**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 March 31, 2006**





**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**
              **Delaware**
            
            **86-1067239**
              **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 large accelerated filers, accelerated
      filers, or non-accelerated filers. See definition of “accelerated filer and
      large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer o  Accelerated
      filer o  Non-accelerated
      filer þ





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.





**CCO
      Holdings, LLC**


**CCO
      Holdings Capital Corp.**


**Quarterly
      Report on Form 10-Q for the Period ended March 31, 2006**





**Table
      of Contents**





**Page**PART
                I. FINANCIAL INFORMATIONItem
                1.Financial
                Statements - CCO Holdings, LLC and SubsidiariesCondensed
                Consolidated Balance Sheets as ofMarch
                31, 2006and
                December 31, 2005
            4Condensed
                Consolidated Statements of Operations for the threemonths
                endedMarch
                31, 2006and
                2005
            5Condensed
                Consolidated Statements of Cash Flows for thethree
                months endedMarch
                31, 2006and 2005
            6Notes
                to Condensed Consolidated Financial Statements
            7Item
                2.Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            18Item
                4.Controls
                and Procedures
            27PART
                II. OTHER INFORMATIONItem
                1.Legal
                Proceedings
            29Item
                1A. Risk Factors
            29Item
                5. Other Information
            39Item
                6.Exhibits
            39SIGNATURES
            40EXHIBIT
                INDEX
            41





This
      quarterly report on Form 10-Q is for the three months ended March 31, 2006.
      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.














**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
                and our parent companies’ ability to be able to provide under the
                applicable debt instruments such funds (by dividend, investment or
                otherwise) to the applicable obligor of such
                debt; ·
            our
              and our parent companies’ ability to comply with all covenants in our and
              our parent companies’ indentures and credit facilities, any violation of
              which would result in a violation of the applicable facility or indenture
              and could trigger a default of other obligations under cross-default
              provisions;


·
            our
                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 through new issuances, exchange
                offers or otherwise, including restructuring our and our parent companies’
                balance sheet and leverage
                position;


·
            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
                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


**PART
      I. FINANCIAL INFORMATION.**








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








**CCO
      HOLDINGS, LLC AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


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





**March
                31****,**
            
            **December
                31,****2006**
            
            **2005****(Unaudited)****ASSETS**CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            24
            
            $
            3Accounts
                receivable, less allowance for doubtful accounts of$15
                and $17, respectively
            
            
            148
            
            
            212Prepaid
                expenses and other current assets
            
            
            23
            
            
            22Assets
                held for sale
            
            
            754
            
            
            --Total
                current assets
            
            
            949
            
            
            237INVESTMENT
                IN CABLE PROPERTIES:Property,
                plant and equipment, net of accumulateddepreciation
                of $6,679 and $6,712, respectively
            
            
            5,402
            
            
            5,800Franchises,
                net
            
            
            9,287
            
            
            9,826Total
                investment in cable properties, net
            
            
            14,689
            
            
            15,626OTHER
                NONCURRENT ASSETS
            
            
            228
            
            
            224Total
                assets
            
            $
            15,866
            
            $
            16,087**LIABILITIES
                AND MEMBER’S EQUITY**CURRENT
                LIABILITIES:Accounts
                payable and accrued expenses
            
            $
            864
            
            $
            875Payables
                to related party
            
            
            91
            
            
            95Liabilities
                held for sale
            
            
            19
            
            
            --Total
                current liabilities
            
            
            974
            
            
            970LONG-TERM
                DEBT
            
            
            8,679
            
            
            9,023LOANS
                PAYABLE - RELATED PARTY
            
            
            324
            
            
            22DEFERRED
                MANAGEMENT FEES - RELATED PARTY
            
            
            14
            
            
            14OTHER
                LONG-TERM LIABILITIES
            
            
            369
            
            
            392MINORITY
                INTEREST
            
            
            626
            
            
            622MEMBER’S
                EQUITY:Member’s
                equity
            
            
            4,879
            
            
            5,042Accumulated
                other comprehensive income
            
            
            1
            
            
            2Total
                member’s equity
            
            
            4,880
            
            
            5,044Total
                liabilities and member’s equity
            
            $
            15,866
            
            $
            16,087


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


**CCO
      HOLDINGS, LLC AND SUBSIDIARIES**


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


**(DOLLARS
      IN MILLIONS)**


**Unaudited**









**Three
                Months Ended March 31,****2006**
            
            **2005**REVENUES
            
            $
            1,374
            
            $
            1,271COSTS
                AND EXPENSES:Operating
                (excluding depreciation and amortization)
            
            
            626
            
            
            559Selling,
                general and administrative
            
            
            281
            
            
            241Depreciation
                and amortization
            
            
            358
            
            
            381Asset
                impairment charges
            
            
            99
            
            
            31Other
                operating expenses, net
            
            
            3
            
            
            81,367
            
            
            1,220Income
                from operations
            
            
            7
            
            
            51OTHER
                INCOME AND (EXPENSES):Interest
                expense, net
            
            
            (192
            )
            
            (156
            )Other
                income, net
            
            
            6
            
            
            20(186
            )
            
            (136
            )Loss
                before income taxes
            
            
            (179
            )
            
            (85
            )INCOME
                TAX EXPENSE
            
            
            (2
            )
            
            (6
            )Net
                loss
            
            $
            (181
            )
            $
            (91
            )


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


**CCO
      HOLDINGS, LLC AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(DOLLARS
      IN MILLIONS)**


**Unaudited**





**Three
                Months Ended****March
                31,****2006**
            
            **2005**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (181
            )
            $
            (91
            )Adjustments
                to reconcile net loss to net cash flows from operating
                activities:Depreciation
                and amortization
            
            
            358
            
            
            381Asset
                impairment charges
            
            
            99
            
            
            31Noncash
                interest expense
            
            
            8
            
            
            7Deferred
                income taxes
            
            
            --
            
            
            5Other,
                net
            
            
            (2
            )
            
            (17
            )Changes
                in operating assets and liabilities, net of effects from acquisitions
                and
                dispositions:Accounts
                receivable
            
            
            60
            
            
            32Prepaid
                expenses and other assets
            
            
            (3
            )
            
            (2
            )Accounts
                payable, accrued expenses and other
            
            
            (11
            )
            
            (72
            )Receivables
                from and payables to related party, including management
                fees
            
            
            (5
            )
            
            (5
            )Net
                cash flows from operating activities
            
            
            323
            
            
            269CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchases
                of property, plant and equipment
            
            
            (241
            )
            
            (211
            )Change
                in accrued expenses related to capital expenditures
            
            
            (7
            )
            
            16Proceeds
                from sale of assets
            
            
            9
            
            
            6Purchase
                of cable system
            
            
            (42
            )
            
            --Purchases
                of investments
            
            
            --
            
            
            (1
            )Proceeds
                from investments
            
            
            5
            
            
            --Net
                cash flows from investing activities
            
            
            (276
            )
            
            (190
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Borrowings
                of long-term debt
            
            
            415
            
            
            200Borrowings
                from related parties
            
            
            300
            
            
            139Repayments
                of long-term debt
            
            
            (759
            )
            
            (740
            )Repayments
                to related parties
            
            
            --
            
            
            (7
            )Payments
                for debt issuance costs
            
            
            --
            
            
            (3
            )Contributions
            
            
            148
            
            
            --Distributions
            
            
            (130
            )
            
            (188
            )Net
                cash flows from financing activities
            
            
            (26
            )
            
            (599
            )NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            21
            
