**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**Washington,
      D.C. 20549**





**FORM
      10-Q**








*(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:** **333-112593**


**333-112593-01** ****





**CCO
      Holdings, LLC ***


**CCO
      Holdings Capital Corp. ***


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





**Delaware**
            
            **86-1067239****Delaware**
            
            **20-0257904***(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)*





Indicate
      by check mark whether the registrants (1) have filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrants were
      required to file such reports), and (2) have been subject to such filing
      requirements for the past 90 days. YES [X] NO [  ]





Indicate
      by check mark whether the registrants are accelerated filers (as defined in
      Rule
      12b-2 of the Exchange Act). YES [ ] NO [X]





Indicate
      the number of shares outstanding of each of the issuers' classes of common
      stock, as of the latest practicable date:





All
      of
      the issued and outstanding shares of capital stock of CCO Holdings Capital
      Corp.
      are held by CCO Holdings, LLC. All of the limited liability company membership
      interests of CCO Holdings, LLC are held by CCH II, LLC (an indirect wholly
      owned subsidiary
      of Charter Communications Holdings, LLC, a reporting company under the Exchange
      Act). There is no public trading market for any of the aforementioned limited
      liability company membership interests of shares of capital stock.





*
      CCO
      Holdings, LLC and CCO Holdings Capital Corp. meet the conditions set forth
      in
      General Instruction H(1)(a) and (b) to Form 10-Q and are therefore filing with
      the reduced disclosure format.







Table
          of Contents


**CCO
      Holdings, LLC**


**CCO
      Holdings 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 - CCO Holdings, LLC and SubsidiariesCondensed
                Consolidated Balance Sheets as ofSeptember
                30, 2005and
                December 31, 2004
            4Condensed
                Consolidated Statements of Operations for the three
                and ninemonths
                endedSeptember
                30, 2005and
                2004
            5Condensed
                Consolidated Statements of Cash Flows for thenine
                months endedSeptember
                30, 2005and 2004
            6Notes
                to Condensed Consolidated Financial
                Statements
            7Item
                2.Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            27Item
                4.Controls
                and Procedures
            45PART
                II. OTHER INFORMATIONItem
                1.Legal
                Proceedings
            46Item
                5. Other Information
            48Item
                6.Exhibits
            48SIGNATURES
            49EXHIBIT
                INDEX
            50








This
      quarterly report on Form 10-Q is for the three and nine months ended
      September 30, 2005. The Securities and Exchange Commission ("SEC") allows
      us to "incorporate by reference" information that we file with the SEC, which
      means that we can disclose important information to you by referring you
      directly to those documents. Information incorporated by reference is considered
      to be part of this quarterly report. In addition, information that we file
      with
      the SEC in the future will automatically update and supersede information
      contained in this quarterly report. In this quarterly report, "we," "us" and
      "our" refer to CCO Holdings, LLC and its subsidiaries.








Table
          of Contents





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





This quarterly
      report includes
      forward-looking statements within the meaning of Section 27A of the
      Securities Act of 1933, as amended (the " Securities
      Act " ),
      and
      Section 21E of the Securities Exchange Act of 1934, as amended (the " Exchange
      Act " ),
      regarding, among other things, our plans, strategies and prospects, both
      business and financial including, without limitation, the forward-looking
      statements set forth in the " Results
      of Operations " and " Liquidity
      and Capital Resources " sections
      under Part I, Item 2. " Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations " in this quarterly
      report .
      Although we believe that our plans, intentions and expectations reflected in
      or
      suggested by these forward-looking statements are reasonable, we cannot assure
      you that we will achieve or realize these plans, intentions or expectations.
      Forward-looking statements are inherently subject to risks, uncertainties and
      assumptions including, without limitation, the factors described under " Certain
      Trends and Uncertainties " under
      Part I, Item 2. " Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations " in this quarterly
      report .
      Many of
      the forward-looking statements contained in this quarterly
      report may
      be
      identified by the use of forward-looking words such as " believe, "  " expect, "  " anticipate, "  " should, "  " planned, "  " will, "  " may, "  " intend, "  " estimated " and " potential " among
      others. Important factors that could cause actual results to differ materially
      from the forward-looking statements we make in this quarterly
      report are
      set
      forth in this quarterly
      report and
      in
      other reports or documents that we file from time to time with the SEC, and
      include, but are not limited to:





·
            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.





All
      forward-looking statements attributable to us or any person acting on our behalf
      are expressly qualified in their entirety by this cautionary statement. We
      are
      under no duty or obligation to update any of the forward-looking statements
      after the date of this quarterly
      report .








