shares      of      restricted stock. The restricted stock was granted on February 25, 2004.      Employees tendered approximately 79% of the options exchangeable under the      program. 

The      cost to the Company of the stock option exchange program was      approximately $10 million, with a 2004 cash compensation expense of      approximately $4 million and a non-cash compensation expense of approximately      $6      million to be expensed ratably over the three-year vesting period of the      restricted stock issued in the exchange.

In      January 2004, the Compensation Committee of the board of directors of Charter      approved Charter’s Long-Term Incentive Program ("LTIP"), which is a program      administered under the 2001 Stock Incentive Plan. Under the LTIP, employees      of      Charter and its subsidiaries whose pay classifications exceed*** ***a      certain      level are eligible to receive stock options and more senior level employees      are      eligible to receive stock options and performance shares. The stock options      vest      25% on each of the first four anniversaries of the date of grant. The      performance units vest on the third anniversary of the grant date and shares      of      Charter Class A common stock are issued, conditional upon Charter’s performance      against financial performance targets established by Charter’s management and      approved by its board of directors. Charter granted 6.9 million performance      shares in January 2004 under this program and the Company recognized expense      of      $2 million and $8 million during the three and nine months ended September      30,      2004, respectively. However, in the fourth quarter of 2004, the Company reversed      the $8 million of expense recorded in the first three quarters of 2004 based      on      the Company’s assessment of the probability of achieving the financial      performance measures established by Charter and required to be met for the      performance shares to vest. In March and April 2005, Charter granted 2.8 million      performance shares under the LTIP and the Company recognized approximately      $1      million during the three and nine months ended September 30,      2005.

| **18.** | **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.

***CC      VIII***

As      part of the acquisition of the cable systems owned by Bresnan      Communications Company Limited Partnership in February 2000, CC VIII, CCH II’s      indirect limited liability company subsidiary, issued, after adjustments,      24,273,943 Class A preferred membership units (collectively the "CC VIII      interest") with a value and an initial capital account of approximately $630      million to certain sellers affiliated with AT&T Broadband, subsequently      owned by Comcast Corporation (the "Comcast sellers"). While held by the Comcast      sellers, the CC VIII interest was entitled to a 2% priority return on its      initial capital account and such priority return was entitled to preferential      distributions from available cash and upon liquidation of CC VIII. While held      by      the Comcast sellers, the CC VIII interest generally did not share in the profits      and losses of CC VIII. Mr. Allen granted the Comcast sellers the right to sell      to him the CC VIII interest for approximately $630 million plus 4.5% interest      annually from February 2000 (the "Comcast put right"). In April 2002, the      Comcast sellers exercised the Comcast put right in full, and this transaction      was consummated on June 6, 2003. Accordingly, Mr. Allen, indirectly through      a      company controlled by him, Charter Investment, Inc. ("CII"), became the holder      of the CC VIII interest. Consequently, subject to the matters referenced in      the      next paragraph, Mr. Allen generally thereafter has been allocated his pro rata      share (based on number of membership interests outstanding) of profits or losses      of CC VIII. In the event of a liquidation of CC VIII, Mr. Allen

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

An      issue arose as to whether the documentation for the Bresnan      transaction was correct and complete with regard to the ultimate ownership      of      the CC VIII interest following consummation of the Comcast put right.      Specifically, under the terms of the Bresnan transaction documents that were      entered into in June 1999, the Comcast sellers originally would have received,      after adjustments, 24,273,943 Charter Holdco membership units, but due to an      FCC      regulatory issue raised by the Comcast sellers shortly before closing, the      Bresnan transaction was modified to provide that the Comcast sellers instead      would receive the preferred equity interests in CC VIII represented by the      CC      VIII interest. As part of the last-minute changes to the Bresnan transaction      documents, a draft amended version of the Charter Holdco limited liability      company agreement was prepared, and contract provisions were drafted for that      agreement that would have required an automatic exchange of the CC VIII interest      for 24,273,943 Charter Holdco membership units if the Comcast sellers exercised      the Comcast put right and sold the CC VIII interest to Mr. Allen or his      affiliates. However, the provisions that would have required this automatic      exchange did not appear in the final version of the Charter Holdco limited      liability company agreement that was delivered and executed at the closing      of      the Bresnan transaction. The law firm that prepared the documents for the      Bresnan transaction brought this matter to the attention of Charter and      representatives of Mr. Allen in 2002. 

Thereafter,      the board of directors of Charter formed a Special      Committee (currently comprised of Messrs. Merritt, Tory and Wangberg) to      investigate the matter and take any other appropriate action on behalf of      Charter with respect to this matter. After conducting an investigation of the      relevant facts and circumstances, the Special Committee determined that a      "scrivener’s error" had occurred in February 2000 in connection with the      preparation of the last-minute revisions to the Bresnan transaction documents      and that, as a result, Charter should seek reformation of the Charter Holdco      limited liability company agreement, or alternative relief, in order to restore      and ensure the obligation that the CC VIII interest be automatically exchanged      for Charter Holdco units. The Special Committee further determined that, as      part      of such contract reformation or alternative relief, Mr. Allen should be required      to contribute the CC VIII interest to Charter Holdco in exchange for 24,273,943      Charter Holdco membership units. The Special Committee also recommended to      the      board of directors of Charter that, to the extent contract reformation were      achieved, the board of directors should consider whether the CC VIII interest      should ultimately be held by Charter Holdco or Charter Holdings or another      entity owned directly or indirectly by them. 

Mr.      Allen disagreed with the Special Committee’s determinations      described above and so notified the Special Committee. Mr. Allen contended      that      the transaction was accurately reflected in the transaction documentation and      contemporaneous and subsequent company public disclosures.

The      parties engaged in a process of non-binding mediation to seek to      resolve this matter, without success. The Special Committee evaluated what      further actions or processes to undertake to resolve this dispute. To      accommodate further deliberation, each party agreed to refrain from initiating      legal proceedings over this matter until it had given at least ten days’ prior      notice to the other. In addition, the Special Committee and Mr. Allen determined      to utilize the Delaware Court of Chancery’s program for mediation of complex      business disputes in an effort to resolve the CC VIII interest dispute.

As      of October 31, 2005, Mr. Allen, the Special Committee, Charter,      Charter Holdco and certain of their affiliates, having investigated the facts      and circumstances relating to the dispute involving the CC VIII interest, after      consultation with counsel and other advisors, and as a result of the Delaware      Chancery Court’s non-binding mediation program, agreed to settle the dispute,      and execute certain permanent and irrevocable releases pursuant to the      Settlement Agreement and Mutual Release agreement dated October 31, 2005 (the      "Settlement"). 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

Pursuant      to the Settlement, CII has retained 30% of its CC VIII      interest (the "Remaining Interests").  The Remaining Interests are subject      to certain drag along, tag along and transfer restrictions as detailed in the      revised CC VIII Limited Liability Company Agreement.  CII transferred      the      other 70% of the CC VIII interest directly and indirectly, through Charter      Holdco, to a newly formed entity, CCHC (a direct subsidiary of Charter Holdco      and the direct parent of Charter Holdings).  Of that other 70% of the      CC      VIII preferred interests, 7.4% has been transferred by CII for a subordinated      exchangeable note of CCHC with an initial accreted value of $48.2 million,      accreting at 14%, compounded quarterly, with a 15-year maturity (the      "Note").  The remaining 62.6% has been transferred for no      consideration.

As      part of the Settlement, CC VIII issued approximately      49 million additional Class B units to CC V in consideration for prior      capital contributions to CC VIII by CC V, with respect to transactions that      were      unrelated to the dispute in connection with CII's membership units in CC VIII.      As a result, Mr. Allen’s pro rata share of the profits and losses of CC VIII      attributable to the Remaining Interests is approximately 5.6%.

The      Note is exchangeable, at CII's option, at any time, for Charter      Holdco Class A Common units at a rate equal to then accreted value, divided      by      $2.00 (the "Exchange Rate"). Customary anti-dilution protections have been      provided that could cause future changes to the Exchange Rate. Additionally,      the      Charter Holdco Class A Common units received will be exchangeable by the holder      into Charter common stock in accordance with existing agreements between CII,      Charter and certain other parties signatory thereto. Beginning three years      and      four months after the closing of the Settlement, if the closing price of Charter      common stock is at or above the Exchange Rate for a certain period of time      as      specified in the Exchange Agreement, Charter Holdco may require the exchange      of      the Note for Charter Holdco Class A Common units at the Exchange Rate.

CCHC      has the right to redeem the Note under certain circumstances,      for cash in an amount equal to the then accreted value. CCHC must redeem the      Note at its maturity for cash in an amount equal to the initial stated value      plus the accreted return through maturity. 

The      Board of Directors has determined that the transferred CC VIII      interests remain at CCHC.

***TechTV,      Inc.***

TechTV,      Inc. ("TechTV")      operated a cable television network that offered programming mostly related      to      technology. Pursuant to an affiliation agreement that originated in 1998 and      that terminates in 2008, TechTV has provided the Company with programming for      distribution via Charter’s cable systems. The affiliation agreement provides,      among other things, that TechTV must offer Charter certain terms and conditions      that are no less favorable in the affiliation agreement than are given to any      other distributor that serves the same number of or fewer TechTV viewing      customers. Additionally, pursuant to the affiliation agreement, the Company      was      entitled to incentive payments for channel launches through December 31,      2003.

In      March 2004, Charter Holdco entered into agreements with Vulcan      Programming and TechTV, which provide for (i) Charter Holdco and TechTV to      amend      the affiliation agreement which, among other things, revises the description      of      the TechTV network content, provides for Charter Holdco to waive certain claims      against TechTV relating to alleged breaches of the affiliation agreement and      provides for TechTV to make payment of outstanding launch receivables due to      Charter Holdco under the affiliation agreement, (ii) Vulcan Programming to      pay      approximately $10 million and purchase over a 24-month period at fair market      rates, $2 million of advertising time across various cable networks on Charter      cable systems in consideration of the agreements, obligations, releases and      waivers under the agreements and in settlement of the aforementioned claims      and      (iii) TechTV to be a provider of content relating to technology and video gaming      for Charter’s interactive television platforms through December 31, 2006      (exclusive for the first year). For each of the three and nine months ended      September 30, 2005 and 2004, the Company recognized approximately $0.3 million      and $1 million, respectively, of the Vulcan Programming payment as an offset      to      programming expense. For the three and nine months ended September 30, 2005,      the      Company paid approximately $1 million and $2 million, respectively, and for      the      three and nine months ended September 30, 2004, the Company paid approximately      $0.5 million and $1 million, respectively, under the affiliation      agreement.

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

The      Company believes that Vulcan Programming, which is 100% owned by      Mr. Allen, owned an approximate 98% equity interest in TechTV at the      time      Vulcan Programming sold TechTV to an unrelated third party in May 2004. Until      September 2003, Mr. Savoy, a former Charter director, was the president      and      director of Vulcan Programming and was a director of TechTV. Mr. Wangberg,      one of Charter’s directors, was the chairman, chief executive officer and a      director of TechTV. Mr. Wangberg resigned as the chief executive officer of      TechTV in July 2002. He remained a director of TechTV along with Mr. Allen      until      Vulcan Programming sold TechTV. 