            
            (520
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            3
            
            
            546CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            24
            
            $
            26CASH
                PAID FOR INTEREST
            
            $
            127
            
            $
            106NONCASH
                TRANSACTIONS:Issuance
                of debt by Charter Communications Operating, LLC
            
            $
            37
            
            $
            271Retirement
                of Renaissance Media Group LLC debt
            
            $
            (37
            )
            $
            --Retirement
                of Charter Communications Holdings, LLC notes and accrued
                interest
            
            $
            --
            
            $
            (280
            )Transfer
                of property, plant and equipment from parent company
            
            $
            --
            
            $
            139





The
            accompanying notes are an integral part of these condensed consolidated
            financial statements.
 6
 **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
      March 31, 2006 are equity interests in its operating subsidiaries. CCO Holdings
      is a direct subsidiary of CCH II, LLC ("CCH II"), which is an indirect
      subsidiary of Charter Communications Holdings, LLC ("Charter Holdings"). Charter
      Holdings is an indirect subsidiary of Charter Communications, Inc. ("Charter").
      The condensed consolidated financial statements include the accounts of CCO
      Holdings and all of its subsidiaries where the underlying operations reside,
      which are 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
      2005 amounts have been reclassified to conform with the 2006
      presentation.




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


The
      Company had net loss of $181 million and $91 million for the three months ended
      March 31, 2006 and 2005, respectively. The Company’s net cash flows from
      operating activities were $323 million and $269 million for the three months
      ended March 31, 2006 and 2005, respectively.





***Recent
      Financing Transactions***





On
      January 30, 2006, CCH II and CCH II Capital Corp., the Company’s parent
      companies, issued $450 million in debt securities, the proceeds of which were
      provided, directly or indirectly through loans payable-related party and capital
      contributions, to Charter Communications Operating, LLC ("Charter Operating"),
      which used such funds to reduce borrowings, but not commitments, under the
      revolving portion of its credit facilities.





In
      April
      2006, Charter Operating completed a $6.85 billion refinancing of its credit
      facilities including a new $350 million revolving/term facility (which converts
      to a term loan in one year), a $5.0 billion term loan due in 2013 and certain
      amendments to the existing $1.5 billion revolving credit facility. In addition,
      the refinancing reduced margins on Eurodollar rate Term A & B loans to
      2.625% from a weighted average of 3.15% previously and margins on base rate
      term
      loans to 1.625% from a weighted average of 2.15% previously. Concurrent with
      this refinancing, the Company’s bridge loan was terminated.





7
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




The
      Company's long-term financing as of March 31, 2006 consists of $5.4 billion
      of
      credit facility debt and $3.3 billion accreted value of high-yield notes. Pro
      forma for the completion of the credit facility refinancing discussed above,
      none of the Company’s debt matures in the remainder of 2006, and in 2007 and
      2008, $25 million and $128 million mature, respectively. In 2009 and beyond,
      significant additional amounts will become due under the Company’s remaining
      long-term debt obligations.





The
      Company requires significant cash to fund debt service costs, capital
      expenditures and ongoing operations. The Company has historically funded these
      requirements through cash flows from operating activities, borrowings under
      its
      credit facilities, equity contributions from its parent companies, sales of
      assets, issuances of debt securities and cash on hand. However, the mix of
      funding sources changes from period to period. For the three months ended March
      31, 2006, the Company generated $323 million of net cash flows from operating
      activities, after paying cash interest of $127 million. In addition, the Company
      used approximately $241 million for purchases of property, plant and equipment.
      Finally, the Company used $26 million of net cash flows in financing
      activities.





The
      Company expects that cash on hand, cash flows from operating activities,
      proceeds from sales of assets and the amounts available under its credit
      facilities will be adequate to meet its and its parent companies’ cash needs
      through 2007. The Company believes that cash flows from operating activities
      and
      amounts available under the Company’s credit facilities may not be sufficient to
      fund the Company’s operations and satisfy its and its parent companies’ interest
      and debt repayment obligations in 2008 and will not be sufficient to fund such
      needs in 2009 and beyond. The Company has been advised that Charter continues
      to
      work with its financial advisors in its approach to addressing liquidity, debt
      maturities and the Company’s overall balance sheet leverage.





***Debt
      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. The Charter Operating credit facilities, along with the Company’s
      indentures, contain certain restrictive covenants, some of which require the
      Company to maintain specified financial ratios and meet financial tests and
      to
      provide annual audited financial statements with an unqualified opinion from
      the
      Company’s independent auditors. As of March 31, 2006, 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 for the next
      twelve months. As of March 31, 2006, t he Company’s potential availability under its credit facilities totaled
      approximately $904 million, although the actual availability at that time was
      only $516 million because of limits imposed by covenant restrictions .
      However, pro forma for the completion of the credit facility refinancing
      discussed above, the Company’s potential availability under its credit
      facilities as of March 31, 2006 would have been approximately $1.3 billion,
      although actual covenanted availability
      of $516 million would remain unchanged. Continued
      access to the Company’s credit facilities is subject to the Company remaining in
      compliance with these covenants, including covenants tied to the Company’s
      operating performance. If any events of non-compliance occur, funding under
      the
      credit facilities may not be available and defaults on some or potentially
      all
      of the Company’s debt obligations could occur. An event of default under 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 and results of
      operations.





***Parent
      Company Debt Obligations***





Any
      financial or liquidity problems of the Company’s parent companies could cause
      serious disruption to the Company's business and have a material adverse effect
      on the Company’s business and results of operations. A failure by Charter
      Holdings, CCH I Holdings, LLC ("CIH"), CCH I, LLC (“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 Company’s 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. On a
      consolidated basis, the




8
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




Company’s
      parent companies have a significant level of debt, which, including the
      Company’s debt, totaled approximately $19.5 billion as of March 31, 2006, as
      discussed below.





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
      $20 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 and its subsidiaries. As
      of March
      31,
      2006 ,
      Charter
      Holdco was owed $24 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 $99 million of governmental securities pledged as security for the next
      four
      scheduled semi-annual interest payments on Charter’s 5.875% convertible senior
      notes.





A s
      of
      March 31, 2006, Charter Holdings, CIH, CCH I and CCH II had approximately $9.9
      billion principal amount of high-yield notes outstanding with approximately
      $105
      million, $0, $684 million and $9.1 billion maturing in 2007, 2008, 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 Company’s ability and the ability of the parent
      companies to raise additional capital at reasonable rates or at all is
      uncertain. During
      the three months ended March 31, 2006, the Company distributed $130 million
      of
      cash to its parent company.





Distributions
      by Charter’s subsidiaries to a parent company (including Charter, CCHC, LLC
      (“CCHC”), Charter Holdco, Charter Holdings, CIH, CCH I and CCH II) for
      payment of principal on parent company notes are
      restricted under the indentures governing the CIH notes, CCH I notes, CCH II
      notes, CCO Holdings notes and Charter Operating notes unless
      there is no default, each applicable subsidiary’s leverage ratio test is met at
      the time of such distribution and, in the case of Charter’s convertible
      senior notes, other specified tests are met. For
      the
      quarter ended March 31, 2006, there was no default under any of these indentures
      and the other specified tests were met. However, certain of the Company’s
      subsidiaries did not meet their respective leverage ratio tests based on March
      31, 2006 financial results .
      As a
      result, distributions from certain of the Company’s subsidiaries to their parent
      companies have been restricted and will continue to be restricted until those
      tests are met. Distributions
      by Charter Operating for payment of principal on parent company notes are
      further restricted by the covenants in the credit facilities.