3
 Table
          of Contents


**PART
      I. FINANCIAL INFORMATION.**








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





**CCO
      HOLDINGS, 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
            
            $
            546Accounts
                receivable, less allowance for doubtful accounts of$15
                and $15, respectively
            
            
            185
            
            
            175Prepaid
                expenses and other current assets
            
            
            23
            
            
            20Total
                current assets
            
            
            217
            
            
            741INVESTMENT
                IN CABLE PROPERTIES:Property,
                plant and equipment, net of accumulateddepreciation
                of $6,357 and $5,142, respectively
            
            
            5,895
            
            
            6,110Franchises,
                net
            
            
            9,830
            
            
            9,878Total
                investment in cable properties, net
            
            
            15,725
            
            
            15,988OTHER
                NONCURRENT ASSETS
            
            
            227
            
            
            235Total
                assets
            
            $
            16,169
            
            $
            16,964**LIABILITIES
                AND MEMBER’S EQUITY**CURRENT
                LIABILITIES:Accounts
                payable and accrued expenses
            
            $
            933
            
            $
            901Payables
                to related party
            
            
            107
            
            
            24Total
                current liabilities
            
            
            1,040
            
            
            925LONG-TERM
                DEBT
            
            
            8,805
            
            
            8,294LOANS
                PAYABLE - RELATED PARTY
            
            
            57
            
            
            29DEFERRED
                MANAGEMENT FEES - RELATED PARTY
            
            
            14
            
            
            14OTHER
                LONG-TERM LIABILITIES
            
            
            434
            
            
            493MINORITY
                INTEREST
            
            
            665
            
            
            656MEMBER’S
                EQUITY:Member’s
                equity
            
            
            5,154
            
            
            6,568Accumulated
                other comprehensive loss
            
            
            --
            
            
            (15
            )Total
                member’s equity
            
            
            5,154
            
            
            6,553Total
                liabilities and member’s equity
            
            $
            16,169
            
            $
            16,964


The
            accompanying notes are an integral part of these condensed consolidated
            financial statements.
 4
 Table
          of Contents


**CCO
      HOLDINGS, 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
            
            $
            3,701COSTS
                AND EXPENSES:Operating
                (excluding depreciation and amortization)
            
            
            586
            
            
            525
            
            
            1,714
            
            
            1,552Selling,
                general and administrative
            
            
            269
            
            
            252
            
            
            762
            
            
            735Depreciation
                and amortization
            
            
            375
            
            
            371
            
            
            1,134
            
            
            1,105Impairment
                of franchises
            
            
            --
            
            
            2,433
            
            
            --
            
            
            2,433Asset
                impairment charges
            
            
            --
            
            
            --
            
            
            39
            
            
            --(Gain)
                loss on sale of assets, net
            
            
            1
            
            
            --
            
            
            5
            
            
            (104
            )Option
                compensation expense, net
            
            
            3
            
            
            8
            
            
            11
            
            
            34Hurricane
                asset retirement loss
            
            
            19
            
            
            --
            
            
            19
            
            
            --Special
                charges, net
            
            
            2
            
            
            3
            
            
            4
            
            
            1001,255
            
            
            3,592
            
            
            3,688
            
            
            5,855Income
                (loss) from operations
            
            
            63
            
            
            (2,344
            )
            
            224
            
            
            (2,154
            )OTHER
                INCOME AND EXPENSES:Interest
                expense, net
            
            
            (178
            )
            
            (148
            )
            
            (502
            )
            
            (406
            )Gain
                (loss) on derivative instruments and hedging activities,
                net
            
            
            17
            
            
            (8
            )
            
            43
            
            
            48Loss
                on extinguishment of debt
            
            
            --
            
            
            --
            
            
            (6
            )
            
            (21
            )Gain
                on investments
            
            
            --
            
            
            --
            
            
            21
            
            
            --(161
            )
            
            (156
            )
            
            (444
            )
            
            (379
            )Loss
                before minority interest, income taxes and cumulative effect of accounting
                change
            
            
            (98
            )
            
            (2,500
            )
            
            (220
            )
            
            (2,533
            )MINORITY
                INTEREST
            
            
            (3
            )
            
            34
            
            
            (9
            )
            
            25Loss
                before income taxes and cumulative effect of accounting
                change
            
            
            (101
            )
            
            (2,466
            )
            
            (229
            )
            
            (2,508
            )INCOME
                TAX BENEFIT (EXPENSE)
            
            
            (2
            )
            
            45
            
            
            (10
            )
            
            41Loss
                before cumulative effect of accounting change
            
            
            (103
            )
            
            (2,421
            )
            
            (239
            )
            
            (2,467
            )CUMULATIVE
                EFFECT OF ACCOUNTING CHANGE, NET OF TAX
            
            
            --
            
            
            (840
            )
            
            --
            
            
            (840
            )Net
                loss
            
            $
            (103
            )
            $
            (3,261
            )
            $
            (239
            )
            $
            (3,307
            )


The
            accompanying notes are an integral part of these condensed consolidated
            financial statements.
 5
 Table
          of Contents


**CCO
      HOLDINGS, 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
            
            $
            (239
            )
            $
            (3,307
            )Adjustments
                to reconcile net loss to net cash flows from operating
                activities:Minority
                interest
            
            
            9
            
            
            (25
            )Depreciation
                and amortization
            
            
            1,134
            
            
            1,105Asset
                impairment charges
            
            
            39
            
            
            --Impairment
                of franchises
            
            
            --
            
            
            2,433Option
                compensation expense, net
            
            
            11
            
            
            25Hurricane
                asset retirement loss
            
            
            19
            
            
            --Special
                charges, net
            
            
            --
            
            
            85Noncash
                interest expense
            
            
            21
            
            
            15Gain
                on derivative instruments and hedging activities, net
            
            
            (43
            )
            