***Digeo,      Inc.***

In      March      2001, a subsidiary of CCH II, Charter Communications Ventures, LLC ("Charter      Ventures"),      and      Vulcan Ventures Incorporated formed DBroadband Holdings, LLC for the sole      purpose of purchasing equity interests in Digeo, Inc. ("Digeo"),      an      entity controlled by Mr. Allen. In connection with the execution of the      broadband carriage agreement, DBroadband Holdings, LLC purchased an equity      interest in Digeo funded by contributions from Vulcan Ventures Incorporated.      The      equity interest is subject to a priority return of capital to Vulcan Ventures      up      to the amount contributed by Vulcan Ventures on Charter Ventures’ behalf. After      Vulcan Ventures recovers its amount contributed and any cumulative loss      allocations, Charter Ventures has a 100% profit interest in DBroadband Holdings,      LLC. Charter Ventures is not required to make any capital contributions,      including capital calls, to Digeo. DBroadband Holdings, LLC is therefore not      included in the Company’s consolidated financial statements. Pursuant to an      amended version of this arrangement, in 2003 Vulcan Ventures contributed a      total      of $29 million to Digeo, $7 million of which was contributed      on      Charter Ventures’ behalf, subject to Vulcan Ventures’ aforementioned priority      return. Since the formation of DBroadband Holdings, LLC, Vulcan Ventures has      contributed approximately $56 million on Charter Ventures’      behalf.

On      March 2, 2001, Charter Ventures entered into a broadband      carriage agreement with Digeo Interactive, LLC ("Digeo Interactive"), a wholly      owned subsidiary of Digeo. The carriage agreement provided that Digeo      Interactive would provide to Charter a "portal" product, which would function      as      the television-based Internet portal (the initial point of entry to the      Internet) for Charter’s customers who received Internet access from Charter. The      agreement term was for 25 years and Charter agreed to use the Digeo      portal      exclusively for six years. Before the portal product was delivered to Charter,      Digeo terminated development of the portal product.

On      September 27, 2001, Charter and Digeo Interactive amended the      broadband carriage agreement. According to the amendment, Digeo Interactive      would provide to Charter the content for enhanced "Wink" interactive television      services, known as Charter Interactive Channels ("i-channels"). In order to      provide the i-channels, Digeo Interactive sublicensed certain Wink technologies      to Charter. Charter is entitled to share in the revenues generated by the      i-channels. Currently, the Company’s digital video customers who receive      i-channels receive the service at no additional charge.

On      September 28, 2002, Charter entered into a second amendment to its      broadband carriage agreement with Digeo Interactive. This amendment superseded      the amendment of September 27, 2001. It provided for the development      by      Digeo Interactive of future features to be included in the Basic i-TV service      to      be provided by Digeo and for Digeo’s development of an interactive "toolkit"      to      enable Charter to develop interactive local content. Furthermore, Charter could      request that Digeo Interactive manage local content for a fee. The amendment      provided for Charter to pay for development of the Basic i-TV service as well      as      license fees for customers who would receive the service, and for Charter and      Digeo to split certain revenues earned from the service. The Company paid Digeo      Interactive approximately $1 million and $2 million for the three and nine      months ended September 30, 2005, respectively, and $1 million and $2 million      for      the three and nine months ended September 30, 2004, respectively, for customized      development of the i-channels and the local content tool kit. This amendment      expired pursuant to its terms on December 31, 2003. Digeo Interactive is      continuing to provide the Basic i-TV service on a month-to-month      basis.

On      June 30, 2003, Charter Holdco entered into an agreement with      Motorola, Inc. for the purchase of 100,000 digital video recorder ("DVR") units.      The software for these DVR units is being supplied by Digeo Interactive, LLC      under a 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

In      April 2004, the Company launched DVR service using units      containing the Digeo software in Charter’s Rochester, Minnesota market using a      broadband media center that is an integrated set-top terminal with a cable      converter, DVR hard drive and connectivity to other consumer electronics devices      (such as stereos, MP3 players, and digital cameras).

In      May      2004, Charter Holdco entered into a binding term sheet with Digeo Interactive      for the development, testing and purchase of 70,000 Digeo PowerKey DVR units.      The term sheet provided that the parties would proceed in good faith to      negotiate, prior to year-end 2004, definitive agreements for the development,      testing and purchase of the DVR units and that the parties would enter into      a      license agreement for Digeo's proprietary software on terms substantially      similar to the terms of the license agreement described above. In November      2004,      Charter Holdco and Digeo Interactive executed the license agreement and in      December 2004, the parties executed the purchase agreement, each on terms      substantially similar to the binding term sheet. Product development and testing      has been completed. Total purchase price and license and maintenance fees during      the term of the definitive agreements are expected to be approximately $41      million. The definitive agreements are terminable at no penalty to Charter      in      certain circumstances.      Charter      paid approximately $7 million and $9 million for the three and nine months      ended      September 30, 2005, respectively, and $0.2 million for each of the three and      nine months ended September 30, 2004 in capital purchases under this      agreement.

In      late 2003, Microsoft sued Digeo for $9 million in a breach of      contract action, involving an agreement that Digeo and Microsoft had entered      into in 2001. Digeo informed us that it believed it had an indemnification      claim      against us for half that amount. Digeo settled with Microsoft agreeing to make      a      cash payment and to purchase certain amounts of Microsoft software products      and      consulting services through 2008. In consideration of Digeo agreeing to release      us from its potential claim against us, after consultation with outside counsel      we agreed, in June 2005, to purchase a total of $2.3 million in Microsoft      consulting services through 2008, a portion of which amounts Digeo has informed      us will count against Digeo’s purchase obligations with Microsoft.

In      October 2005, Charter Holdco and Digeo Interactive entered into a      binding Term Sheet for the test market deployment of the Moxi Entertainment      Applications Pack (“MEAP”).  The MEAP is an addition to the Moxi Client      Software and will contain ten games (such as Video Poker and Blackjack), a      photo application and jukebox application.   The term sheet is      limited      to a test market application of approximately 14,000 subscribers and the      aggregate value is not expected to exceed $0.1 million.  In the event      the      test market proves successful, the companies will replace the Term Sheet with      a      long form agreement including a planned roll-out across additional      markets.  The Term Sheet expires on May 1, 2006.

The      Company believes that Vulcan Ventures, an entity controlled by      Mr. Allen, owns an approximate 60% equity interest in Digeo, Inc., on      a      fully-converted non-diluted basis. Mr. Allen, Lance Conn and Jo Allen Patton,      directors of Charter, are directors of Digeo, and Mr. Vogel was a director      of      Digeo in 2004. During 2004 and 2005, Mr. Vogel held options to purchase      10,000 shares of Digeo common stock.

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

***Oxygen      Media LLC***

Oxygen      Media LLC ("Oxygen") provides programming content aimed at the      female audience for distribution over cable systems and satellite. On      July 22, 2002, Charter Holdco entered into a carriage agreement with      Oxygen      whereby the Company agreed to carry programming content from Oxygen. Under      the      carriage agreement, the Company currently makes Oxygen programming available      to      approximately 5 million of its video customers. The term of the carriage      agreement was retroactive to February 1, 2000, the date of launch of      Oxygen      programming by the Company, and runs for a period of five years from that date.      For the three and nine months ended September 30, 2005, the Company paid Oxygen      approximately $2 million and $7 million, respectively, and for the three and      nine months ended September 30, 2004, the Company paid Oxygen approximately      $3      million and $11 million, respectively, for programming content. In addition,      Oxygen pays the Company marketing support fees for customers launched after      the      first year of the term of the carriage agreement up to a total of      $4 million. The Company recorded approximately $0.1 million related      to      these launch incentives as a reduction of programming expense for the nine      months ended September 30, 2005 and $0.4 million and $1 million for      the      three and nine months ended September 30, 2004, respectively. 

Concurrently      with the execution of the carriage agreement, Charter Holdco entered into an      equity issuance agreement pursuant to which Oxygen’s parent company, Oxygen      Media Corporation ("Oxygen      Media"),      granted a subsidiary of Charter Holdco a warrant to purchase 2.4 million      shares of Oxygen Media common stock for an exercise price of $22.00 per share.      In February 2005, this warrant expired unexercised. Charter Holdco was also      to      receive unregistered shares of Oxygen Media common stock with a guaranteed      fair      market value on the date of issuance of $34 million, on or prior to      February 2, 2005, with the exact date to be determined by Oxygen Media,      but      this commitment was later revised as discussed below. 

The      Company recognized the guaranteed value of the investment over      the life of the carriage agreement as a reduction of programming expense. For      the nine months ended September 30, 2005, the Company recorded approximately      $2      million as a reduction of programming expense and for the three and nine months      ended September 30, 2004, the Company recorded approximately $3 million and      $11      million as a reduction of programming expense, respectively. The carrying value      of the Company’s investment in Oxygen was approximately $33 million and $32      million as of September 30, 2005 and December 31, 2004,      respectively.

In      August 2004, Charter Holdco and Oxygen entered into agreements      that amended and renewed the carriage agreement. The amendment to the carriage      agreement (a) revises the number of the Company’s customers to which Oxygen      programming must be carried and for which the Company must pay, (b) releases      Charter Holdco from any claims related to the failure to achieve distribution      benchmarks under the carriage agreement, (c) requires Oxygen to make payment      on      outstanding receivables for marketing support fees due to the Company under      the      carriage agreement and (d) requires that Oxygen provide its programming content      to the Company on economic terms no less favorable than Oxygen provides to      any      other cable or satellite operator having fewer subscribers than the Company.      The      renewal of the carriage agreement (a) extends the period that the Company will      carry Oxygen programming to the Company’s customers through January 31, 2008 and      (b) requires license fees to be paid based on customers receiving Oxygen      programming, rather than for specific customer benchmarks. 

In      August 2004, Charter Holdco and Oxygen also amended the equity      issuance agreement to provide for the issuance of 1 million shares of Oxygen      Preferred Stock with a liquidation preference of $33.10 per share plus accrued      dividends to Charter Holdco on February 1, 2005 in place of the $34 million      of      unregistered shares of Oxygen Media common stock. Oxygen Media delivered these      shares in March 2005. The preferred stock is convertible into common stock      after      December 31, 2007 at a conversion ratio per share of preferred stock, the      numerator of which is the liquidation preference and the denominator of which      is      the fair market value per share of Oxygen Media common stock on the conversion      date. 

As      of September 30, 2005, through Vulcan Programming, Mr. Allen owned      an approximate 31% interest in Oxygen assuming no exercises of outstanding      warrants or conversion or exchange of convertible or exchangeable securities.      Ms. Jo Allen Patton is a director and the President of Vulcan Programming.      Mr.      Lance Conn is a Vice President of Vulcan Programming. Mr. Nathanson has an      indirect beneficial interest of less than 1% in Oxygen. 

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**CCH          II, LLC AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**(UNAUDITED)**

**(dollars          in millions, except where          indicated)**

***Helicon***

In      1999, the Company purchased the Helicon cable systems. As part of      that purchase, Mr. Allen entered into a put agreement with a certain      seller      of the Helicon cable systems that received a portion of the purchase price      in      the form of a preferred membership interest in Charter Helicon, LLC with a      redemption price of $25 million plus accrued interest. Under the Helicon      put agreement, such holder had the right to sell any or all of the interest      to      Mr. Allen prior to its mandatory redemption in cash on July 30,      2009.      On August 31, 2005, 40% of the preferred membership interest was put      to      Mr. Allen. The remaining 60% of the preferred interest in Charter Helicon,      LLC remained subject to the put to Mr. Allen. Such preferred interest      was      recorded in other long-term liabilities as of September 30, 2005 and December      31, 2004. On October 6, 2005, Charter Helicon, LLC redeemed all of the preferred      membership interest for the redemption price of $25 million plus accrued      interest.

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**Item      2.** **Management's      Discussion and Analysis of Financial Condition and Results of      Operations.**

**General**

CCH      II,      LLC ("CCH II") is a holding company whose principal assets as of September      30, 2005      are      equity interests in its operating subsidiaries. CCH      II is      a subsidiary of CCH I, LLC ("CCH I"). CCH I is a subsidiary of CCH I Holdings,      LLC ("CIH")      which      is a subsidiary of Charter Communications Holdings, LLC ("Charter Holdings").      Charter Holdings is a subsidiary of CCHC, LLC ("CCHC")      which      is a subsidiary of Charter Communications Holding Company, LLC ("Charter      Holdco"). Charter Holdco is a subsidiary of Charter Communications, Inc.      ("Charter"). CCH II is the sole owner of CCO Holdings, LLC ("CCO Holdings"),      which in turn is sole owner of Charter Communications Operating, LLC ("Charter      Operating"). "We,"      "us" and "our" refer to CCH II and its subsidiaries. Our "parent companies"      are      CCH I, CIH, Charter Holdings, CCHC, Charter Holdco and Charter.