Distributions
      by CIH, CCH I, CCH II, CCO Holdings and Charter Operating to a parent company
      for payment of parent company interest are permitted if there is no default
      under the aforementioned indentures. However, distributions for payment of
      interest on Charter’s convertible
      senior notes are further limited to when each applicable subsidiary’s leverage
      ratio test is met and other specified tests are met. There can be no assurance
      that they will satisfy these tests at the time of such
      distribution.





***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
      Charter’s 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 March
      31,
      2006, t here
      was
      no default under Charter Holdings’ indentures and
      the
      other specified tests were met. However, Charter Holdings did not meet the
      leverage ratio test of 8.75 to 1.0 based on March 31, 2006 financial
      results . As
      a
      result, distributions from Charter Holdings to Charter or Charter Holdco have
      been restricted and will continue to be restricted until that test is met. During
      this restriction period, the
      indentures governing the Charter Holdings notes permit Charter Holdings and
      its
      subsidiaries to make specified investments (that are not restricted payments)
      in
      Charter Holdco or Charter up to an amount determined by a formula, as long
      as
      there is no default under the indentures.





**3.**
            **Sale
                of Assets**





In
      February 2006, the Company signed three separate definitive agreements to sell
      certain cable television systems serving a total of approximately 360,000 analog
      video customers in West Virginia, Virginia, Illinois, Kentucky,




9
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




Nevada,
      Colorado, New Mexico and Utah for a
      total of approximately $971 million. As of March 31, 2006, 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 three months ended March 31,
      2006 of approximately $99 million. In addition, assets and liabilities to be
      sold were reclassified as held for sale. Assets held for sale on the Company's
      balance sheet as of March 31, 2006 included current assets of approximately
      $5
      million, property, plant and equipment of approximately $312 million and
      franchises of approximately $437 million. Liabilities held for sale on the
      Company's balance sheet as of March 31, 2006 included current liabilities of
      approximately $6 million and other long-term liabilities of approximately $13
      million.





In
      2005,
      the Company closed the sale of certain cable systems in Texas, West Virginia
      and
      Nebraska representing a total of approximately 33,000 analog video customers.
      During the three months ended March 31, 2005, certain of those cable systems
      met
      the criteria for assets held for sale. As such, the assets were written down
      to
      fair value less estimated costs to sell resulting in asset impairment charges
      during the three months ended March 31, 2005 of approximately $31 million.





**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. 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.





As
      of
      March 31, 2006 and December 31, 2005, indefinite-lived and finite-lived
      intangible assets are presented in the following table:





**March
                31, 2006**
            
            **December 31,
                2005****Gross**
              **Carrying**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
              **Carrying**
              **Amount**
            
            **Gross**
              **Carrying**
              **Amount**
            
            **Accumulated
                Amortization**
            
            **Net**
              **Carrying**
              **Amount****Indefinite-lived
                intangible assets:**Franchises
                with indefinite lives
            
            $
            9,270
            
            $
            --
            
            $
            9,270
            
            $
            9,806
            
            $
            --
            
            $
            9,806Goodwill
            
            
            52
            
            
            --
            
            
            52
            
            
            52
            
            
            --
            
            
            52$
            9,322
            
            $
            --
            
            $
            9,322
            
            $
            9,858
            
            $
            --
            
            $
            9,858**Finite-lived
                intangible assets:**Franchises
                with finite lives
            
            $
            23
            
            $
            6
            
            $
            17
            
            $
            27
            
            $
            7
            
            $
            20





For
      the
      three months ended March 31, 2006, the net carrying amount of indefinite-lived
      and finite-lived franchises was reduced by $434 million and $3 million,
      respectively, related to franchises reclassified as assets held for sale. For
      the three months ended March 31, 2006, franchises with indefinite lives also
      decreased $3 million related to a cable asset sale completed in the first
      quarter of 2006 and $99 million as a result of the asset impairment charges
      recorded related to assets held for sale (see Note 3). Franchise amortization
      expense for the three months ended March 31, 2006 and 2005 was approximately
      $0
      and $1 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 $2 million
      annually for




10
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




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.





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





Accounts
      payable and accrued expenses consist of the following as of March 31, 2006
      and
      December 31, 2005:





**March
                31,**
              **2006**
            
            **December 31,**
              **2005**Accounts
                payable - trade
            
            $
            81
            
            $
            100Accrued
                capital expenditures
            
            
            66
            
            
            73Accrued
                expenses:Interest
            
            
            173
            
            
            118Programming
                costs
            
            
            288
            
            
            272Franchise-related
                fees
            
            
            44
            
            
            67Compensation
            
            
            54
            
            
            60Other
            
            
            158
            
            
            185$
            864
            
            $
            875





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





Long-term
      debt consists of the following as of March
      31,
      2006 and
      December 31, 2005:





**March
                31, 2006**
            
            **December
                31, 2005****Principal
                Amount**
            
            **Accreted
                Value**
            
            **Principal
                Amount**
            
            **Accreted
                Value****Long-Term
                Debt**CCO
                Holdings, LLC:83⁄4%
                senior notes due 2013
            
            $
            800
            
            $
            795
            
            $
            800
            
            $
            794Senior
                floating 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
            
            
            770
            
            
            770
            
            
            733
            
            
            733Renaissance
                Media Group LLC:10.000%
                senior discount notes due 2008
            
            
            77
            
            
            78
            
            
            114
            
            
            115**Credit
                Facilities**Charter
                Operating
            
            
            5,386
            
            
            5,386
            
            
            5,731
            
            
            5,731$
            8,683
            
            $
            8,679
            
            $
            9,028
            
            $
            9,023





The
      accreted values presented above generally 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.





On
      March
      13, 2006, the Company exchanged $37 million of Renaissance Media Group LLC
      10%
      senior discount notes due 2008 for $37 million principal amount of new Charter
      Operating 8 3/8% senior second-lien notes due 2014 issued in a private
      transaction under Rule 144A. The terms and conditions of the new Charter
      Operating 8 3/8% senior second-lien notes due 2014 are identical to Charter
      Operating’s currently outstanding 8 3/8% senior second-lien notes due
      2014.





11
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




In
      March
      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 $271
      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 $284 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 canceled.





***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 three months ended March
      31,
      2005 of
      approximately $5 million included
      in other expense on the Company’s condensed consolidated statements of
      operations .


**7.**
              **Loans
                  Payable-Related Party**


Loans
      payable-related party as of March 31, 2006 consists of loans from Charter
      Holdco, Charter Holdings and CCH II to the Company of $24 million, $105 million
      and $195 million, respectively. Loans payable-related party as of December
      31,
      2005 consists of loans from Charter Holdco to the Company of $22 million.
 These loans bear interest at a rate of LIBOR plus 3.0%, reset quarterly.
 These loans are subject to certain limitations and may be repaid with
      borrowings under the Company’s revolving credit facility.


**8.**
              **Minority
                  Interest**


Minority
      interest on the Company’s consolidated balance sheets as of March 31, 2006 and
      December 31, 2005 primarily represents preferred membership interests in CC
      VIII, LLC ("CC VIII"), an indirect subsidiary of CCO Holdings, of $626 million
      and $622 million, respectively. As
      more
      fully described in Note 19, this preferred interest is held by CCHC and Mr.
      Allen, Charter’s Chairman and controlling shareholder. Minority interest in the
      accompanying condensed consolidated statements of operations includes the 2%
      accretion of the preferred membership interests plus approximately 18.6% of
      CC
      VIII’s income, net of accretion.





**9.**
            **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 March 31, 2006 and 2005 was $182 million and $82 million,
      respectively.