            (48
            )(Gain)
                loss on sale of assets, net
            
            
            5
            
            
            (104
            )Loss
                on extinguishment of debt
            
            
            --
            
            
            18Gain
                on investments
            
            
            (21
            )
            
            --Deferred
                income taxes
            
            
            6
            
            
            (44
            )Cumulative
                effect of accounting change, net of tax
            
            
            --
            
            
            840Other,
                net
            
            
            --
            
            
            (1
            )Changes
                in operating assets and liabilities, net of effects from
                dispositions:Accounts
                receivable
            
            
            (15
            )
            
            (1
            )Prepaid
                expenses and other assets
            
            
            (7
            )
            
            (1
            )Accounts
                payable, accrued expenses and other
            
            
            (28
            )
            
            (113
            )Receivables
                from and payables to related party, including deferred management
                fees
            
            
            (68
            )
            
            (68
            )Net
                cash flows from operating activities
            
            
            823
            
            
            809CASH
                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
            
            
            727Purchases
                of investments
            
            
            (1
            )
            
            (4
            )Proceeds
                from investments
            
            
            16
            
            
            --Other,
                net
            
            
            (2
            )
            
            (2
            )Net
                cash flows from investing activities
            
            
            (725
            )
            
            94CASH
                FLOWS FROM FINANCING ACTIVITIES:Borrowings
                of long-term debt
            
            
            897
            
            
            2,873Borrowings
                from related parties
            
            
            140
            
            
            --Repayments
                of long-term debt
            
            
            (1,014
            )
            
            (4,707
            )Repayments
                to related parties
            
            
            (112
            )
            
            --Proceeds
                from issuance of debt
            
            
            294
            
            
            1,500Payments
                for debt issuance costs
            
            
            (8
            )
            
            (97
            )Distributions
            
            
            (832
            )
            
            (466
            )Net
                cash flows from financing activities
            
            
            (635
            )
            
            (897
            )NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            (537
            )
            
            6CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            546
            
            
            85CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            9
            
            $
            91CASH
                PAID FOR INTEREST
            
            $
            415
            
            $
            339NONCASH
                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.
 6
 Table
          of Contents


**CCO
        HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
        in millions, except where indicated)**


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





CCO
      Holdings, LLC ("CCO Holdings") is a holding company whose principal assets
      at
      September 30, 2005 are equity interests in its operating subsidiaries. CCO
      Holdings is a subsidiary of CCH II, LLC ("CCH II"). 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"). CCO Holdings is
      the
      sole owner of Charter Communications Operating, LLC ("Charter Operating").
      The
      condensed consolidated financial statements include the accounts of CCO Holdings
      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 CCO Holdings' Annual
      Report on Form 10-K have been condensed or omitted for this quarterly report.
      The accompanying condensed consolidated financial statements are unaudited
      and
      are subject to review by regulatory authorities. However, in the opinion of
      management, such financial statements include all adjustments, which consist
      of
      only normal recurring adjustments, necessary for a fair presentation of the
      results for the periods presented. Interim results are not necessarily
      indicative of results for a full year.




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Areas involving significant judgments and estimates include
      capitalization of labor and overhead costs; depreciation and amortization costs;
      impairments of property, plant and equipment, franchises and goodwill; income
      taxes; and contingencies. Actual results could differ from those
      estimates.




*Reclassifications*




Certain
      2004 amounts have been reclassified to conform with the 2005
      presentation.





**2.**
            **Liquidity
                and Capital Resources**





The
      Company incurred net loss of $103 million and $239 million for the three and
      nine months ended September 30, 2005, respectively, and $3.3 billion for each
      of
      the three and nine months ended September 30, 2004. The Company’s net cash flows
      from operating activities were $823 million and $809 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 $3.3 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




7
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




securities
      and from cash on hand. However, the mix of funding sources changes from period
      to period. For the nine months ended September 30, 2005, the Company generated
      $823 million of net cash flows from operating activities, after paying cash
      interest of $415 million. In addition, the Company used approximately $815
      million for purchases of property, plant and equipment. Finally, the Company
      had
      net cash flows used in financing activities of $635 million.





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




8
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




by
      Charter Holdings, CIH, CCH I or CCH II to satisfy their debt payment obligations
      or a bankruptcy filing with respect to Charter Holdings, CIH, CCH I or CCH
      II
      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.





A s
      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 $832 million to CCH II 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.





A s
      of
      September 30, 2005, Charter Holdings, CIH, CCH I and CCH II had approximately
      $9.4 billion principal amount of high-yield notes outstanding with approximately
      $105 million, $684 million and $8.6 billion maturing in 2007, 2009 and
      thereafter, respectively. Charter, Charter Holdings, CIH, CCH I and CCH II
      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 CCO Holdings and its subsidiaries to a parent company (including Charter,
      Charter Holdco, CCHC, Charter Holdings, CIH, CCH I and CCH II) for
      payment of principal on parent company notes are
      restricted by the Bridge Loan and the indentures governing the 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 ,
      2005 financial
      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.




9
 Table
          of Contents


**CCO
          HOLDINGS, 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,




10
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




2002.
      The
      Company did not record any value associated with the customer relationship
      intangibles related to those acquisitions. For acquisitions subsequent to
      January 1, 2002 the Company did assign a value to the customer relationship
      intangible, which is amortized over its estimated useful life.