The      chart      below sets forth our organizational structure and that of our principal direct      and indirect parents and subsidiaries pro forma for the creation of CCHC and      settlement of the CC VIII, LLC ("CC      VIII")      dispute. See      Note      18 to the condensed consolidated financial statements. Equity      ownership and voting percentages are actual percentages as of September 30,      2005      and do not give effect to any exercise, conversion or exchange of options,      preferred stock, convertible notes or other convertible or exchangeable      securities.

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| (1)    |   | Charter                acts as the sole manager of Charter Holdco and its                direct and indirect limited liability company subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (2)    |   | These                membership units are held by Charter Investment, Inc. and                Vulcan Cable III Inc., each of which is 100% owned by Paul G. Allen,                our                chairman and controlling shareholder. They are exchangeable at any                time on                a one-for-one basis for shares of Charter Class A common                stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (3)    |   | The                percentages shown in this table reflect the issuance of the                27.2 million shares of Class A common stock issued                on                July 29, 2005 and the corresponding issuance of an equal number                of                mirror membership units by Charter Holdco to Charter. However, for                accounting purposes, Charter’s common equity interest in Charter Holdco is                48%, and Paul G. Allen’s ownership of Charter Holdco is 52%. These                percentages exclude the 27.2 million mirror membership units                issued                to Charter due to the required return of the issued mirror units                upon                return of the shares offered pursuant to the share lending agreement. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (4)    |   | Represents                the impact of the settlement of the CC VIII dispute. See Note 18                to                the condensed consolidated financial                statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

We      are a broadband communications company operating in the United      States. We offer our customers traditional cable video programming (analog      and      digital video) as well as high-speed Internet services and, in some areas,      advanced broadband services such as high definition television, video on demand,      telephone and interactive television. We sell our cable video programming,      high-speed Internet and advanced broadband services on a subscription      basis.

The      following table summarizes our customer statistics for analog and digital video,      residential high-speed Internet and residential telephone as of September      30, 2005      and2004:

|                                                                                  |   | **Approximate                as of** |      |
|---------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                                                  |   | **September                30,**     |      | **September                30,** |   |
|                                                                                  |   | **2005                (a)**          |      | **2004                (a)** |   |
|                                                                                  |   |                                 |      |   |   |
| **Cable                Video Services:**                                              |   |                                 |      |   |   |   |   |
| **Analog                Video:**                                                      |   |                                 |      |   |   |   |   |
| Residential                (non-bulk) analog video customers                (b)       |   |                                 | 5,636,100 |   |   | 5,825,000 |   |
| Multi-dwelling                (bulk) and commercial unit customers                (c) |   |                                 | 270,200   |   |   | 249,600 |   |
| Total                analog video customers (b)(c)                                    |   |                                 | 5,906,300 |   |   | 6,074,600 |   |
|                                                                                  |   |                                 |      |   |   |   |   |
| **Digital                Video:**                                                     |   |                                 |      |   |   |   |   |
| Digital                video customers (d)                                            |   |                                 | 2,749,400 |   |   | 2,688,900 |   |
|                                                                                  |   |                                 |      |   |   |   |   |
| **Non-Video                Cable Services:**                                          |   |                                 |      |   |   |   |   |
| Residential                high-speed Internet customers                (e)           |   |                                 | 2,120,000 |   |   | 1,819,900 |   |
| Residential                telephone customers (f)                                    |   |                                 | 89,900    |   |   | 40,200 |   |

The      September 30, 2005 statistics presented above reflect the minimal      loss of customers related to hurricanes Katrina and Rita. Based on preliminary      estimates, customer losses related to hurricanes Katrina and Rita are expected      to be approximately 10,000 to 15,000.

After      giving effect to the sale of certain non-strategic cable      systems in July 2005, September 30, 2004 analog video customers, digital video      customers and high-speed Internet customers would have been 6,046,900, 2,677,600      and 1,819,300, respectively.

|   | (a) | "Customers"                include all persons our corporate billing records show as receiving                service (regardless of their payment status), except for complimentary                accounts (such as our employees). At September 30, 2005 and 2004,                "customers" include approximately 44,400 and 46,000 persons whose                accounts                were over 60 days past due in payment, approximately 9,800 and 5,500                persons whose accounts were over 90 days past due in payment, and                approximately 6,000 and 2,000 of which were over 120 days past due                in                payment, respectively. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (b) | "Residential                (non-bulk) analog video customers" include all                customers who receive video services, except for complimentary accounts                (such as our employees). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Included                within "video customers" are those in commercial and                multi-dwelling structures, which are calculated on an equivalent                bulk unit                ("EBU") basis. EBU is calculated for a system by dividing the bulk                price                charged to accounts in an area by the most prevalent price charged                to                non-bulk residential customers in that market for the comparable                tier of                service. The EBU method of estimating analog video customers is consistent                with the methodology used in determining costs paid to programmers                and has                been consistently applied year over year. As we increase our effective                analog prices to residential customers without a corresponding increase                in                the prices charged to commercial service or multi-dwelling customers,                our                EBU count will decline even if there is no real loss in commercial                service                or multi-dwelling customers. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | "Digital                video customers" include all households that have one                or more digital set-top terminals. Included in "digital video customers"                on September 30, 2005 and 2004 are approximately 8,900 and 10,700                customers, respectively, that receive digital video service directly                through satellite transmission. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | "Residential                high-speed Internet customers" represent those                customers who subscribe to our high-speed Internet service. At September                30, 2005 and 2004, approximately 1,876,000 and 1,614,400 of these                high-speed Internet customers, respectively, receive video services                from                us and are included within our video statistics above. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | "Residential                telephone customers" include all households who                subscribe to our telephone                service. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

**Overview      of Operations**

We      have a      history of net losses. Further, we expect to continue to report net losses      for      the foreseeable future. Our net losses are principally attributable to      insufficient revenue to cover the combination      of operating costs and interest      costs we incur because of our high level of debt, depreciation expenses that      we      incur resulting from the capital investments we have made and continue to make      in our business, and impairment of our franchise intangibles. We expect that      these expenses (other than impairment of franchises) will remain significant,      and we therefore expect to continue to report net losses for the foreseeable      future. Effective January 1, 2005, we ceased recognizing minority interest      in      earnings or losses of CC VIII for financial reporting purposes until the      resolution of the dispute between Charter and Paul G. Allen, Charter’s Chairman      and controlling shareholder, regarding the preferred membership units in CC      VIII      was determinable or other events occurred. This dispute was settled October      31,      2005. We are currently determining the impact of the settlement. Subsequent      to      recording the impact of the settlement in the fourth quarter of 2005,      approximately 6% of CC VIII’s income will be allocated to minority      interest.

For      the      three and nine months ended September 30, 2005, our income from operations,      which includes depreciation and amortization expense and asset impairment      charges but excludes interest expense, was $63 million and $224 million,      respectively. For the three and nine months ended September 30, 2004, our loss      from operations was $2.3 billion and $2.2 billion, respectively. We had      operating margins of 5% and 6% for the three and nine months ended September      30,      2005, respectively, and negative operating margins of 188% and 58% for the      three      and nine months ended September 30, 2004, respectively. The increase in income      from operations and operating margins for the three and nine months ended      September 30, 2005 compared to 2004 was principally due to impairment of      franchises of $2.4 billion recorded in 2004 which did not recur in      2005. 

Historically,      our ability to fund operations and investing activities      has depended on our continued access to credit under our credit facilities.      We      expect we will continue to borrow under our credit facilities from time to      time      to fund cash needs. The occurrence of an event of default under our credit      facilities could result in borrowings from these credit facilities being      unavailable to us and could, in the event of a payment default or acceleration,      also trigger events of default under the indentures governing our outstanding      notes and would have a material adverse effect on us. Approximately $7 million      of our debt matures during the remainder of 2005, which we expect to fund      through borrowings under our revolving credit facility. See "— Liquidity and      Capital Resources."

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**Critical      Accounting Policies and Estimates**

For      a discussion of our critical accounting policies and the means by      which we develop estimates therefore, see "Item 7. Management’s Discussion and      Analysis of Financial Condition and Results of Operations" in our 2004 Annual      Report on Form 10-K.

**RESULTS      OF OPERATIONS**

***Nine      Months Ended September 30, 2005 Compared to Nine Months Ended      September 30, 2004***

The      following table sets forth the percentages of revenues that items      in the accompanying consolidated statements of operations constituted for the      periods presented (dollars in millions):

|                                                                                                                 |   | **Nine                Months Ended September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                                                                 |   | **2005**                                           |   | **2004** |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |
| Revenues                                                                                                             |   | $                                                  | 3,912  |   |   | 100 | % | $ | 3,701 |   |   | 100 | % |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                                   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Operating                (excluding depreciation and                amortization)                                    |   |                                               | 1,714  |   |   | 44 | % |   | 1,552 |   |   | 42 | % |
| Selling,                general and administrative                                                                   |   |                                               | 762    |   |   | 19 | % |   | 735 |   |   | 20 | % |
| Depreciation                and amortization                                                                         |   |                                               | 1,134  |   |   | 29 | % |   | 1,105 |   |   | 30 | % |
| Impairment                of franchises                                                                              |   |                                               | --     |   |   | -- |   |   | 2,433 |   |   | 66 | % |
| Asset                impairment charges                                                                              |   |                                               | 39     |   |   | 1 | % |   | -- |   |   | -- |   |
| (Gain)                loss on sale of assets, net                                                                    |   |                                               | 5      |   |   | -- |   |   | (104 | ) |   | (3 | )% |
| Option                compensation expense, net                                                                      |   |                                               | 11     |   |   | -- |   |   | 34 |   |   | 1 | % |
| Hurricane                asset retirement loss                                                                       |   |                                               | 19     |   |   | 1 | % |   | -- |   |   | -- |   |
| Special                charges, net                                                                                  |   |                                               | 4      |   |   | -- |   |   | 100 |   |   | 2 | % |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                                               | 3,688  |   |   | 94 | % |   | 5,855 |   |   | 158 | % |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) from operations                                                                         |   |                                               | 224    |   |   | 6 | % |   | (2,154 | ) |   | (58 | )% |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense, net                                                                                 |   |                                               | (627   | ) |   |   |   |   | (531 | ) |   |   |   |
| Gain                on derivative instruments and hedging activities,                net                             |   |                                               | 43     |   |   |   |   |   | 48 |   |   |   |   |
| Loss                on extinguishment of debt                                                                        |   |                                               | (6     | ) |   |   |   |   | (21 | ) |   |   |   |
| Gain                on investments                                                                                   |   |                                               | 21     |   |   |   |   |   | -- |   |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                                               | (569   | ) |   |   |   |   | (504 | ) |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                before minority interest, income taxes and cumulative                effect of accounting change |   |                                               | (345   | ) |   |   |   |   | (2,658 | ) |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Minority                interest                                                                                     |   |                                               | (9     | ) |   |   |   |   | 25 |   |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes and cumulative effect of accounting                change                    |   |                                               | (354   | ) |   |   |   |   | (2,633 | ) |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Income                tax benefit (expense)                                                                          |   |                                               | (10    | ) |   |   |   |   | 41 |   |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Loss                before cumulative effect of accounting                change                                     |   |                                               | (364   | ) |   |   |   |   | (2,592 | ) |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative                effect of accounting change, net of                tax                                     |   |                                               | --     |   |   |   |   |   | (840 | ) |   |   |   |
|                                                                                                                 |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                              |   | $                                                  | (364   | ) |   |   |   | $ | (3,432 | ) |   |   |   |

***Revenues.***** **Revenues      increased by $211 million, or 6%, from $3.7 billion for the nine months ended      September 30, 2004 to $3.9 billion for the nine months ended September 30,      2005.      This increase is principally the result of an increase of 300,100 and 60,500      high-speed Internet and digital video customers, respectively, as well as price      increases for video and high-speed Internet services, and is offset partially      by      a decrease of 168,300 analog video customers and $6 million of credits issued      to      hurricane Katrina impacted customers related to service outages.