**10.**
            **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.





12
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




The
      Company does not hold or issue derivative instruments for trading purposes. The
      Company does, however, have certain interest rate derivative instruments that
      have been designated as cash flow hedging instruments. Such instruments
      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 March 31, 2006 and 2005, other income includes gains of $2 million
      and $1 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 March 31, 2006 and 2005,
      a
      loss of $1 million and a gain $9 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 other income in
      the
      Company’s condensed consolidated statements of operations. For the three months
      ended March 31, 2006 and 2005, other income includes gains of $6 million and
      $26
      million, respectively, for interest rate derivative instruments not designated
      as hedges.





As
      of
      March 31, 2006 and December 31, 2005, the Company had outstanding $1.8 billion
      and $1.8 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.


**11.**
              **Revenues**


Revenues
      consist of the following for the three months ended March 31, 2006 and
      2005:





**Three
                Months**
              **Ended
                March 31,****2006**
            
            **2005**Video
            
            $
            869
            
            $
            842High-speed
                Internet
            
            
            254
            
            
            215Telephone
            
            
            20
            
            
            6Advertising
                sales
            
            
            70
            
            
            64Commercial
            
            
            76
            
            
            65Other
            
            
            85
            
            
            79$
            1,374
            
            $
            1,271





13
 **CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**


**12.**
            **Operating
                Expenses**





Operating
      expenses consist of the following for the three months ended March 31, 2006
      and
      2005:





**Three
                Months**
              **Ended
                March 31,****2006**
            
            **2005**Programming
            
            $
            391
            
            $
            358Service
            
            
            209
            
            
            176Advertising
                sales
            
            
            26
            
            
            25$
            626
            
            $
            559





**13.**
            **Selling,
                General and Administrative
                Expenses**





Selling,
      general and administrative expenses consist of the following for the three
      months ended March 31, 2006 and 2005:





**Three
                Months**
              **Ended
                March 31,****2006**
            
            **2005**General
                and administrative
            
            $
            243
            
            $
            206Marketing
            
            
            38
            
            
            35$
            281
            
            $
            241





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





**14.**
            **Other
                Operating Expenses**





Other
      operating expenses consist of the following for the three months ended March
      31,
      2006 and 2005:





**Three
                Months**
              **Ended
                March 31,****2006**
            
            **2005**Loss
                on sale of assets, net
            
            $
            --
            
            $
            4Special
                charges, net
            
            
            3
            
            
            4$
            3
            
            $
            8





Special
      charges for the three months ended March 31, 2006 and 2005 primarily represent
      severance costs as a result of reducing workforce, consolidating administrative
      offices and executive severance.





14
 **CCO
          HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
          in millions, except where indicated)**


**15.**
            **Other
                Income**





Other
      income consists of the following for the three months ended March 31, 2006
      and
      2005:





**Three
                Months**
              **Ended
                March 31,****2006**
            
            **2005**Gain
                on derivative instruments and hedging activities, net
            
            $
            8
            
            $
            27Loss
                on extinguishment of debt
            
            
            --
            
            
            (5
            )Minority
                interest
            
            
            (4
            )
            
            (3
            )Other,
                net
            
            
            2
            
            
            1$
            6
            
            $
            20





**16.**
            **Income
                Taxes**





CCO
      Holdings is a single member limited liability company not subject to income
      tax.
      CCO Holdings holds all operations through indirect subsidiaries. The majority
      of
      these indirect subsidiaries are limited liability companies that are also not
      subject to income tax. However, certain of CCO Holdings’ indirect subsidiaries
      are corporations that are subject to income tax.





As
      of
      March 31, 2006 and December 31, 2005, the Company had net deferred income tax
      liabilities of approximately $213 million. The
      net
      deferred income tax liabilities relate to certain of the Company’s indirect
      subsidiaries, which file separate income tax returns.





During
      the three months ended March 31, 2006 and 2005, the Company recorded $2 million
      and $6 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 .





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 condensed consolidated financial
      condition or results of operations.




**17.**
              **Contingencies**
 The
        Company is a party to lawsuits and claims that arise in the ordinary course
        of
        conducting its business. In the opinion of management, after taking into
        account
        recorded liabilities, the outcome of these 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.





**18.**
            **Stock
                Compensation Plans**





Charter
      has stock option plans (the “Plans”) which provide for the grant of
      non-qualified stock options, stock appreciation rights, dividend equivalent
      rights, performance units and performance shares, share awards, phantom stock
      and/or shares of restricted stock (not to exceed 20,000,000), as each term
      is
      defined in the Plans. Employees, officers, consultants and directors of Charter
      and its subsidiaries and affiliates are eligible to receive grants under the
      Plans. Options granted generally vest over four to five years from the grant
      date, with 25% generally vesting on the anniversary of the grant date and
      ratably thereafter. Generally, options expire 10 years from the grant date.
      The Plans allow for the issuance of up to a total of 90,000,000 shares of
      Charter Class A common stock (or units convertible into Charter Class A
      common stock).





15
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model. The following weighted average assumptions
      were used for grants during the three months ended March 31, 2006 and 2005,
      respectively: risk-free interest rates of 4.5% and 3.7%; expected volatility
      of
      91.8% and 72.5%; and expected lives of 6.25 years and 4.5 years, respectively.
      The valuations assume no dividends are paid. During the three months ended
      March
      31, 2006, Charter granted 4.8 million stock options with a weighted average
      exercise price of $1.07. As of March 31, 2006, Charter had 30.7 million and
      10.7
      million options outstanding and exercisable, respectively, with weighted average
      exercise prices of $3.96 and $7.39, respectively, and weighted average remaining
      contractual lives of 8 years and 7 years, respectively.





On
      January 1, 2006, the Company adopted revised SFAS No. 123, *Share
      - Based payment,* which
      addresses the accounting for share-based payment transactions in which a company
      receives employee services in exchange for (a) equity instruments of that
      company or (b) liabilities that are based on the fair value of the company’s
      equity instruments or that may be settled by the issuance of such equity
      instruments. Because the Company adopted the fair value recognition provisions
      of SFAS No. 123 on January 1, 2003, the revised standard did not have a material
      impact on its financial statements. The Company recorded $4 million of option
      compensation expense which is included in general and administrative expense
      for
      each of the three months ended March 31, 2006 and 2005, respectively.





In
      February 2006, the Compensation Committee of Charter’s Board of Directors
      approved a modification to the financial performance measures under Charter's
      Long-Term Incentive Program ("LTIP") required to be met for the performance
      shares to vest. After the modification, management believes that approximately
      2.5 million of the performance shares are likely to vest. As such, expense
      of
      approximately $3 million will be amortized over the remaining two year service
      period. During the three months ended March 31, 2006, Charter granted an
      additional 7.9 million performance shares under the LTIP. The impacts of such
      grant and the modification of the 2005 awards were de minimis to the Company’s
      results of operations for the three months ended March 31, 2006.





**19.**
            **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, LLC***





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"). Mr. Allen granted the Comcast
      sellers the right to sell to him the CC VIII interest for approximately
      $630 million plus 4.5% interest annually from February 2000 (the "Comcast
      put right"). In April 2002, the Comcast sellers exercised the Comcast put right
      in full, and this transaction was consummated on June 6, 2003. Accordingly,
      Mr. Allen has become the holder of the CC VIII interest, indirectly
      through an affiliate. In
      the
      event of a liquidation of CC VIII, Mr. Allen would be entitled to a priority
      distribution with respect to a 2% priority return (which will continue to
      accrete). Any remaining distributions in liquidation would be distributed to
      CC
      V Holdings, LLC and Mr. Allen in proportion to CC V Holdings, LLC's capital
      account and Mr. Allen's capital account (which would have equaled 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).