In
      September 2004, 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
            
            $
            --
            
            $
            9,845Goodwill
            
            
            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.





11
 Table
          of Contents
 **CCO
            HOLDINGS, 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
            
            $
            138Accrued
                capital expenditures
            
            
            99
            
            
            60Accrued
                expenses:Interest
            
            
            172
            
            
            101Programming
                costs
            
            
            287
            
            
            278Franchise-related
                fees
            
            
            56
            
            
            67Compensation
            
            
            57
            
            
            47Other
            
            
            200
            
            
            210$
            933
            
            $
            901





**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**CCO
                Holdings, LLC:83⁄4%
                senior notes due 2013
            
            $
            800
            
            $
            794
            
            $
            500
            
            $
            500Senior
                floating rate notes due 2010
            
            
            550
            
            
            550
            
            
            550
            
            
            550Charter
                Communications Operating, LLC:8%
                senior second lien notes due 2012
            
            
            1,100
            
            
            1,100
            
            
            1,100
            
            
            1,1008
                3/8% senior second lien notes due 2014
            
            
            733
            
            
            733
            
            
            400
            
            
            400Renaissance
                Media Group LLC:10.000%
                senior discount notes due 2008
            
            
            114
            
            
            115
            
            
            114
            
            
            116CC
                V Holdings, LLC:11.875%
                senior discount notes due 2008
            
            
            --
            
            
            --
            
            
            113
            
            
            113**Credit
                Facilities**Charter
                Operating
            
            
            5,513
            
            
            5,513
            
            
            5,515
            
            
            5,515$
            8,810
            
            $
            8,805
            
            $
            8,292
            
            $
            8,294





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 borrowing, (b) by an
      additional 25 basis points at the end of each of the next two subsequent three
      month periods and (c) by 62.5 basis points at the end of each of the next two
      subsequent three-month periods. CCO Holdings will be required to prepay




12
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




loans
      from the net proceeds from (i) the issuance of equity or incurrence of debt
      by
      Charter and its subsidiaries, with certain exceptions, and (ii) certain asset
      sales (to the extent not used for other purposes permitted under the Bridge
      Loan).





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, CCO Holdings’ 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 CCO Holdings, 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 $98 million and $3.3 billion,
      respectively, and was $224 million and $3.3 billion for the nine months ended
      September 30, 2005 and 2004, respectively.





13
 Table
          of Contents
 **CCO
            HOLDINGS, 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.





14
 Table
          of Contents
 **CCO
            HOLDINGS, 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
            
            $
            2,534High-speed
                Internet
            
            
            230
            
            
            189
            
            
            671
            
            
            538Advertising
                sales
            
            
            74
            
            
            73
            
            
            214
            
            
            205Commercial
            
            
            71
            
            
            61
            
            
            205
            
            
            175Other
            
            
            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
            
            $
            991Service
            
            
            203
            
            
            173
            
            
            572
            
            
            489Advertising
                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
            
            $
            636Marketing
            
            
            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.





15
 Table
          of Contents


**CCO
          HOLDINGS, 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
            
            $
            14Special
                Charges
            
            
            1
            
            
            6
            
            
            5
            
            
            9Payments
            
            
            (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
      of September
      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.





16
 Table
          of Contents


**CCO
          HOLDINGS, 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.





17
 Table
          of Contents


**CCO
          HOLDINGS, 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.





18
 Table
          of Contents
 **CCO
            HOLDINGS, 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
            
            $
            (103
            )
            $
            (3,261
            )
            $
            (239
            )
            $
            (3,307
            )Add
                back stock-based compensation expense related to stock
              options
                included in reported net loss
            
            
            3
            
            
            8
            
            
            11
            
            
            34Less
                employee stock-based compensation expense determined under fair
              value
                based method for all employee stock option awards
            
            
            (3
            )
            
            (6
            )
            
            (11
            )
            
            (37
            )Effects
                ofunvested
                options instock
                option exchange
            
            
            --
            
            
            --
            
            
            --
            
            
            48Pro
                forma
            
            $
            (103
            )
            $
            (3,259
            )
            $
            (239
            )
            $
            (3,262
            )





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




19
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




members
      of Charter’s board of directors who were not also employees of the Company were
      not eligible to participate in the exchange offer.





In
      the
      closing of the exchange offer on February 20, 2004, 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, CCO Holdings’ 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




20
 Table
          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




would
      be
      entitled to a priority distribution with respect to the 2% priority return
      (which will continue to accrete). Any remaining distributions in liquidation
      would be distributed to CC V Holdings, LLC, an indirect subsidiary of Charter
      ("CC V"), and Mr. Allen in proportion to CC V's capital account and Mr. Allen’s
      capital account (which will equal the initial capital account of the Comcast
      sellers of approximately $630 million, increased or decreased by Mr. Allen’s pro
      rata share of CC VIII’s profits or losses (as computed for capital account
      purposes) after June 6, 2003). The limited liability company agreement of CC
      VIII does not provide for a mandatory redemption of the CC VIII
      interest.





An
      issue
      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").