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Average      monthly revenue per analog video customer increased to $72.97 for the nine      months ended September      30,      2005      from $66.24 for the nine months ended September      30,      2004      primarily as a result of incremental revenues from advanced services and price      increases. Average monthly revenue per analog video customer represents total      revenue for the nine months ended during the respective period, divided by      nine,      divided by the average number of analog video customers during the respective      period.

Revenues      by service offering were as follows (dollars in      millions):

|                               |   | **Nine                Months Ended September 30,** |   |
|------------------------------------|--------|----------------------------------------------------|--------|
|                               |   | **2005**                                           |   | **2004** |   | **2005                over 2004** |   |
|                               |   |  **Revenues**                                 |   | **%                of****Revenues** |   |  **Revenues** |   | **%                of****Revenues** |   |  **Change** |   | **%                Change** |   |
|                               |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Video                              |   | $                                                  | 2,551  |   |   | 65 | % | $ | 2,534 |   |   | 68 | % | $ | 17 |   |   | 1 | % |
| High-speed                Internet |   |                                               | 671    |   |   | 17 | % |   | 538 |   |   | 14 | % |   | 133 |   |   | 25 | % |
| Advertising                sales   |   |                                               | 214    |   |   | 6 | % |   | 205 |   |   | 6 | % |   | 9 |   |   | 4 | % |
| Commercial                         |   |                                               | 205    |   |   | 5 | % |   | 175 |   |   | 5 | % |   | 30 |   |   | 17 | % |
| Other                              |   |                                               | 271    |   |   | 7 | % |   | 249 |   |   | 7 | % |   | 22 |   |   | 9 | % |
|                               |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | $                                                  | 3,912  |   |   | 100 | % | $ | 3,701 |   |   | 100 | % | $ | 211 |   |   | 6 | % |

Video      revenues consist primarily of revenues from analog and digital      video services provided to our non-commercial customers. Video revenues      increased by $17 million for the nine months ended September 30, 2005 compared      to the nine months ended September 30, 2004. Approximately $102 million of      the      increase was the result of price increases and incremental video revenues from      existing customers and approximately $11 million resulted from an increase      in      digital video customers. The increases were offset by decreases of approximately      $66 million related to a decrease in analog video customers, approximately      $25      million resulting from the System Sales and approximately $5 million of credits      issued to hurricanes Katrina and Rita impacted customers related to service      outages. 

Revenues      from high-speed Internet services provided to our      non-commercial customers increased $133 million, or 25%, from $538 million      for      the nine months ended September 30, 2004 to $671 million for the nine      months ended September 30, 2005. Approximately $101 million of the increase      related to the increase in the average number of customers receiving high-speed      Internet services, whereas approximately $36 million related to the increase      in      average price of the service. The increase in high-speed Internet revenues      was      reduced by approximately $3 million as a result of the System Sales and $1      million of credits issued to hurricanes Katrina and Rita impacted customers      related to service outages.

Advertising      sales revenues consist primarily of revenues from      commercial advertising customers, programmers and other vendors. Advertising      sales increased $9 million, or 4%, from $205 million for the nine months ended      September 30, 2004 to $214 million for the nine months ended September 30,      2005,      primarily as a result of an increase in local advertising sales and an increase      of $3 million in advertising sales revenues from vendors offset by a decline      in      national advertising sales. In addition, the increase was offset by a decrease      of $1 million as a result of the System Sales. For the nine months ended      September 30, 2005 and 2004, we received $12 million and $9 million,      respectively, in advertising sales revenues from vendors.

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Commercial      revenues consist primarily of revenues from cable video      and high-speed Internet services to our commercial customers. Commercial      revenues increased $30 million, or 17%, from $175 million for the nine months      ended September 30, 2004 to $205 million for the nine months ended September      30,      2005, primarily as a result of an increase in commercial high-speed Internet      revenues. The increase was reduced by approximately $3 million as a result      of      the System Sales.

Other      revenues consist of revenues from franchise fees, telephone      revenue, equipment rental, customer installations, home shopping, dial-up      Internet service, late payment fees, wire maintenance fees and other      miscellaneous revenues. Other revenues increased $22 million, or 9%, from $249      million for the nine months ended September 30, 2004 to $271 million for the      nine months ended September 30, 2005. The increase was primarily the result      of      an increase in telephone revenue of $11 million, franchise fees of $11 million      and installation revenue of $7 million and was partially offset by approximately      $2 million as a result of the System Sales.

***Operating      Expenses*****.**      Operating expenses increased $162 million, or 10%, from $1.6 billion for the      nine months ended September 30, 2004 to $1.7 billion for the nine months ended      September 30, 2005. The increase in operating expenses was reduced by $13      million as a result of the System Sales. Programming costs included in the      accompanying condensed consolidated statements of operations were      $1.1 billion and $991 million, representing 29% and 17% of total costs      and      expenses for the nine months ended September 30, 2005 and 2004, respectively.      Key expense components as a percentage of revenues were as follows (dollars      in      millions): 

|                             |   | **Nine                Months Ended September 30,** |   |
|----------------------------------|--------|----------------------------------------------------|--------|
|                             |   | **2005**                                           |   | **2004** |   | **2005                over 2004** |   |
|                             |   |  **Expenses**                                 |   | **%                of****Revenues** |   |  **Expenses** |   | **%                of****Revenues** |   |  **Change** |   | **%                Change** |   |
|                             |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Programming                      |   | $                                                  | 1,066  |   |   | 27 | % | $ | 991 |   |   | 27 | % | $ | 75 |   |   | 8 | % |
| Service                          |   |                                               | 572    |   |   | 15 | % |   | 489 |   |   | 13 | % |   | 83 |   |   | 17 | % |
| Advertising                sales |   |                                               | 76     |   |   | 2 | % |   | 72 |   |   | 2 | % |   | 4 |   |   | 6 | % |
|                             |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   | $                                                  | 1,714  |   |   | 44 | % | $ | 1,552 |   |   | 42 | % | $ | 162 |   |   | 10 | % |

Programming      costs consist primarily of costs paid to programmers for      analog, premium, digital channels, VOD and pay-per-view programming. The      increase in programming costs of $75 million, or 8%, for the nine months      ended September 30, 2005 over the nine months ended September 30, 2004 was      a      result of price increases, particularly in sports programming, partially offset      by decreases in analog video customers. Additionally, the increase in      programming costs was reduced by $10 million as a result of the System Sales.      Programming costs were offset by the amortization of payments received from      programmers in support of launches of new channels of $27 million and      $43 million for the nine months ended September 30, 2005 and 2004,      respectively. Programming costs for the nine months ended September 30, 2004      also include a $5 million reduction related to the settlement of a dispute      with      TechTV, Inc. See Note 18 to the condensed consolidated financial      statements.

Our      cable programming costs have increased in every year we have      operated in excess of 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 programming. In 2005,      programming costs have increased and we expect will continue to increase at      a      higher rate than in 2004. These costs will be determined in part on the outcome      of programming negotiations in 2005 and will likely be subject to offsetting      events or otherwise affected by factors similar to the ones mentioned in the      preceding paragraph. 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 Internet revenues, advertising      revenues and commercial service revenues.

Service      costs consist primarily of service personnel salaries and      benefits, franchise fees, system utilities, costs of providing high-speed      Internet service, maintenance and pole rent expense. The increase in service      costs of $83 million, or 17%, resulted primarily from increased labor      and      maintenance costs to support improved service levels and our advanced products,      higher fuel prices and pole rent expense. The increase in service costs was      

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***Selling,      General and Administrative Expenses.***      Selling,      general and administrative expenses increased by $27 million, or 4%, from $735      million for the nine months ended September      30,      2004 to      $762 million for the nine months ended September      30,      2005.The      increase in selling, general and administrative expenses was reduced by $5      million as a result of the System Sales. Key      components of expense as a percentage of revenues were as follows (dollars      in      millions):

|                                      |   | **Nine                Months Ended September 30,** |   |
|-------------------------------------------|--------|----------------------------------------------------|--------|
|                                      |   | **2005**                                           |   | **2004** |   | **2005                over 2004** |   |
|                                      |   |  **Expenses**                                 |   | **%                of****Revenues** |   |  **Expenses** |   | **%                of****Revenues** |   |  **Change** |   |  **%                Change** |   |
|                                      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| General                and administrative |   | $                                                  | 658    |   |   | 17 | % | $ | 636 |   |   | 17 | % | $ | 22 |   |   | 3 | % |
| Marketing                                 |   |                                               | 104    |   |   | 2 | % |   | 99 |   |   | 3 | % |   | 5 |   |   | 5 | % |
|                                      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   | $                                                  | 762    |   |   | 19 | % | $ | 735 |   |   | 20 | % | $ | 27 |   |   | 4 | % |

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 $22 million, or 3%, resulted primarily from      increases in professional fees associated with consulting services of $28      million and a rise in salaries and benefits of $21 million related to increased      emphasis on improved service levels and operational efficiencies, offset by      decreases in bad debt expense of $13 million, property and casualty insurance      of      $7 million and the System Sales of $5 million.

Marketing      expenses increased $5 million, or 5%, as a result of      an increased investment in targeted marketing campaigns. 

***Depreciation      and Amortization****.*Depreciation      and amortization expense increased by $29 million, or 3%, as a result      of 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 $2.4 billion impairment charge for the nine months ended      September 30, 2004. 

***Asset      Impairment Charges.***Asset      impairment charges for the nine months ended September 30, 2005 represent the      write-down of assets related to pending cable asset sales to fair value less      costs to sell. See Note 3 to the condensed consolidated financial      statements.

***(Gain)      Loss on Sale of Assets, Net.***Loss      on      sale of assets of $5 million for the nine months ended September 30, 2005      primarily represents the loss recognized on the disposition of plant and      equipment. Gain on sale of assets of $104 million for the nine months ended      September 30, 2004 primarily represents the pretax gain realized on the sale      of      systems to Atlantic Broadband Finance, LLC which closed on March 1 and April      30,      2004. 

***Option      Compensation Expense, Net***.      Option      compensation expense of $11 million for the nine months ended September      30, 2005      primarily represents options expensed in accordance with SFAS      No. 123.      Option compensation expense of $34 million for the nine months endedSeptember      30,      2004      primarily represents the expense of approximately $9 million related to a stock      option exchange program under      which      our employees were offered the right to exchange all stock options (vested      and      unvested) issued under the 1999 Charter Communications Option Plan and 2001      Stock Incentive Plan that had an exercise price over $10 per share for shares      of      restricted Charter Class A common stock or, in some instances, cash.      The      exchange offer closed in February 2004. Additionally, during the nine months      ended September      30,      2004,      we recognized approximately $8 million related to the performance shares granted      under the Charter Long-Term Incentive Program and approximately $17 million      related to options granted following the adoption of SFAS      No.      123.

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***Hurricane      Asset Retirement Loss.***Hurricane      asset retirement loss represents the loss associated with the write-off of      the      net book value of assets destroyed by hurricanes Katrina and Rita in the third      quarter of 2005.

***Special      Charges, Net****.*Special      charges of $4 million for the nine months ended September 30, 2005 represents      $5      million of severance and related costs of our management realignment and $1      million related to legal settlements offset      by      approximately $2 million related to an agreed upon cash discount on settlement      of the consolidated Federal Class Action and Federal Derivative      Action.      See "—      Legal Proceedings." Special charges of $100 million for the nine months ended      September 30, 2004 represents approximately $85 million as part of the terms      set      forth in memoranda of understanding regarding settlement of the consolidated      Federal Class Action and Federal Derivative Action and approximately $9 million      of litigation costs related to the tentative settlement of the South Carolina      national class action suit, which were approved by the respective courts and      approximately $9 million of severance and related costs of our workforce      reduction. For the nine months ended September 30, 2004, the severance costs      were offset by $3 million received from a third party in settlement of a      dispute.