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. Thereafter, the board of
      directors of Charter formed a Special Committee of independent directors to
      investigate the matter and take




16
 **CCO
            HOLDINGS, LLC AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **(dollars
            in millions, except where indicated)**




any
      other
      appropriate action on behalf of Charter with respect to this matter. After
      conducting an investigation of the relevant facts and circumstances, the Special
      Committee determined that a "scrivener’s error" had occurred in February 2000 in
      connection with the preparation of the last-minute revisions to the Bresnan
      transaction documents and that, as a result, Charter should seek the reformation
      of the Charter Holdco limited liability company agreement, or alternative
      relief, in order to restore and ensure the obligation that the CC VIII interest
      be automatically exchanged for Charter Holdco units.





As
      of
      October 31, 2005, Mr. Allen, the Special Committee, Charter, Charter Holdco
      and
      certain of their affiliates, 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"). 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 the 70% of the CC VIII preferred interests, 7.4% has
      been
      transferred by CII to CCHC for a subordinated exchangeable note with an initial
      accreted value of $48 million, accreting at 14%, compounded quarterly, with
      a
      15-year maturity (the "Note"). The remaining 62.6% has been transferred by
      CII
      to Charter Holdco, in accordance with the terms of the settlement for no
      additional monetary consideration. Charter Holdco contributed the 62.6% interest
      to CCHC.





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 the 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 February 28, 2009, 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, such amount, if redeemed prior to February
      28,
      2009, would also include a make whole up to the accreted value through February
      28, 2009. 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.





Charter’s
      Board of Directors has determined that the transferred CC VIII interests remain
      at CCHC.








17


**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 March
      31,
      2006 are
      equity interests in its operating subsidiaries. CCO
      Holdings is a direct subsidiary of CCH II, LLC ("CCH II"), which is an indirect
      subsidiary of Charter Communications Holdings, LLC ("Charter Holdings"). Charter
      Holdings is an indirect subsidiary of Charter Communications, Inc. ("Charter").
      " We, "  " us " and " our " refer to
      CCO Holdings and/or its subsidiaries.





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 March
      31,
      2006 and 2005 :





**Approximate
                as of****March
                31,**
            
            **March
                31,****2006
                (a)**
            
            **2005
                (a)****Cable
                Video Services:****Analog
                Video:**Residential
                (non-bulk) analog video customers (b)
            
            
            5,640,200
            
            
            5,732,600Multi-dwelling
                (bulk) and commercial unit customers (c)
            
            
            273,700
            
            
            252,200Total
                analog video customers (b)(c)
            
            
            5,913,900
            
            
            5,984,800**Digital
                Video:**Digital
                video customers (d)
            
            
            2,866,400
            
            
            2,694,600**Non-Video
                Cable Services:**Residential
                high-speed Internet customers (e)
            
            
            2,322,400
            
            
            1,978,400Residential
                telephone customers (f)
            
            
            191,100
            
            
            55,300





Included
      in the 70,900 net loss of analog video customers is approximately 15,800 of
      net
      losses related to systems impacted by hurricanes Katrina and Rita.





After
      giving effect to the acquisition of cable systems in January 2006 and the sale
      of certain non-strategic cable systems in July 2005, March 31, 2005 analog
      video
      customers, digital video customers, high-speed Internet customers and telephone
      customers would have been 5,974,600, 2,690,300, 1,990,200 and 70,300,
      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 March 31, 2006 and 2005, "customers"
                include approximately 48,500 and 43,100 persons whose accounts were
                over
                60 days past due in payment, approximately 11,900 and 7,000 persons
                whose
                accounts were over 90 days past due in payment, and approximately
                7,800
                and 3,600 of which were over 120 days past due in payment, respectively.





(b)
            "Analog
                video customers" include all customers who receive video services
                (including those who also purchase high-speed Internet and telephone
                services) but excludes approximately 287,700 and 241,700 customers
                at
                March 31, 2006 and 2005, respectively, who receive high-speed Internet
                service only or telephone service only and who are only counted as
                high-speed Internet customers or telephone
                customers.





(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




18




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 March
                31, 2006
                and 2005 are approximately 8,500 and 10,000 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.





(f)
            "Residential
                telephone customers" include all households receiving telephone
                service.





**Overview
      of Operations**





We
      have a
      history of net losses. Our net losses are principally attributable to
      insufficient revenue to cover the combination
      of operating costs and interest
      costs we incur because of our debt and depreciation expenses that we incur
      resulting from the capital investments we have made and continue to make in
      our
      cable properties. We expect that these expenses will remain significant, and
      we
      therefore expect to continue to report net losses for the foreseeable future.




For
      the
      three months ended March 31, 2006 and 2005, our income from operations, which
      includes depreciation and amortization expense and asset impairment charges
      but
      excludes interest expense, was $7 million and $51 million, respectively. We
      had
      operating margins of 1% and 4% for the three months ended March 31, 2006 and
      2005, respectively. The decrease in income from operations and operating margins
      for the three months ended March 31, 2006 compared to 2005 was principally
      due
      to an increase in operating costs and asset impairment charges of $68
      million.




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 $22 million of indebtedness under
      our credit facilities is scheduled to mature during the remainder of 2006,
      which
      we expect to fund through borrowings under our revolving credit facility. See
      "—
Liquidity and Capital Resources."





**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 2005 Annual Report on
      Form
      10-K.





19


**RESULTS
      OF OPERATIONS**





***Three
      Months Ended*** ***March
      31, 2006*** ***Compared to Three Months Ended*** ***March
      31, 2005***





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





**Three
                Months Ended March 31,****2006**
            
            **2005**Revenues
            
            $
            1,374
            
            
            100
            %
            $
            1,271
            
            
            100
            %Costs
                and expenses:Operating
                (excluding depreciation and amortization)
            
            
            626
            
            
            46
            %
            
            559
            
            
            44
            %Selling,
                general and administrative
            
            
            281
            
            
            20
            %
            
            241
            
            
            19
            %Depreciation
                and amortization
            
            
            358
            
            
            26
            %
            
            381
            
            
            30
            %Asset
                impairment charges
            
            
            99
            
            
            7
            %
            
            31
            
            
            2
            %Other
                operating expenses, net
            
            
            3
            
            
            --
            
            
            8
            
            
            1
            %1,367
            
            
            99
            %
            
            1,220
            
            
            96
            %Income
                from operations
            
            
            7
            
            
            1
            %
            
            51
            
            
            4
            %Interest
                expense, net
            
            
            (192
            )
            
            
            
            
            (156
            )Other
                income, net
            
            
            6
            
            
            
            
            
            20(186
            )
            
            
            
            
            (136
            )Loss
                before income taxes
            
            
            (179
            )
            
            
            
            
            (85
            )Income
                tax expense
            
            
            (2
            )
            
            
            
            
            (6
            )Net
                loss
            
            $
            (181
            )
            
            
            
            $
            (91
            )





***Revenues*** .
      The
      overall increase in revenues in 2006 compared to 2005 is principally the result
      of an increase of 344,000 high-speed Internet customers and 171,800 digital
      video customers, as well as price increases for video and high-speed Internet
      services, and is offset partially by a decrease of 70,900 analog video
      customers. Our
      goal
      is to increase revenues by improving customer service, which we believe will
      stabilize our analog video customer base, implementing price increases on
      certain services and packages and increasing the number of customers who
      purchase high-speed Internet services, digital video and advanced products
      and
      services such as telephone, video on demand ("VOD"), high definition television
      and digital video recorder service.