21
 Table
          of Contents


**CCO
          HOLDINGS, 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.





22
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          of Contents


**CCO
          HOLDINGS, 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 CCO Holdings, 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




23
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          of Contents


**CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**




license
      agreement entered into in April 2004. Under the license agreement Digeo
      Interactive granted to Charter Holdco the right to use Digeo’s proprietary
      software for the number of DVR units that Charter deployed from a maximum of
      10
      headends through year-end 2004. This maximum number of headends was increased
      from 10 to 15 pursuant to a letter agreement executed on June 11, 2004 and
      the
      date for entering into license agreements for units deployed was extended to
      June 30, 2005. The number of headends was increased from 15 to 20 pursuant
      to a
      letter agreement dated August 4, 2004, from 20 to 30 pursuant to a letter
      agreement dated September 28, 2004 and from 30 to 50 headends by a letter
      agreement in February 2005. The license granted for each unit deployed under
      the
      agreement is valid for five years. In addition, Charter will pay certain other
      fees including a per-headend license fee and maintenance fees. Maximum license
      and maintenance fees during the term of the agreement are expected to be
      approximately $7 million. The agreement provides that Charter is entitled to
      receive contract terms, considered on the whole, and license fees, considered
      apart from other contract terms, no less favorable than those accorded to any
      other Digeo customer. Charter paid approximately $1 million in license and
      maintenance fees for each of the three and nine months ended September 30,
      2005.





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.





24
 Table
          of Contents


**CCO
          HOLDINGS, 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.





25
 Table
          of Contents


**CCO
          HOLDINGS, 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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 Table
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**Item
      2.****Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.**





**General**





CCO
      Holdings, LLC ("CCO Holdings") is a holding company whose principal assets
      as of September
      30, 2005 are
      equity interests in its operating subsidiaries. CCO
      Holdings is a subsidiary of CCH II, LLC ("CCH II"). 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"). CCO Holdings is the sole owner of Charter Communications Operating,
      LLC ("Charter Operating"). "We,"
      "us" and "our" refer to CCO Holdings and its subsidiaries. Our "parent
      companies" are CCH II, 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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 Table
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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 18to
                  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 and 2004 :





**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
            
            
            5,825,000Multi-dwelling
                (bulk) and commercial unit customers (c)
            
            
            270,200
            
            
            249,600Total
                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
            
            
            1,819,900Residential
                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, 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
            
            
            (502
            )
            
            
            
            
            (406
            )Gain
                on derivative instruments and hedging activities, net
            
            
            43
            
            
            
            
            
            48Loss
                on extinguishment of debt
            
            
            (6
            )
            
            
            
            
            (21
            )Gain
                on investments
            
            
            21
            
            
            
            
            
            --(444
            )
            
            
            
            
            (379
            )Loss
                before minority interest, income taxes and cumulative effect of accounting
                change
            
            
            (220
            )
            
            
            
            
            (2,533
            )Minority
                interest
            
            
            (9
            )
            
            
            
            
            25Loss
                before income taxes and cumulative effect of accounting
                change
            
            
            (229
            )
            
            
            
            
            (2,508
            )Income
                tax benefit (expense)
            
            
            (10
            )
            
            
            
            
            41Loss
                before cumulative effect of accounting change
            
            
            (239
            )
            
            
            
            
            (2,467
            )Cumulative
                effect of accounting change, net of tax
            
            
            --
            
            
            
            
            
            (840
            )Net
                loss
            
            $
            (239
            )
            
            
            
            $
            (3,307
            )




***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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Through
      September and October, we have been restoring service to our impacted customers
      and, as of the date of this report, substantially all of our customers’ service
      has been restored. Included in the reduction in analog video customers and
      reducing the increase in digital video and high-speed Internet customers are
      26,800 analog video customers, 12,000 digital video customers and 600 high-speed
      Internet customers sold in the cable system sales in Texas and West Virginia,
      which closed in July 2005. The cable system sales to Atlantic Broadband Finance,
      LLC, which closed in March and April 2004 and the cable system sales in Texas
      and West Virginia, which closed in July 2005 (referred to in this section as
      the
      "System Sales") reduced the increase in revenues by approximately $33 million.
      Our goal is to increase revenues by improving customer service, which we believe
      will stabilize our analog video customer base, implementing price increases
      on
      certain services and packages and increasing the number of customers who
      purchase high-speed Internet services, digital video and advanced products
      and
      services such as telephone, VOD, high definition television and digital video
      recorder service.





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




32
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reduced
      by $3 million as a result of the System Sales. Advertising sales expenses
      consist of costs related to traditional advertising services provided to
      advertising customers, including salaries, benefits and commissions. Advertising
      sales expenses increased $4 million, or 6%, primarily as a result of increased
      salary, benefit and commission costs.




***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 ended September 30,
      2004
      primarily represents the expense of approximately $9 million related to a stock
      option exchange program under which
      our employees were offered the right to exchange all stock options (vested
      and
      unvested) issued under the 1999 Charter Communications Option Plan and 2001
      Stock Incentive Plan that had an exercise price over $10 per share for shares
      of
      restricted Charter Class A common stock or, in some instances, cash .
      The
      exchange offer closed in February 2004. Additionally, during the nine months
      ended September 30,
      2004,
      we recognized approximately $8 million related to the 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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 Table
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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 24%, from $406 million for
      the
      nine months ended September
      30 ,
      2004 to
      $502 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 $7.6 billion for
      the
      nine months ended September
      30 ,
      2004 compared
      to $8.4 billion for
      the
      nine months ended September
      30 ,
      2005
      and an
      increase in our average borrowing rate from 6.64% in
      the
      nine months ended September
      30 , 2004
      to
      7.50% 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 $3.3 billion for the nine months ended September
      30 ,
      2004 to
      $239 million for the nine months ended September
      30 ,
      2005 as
      a result of the factors described above.