***Interest      Expense, Net***.      Net      interest expense increased by $96 million, or 18%, from $531 millionfor      the      nine months ended September      30,      2004to      $627 million for      the      nine months ended September      30,      2005.      The      increase in net interest expense was a result of an      increase      of $759 million in average debt outstanding from $9.2 billion for      the      nine months ended September      30,      2004compared      to $10.0 billion for      the      nine months ended September      30,      2005      and      an      increase in our average borrowing rate from 7.26% in      the      nine months ended September      30,      2004      to      7.93% in the      nine      months ended September      30,      2005.      

***Gain      on Derivative Instruments and Hedging Activities, Net.***Net      gain      on derivative instruments and hedging activities decreased $5 million from      $48      million for the nine months ended September 30, 2004 to $43 million for the      nine      months ended September 30, 2005. The decrease is primarily a result of a      decrease in gains on interest rate agreements that do not qualify for hedge      accounting under SFAS No. 133, which decreased from $45 million for the nine      months ended September 30, 2004 to $41 million for the nine months ended      September 30, 2005. 

***Loss      on extinguishment of debt.***Loss      on      extinguishment of debt of $6 million for the nine months ended September 30,      2005 primarily represents approximately $5 million of losses related to the      redemption of our subsidiary’s, CC V Holdings, LLC, 11.875% notes due 2008. See      Note 6 to the condensed consolidated financial statements. Loss      on      extinguishment of debt of $21 million for the nine months ended September 30,      2004 represents the write-off of deferred financing fees and third party costs      related to the Charter Operating refinancing in April 2004.

***Gain      on investments.***** **Gain      on      investments of $21 million for the nine months ended September      30,      2005      primarily represents a gain      realized on an exchange of our interest in an equity investee for an investment      in a larger enterprise.

***Minority      Interest.**** *Minority      interest represents the 2% accretion of the preferred membership interests      in      our indirect subsidiary, CC VIII, and in 2004, the pro rata share of the profits      and losses of CC VIII. Effective January 1, 2005, we ceased recognizing minority      interest in earnings or losses of CC VIII for financial reporting purposes      until      the dispute between Charter and Mr. Allen regarding the preferred membership      interests in CC VIII was resolved. This dispute was settled October 31, 2005.      See Note 7 to the condensed consolidated financial statements. 

***Income      Tax Benefit (Expense).**** *Income      tax expense of $10 million and income tax benefit of $41 million was recognized      for the nine months ended September 30, 2005 and 2004, respectively. Income      tax      expense represents increases in the deferred tax liabilities and current federal      and state income tax expenses of certain of our indirect corporate subsidiaries.      

The      income tax benefit recognized in the nine months ended September      30, 2004 was directly related to the impairment of franchises as discussed      above. We do not expect to recognize a similar benefit associated with the      impairment of franchises in future periods. However, the actual tax provision      calculations in future periods will be the result of current and future      temporary differences, as well as future operating results. 

***Net      Loss***.      Net      loss decreased by $3.1 billion, from $3.4 billion for the nine months ended      September      30,      2004 to      $364 million for the nine months ended September      30,      2005 as      a result of the factors described above.

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**Liquidity      and Capital Resources**

***Introduction***
** **

***Overview***
** **

For      the remainder of 2005, $7 million of our debt matures, and in      2006, an additional $30 million matures. In 2007 and beyond, significant      additional amounts will become due under our remaining long-term debt      obligations.

Our      business requires significant cash to fund debt service costs,      capital expenditures and ongoing operations. We have historically funded our      debt service costs, operating activities and capital requirements through cash      flows from operating activities, borrowings under our credit facilities, equity      contributions from our parent companies, sales of assets, issuances of debt      securities and cash on hand. However, the mix of funding sources changes from      period to period. For the nine months ended September 30, 2005, we generated      $659 million of net cash flows from operating activities after paying cash      interest of $579 million. In addition, we used approximately $815 million for      purchases of property, plant and equipment. Finally, we had net cash flows      used      in financing activities of $471 million. We expect that our mix of sources      of      funds will continue to change in the future based on overall needs relative      to      our cash flow and on the availability of funds under our credit facilities,      our      access to the debt markets, the timing of possible asset sales and our ability      to generate cash flows from operating activities. We continue to explore asset      dispositions as one of several possible actions that we could take in the future      to improve our liquidity, but we do not presently consider future asset sales      as      a significant source of liquidity.

In      October 2005, CCO Holdings and CCO Holdings Capital Corp., as      guarantor thereunder, entered into a senior bridge loan agreement (the "Bridge      Loan") with JPMorgan Chase Bank, N.A., Credit Suisse, Cayman Islands Branch      and      Deutsche Bank AG Cayman Islands Branch (the "Lenders") whereby the Lenders      have      committed to make loans to CCO Holdings in an aggregate amount of $600 million.      CCO Holdings may draw upon the facility between January 2, 2006 and September      29, 2006 and the loans will mature on the sixth anniversary of the first      borrowing under the Bridge Loan.

We      expect that cash on hand, cash flows from operating activities and      the amounts available under our credit facilities and Bridge Loan will be      adequate to meet our and our parent companies’ cash needs for the remainder of      2005 and 2006. Cash flows from operating activities and amounts available under      our credit facilities and Bridge Loan may not be sufficient to fund our      operations and satisfy our and our parent companies’ interest payment      obligations in 2007. It is likely that we and our parent companies will require      additional funding to satisfy our and Charter’s debt repayment obligations in      2007. We believe that cash flows from operating activities and amounts available      under our credit facilities and Bridge Loan will not be sufficient to fund      our      operations and satisfy our and our parent companies’ interest and principal      repayment obligations thereafter.

We      have been advised that Charter is working with its financial      advisors to address its and our funding requirements. However, there can be      no      assurance that such funding will be available to us. Although Paul G. Allen,      Charter’s Chairman and controlling shareholder, and his affiliates have      purchased equity from Charter and Charter Holdco in the past, Mr. Allen and      his      affiliates are not obligated to purchase equity from, contribute to or loan      funds to Charter, Charter Holdco or us in the future.

***Credit      Facilities and Covenants***

Our      ability to operate depends upon, among other things, our continued access to      capital, including credit under the Charter Operating credit facilities. These      credit facilities, along with our indentures and Bridge Loan, contain certain      restrictive covenants, some of which require us to maintain specified financial      ratios and meet financial tests and to provide audited financial statements      with      an unqualified opinion from our independent auditors. As of September      30,      2005,      we are in compliance with the covenants under our indentures and credit      facilities and we expect to remain in compliance with those covenants and the      Bridge Loan covenants for the next twelve months. Our      total      potential borrowing availability under the current credit facilities totaled      $786 million as of September 30, 2005, although the actual availability      at      that time was only $648 million because of limits imposed by covenant

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***Parent      Company Debt Obligations***

Any      financial or liquidity problems of our parent companies could      cause serious disruption to our business and have a material adverse effect      on      our business and results of operations. A failure by Charter Holdings, CIH      or      CCH I to satisfy their debt payment obligations or a bankruptcy filing with      respect to Charter Holdings, CIH or CCH I would give the lenders under the      Charter Operating credit facilities the right to accelerate the payment      obligations under these facilities. Any such acceleration would be a default      under the indenture governing the Company’s notes.

As      of      September 30, 2005, Charter had approximately $888 million principal amount      of      senior convertible notes outstanding with approximately $25 million and $863      million maturing in 2006 and 2009, respectively. During      the nine months ended September 30, 2005, we distributed $668 million to Charter      Holdings of which $60 million was subsequently distributed to Charter      Holdco. As      ofSeptember      30,      2005,      Charter Holdco was owed $57 million in intercompany loans from its subsidiaries,      which were available to pay interest and principal on Charter's convertible      senior notes. In      addition, Charter has $123 million of governmental securities pledged as      security for the next five semi-annual interest payments on Charter’s 5.875%      convertible senior notes.

As      of      September 30, 2005, Charter Holdings, CIH and CCH I had approximately $7.8      billion principal amount of high-yield notes outstanding with approximately      $105      million, $684 million and $7.0 billion maturing in 2007, 2009 and thereafter,      respectively. Charter, Charter Holdings, CIH and CCH I will need to raise      additional capital or receive distributions or payments from the Company in      order to satisfy their debt obligations. However, because of their significant      indebtedness, the ability of the parent companies to raise additional capital      at      reasonable rates is uncertain.

Distributions      by CCH II 

In      September 2005, Charter Holdings and its wholly owned subsidiaries, CCH I and      CIH, completed the exchange of approximately $6.8 billion total principal amount      of outstanding debt securities of Charter Holdings in a private placement for      new debt securities. Holders of Charter Holdings notes due in 2009 and 2010      exchanged $3.4 billion principal amount of notes for $2.9 billion principal      amount of new 11% CCH I senior secured notes due 2015. Holders of Charter      Holdings notes due 2011 and 2012 exchanged $845 million principal amount of      notes for $662 million principal amount of 11% CCH I senior secured notes due      2015. In addition, holders of Charter Holdings notes due 2011 and 2012 exchanged      $2.5 billion principal amount of notes for $2.5 billion principal amount of      various series of new CIH notes. Each series of new CIH notes has the same      stated interest rate and provisions for payment of cash interest as the series      of old Charter Holdings notes for which such CIH notes were exchanged. In      addition, the maturities for each series were extended three years. 

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***Specific      Limitations*** ***at      Charter Holdings***

The      indentures governing the Charter Holdings notes permit Charter Holdings to      make      distributions to Charter Holdco for payment of interest or principal on the      convertible senior notes, only if, after giving effect to the distribution,      Charter Holdings can incur additional debt under the leverage ratio of 8.75      to      1.0, there is no default under Charter Holdings' indentures and other specified      tests are met. For the quarter ended September      30,      2005,      there was no default under Charter Holdings' indentures and other specified      tests were met. However, Charter Holdings did not meet the leverage ratio of      8.75 to 1.0 based on September      30,      2005financial      results. As a result, distributions from Charter Holdings to Charter, Charter      Holdco or CCHC for payment of interest or principal are currently      restricted and will continue to be restricted until that test is met. During      this restriction period,      the      indentures governing the Charter Holdings notes permit Charter Holdings and      its      subsidiaries to make specified investments in Charter Holdco or Charter, up      to      an amount determined by a formula, as long as there is no default under the      indentures.

Our      significant amount of debt could negatively affect our ability to      access additional capital in the future. No assurances can be given that we      will      not experience liquidity problems if we do not obtain sufficient additional      financing on a timely basis as our debt becomes due or because of adverse market      conditions, increased competition or other unfavorable events. If, at any time,      additional capital or borrowing capacity is required beyond amounts internally      generated or available under our credit facilities or through additional debt      or      equity financings, we would consider:

|   | · | issuing                debt or equity at the parent companies’ level, the                proceeds of which could be loaned or contributed to                us; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | issuing                debt securities that may have structural or other                priority over our existing                notes; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | further                reducing our expenses and capital expenditures, which                may impair our ability to increase                revenue; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | selling                assets; or |
|--------|--------|-----------------------------------|

|   | · | requesting                waivers or amendments with respect to our credit                facilities, the availability and terms of which would be subject                to market                conditions. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

If      the above strategies are not successful, 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 principal and interest      payments to which they are contractually entitled.

***Sale      of Assets***

In      July 2005, we closed the sale of certain cable systems in Texas      and West Virginia and closed the sale of an additional cable system in Nebraska      in October 2005 for a total sales price of approximately $37 million,      representing a total of approximately 33,000 customers. 