Average
      monthly revenue per analog video customer increased to $77.64 for the three
      months ended March
      31,
      2006 from
      $70.75 for the three months ended March
      31,
      2005 primarily as a result of incremental revenues from advanced services and price
      increases. Average monthly revenue per analog video customer represents total
      quarterly revenue, divided by three, divided by the average number of analog
      video customers during the respective period.





20


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





**Three
                Months Ended March 31,****2006**
            
            **2005**
            
            **2006
                over 2005****Revenues**
            
            **%
                of**
              **Revenues**
            
            **Revenues**
            
            **%
                of**
              **Revenues**
            
            **Change**
            
            **%
                Change**Video
            
            $
            869
            
            
            63
            %
            $
            842
            
            
            66
            %
            $
            27
            
            
            3
            %High-speed
                Internet
            
            
            254
            
            
            18
            %
            
            215
            
            
            17
            %
            
            39
            
            
            18
            %Telephone
            
            
            20
            
            
            2
            %
            
            6
            
            
            1
            %
            
            14
            
            
            233
            %Advertising
                sales
            
            
            70
            
            
            5
            %
            
            64
            
            
            5
            %
            
            6
            
            
            9
            %Commercial
            
            
            76
            
            
            6
            %
            
            65
            
            
            5
            %
            
            11
            
            
            17
            %Other
            
            
            85
            
            
            6
            %
            
            79
            
            
            6
            %
            
            6
            
            
            8
            %$
            1,374
            
            
            100
            %
            $
            1,271
            
            
            100
            %
            $
            103
            
            
            8
            %





Video
      revenues consist primarily of revenues from analog and digital video services
      provided to our non-commercial customers. Approximately
      $27 million of the increase was the result of price increases and incremental
      video revenues from existing customers and approximately $11 million was the
      result of an increase in digital video customers. The increases were offset
      by
      decreases of approximately $11 million related to a decrease in analog video
      customers.





Approximately
      $38 million of the increase in revenues from high-speed Internet services
      provided to our non-commercial customers related to the increase in the average
      number of customers receiving high-speed Internet services, whereas
      approximately $1 million related to the
      increase in average price of the service .





Revenues
      from telephone services increased primarily as a result of an increase of
      135,800 telephone customers in 2006.





Advertising
      sales revenues consist primarily of revenues from commercial advertising
      customers, programmers and other vendors. Advertising sales revenues increased
      primarily as a result of an increase in local advertising sales and a one-time
      ad buy by a programmer offset by a decline in national advertising sales. For
      the three months ended March 31, 2006 and 2005, we received $6 million and
      $3
      million, respectively, in advertising sales revenues from
      programmers.





Commercial
      revenues consist primarily of revenues from cable video and high-speed Internet
      services to our commercial customers. Commercial revenues increased primarily
      as
      a result of an increase in commercial high-speed Internet revenues.





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. For each
      of the three months ended March 31, 2006 and 2005, franchise fees represented
      approximately 53% of total other revenues. The increase in other revenues was
      primarily the result of an increase in franchise fees of $4 million,
      installation revenue of $1 million and wire maintenance fees of $1
      million.





21


***Operating
      Expenses*** **.** Programming costs included in the accompanying condensed consolidated statements
      of operations were $391 million and $358 million, representing 62% and 64%
      of total operating expenses for the three months ended March 31, 2006 and 2005,
      respectively. Key expense components as a percentage of revenues were as follows
      (dollars in millions):





**Three
                Months Ended March 31,****2006**
            
            **2005**
            
            **2006
                over 2005****Expenses**
            
            **%
                of**
              **Revenues**
            
            **Expenses**
            
            **%
                of**
              **Revenues**
            
            **Change**
            
            **%
                Change**Programming
            
            $
            391
            
            
            29
            %
            $
            358
            
            
            28
            %
            $
            33
            
            
            9
            %Service
            
            
            209
            
            
            15
            %
            
            176
            
            
            14
            %
            
            33
            
            
            19
            %Advertising
                sales
            
            
            26
            
            
            2
            %
            
            25
            
            
            2
            %
            
            1
            
            
            4
            %$
            626
            
            
            46
            %
            $
            559
            
            
            44
            %
            $
            67
            
            
            12
            %





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 was primarily a result of rate increases. Programming costs
      were offset by the amortization of payments received from programmers in support
      of launches of new channels of $4 million and $9 million for the three months
      ended March 31, 2006 and 2005, respectively.





Our
      cable
      programming costs have increased in every year we have operated in excess of
      customary inflationary and cost-of-living increases. We expect them to continue
      to increase due to a variety of factors, including annual increases imposed
      by
      programmers and additional programming being provided to customers as a result
      of system rebuilds and bandwidth reallocation, both of which increase channel
      capacity. In 2006, we expect programming costs to increase at a higher rate
      than
      in 2005. These costs will be determined in part on the outcome of programming
      negotiations in 2006 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 have resulted in declining operating
      margins for our video services because we have been unable to pass on all 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 telephone revenues, 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 resulted
      primarily from increased labor and maintenance costs to support improved service
      levels and our advanced products of $12 million, increased costs of providing
      high-speed Internet and telephone service of $9 million, higher fuel and utility
      prices of $4 million and franchise fees of $3 million. Advertising sales
      expenses consist of costs related to traditional advertising services provided
      to advertising customers, including salaries, benefits and commissions.
      Advertising sales expenses increased primarily as a result of increased salary,
      benefit and commission costs.




***Selling,
      General and Administrative Expenses.*** Key
      components of expense as a percentage of revenues were as follows (dollars
      in
      millions):





**Three
                Months Ended March 31,****2006**
            
            **2005**
            
            **2006
                over 2005****Expenses**
            
            **%
                of**
              **Revenues**
            
            **Expenses**
            
            **%
                of**
              **Revenues**
            
            **Change**
            
            **%
                Change**General
                and administrative
            
            $
            243
            
            
            17
            %
            $
            206
            
            
            16
            %
            $
            37
            
            
            18
            %Marketing
            
            
            38
            
            
            3
            %
            
            35
            
            
            3
            %
            
            3
            
            
            9
            %$
            281
            
            
            20
            %
            $
            241
            
            
            19
            %
            $
            40
            
            
            17
            %





General
      and administrative expenses consist primarily of salaries and benefits, rent
      expense, billing costs, customer care center costs, internal network costs,
      bad
      debt expense and property taxes. The increase in general and administrative
      expenses resulted primarily from a rise in salaries and benefits of $26 million
      and increases in




22




customer
      care center costs of $4 million related to investments to improve customer
      service levels, consulting services of $2 million, billing costs of $2 million,
      property and casualty insurance of $2 million and property taxes of $1 million.





Marketing
      expenses increased as a result of an increased investment in targeted marketing
      campaigns.





***Depreciation
      and Amortization.*** ** Depreciation
      and amortization expense decreased by $23 million for
      the
      three months ended March
      31,
      2006 compared to the three months ended March 31, 2005. The decrease in
      depreciation was the result of assets becoming fully depreciated offset by
      an
      increase in capital expenditures.





***Asset
      Impairment Charges.*** Asset
      impairment charges for the three months ended March 31, 2006 and 2005 represent
      the write-down of assets related to cable asset sales to fair value less costs
      to sell .
      See
      Note 3 to the condensed consolidated financial statements .





***Other
      Operating Expenses, Net.*** Other
      operating expenses decreased $5 million as a result of a $4 million decrease
      in
      losses on sales of assets and a $1 million decrease in special
      charges.