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 Table
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**Liquidity
      and Capital Resources**




***Introduction*** ****




This
      section contains a discussion of our liquidity and capital resources, including
      a discussion of our cash position, sources and uses of cash, access to credit
      facilities and other financing sources, historical financing activities, cash
      needs, capital expenditures and outstanding debt.




***Overview*** ****





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
      $823 million of net cash flows from operating activities after paying cash
      interest of $415 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 $635 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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restrictions .
      In
      addition, effective January 2, 2006, we will have additional borrowing
      availability of $600 million as a result of the Bridge Loan. Continued access
      to
      our credit facilities and Bridge Loan is subject to our remaining in compliance
      with the covenants of these credit facilities and Bridge Loan, including
      covenants tied to our operating performance. If our operating performance
      results in non-compliance with these covenants, or if any of certain other
      events of non-compliance under these credit facilities, Bridge Loan or
      indentures governing our debt occur, funding under the credit facilities and
      Bridge Loan may not be available and defaults on some or potentially all of
      our
      debt obligations could occur. An event of default under the covenants governing
      any of our debt instruments could result in the acceleration of our payment
      obligations under that debt and, under certain circumstances, in cross-defaults
      under our other debt obligations, which could have a material adverse effect
      on
      our consolidated financial condition and results of operations.





***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, CCH I or CCH
      II
      to satisfy their debt payment obligations or a bankruptcy filing with respect
      to
      Charter Holdings, CIH, CCH I or CCH II 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.





A s
      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 $832 million to CCH
      II
      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 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.





A s
      of
      September 30, 2005, Charter Holdings, CIH, CCH I and CCH II had approximately
      $9.4 billion principal amount of high-yield notes outstanding with approximately
      $105 million, $684 million and $8.6 billion maturing in 2007, 2009 and
      thereafter, respectively. Charter, Charter Holdings, CIH, CCH I and CCH II
      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 CCO Holdings and its subsidiaries to a parent company (including Charter,
      Charter Holdco, CCHC, Charter Holdings, CIH, CCH I and CCH II) for
      payment of principal on parent company notes are
      restricted by the Bridge Loan and the indentures governing the 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.





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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 ,
      2005 financial
      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.





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
      of September
      30, 2005 and
      December 31, 2004, long-term debt totaled approximately $8.8 billion and $8.3
      billion, respectively. This debt was comprised of approximately $5.5 billion
      and
      $5.5 billion of
      credit
      facility debt and $3.3
      billion and $2.8 billion accreted value of high-yield notes, respectively.
      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 8.3% and 8.2%,
      respectively, resulting in a blended weighted average interest rate of 7.8%
      and
      7.3%, respectively. The
      interest rate on approximately 55% and 59% 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.





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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 $823 million of net cash flows from operating
      activities after paying cash interest of $415 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 $635 million.




***O*** ***perating
      Activities.*** ** Net
      cash
      provided by operating activities increased $14 million, or 2%, from $809 million
      for the nine months ended September 30, 2004 to $823 million for the nine months
      ended September 30, 2005. For the nine months ended September 30, 2005, net
      cash
      provided by operating activities increased primarily as a result of changes
      in
      operating assets and liabilities that used $65 million less cash during the
      nine
      months ended September 30, 2005 than the corresponding period in 2004 combined
      with an increase in revenue over cash costs partially offset by an increase
      in
      cash interest expense of $90 million over the corresponding prior period.




***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.*** ** Net
      cash
      used in financing activities for the nine months ended September 30, 2005 and
      2004 was $635 million and $897 million, respectively. Financing activities
      used
      $262 million less cash during the nine months ended September 30, 2005 than
      the
      corresponding period in 2004 primarily as a result of a decrease in net
      repayments of long-term debt and in payments for debt issuance costs offset
      partially by an increase in distributions to parent company.





***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.




Upgrading
      our cable systems has enabled us to offer digital television, high-speed
      Internet services, VOD, interactive services, additional channels and tiers,
      expanded pay-per-view options and telephone services to a larger customer base.
      Our capital expenditures are funded primarily from cash flows from operating
      activities, the issuance of debt and borrowings under credit facilities. In
      addition, during the nine months ended September
      30, 2005 and
      2004, our liabilities related to capital expenditures increased $39 million
      and
      decreased $11 million, respectively.