In      March 2004, we closed the sale of certain cable systems in      Florida, Pennsylvania, Maryland, Delaware and West Virginia to Atlantic      Broadband Finance, LLC. We closed the sale of an additional cable system in      New      York to Atlantic Broadband Finance, LLC in April 2004. The total net proceeds      from the sale of all of these systems were approximately $735 million. The      proceeds were used to repay a portion of amounts outstanding under our revolving      credit facility.

***Long-Term      Debt***

As      ofSeptember      30, 2005 and      December 31, 2004, long-term debt totaled approximately $10.4 billion and $9.9      billion, respectively. This debt was comprised of approximately $5.5 billion      and      $5.5 billion of      credit      facility debt and      $4.9      billion and $4.4 billion accreted value of high-yield notes, respectively.      As ofSeptember      30, 2005 and      December 31, 2004, the weighted average interest rate on the credit facility      debt was approximately 7.5% and 6.8%, respectively, and the weighted average      interest rate on the high-yield notes was approximately 8.9% and 8.9%,      respectively, resulting in a blended weighted average interest rate of 8.1%      and      7.8%, respectively. The      interest rate on 

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***Issuance      of Charter Operating Notes in Exchange for Charter Holdings Notes.***In      March      and June 2005, our subsidiary, Charter Operating, consummated exchange      transactions with a small number of institutional holders of Charter Holdings      8.25% senior notes due 2007 pursuant to which Charter Operating issued, in      private placement, approximately $333 million principal amount of its 8.375%      senior second lien notes due 2014 in exchange for approximately $346 million      of      the Charter Holdings 8.25% senior notes due 2007. The Charter Holdings notes      received in the exchange were thereafter distributed to Charter Holdings and      cancelled.

***CC      V Holdings, LLC Notes.***The      Charter Operating credit facilities required us to redeem the CC V Holdings,      LLC      notes as a result of the Charter Holdings leverage ratio becoming less than      8.75      to 1.0. In satisfaction of this requirement, in      March      2005, CC V Holdings, LLC redeemed all of its 11.875% notes due 2008, at 103.958%      of principal amount, plus accrued and unpaid interest to the date of redemption.      The total cost of redemption was approximately $122 million and was funded      through borrowings under our credit facilities. Following      such redemption, CC V Holdings, LLC and its subsidiaries (other than      non-guarantor subsidiaries) guaranteed the Charter Operating credit facilities      and granted a lien on all of their assets as to which a lien can be perfected      under the Uniform Commercial Code by the filing of a financing      statement.

***Historical      Operating, Financing and Investing      Activities***

We      held      $9 million in cash and cash equivalents as of September 30, 2005 compared      to $546 million as of December 31, 2004. For the nine months ended      September 30, 2005, we generated $659 million of net cash flows from operating      activities after paying cash interest of $579 million. In addition, we used      approximately $815 million for purchases of property, plant and equipment.      Finally, we had net cash flows used in financing activities of $471 million.      

***Operating      Activities.***
* *

***Investing      Activities.**** *Net      cash      used in investing activities for the nine months ended September 30, 2005 was      $725 million and net cash provided by investing activities for the nine months      ended September 30, 2004 was $94 million. Investing activities used $819 million      more cash during the nine months ended September 30, 2005 than the corresponding      period in 2004 primarily as a result of increased cash used for capital      expenditures in 2005 coupled with proceeds from the      sale of      certain cable systems to Atlantic Broadband Finance, LLC in 2004.

***Financing      Activities.***
* *

***Capital      Expenditures***** **

We      have      significant ongoing capital expenditure requirements. Capital expenditures      were      $815 million and $616 million for the nine months ended September      30, 2005      and      2004, respectively. Capital expenditures increased as a result of increased      spending on support capital related to our investment in service improvements      and scalable infrastructure related to telephone services, VOD and digital      simulcast. See the table below for more details. 

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During      2005, we expect capital expenditures to be approximately $1.0      billion to $1.1 billion. The increase in capital expenditures for 2005 compared      to 2004 is the result of expected increases in telephone services, deployment      of      advanced digital set-top terminals and capital expenditures to replace plant      and      equipment destroyed by hurricanes Katrina and Rita. We expect that the nature      of      these expenditures will continue to be composed primarily of purchases of      customer premise equipment, support capital and for scalable infrastructure      costs. We expect to fund capital expenditures for 2005 primarily from cash      flows      from operating activities and borrowings under our credit      facilities.

We      have adopted capital expenditure disclosure guidance, which was      developed by eleven publicly traded cable system operators, including Charter,      with the support of the National Cable & Telecommunications Association      ("NCTA"). The disclosure is intended to provide more consistency in the      reporting of operating statistics in capital expenditures and customers among      peer companies in the cable industry. These disclosure guidelines are not      required disclosure under GAAP, nor do they impact our accounting for capital      expenditures under GAAP. 

The      following table presents our major capital expenditures      categories in accordance with NCTA disclosure guidelines for the three and      nine      months ended September 30, 2005 and 2004 (dollars in millions):

|                                          |   | **Three                Months Ended September 30,** |   | **Nine                Months Ended September 30,** |   |
|-----------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------|--------|
|                                          |   | **2005**                                            |   | **2004**                                           |   | **2005** |   | **2004** |   |
|                                          |   |                                                |   |                                               |   |   |   |   |   |
| Customer                premise equipment (a) |   | $                                                   | 94     |                                               | $      | 127 |   | $ | 322 |   | $ | 344 |   |
| Scalable                infrastructure (b)    |   |                                                | 49     |                                               |   | 21 |   |   | 138 |   |   | 54 |   |
| Line                extensions (c)            |   |                                                | 37     |                                               |   | 34 |   |   | 114 |   |   | 94 |   |
| Upgrade/Rebuild                (d)            |   |                                                | 13     |                                               |   | 10 |   |   | 35 |   |   | 28 |   |
| Support                capital (e)            |   |                                                | 80     |                                               |   | 44 |   |   | 206 |   |   | 96 |   |
|                                          |   |                                                |   |                                               |   |   |   |   |   |   |   |   |   |
| Total                capital expenditures (f) |   | $                                                   | 273    |                                               | $      | 236 |   | $ | 815 |   | $ | 616 |   |

| (a) | Customer                premise equipment includes costs incurred at the                customer residence to secure new customers, revenue units and additional                bandwidth revenues. It also includes customer installation costs                in                accordance with SFAS 51 and customer premise equipment (e.g., set-top                terminals and cable modems,                etc.). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Scalable                infrastructure includes costs, not related to customer                premise equipment or our network, to secure growth of new customers,                revenue units and additional bandwidth revenues or provide service                enhancements (e.g., headend                equipment). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Line                extensions include network costs associated with entering                new service areas (e.g., fiber/coaxial cable, amplifiers, electronic                equipment, make-ready and design                engineering). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Upgrade/rebuild                includes costs to modify or replace existing                fiber/coaxial cable networks, including                betterments. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Support                capital includes costs associated with the replacement                or enhancement of non-network assets due to technological and physical                obsolescence (e.g., non-network equipment, land, buildings and                vehicles). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | Represents                all capital expenditures made during the three and                nine months ended September 30, 2005 and 2004,                respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Certain      Trends and Uncertainties**

The      following discussion highlights a number of trends and uncertainties, in      addition to those discussed elsewhere in this quarterly report and in the"Critical      Accounting Policies and Estimates"      section      of Item 7. "Management's      Discussion and Analysis of Financial Condition and Results of      Operations"      in our      2004 Annual Report on Form 10-K, that could materially impact our business,      results of operations and financial condition.

***Restrictive      Covenants.**** *Our      credit facilities, the Bridge Loan and the indentures governing our and our      subsidiaries’ other debt contain a number of significant covenants that could      adversely impact our ability to operate our business, and therefore could      adversely affect our results of operations. These covenants restrict our and      our      subsidiaries’ ability to: 

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| · incur                additional debt;                          |
|----------------------------------------------------------------------------|
| · repurchase                or redeem equity interests and debt; |
| · issue                equity;                                   |
| · make                certain investments or acquisitions;       |
| · pay                dividends or make other distributions;      |
| · dispose                of assets or merge;                     |
| · enter                into related party transactions;          |
| · grant                liens; and                                |
| · pledge                assets.                                  |

Furthermore,      our credit facilities require us to, among other things,      maintain specified financial ratios, meet specified financial tests and provide      audited financial statements with an unqualified opinion from our independent      auditors. Our ability to comply with these provisions may be affected by events      beyond our control. 

The      breach of any covenants or obligations in the foregoing      indentures or credit facilities, not otherwise waived or amended, could result      in a default under the applicable debt agreement or instrument and could trigger      acceleration of the related debt, which in turn could trigger defaults under      other agreements governing our long-term indebtedness. In addition, the secured      lenders under the Charter Operating credit facilities and the Charter Operating      senior second-lien notes could foreclose on their collateral, which includes      equity interests in our subsidiaries, and exercise other rights of secured      creditors. Any default under those credit facilities, the Bridge Loan, the      indentures governing our notes or our subsidiaries’ debt could adversely affect      our growth, our financial condition and our results of operations and our      ability to make payments on our notes, the Bridge Loan and the credit facilities      and other debt of our subsidiaries. For more information, see the section above      entitled "— Liquidity and Capital Resources."

***Parent      Companies’ Liquidity Concerns*****.**      Our      parent companies have a significant amount of debt and may incur additional      debt      in the future. At September 30, 2005, Charter had approximately $25 million      and      $863 million aggregate principal amount of convertible senior notes outstanding,      which mature in 2006 and 2009, respectively. As      of      September 30, 2005, Charter Holdings, CIH and CCH I had approximately $7.8      billion principal amount of high-yield notes outstanding with approximately      $105      million, $684 million and $7.0 billion maturing in 2007, 2009 and thereafter,      respectively. Charter, Charter Holdings, CIH and CCH I will need to raise      additional capital or receive distributions or payments from the Company in      order to satisfy their debt obligations. However, because of their significant      indebtedness, the ability of the parent companies to raise additional capital      at      reasonable rates is uncertain. 

Charter’s      ability to make interest payments on its convertible senior notes, and, in      2006      and 2009, to repay the outstanding principal of its convertible senior notes      of      $25 million and $863 million, respectively, will depend on its ability to raise      additional capital and/or on receipt of payments or distributions from Charter      Holdco or its subsidiaries, including CCH II, CCO Holdings and Charter      Operating. During the nine months ended September 30, 2005, we distributed      $668      million to Charter Holdings of which $60 million was subsequently distributed      to      Charter Holdco. As      ofSeptember      30,      2005,      Charter Holdco was owed $57 million in intercompany loans from its subsidiaries,      which were available to pay interest and principal on Charter's convertible      senior notes. In      addition, Charter has $123 million of governmental securities pledged as      security for the next five semi-annual interest payments on Charter’s 5.875%      convertible senior notes.

Distributions      by CCH II and its subsidiaries to a parent company (including Charter,      Charter Holdco, CCHC, Charter Holdings, CIH and CCH I) for      payment of principal on parent company notes are      restricted by the Bridge Loan and the indentures governing the CCH II notes,      CCO      Holdings notes, and Charter Operating notes, unless      under their respective indentures there is no default and a specified leverage      ratio test is met at the time of such event. For the quarter ended September      30,      2005, there was no default under any of the aforementioned indentures. However,      CCO Holdings did not meet its leverage ratio test of 4.5 to 1.0 based on      September 30, 2005 financial results. As a result, distributions from CCO      Holdings to CCH II, CCH I, CIH, Charter Holdings, CCHC, Charter Holdco or      Charter for payment of principal of the respective parent company’s debt are      currently restricted and will continue to be restricted until that test is      met.      However distributions for payment of the respective parent company’s interest      are permitted.