***Interest
      Expense, Net*** **.**  Net
      interest expense increased by $36 million, or 23%, for
      the
      three months ended March
      31,
      2006 compared to the
      three
      months ended March
      31,
      2005. The increase in net interest expense was a result of an increase in our
      average borrowing rate from 7.34% in the first quarter of 2005 to 8.17% in
      the
      first quarter of 2006 and an increase of $692 million in average debt
      outstanding from $8.2 billion for the first quarter of 2005 compared to
      $8.9 billion for the first quarter of 2006.





***Other
      Income, Net.*** Other
      income decreased $14 million primarily as a result of a $19 million decrease
      in
      net gains on derivative instruments and hedging activities as a result of
      decreases in gains on interest rate agreements that do not qualify for hedge
      accounting under Statement of Financial Accounting Standards ("SFAS") No. 133, *Accounting
      for Derivative Instruments and Hedging Activities.* Other
      income in 2005 also included net losses on extinguishment of debt of $5 million
      which did not recur in 2006. See Note 6 to the condensed consolidated financial
      statements. Other income also includes the 2% accretion of the preferred
      membership interests in our indirect subsidiary, CC VIII, and the pro rata
      share
      of the profits and losses of CC VIII.





***Income
      Tax Expense.*** Income
      tax expense was recognized through increases in deferred tax liabilities and
      current federal and state income tax expenses of certain of our indirect
      corporate subsidiaries.





***Net
      Loss*** .
      Net
      loss increased by $90 million, or 99%, for the three months ended March
      31,
      2006 compared
      to the three months ended March
      31,
      2005 as a
      result of the factors described above.





**Liquidity
      and Capital Resources**




***Introduction*** ****




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




***Recent
      Financing Transactions*** ****





On
      January 30, 2006, CCH II and CCH II Capital Corp., our parent companies, issued
      $450 million in debt securities, the proceeds of which were provided, directly
      or indirectly, to Charter Communications Operating, LLC ("Charter Operating"),
      which used such funds to reduce borrowings, but not commitments, under the
      revolving portion of its credit facilities.





In
      April
      2006, Charter Operating completed a $6.85 billion refinancing of its credit
      facilities including a new $350 million revolving/term facility (which converts
      to a term loan in one year), a $5.0 billion term loan due in 2013 and certain
      amendments to the existing $1.5 billion revolving credit facility. In addition,
      the refinancing reduced margins on Eurodollar rate Term A & B loans to
      2.625% from a weighted average of 3.15% previously and margins on base rate
      term
      loans to 1.625% from a weighted average of 2.15% previously. Concurrent with
      this refinancing, our bridge loan was terminated.





23




Our
      long-term financing as of March 31, 2006 consists of $5.4 billion of credit
      facility debt and $3.3 billion accreted value of high-yield notes. Pro forma
      for
      the completion of the credit facility refinancing discussed above, none of
      our
      debt matures in the remainder of 2006, and in 2007 and 2008, $25 million and
      $128 million mature, respectively. In 2009 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 these
      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 three months ended March
      31, 2006, we generated $323 million of net cash flows from operating activities
      after paying cash interest of $127 million. In addition, we used approximately
      $241 million for purchases of property, plant and equipment. Finally, we used
      $26 million of net cash flows in financing activities. 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 and our parent companies’ 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 unannounced future asset sales as a significant source of
      liquidity.





We
      expect
      that cash on hand, cash flows from operating activities, proceeds from sale
      of
      assets and the amounts available under our credit facilities will be adequate
      to
      meet our and our parent companies’ cash needs through 2007. We believe that cash
      flows from operating activities and amounts available under our credit
      facilities may not be sufficient to fund our operations and satisfy our and
      our
      parent companies’ interest and principal repayment obligations in 2008 and will
      not be sufficient to fund such needs in 2009 and beyond. We have been advised
      that Charter continues to work with its financial advisors in its approach
      to
      addressing liquidity, debt maturities and our overall balance sheet
      leverage.





***Debt
      Covenants***





Our
      ability to operate depends upon, among other things, our continued access to
      capital, including credit under the Charter Operating credit facilities. The
      Charter Operating credit facilities, along with our indentures, contain certain
      restrictive covenants, some of which require us to maintain specified financial
      ratios and meet financial tests and to provide annual audited financial
      statements with an unqualified opinion from our independent auditors. As of
      March 31, 2006, we are in compliance with the covenants under our indentures
      and
      credit facilities, and we expect to remain in compliance with those covenants
      for the next twelve months. As of March 31, 2006, our potential availability
      under our credit facilities totaled approximately $904 million, although the
      actual availability at that time was only $516 million because of limits imposed
      by covenant restrictions. However,
      pro forma for the completion of the credit facility refinancing discussed above,
      our potential availability under our credit facilities as of March 31, 2006
      would have been approximately $1.3 billion, although actual covenanted availability
      of $516 million would remain unchanged. Continued access to our credit facilities is subject to our remaining in
      compliance with these covenants, including covenants tied to our operating
      performance. If any events of non-compliance occur, funding under the credit
      facilities may not be available and defaults on some or potentially all of
      our
      debt obligations could occur. An event of default under 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, CCH I Holdings, LLC
      ("CIH"), CCH I, LLC (“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 our credit facilities the right to
      accelerate the payment obligations under these facilities. Any such acceleration
      would be a default under the indenture governing our notes. On a
      consolidated basis, our parent companies have a significant level of debt,
      which, including our debt, totaled approximately $19.5 billion as of March
      31,
      2006, as discussed below.





24




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
      $20 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 and its subsidiaries. As of March 31, 2006, Charter Holdco was owed
      $24
      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 $99 million of governmental securities pledged as security for
      the
      next four scheduled semi-annual interest payments on Charter’s 5.875%
      convertible senior notes.





A s
      of
      March 31, 2006, Charter Holdings, CIH, CCH I and CCH II had approximately $9.9
      billion principal amount of high-yield notes outstanding with approximately
      $105
      million, $0, $684 million and $9.1 billion maturing in 2007, 2008, 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
      us in
      order to satisfy their debt obligations. However, because of their significant
      indebtedness, our ability and the ability of the parent companies to raise
      additional capital at reasonable rates or at all is uncertain. During
      the three months ended March 31, 2006, we distributed $130 million of cash
      to
      our parent company.





Distributions
      by Charter’s subsidiaries to a parent company (including Charter, CCHC, LLC,
      Charter Holdco, Charter Holdings, CIH, CCH I and CCH II) for
      payment of principal on parent company notes are
      restricted under the indentures governing the CIH notes, CCH I notes, CCH II
      notes, CCO Holdings notes and Charter Operating notes unless
      there is no default, each applicable subsidiary’s leverage ratio test is met at
      the time of such distribution and, in the case of our convertible senior notes,
      other specified tests are met. For
      the
      quarter ended March 31, 2006, there was no default under any of these indentures
      and the other specified tests were met. However, certain of our subsidiaries
      did
      not meet their respective leverage ratio tests based on March 31, 2006 financial
      results. As
      a
      result, distributions from certain of our subsidiaries to their parent companies
      have been restricted and will continue to be restricted until those tests are
      met. Distributions
      by Charter Operating for payment of principal on parent company notes are
      further restricted by the covenants in the credit facilities.





Distributions
      by CIH, CCH I, CCH II, CCO Holdings and Charter Operating to a parent company
      for payment of parent company interest are permitted if there is no default
      under the aforementioned indentures. However, distributions for payment of
      interest on Charter’s convertible
      senior notes are further limited to when each applicable subsidiary’s leverage
      ratio test is met and other specified tests are met. There can be no assurance
      that they will satisfy these tests at the time of such distribution.