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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
            
            $
            344Scalable
                infrastructure (b)
            
            
            49
            
            
            21
            
            
            138
            
            
            54Line
                extensions (c)
            
            
            37
            
            
            34
            
            
            114
            
            
            94Upgrade/Rebuild
                (d)
            
            
            13
            
            
            10
            
            
            35
            
            
            28Support
                capital (e)
            
            
            80
            
            
            44
            
            
            206
            
            
            96Total
                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:





·incur
                  additional debt;
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  ·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. A s
      of
      September 30, 2005, Charter Holdings, CIH, CCH I and CCH II had approximately
      $9.4 billion principal amount of high-yield notes outstanding with approximately
      $105 million, $684 million and $8.6 billion maturing in 2007, 2009 and
      thereafter, respectively. Charter, Charter Holdings, CIH, CCH I and CCH II
      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 CCO Holdings and Charter Operating. During
      the nine months ended September 30, 2005, we distributed $832 million to CCH
      II
      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 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 CCO Holdings and its subsidiaries to a parent company (including Charter,
      Charter Holdco, CCHC, Charter Holdings, CIH, CCH I and CCH II) for
      payment of principal on parent company notes are
      restricted by the Bridge Loan and the indentures governing the 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.





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




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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 ,
      2005 financial
      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 CCO Holdings’ 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 CCO Holdings’
      subsidiaries to distribute funds to CCO Holdings 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 CCO Holdings’
      subsidiaries would be payable from the subsidiaries’ assets, prior to any
      distribution of the subsidiaries’ assets to pay the interest and principal
      amounts on CCO Holdings’ notes. In addition, the lenders under our credit
      facilities could foreclose on their collateral, which includes equity interests
      in CCO Holdings’ 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.




***CCO
      Holdings Relies on its Subsidiaries to Meet its Liquidity Needs, and CCO
      Holdings’ Notes are Structurally Subordinated to all Liabilities of its
      Subsidiaries.*** ** We
      rely
      on our subsidiaries to make distributions or other payments to CCO Holdings
      to
      enable CCO Holdings to make payments on its notes. The borrowers and guarantors
      under the Charter Operating credit facilities are CCO Holdings’ indirect
      subsidiaries. A number of CCO Holdings’ subsidiaries are also obligors under
      other debt instruments, including Charter Operating, which is a co-issuer of
      senior-second lien notes. As of September 30, 2005, our total debt was
      approximately $8.8 billion, of which $7.5 billion was structurally senior to
      the
      CCO Holdings notes. The Charter Operating credit facilities and the indentures
      governing the senior notes and senior second-lien notes issued by subsidiaries
      of CCO Holdings contain restrictive covenants that limit the ability of such
      subsidiaries to make distributions or other payments to CCO Holdings.





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 CCO Holdings’ subsidiaries
      would be payable from the subsidiaries’ assets, prior to any distribution of the
      subsidiaries’ assets to pay the interest and principal amounts on CCO Holdings
      notes. In addition, the lenders under our credit facilities and noteholders
      under our Charter Operating notes could foreclose on their collateral, which
      includes equity interests in CCO Holdings’ subsidiaries, and they could exercise
      other rights of secured creditors. Any default under any of our credit
      facilities, the Bridge Loan or notes could force us to examine




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all
      options, including seeking the protection of the bankruptcy laws. In the event
      of the bankruptcy, liquidation or dissolution of a subsidiary, following payment
      by such subsidiary of its liabilities, the lenders under our credit facilities
      and the holders of the other debt instruments and all other creditors of CCO
      Holdings’ subsidiaries would have the right to be paid before holders of CCO
      Holdings notes from any of CCO Holdings’ subsidiaries’ assets. Such subsidiaries
      may not have sufficient assets remaining to make any payments to CCO Holdings
      as
      an equity holder or otherwise and may be restricted by bankruptcy and insolvency
      laws from making any such payments.





The
      foregoing contractual and legal restrictions could limit CCO
      Holdings’ ability to make payments of principal and/or interest to the holders
      of its notes. Further, if CCO Holdings 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 CCO Holdings
      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.





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.




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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 CCO Holdings’ subsidiaries, the credit facilities, Bridge Loan
      and the notes would have to be repaid by CCO Holdings’ subsidiaries before their
      assets could be available to CCO Holdings or its parent companies to repurchase
      CCO Holdings’ 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 CCO Holdings’ 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 CCO Holdings and its parent
      companies’ notes. See "— Certain Trends and Uncertainties —
      Liquidity."




***Variable
      Interest Rates.*** At
      September  30,
      2005,
      excluding the effects of hedging, approximately 69% 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 8.3% and 8.2%,
      respectively, resulting in a blended weighted average interest rate of 7.8%
      and
      7.3%, respectively. The interest rate on approximately 55% and 59% 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*** **.** It
      is
      difficult to assess the impact that the general economic slowdown and global
      conflict will have on future operations. However, the economic slowdown has
      resulted and could continue to result in reduced spending by customers and
      advertisers, which could reduce our revenues, and also could affect our ability
      to collect accounts receivable and maintain customers. Reductions in operating
      revenues would likely negatively affect our ability to make expected capital
      expenditures and could also result in our inability to meet our obligations
      under our financing agreements. These developments could also have a negative
      impact on our financing and variable interest rate agreements through
      disruptions in the market or negative market conditions.





***Regulation
      and Legislation*** **.** Cable
      system operations are extensively regulated at the federal, state, and local
      level, including rate regulation of basic service and equipment and municipal
      approval of franchise agreements and their terms, such as franchise requirements
      to upgrade cable plant and meet specified customer service standards. Additional
      legislation and regulation is always possible. 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 10.11.





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





The
      index
      to the exhibits begins on page 50 of this quarterly report.