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The      indentures governing the Charter Holdings notes permit Charter Holdings to      make      distributions to Charter Holdco for payment of interest or principal on the      convertible senior notes, only if, after giving effect to the distribution,      Charter Holdings can incur additional debt under the leverage ratio of 8.75      to      1.0, there is no default under Charter Holdings' indentures and other specified      tests are met. For the quarter ended September      30,      2005,      there was no default under Charter Holdings' indentures and other specified      tests were met. However, Charter Holdings did not meet the leverage ratio of      8.75 to 1.0 based on September      30,      2005financial      results. As a result, distributions from Charter Holdings to Charter, Charter      Holdco or CCHC for payment of interest or principal are currently      restricted and will continue to be restricted until that test is met. During      this restriction period,      the      indentures governing the Charter Holdings notes permit Charter Holdings and      its      subsidiaries to make specified investments in Charter Holdco or Charter, up      to      an amount determined by a formula, as long as there is no default under the      indentures.

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 our credit facilities and would require      a      change of control repurchase offer under our outstanding notes.

***Acceleration      of Indebtedness of CCH II’s Subsidiaries.**** *In      the      event of a default under our credit facilities, the Bridge Loan or notes, our      creditors could elect to declare all amounts borrowed, together with accrued      and      unpaid interest and other fees, to be due and payable. In such event, our credit      facilities, the Bridge Loan and indentures would not permit CCH II’s      subsidiaries to distribute funds to CCH II to pay interest or principal on      its      notes. If the amounts outstanding under such credit facilities, the Bridge      Loan      or notes are accelerated, all of the debt and liabilities of CCH II’s      subsidiaries would be payable from the subsidiaries’ assets, prior to any      distribution of the subsidiaries’ assets to pay the interest and principal      amounts on CCH II’s notes. In addition, the lenders under our credit facilities      could foreclose on their collateral, which includes equity interests in CCH      II’s      subsidiaries, and they could exercise other rights of secured creditors. In      any      such case, we might not be able to repay or make any payments on our notes.      Additionally, an acceleration or payment default under our credit facilities      would cause a cross-default in the Bridge Loan and the indentures governing      the      Charter Holdings notes, CIH notes, CCH I notes, CCH II notes, CCO Holdings      notes, Charter Operating notes and Charter’s convertible senior notes and would      trigger the cross-default provision of the Charter Operating credit agreement.      Any default under any of our credit facilities, Bridge Loan or notes might      adversely affect the holders of our notes and our growth, financial condition      and results of operations and could force us to examine all options, including      seeking the protection of the bankruptcy laws. 

***CCH      II Relies on its Subsidiaries to Meet its Liquidity Needs, and CCH II’s Notes      are Structurally Subordinated to all Liabilities of its      Subsidiaries.**** *We      rely      on our subsidiaries to make distributions or other payments to CCH II to enable      CCH II to make payments on its notes. The borrowers and guarantors under the      Charter Operating credit facilities are CCH II’s indirect subsidiaries. A number      of CCH II’s subsidiaries are also obligors under other debt instruments,      including CCO Holdings and Charter Operating, which are each a co-issuer of      senior notes, senior-second lien notes and/or senior discount notes. As of      September 30, 2005, our total debt was approximately $10.4 billion, of which      $8.8 billion was structurally senior to the CCH II notes. The Charter Operating      credit facilities and the indentures governing the senior notes and senior      second-lien notes issued by subsidiaries of CCH II contain restrictive covenants      that limit the ability of such subsidiaries to make distributions or other      payments to CCH II. 

In      the event of a default under our credit facilities, the Bridge      Loan or notes, our lenders or noteholders could elect to declare all amounts      borrowed, together with accrued and unpaid interest and other fees, to be due      and payable. An acceleration or certain payment events of default under our      credit facilities would cause a cross-default in the Bridge Loan, the indentures      governing the Charter Holdings notes, CIH notes, CCH I notes, CCH II notes,      CCO      Holdings notes, Charter Operating notes and Charter’s convertible senior notes.      Similarly, such a default or acceleration under any of these notes would cause      a      cross-default under the notes of the parent entities of the relevant entity.      If      the amounts outstanding under the credit facilities, the Bridge Loan or notes      are accelerated, all of the debt and liabilities of CCH II’s subsidiaries would      be payable from the subsidiaries’ assets, prior to any distribution of the      subsidiaries’ assets to pay the interest and principal amounts on CCH II’s      notes. In addition, the 

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The      foregoing contractual and legal restrictions could limit CCH      II’s      ability to make payments of principal and/or interest to the holders of its      notes. Further, if CCH II made such payments by causing a subsidiary to make      a      distribution to it, and such transfer were deemed a fraudulent transfer or      an      unlawful distribution, the holders of CCH II notes could be required to return      the payment to (or for the benefit of) the creditors of its      subsidiaries.

***Securities      Litigation.***A      number      of putative federal class action lawsuits were filed 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 were 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      entered into Stipulations of Settlement setting forth      proposed terms of settlement for the above-described class actions and      derivative suits. On May 23, 2005 the United States District Court for      the      Eastern District of Missouri conducted the final fairness hearing for the      Actions, and on June 30, 2005, the Court issued its final approval of      the      settlements. Members of the class had 30 days from the issuance of the      June 30 order approving the settlement to file an appeal challenging      the      approval. Two notices of appeal were filed relating to the settlement. Those      appeals were directed to the amount of fees that the attorneys for the class      were to receive and to the fairness of the settlement. At the end of September      2005, Stipulations of Dismissal were filed with the Eighth Circuit Court of      Appeals resulting in the dismissal of both appeals with prejudice. Procedurally      therefore, the settlements are final. See "Part II, Item 1. Legal      Proceedings."

***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 and aggressive      pricing, 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 serve      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 telephone and high-bandwidth Internet access services, to residential      and business customers. Some of these telephone companies have obtained, and      are      now seeking, franchises or alternative authorizations 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.

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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      Internet service over cable systems. 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. Moreover, as we expand our telephone      offerings, we will face considerable competition from established telephone      companies.

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, telephone companies      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 and      our parent company may not have the ability to raise the funds necessary to      fulfill our obligations under our and our parent companies’ senior and senior      discount notes, our Bridge Loan and our credit facilities following a change      of      control. Under the indentures governing our parent company notes, upon the      occurrence of specified change of control events, each such issuer is required      to offer to repurchase all of its outstanding notes. However, our parent      companies may not have sufficient funds at the time of the change of control      event to make the required repurchase of the applicable notes and all of the      notes issuers are limited in their ability to make distributions or other      payments to their respective parent companies to fund any required repurchase.      In addition, a change of control under our credit facilities, Bridge Loan and      indentures governing their and our notes could result in a default under those      credit facilities and Bridge Loan and a required repayment of the notes under      those indentures. Because such credit facilities, Bridge Loan and notes are      obligations of CCH II’s subsidiaries, the credit facilities, Bridge Loan and the      notes would have to be repaid by CCH II’s subsidiaries before their assets could      be available to CCH II or its parent companies to repurchase CCH II’s and its      parent companies’ notes. Any failure to make or complete a change of control      offer would place the applicable issuer or borrower in default under its notes.      The failure of CCH II’s subsidiaries to make a change of control offer or repay      the amounts accelerated under their credit facilities and Bridge Loan would      result in default under these agreements and could result in a default under      the      indentures governing the CCH II and its parent companies’ notes. See "— Certain      Trends and Uncertainties — Liquidity."

***Variable      Interest Rates.***      At      September 30,      2005,      excluding the effects of hedging, approximately 58% of our debt bears interest      at variable rates that are linked to short-term interest rates. In addition,      a      significant portion of our existing debt, assumed debt or debt we might arrange      in the future will bear interest at variable rates. If interest rates rise,      our      costs relative to those obligations will also rise. As of September 30, 2005      and      December 31, 2004, the weighted average interest rate on the credit      facility debt was approximately 7.5% and 6.8%, respectively, and the weighted      average interest rate on the high-yield notes was approximately 8.9% and 8.9%,      respectively, resulting in a blended weighted average interest rate of 8.1%      and      7.8%, respectively. The interest rate on approximately 62% and 66% of the total      principal amount of our debt was effectively fixed, including the effects of      our      interest rate hedge agreements as of September 30, 2005 and December 31, 2004,      respectively. 

***Services.***We      expect      that a substantial portion of our near-term growth will be achieved through      revenues from high-speed Internet 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.

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***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 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 September 30, 2005 approximately      9% of our current programming contracts were expired, and approximately another      20% are scheduled to expire at or before the end of 2005. There can be no      assurance that these agreements will be renewed on favorable or comparable      terms. To the extent that we are unable to reach agreement with certain      programmers on terms that we believe are reasonable we may be forced to remove      such programming channels from our line-up, which could result in a further      loss      of customers. 

***Notes      Price Volatility.***The      market price of our publicly traded notes has been and is likely to continue      to      be highly volatile. We expect that the price of our 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 television      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.

***Economic      Slowdown; Global Conflict***
**.      **

***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. In fact, there has been      legislative activity at the state level to streamline cable franchising and      there is proposed legislation in the United States Congress to overhaul      traditional communications regulation and cable franchising.

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 within      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 has been appealed. In addition, the FCC could      modify its position or Congress could legislate additional carriage      obligations.

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Over      the      past several years, proposals have been advanced that would require cable      operators offering Internet service to provide non-discriminatory access to      their networks to competing Internet service providers. In a June 2005 ruling,      commonly referred to as *Brand      X*,      the      Supreme Court upheld an FCC decision making it less likely that any      non-discriminatory “open” access requirements (which are generally associated      with common carrier regulation of “telecommunications services”) will be imposed      on the cable industry by local, state or federal authorities. The Supreme Court      held that the FCC was correct in classifying cable-provided Internet service      as      an “information service,” rather than a “telecommunications service.” This      favorable regulatory classification limits the ability of various governmental      authorities to impose open access requirements on cable-provided Internet      service. Given the recency of the *Brand      X*decision,      however, the nature of any legislative or regulatory response remains uncertain.      The imposition of open access requirements could materially affect our business.      

**Item      4.** **Controls      and Procedures.**

As      of the end of the period covered by this report, management,      including our Chief Executive Officer and Interim Chief Financial Officer,      evaluated the effectiveness of the design and operation of our disclosure      controls and procedures with respect to the information generated for use in      this quarterly 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 Chief Executive Officer and Interim Chief Financial Officer      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 the quarter ended September 30, 2005 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, our management      believes that its controls provide such reasonable      assurances.

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**PART      II. OTHER INFORMATION.**

**Item      1.** **Legal      Proceedings.**

**Securities      Class Actions and Derivative      Suits**

Fourteen      putative federal class action lawsuits (the "Federal      Class Actions") were filed in 2002 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 quarterly report.      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 Court subsequently consolidated the Federal      Class Actions into a single action (the "Consolidated Federal      Class Action") for pretrial purposes. On August 5, 2004, the      plaintiffs’ representatives, 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) that incorporate the terms      of      the August 5, 2004 Memorandum of Understanding. 

The      Consolidated Federal Class Action was 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. The plaintiffs      alleged that the individual defendants breached their fiduciary duties by      failing to establish and maintain adequate internal controls and procedures.      

The      consolidated State Derivative Action was      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, and Charter Communications, Inc. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

On      March 12, 2004, an action substantively identical to the      State Derivative Action was filed in Missouri State Court against Charter and      certain of its current and former directors, as well as its former auditors.      On      July 14, 2004, the Court consolidated this case with the State Derivative      Action. 

This      action was entitled: 

|   | · | Thomas                Schimmel, Derivatively on behalf on Nominal Defendant                Charter Communications, Inc., v. Ronald L. Nelson, Paul G. Allen,                Marc B.                Nathanson, Nancy B. Peretsman, William D. Savoy, John H. Tory, Carl                E.                Vogel, Larry W. Wangberg, and Arthur Andersen, LLP, and Charter                Communications, Inc. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Separately,      on February 12, 2003, a shareholders derivative suit      (the "Federal Derivative Action"), was filed against Charter and its then      current directors in the United States District Court for the Eastern 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.

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The      Federal Derivative Action was 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 and the individual defendants entered into a      Memorandum 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      various supporting documentation, were filed with the Court on February 2,      2005. On May 23, 2005 the United States District Court for the Eastern      District of Missouri conducted the final fairness hearing for the Actions,      and      on June 30, 2005, the Court issued its final approval of the settlements.      Members of the class had 30 days from the issuance of the June 30 order      approving the settlement to file an appeal challenging the approval. Two notices      of appeal were filed relating to the settlement. Those appeals were directed      to      the amount of fees that the attorneys for the class were to receive and to      the      fairness of the settlement. At the end of September 2005, Stipulations of      Dismissal were filed with the Eighth Circuit Court of Appeals resulting in      the      dismissal of both appeals with prejudice. Procedurally therefore, the      settlements are final.

As      amended, 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 would pay to the      plaintiffs a combination of cash and equity collectively valued at      $144 million, which will include the fees and expenses of plaintiffs’      counsel. Of this amount, $64 million would be paid in cash (by Charter’s      insurance carriers) and the $80 million balance was to be paid (subject      to      Charter’s right to substitute cash therefor as described below) in shares of      Charter Class A common stock having an aggregate value of $40 million      and ten-year warrants to purchase shares of Charter Class A common stock      having an aggregate warrant value of $40 million, with such values in      each      case being determined pursuant to formulas set forth in the Stipulations of      Settlement. However, Charter had the right, in its sole discretion, to      substitute cash for some or all of the aforementioned securities on a dollar      for      dollar basis. Pursuant to that right, Charter elected to fund the      $80 million obligation with 13.4 million shares of Charter      Class A common stock (having an aggregate value of approximately      $15 million pursuant to the formula set forth in the Stipulations of      Settlement) with the remaining balance (less an agreed upon $2 million      discount in respect of that portion allocable to plaintiffs’ attorneys’ fees) to      be paid in cash. In addition, Charter had agreed to issue additional shares      of      its Class A common stock to its insurance carrier having an aggregate      value      of $5 million; however, by agreement with its carrier, Charter paid      $4.5 million in cash in lieu of issuing such shares. Charter delivered      the      settlement consideration to the claims administrator on July 8, 2005,      and      it was held in escrow pending resolution of the appeals. Those appeals are      now      resolved. On July 14, 2005, the Circuit Court for the City of St. Louis      dismissed with prejudice the State Derivative Actions. The claims administrator      is responsible for disbursing the settlement consideration.

As      part of the settlements, Charter committed to a variety of      corporate governance changes, internal practices and public disclosures, all      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.

**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 publicly stated that Charter was 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 was 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 were sentenced April 22, 2005. Charter fully      cooperated with the investigation, and following the sentencings, the      U.S. Attorney’s Office for the Eastern District of Missouri announced that      its investigation was concluded and that no further indictments would      issue.

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**Indemnification**

Charter      was generally required to indemnify, under certain      conditions, 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 grand jury investigation, a      now-settled SEC investigation and the above-described lawsuits, some of      Charter’s current and former directors and current and former officers were      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. One of these former officers has counterclaimed against      Charter alleging, among other things, that Charter owes him additional      indemnification for legal fees that Charter did not pay, and another of these      former officers has counterclaimed against Charter for accrued sick      leave.

**Other      Litigation **

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.

**Item      5.** **Other      Information.**

Charter      entered into an employment agreement with Sue Ann R.      Hamilton, Executive Vice President, Programming, as of October 31, 2005. This      agreement sets forth the terms under which Ms. Hamilton will serve as an      executive of Charter. The term of this agreement is two years from the date      of      the agreement.

The      agreement provides that Ms. Hamilton shall be employed in an      executive capacity to perform such duties as are assigned or delegated by the      President and Chief Executive Officer or the designee thereof. She shall be      eligible to participate in Charter's incentive bonus plan that applies to senior      executives, stock option plan and to receive such employee benefits as are      available to other senior executives. In the event that Ms. Hamilton is      terminated by Charter without "cause" or for "good reason termination," as      those      terms are defined in the employment agreement, Ms. Hamilton will receive her      salary for the remainder of the term of the agreement or twelve months salary,      whichever is greater; a pro rata bonus for the year of termination; twelve      months of COBRA payments; and the vesting of options and restricted stock for      as      long as severance payments are made. The employment agreement contains a      one-year, non-compete provision (or until the end of the term of the agreement,      if longer) in a “competitive business,” as such term is defined in the      agreement, and two-year non-solicitation clauses. The agreement provides that      Ms. Hamilton's salary shall be $371,800. 

The      full text of Ms. Hamilton's employment agreement is filed      herewith as Exhibit 10.12. 

**Item      6.**
**Exhibits.**

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**SIGNATURES**

*Senior      Vice President, *

*Interim      Chief Financial Officer, *

*Principal      Accounting Officer and *

*Corporate      Controller *

*(Principal      Financial Officer and*

*Principal      Accounting Officer)*

*Senior      Vice President, *

*Interim      Chief Financial Officer, *

*Principal      Accounting Officer and *

*Corporate      Controller *

*(Principal      Financial Officer and*

*Principal      Accounting Officer)*

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**EXHIBIT      INDEX**

| Exhibit                  Number | Description                  of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.1                             | Certificate                  of Formation of CCH II, LLC (incorporated by reference to Exhibit 3.1                  to Amendment No. 1 to the registration statement on Form S-4                  of CCH                  II, LLC and CCH II Capital Corporation filed on March 24, 2004                  (File No.                  333-111423)).                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 3.2                             | Amended                  and Restated Limited Liability Company Agreement of CCH II, LLC,                  dated as                  of July 10, 2003 (incorporated by reference to Exhibit 3.2                  to                  Amendment No. 1 to the registration statement on Form S-4                  of CCH II,                  LLC and CCH II Capital Corporation filed on March 24, 2004 (File                  No.                  333-111423)).                                                                                                                                                                                                                                                                                                                              |
| 3.3                             | Certificate                  of Incorporation of CCH II Capital Corporation (incorporated by                  reference                  to Exhibit 3.3 to Amendment No. 1 to the registration statement                  on                  Form S-4 of CCH II, LLC and CCH II Capital Corporation filed                  on March                  24, 2004 (File No. 333-111423)).                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.4                             | Amended                  and Reinstated By-laws of CCH II Capital Corporation (incorporated                  by                  reference to Exhibit 3.4 to Amendment No. 1 to the registration                  statement on Form S-4 of CCH II, LLC and CCH II Capital                  Corporation                  filed on March 24, 2004 (File No. 333-111423)).                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.1                             | Indenture                  relating to the 10.25% Senior Notes due 2010, dated as of                  September 23, 2003, among CCH II, LLC, CCH II                  Capital                  Corporation and Wells Fargo Bank, National Association, as trustee                  (incorporated by reference to Exhibit 10.1 to the current                  report on                  Form 8-K of Charter Communications Inc. filed on September 26,                  2003 (File No. 000-27927)).                                                                                                                                                                                                                                                             |
| 10.1                            | Senior                  Bridge Loan Agreement dated as of October 17, 2005 by and among                  CCO                  Holdings, LLC, CCO Holdings Capital Corp., certain lenders, JPMorgan                  Chase                  Bank, N.A., as Administrative Agent, J.P. Morgan Securities Inc.                  and                  Credit Suisse, Cayman Islands Branch, as joint lead arrangers and                  joint                  bookrunners, and Deutsche Bank Securities Inc., as documentation                  agent.                  (Incorporated by reference to Exhibit 99.1 to the current report                  on Form                  8-K of Charter Communications, Inc. filed on October 19, 2005 (File                  No.                  000-27927)). |
| 10.2†                     | Settlement                  Agreement and Mutual Releases, dated as of October 31, 2005, by                  and among                  Charter Communications, Inc., Special Committee of the Board of                  Directors                  of Charter Communications, Inc., Charter Communications Holding                  Company,                  LLC, CCHC, LLC, CC VIII, LLC, CC V, LLC, Charter Investment, Inc.,                  Vulcan                  Cable III, LLC and Paul G. Allen (incorporated by reference to                  Exhibit 10.17 to the quarterly report on Form 10-Q                  of Charter                  Communications, Inc. filed on November 2, 2005 (File                  No. 000-27927)).                                        |
| 10.3                            | Exchange                  Agreement, dated as of October 31, 2005, by and among Charter                  Communications Holding Company, LLC, Charter Investment, Inc. and                  Paul G.                  Allen (incorporated by reference to Exhibit 10.18 to the                  quarterly                  report on Form 10-Q of Charter Communications, Inc. filed                  on November                  2, 2005 (File No. 000-27927)).                                                                                                                                                                                                                                                                                                                         |
| 10.4                            | CCHC,                  LLC Subordinated and Accreting Note, dated as of October 31, 2005                  (incorporated by reference to Exhibit 10.3 to the current                  report on                  Form 8-K of Charter Communications, Inc. filed on November                  4, 2005                  (File No. 000-27927)).                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5                            | Third                  Amended and Restated Limited Liability Company Agreement for CC                  VIII, LLC,                  dated as of October 31, 2005 (incorporated by reference to                  Exhibit 10.20 to the quarterly report on Form 10-Q                  of Charter                  Communications, Inc. filed on November 2, 2005 (File                  No. 000-27927)).                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.6+                           | Amendment                  No. 7 to the Charter Communications, Inc. 2001 Stock Incentive                  Plan                  effective August 23, 2005 (incorporated by reference to                  Exhibit                  10.43(h) to the registration statement on Form S-1 of Charter                  Communications, Inc. filed on October 5, 2005 (File No.                  333-128828)).                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.7+                           | Restricted                  Stock Agreement, dated as of July 13, 2005, by and between                  Robert P. May and Charter Communications, Inc. (incorporated                  by                  reference to Exhibit 99.1 to the current report on Form 8-K                  of                  Charter Communications, Inc. filed July 13, 2005 (File                  No. 000-27927)).                                                                                                                                                                                                                                                                                                                                                                       |
| 10.8+                           | Restricted                  Stock Agreement, dated as of July 13, 2005, by and between                  Michael J.                  Lovett and Charter Communications, Inc. (incorporated by reference                  to                  Exhibit 99.2 to the current report on Form 8-K of                  Charter                  Communications, Inc. filed July 13, 2005 (File                  No. 000-27927)).                                                                                                                                                                                                                                                                                                                                                       |
| 10.9+                           | Employment                  Agreement, dated as of August 9, 2005, by and between Neil                  Smit and                  Charter Communications, Inc. (incorporated by reference to                  Exhibit 99.1 to the current report on Form 8-K of                  Charter                  Communications, Inc. filed on August 15, 2005 (File                  No. 000-27927)).                                                                                                                                                                                                                                                                                                                                                                                |
| 10.10+                          | Employment                Agreement                dated as of September 2, 2005, by and between Paul E. Martin                and                Charter Communications, Inc. (incorporated by reference to                Exhibit 99.1 to the current report on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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|        | of                  Charter Communications, Inc. filed on September 9, 2005                  (File                  No. 000-27927)).                                                                                                                                                                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.11+ | Employment                  Agreement dated as of September 2, 2005, by and between                  Wayne H.                  Davis and Charter Communications, Inc. (incorporated by reference                  to                  Exhibit 99.2 to the current report on Form 8-K of                  Charter                  Communications, Inc. filed on September 9, 2005 (File                  No. 000-27927)). |
| 10.12+ | Employment                  Agreement dated as of October 31, 2005, by and between Sue Ann                  Hamilton                  and Charter Communications, Inc.                  (incorporated by reference to Exhibit 10.22 to the quarterly                  report                  on Form 10-Q of Charter Communications, Inc. filed on November                  2,                  2005 (File No. 000-27927)).       |
| 31.1*  | Certificate                  of 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 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 (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 Chief Financial Officer).                                                                                                                                                                                                                                       |

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