48
 Table
          of Contents


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, CCH
      II,
      LLC and CCH II Capital Corp. have duly caused this quarterly report to be signed
      on their behalf by the undersigned, thereunto duly authorized.





CCH
      II,
      LLC


Registrant


By:
      CHARTER COMMUNICATIONS, INC., Sole Manager





Dated:
      November 9, 2005




By: /s/
      Paul E. Martin


Name:
      Paul E. Martin


Title: *Senior
      Vice President,*


*Interim
      Chief Financial Officer,*


*Principal
      Accounting Officer and*


*Corporate
      Controller*


*(Principal
      Financial Officer and*


*Principal
      Accounting Officer)*











CCH
      II
      CAPITAL CORP.


Registrant





Dated:
      November 9, 2005




By: /s/
      Paul E. Martin


Name:
      Paul E. Martin


Title: *Senior
      Vice President,*


*Interim
      Chief Financial Officer,*


*Principal
      Accounting Officer and*


*Corporate
      Controller*


*(Principal
      Financial Officer and*


*Principal
      Accounting Officer)*














49
 Table
          of Contents


**EXHIBIT
      INDEX**





Exhibit
                Number
              Description
                  of Document3.1
              Certificate
                  of Formation of CCO Holdings, LLC (incorporated by reference to
                  Exhibit 3.1 to the registration statement on Form S-4
                  of CCO
                  Holdings, LLC and CCO Holdings Capital Corporation filed on February
                  6,
                  2004 (File No. 333-112593)).3.2
              Certificate
                  of Correction of Certificate of Formation of CCO Holdings, LLC
                  (incorporated by reference to Exhibit 3.2 to the registration
                  statement on Form S-4 of CCO Holdings, LLC and CCO Holdings
                  Capital
                  Corporation filed on February 6, 2004 (File No.
                  333-112593)).3.3
              Amended
                  and Restated Limited Liability Company Agreement of CCO Holdings,
                  LLC,
                  dated as of June 19, 2003 (incorporated by reference to Exhibit 3.3
                  to the registration statement on Form S-4 of CCO Holdings,
                  LLC and
                  CCO Holdings Capital Corporation filed on February 6, 2004 (File
                  No.
                  333-112593)).3.4
              Certificate
                  of Incorporation of CCO Holdings, LLC Capital Corp. (originally
                  named CC
                  Holdco I Capital Corp.) (incorporated by reference to Exhibit 3.4
                  to
                  the registration statement on Form S-4 of CCO Holdings,
                  LLC and CCO
                  Holdings Capital Corporation filed on February 6, 2004 (File No.
                  333-112593)).3.5
              Certificate
                  of Amendment of Certificate of Incorporation of CCO Holdings Capital
                  Corp.
                  (incorporated by reference to Exhibit 3.5 to the registration
                  statement on Form S-4 of CCO Holdings, LLC and CCO Holdings
                  Capital
                  Corporation filed on February 6, 2004 (File No.
                  333-112593)).3.6
              By-laws
                  of CCO Holdings Capital Corp. (incorporated by reference to
                  Exhibit 3.6 to the registration statement on Form S-4
                  of CCO
                  Holdings, LLC and CCO Holdings Capital Corporation filed on February
                  6,
                  2004 (File No. 333-112593)).4.1
              Indenture
                  relating to the 83/4%
                  Senior Notes due 2013, dated as of November 10, 2003, by
                  and among
                  CCO Holdings, LLC, CCO Holdings Capital Corp. and Wells Fargo Bank,
                  N.A.,
                  as trustee (incorporated by reference to Exhibit 4.1 to
                  Charter
                  Communications, Inc.’s current report on Form 8-K filed on
                  November 12, 2003 (File No. 000-27927)).4.2
              Indenture
                  dated as of December 15, 2004 among CCO Holdings, LLC, CCO
                  Holdings
                  Capital Corp. and Wells Fargo Bank, N.A., as trustee (incorporated
                  by
                  reference to Exhibit 10.1 to the current report on Form 8-K
                  of
                  CCO Holdings, LLC filed on December 21, 2004 (File No.
                  333-112593)).4.3
              Exchange
                  and Registration Rights Agreement dated December 15, 2004
                  by and
                  among CCO Holdings, LLC, CCO Holdings Capital Corp, on the one
                  hand, and
                  Credit Suisse First Boston LLC and Citigroup Global Markets Inc,
                  on the
                  other hand, as representatives (incorporated by reference to
                  Exhibit 10.2 to the current report on Form 8-K of
                  CCO Holdings,
                  LLC filed on December 21, 2004 (File
                  No. 333-112593)).4.4
              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)).10.1†
              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)).10.2
              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)).10.3
              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)).
   50
 Table
            of Contents
   10.4
              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)).10.5+
              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)).10.6+
              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)).10.7+
              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)).10.8+
              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)).10.9+
              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 of
                  Charter
                  Communications, Inc. filed on September 9, 2005 (File
                  No. 000-27927)).10.10+
              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)).10.11+
              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).








*
      Document attached





+
      Management compensatory plan or arrangement





†
      Portions of this document have been omitted pursuant to a request for
      confidential treatment.  The omitted portions of this document have
      been
      filed with the Securities and Exchange Commission.








51