***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
      Charter’s 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 March
      31,
      2006, there was no default under Charter Holdings’ indentures and the other
      specified tests were met. However, Charter Holdings did not meet the leverage
      ratio test of 8.75 to 1.0 based on March 31, 2006 financial results .  As
      a
      result, distributions from Charter Holdings to Charter or Charter Holdco have
      been restricted and will continue to be restricted until that test is met.  During
      this restriction period,
      in which distributions are restricted, the
      indentures governing the Charter Holdings notes permit Charter Holdings and
      its
      subsidiaries to make specified investments (that are not restricted payments)
      in
      Charter Holdco or Charter up to an amount determined by a formula, as long
      as
      there is no default under the indentures.





Our
      ability to incur additional debt may be limited by the restrictive covenants
      in
      our indentures and credit facilities. 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
                equityat
                a parent company 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;




25




•
            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
      February 2006, we signed three separate definitive agreements to sell certain
      cable television systems serving a total of approximately 360,000 analog video
      customers in West Virginia, Virginia, Illinois, Kentucky, Nevada,
      Colorado, New Mexico and Utah for a
      total of approximately $971 million. As of March 31, 2006, those cable systems
      met the criteria for assets held for sale under 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 three months ended March 31,
      2006 of approximately $99 million.





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.





***Acquisition***





In
      January 2006, we closed the purchase of certain cable systems in Minnesota
      from
      Seren Innovations, Inc. We acquired approximately 17,500 analog video customers,
      8,000 digital video customers, 13,200 high-speed Internet customers and 14,500
      telephone customers for a total purchase price of approximately $42
      million.





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





We
      held
      $24 million in cash and cash equivalents as of March 31, 2006 compared to
      $3 million as of December 31, 2005. For the three months ended March 31,
      2006, we generated $323 million of net cash flows from operating activities
      after paying cash interest of $127 million. In addition, we used approximately
      $241 million for purchases of property, plant and equipment. Finally, we used
      $26 million of net cash flows in financing activities.




***Operating
      Activities.*** ** Net
      cash
      provided by operating activities increased $54 million, or 20%, from $269
      million for the three months ended March 31, 2005 to $323 million for the three
      months ended March 31, 2006. For the three months ended March 31, 2006, net
      cash
      provided by operating activities increased primarily as a result of changes
      in
      operating assets and liabilities that provided $88 million more cash during
      the
      three months ended March 31, 2006 than the corresponding period in 2005 offset
      with an increase in cash interest expense of $35 million over the corresponding
      prior period.




***Investing
      Activities.*** ** Net
      cash
      used by investing activities for the three months ended March 31, 2006 and
      2005
      was $276 million and $190 million, respectively. Investing activities used
      $86
      million more cash during the three months ended March 31, 2006 than the
      corresponding period in 2005 primarily as a result of increased cash used for
      capital expenditures in 2006 coupled with cash used for the purchase of cable
      systems discussed above.




***Financing
      Activities.*** ** Net
      cash
      used in financing activities was $26 million and $599 million for the three
      months ended March 31, 2006 and 2005, respectively. The decrease in cash used
      during the three months ended March 31, 2006 as compared to the corresponding
      period in 2005, was primarily the result of an increase in contributions,
      borrowings of long-term debt and borrowings from related parties.





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





We
      have
      significant ongoing capital expenditure requirements. Capital expenditures
      were
      $241 million and $211 million for the three months ended March
      31,
      2006 and
      2005,
      respectively. Capital expenditures increased as a




26




result
      of
      increased spending on customer premise equipment as a result of increases in
      digital video, high-speed Internet and telephone customers. See the table below
      for more details.




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 three months ended March
      31,
      2006 and
      2005, our liabilities related to capital expenditures decreased $7 million
      and
      increased $16 million, respectively.





During
      2006, we expect capital expenditures to be approximately $1.0 billion to $1.1
      billion. We expect that the nature of these expenditures will continue to be
      composed primarily of purchases of customer premise equipment related to
      telephone and other advanced services, support capital and for scalable
      infrastructure costs. We expect to fund capital expenditures for 2006 primarily
      from cash flows from operating activities, proceeds from asset sales 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
      Generally Accepted Accounting Principles ("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 months ended March 31, 2006 and
      2005 (dollars in millions):





**Three
                Months Ended March 31,****2006**
            
            **2005**Customer
                premise equipment (a)
            
            $
            130
            
            $
            86Scalable
                infrastructure (b)
            
            
            34
            
            
            42Line
                extensions (c)
            
            
            26
            
            
            29Upgrade/Rebuild
                (d)
            
            
            9
            
            
            10Support
                capital (e)
            
            
            42
            
            
            44Total
                capital expenditures
            
            $
            241
            
            $
            211





(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
                No. 51,*Financial
                Reporting by Cable Television Companies,*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).




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





As
      of the
      end of the period covered by this report, management, including our Chief
      Executive Officer and 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 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




27




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 March 31, 2006 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 our
      controls provide such reasonable assurances.


28


**PART
      II. OTHER INFORMATION.**





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





CCO
      Holdings is a party to lawsuits and claims that have arisen 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
      1A.**  **Risk
      Factors**





**Risks
      Related to Significant Indebtedness of Us and Our Parent
      Companies**





***We
      may not generate (or, in general, we and our parent companies may not have
      available to the applicable obligor) sufficient cash flow or have access to
      additional external liquidity sources to fund our capital expenditures, ongoing
      operations and our and our parent companies’ debt
      obligations.***





Our
      ability to service our and our parent companies’ debt and to fund our planned
      capital expenditures and ongoing operations will depend on both our ability
      to
      generate cash flow and our and our parent companies’ access to additional
      external liquidity sources, and in general our and our parent companies’ ability
      to provide (by dividend or otherwise), such funds to the applicable issuer
      of
      the debt obligation. Our ability to generate cash flow is dependent on many
      factors, including:





·
            our
                future operating performance;


·
              the
                  demand for our products and
                  services;




·
            general
                economic conditions and conditions affecting customer and advertiser
                spending;





·
            competition
                and our ability to stabilize customer losses;
                and





·
            legal
                and regulatory factors affecting our
                business.





Some
      of
      these factors are beyond our control. If we and our parent companies are unable
      to generate sufficient cash flow and/or access additional external liquidity
      sources, we and our parent companies may not be able to service and repay our
      and our parent companies’ debt, operate our business, respond to competitive
      challenges or fund our and our parent companies’ other liquidity and capital
      needs. Although CCH II and CCH II Capital Corp, our parent companies, sold
      $450
      million principal amount of 10.250% senior notes due 2010 in January 2006,
      we or
      our parent companies may not be able to access additional sources of external
      liquidity on similar terms, if at all. We believe that cash flows from operating
      activities and amounts available under our credit facilities will not be
      sufficient to fund our operations and satisfy our and our parent companies’
interest and principal repayment obligations in 2009 and beyond. See “Item 2.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations — Liquidity and Capital Resources.”





***We
      may not be able to access funds under our credit facilities if we fail to
      satisfy the covenant restrictions in the credit facilities, which could
      adversely affect our financial condition and our ability to conduct our
      business.***





We
      have
      historically relied on access to credit facilities in order to fund operations
      and to service our and our parent company debt, and we expect such reliance
      to
      continue in the future. Our total potential borrowing availability under the
      Charter Operating credit facilities was approximately $904 million as of March
      31, 2006, although the actual availability at that time was only $516 million
      because of limits imposed by covenant restrictions. However,
      pro forma for the completion of the credit facility refinancing discussed above,
      our potential availability under our credit facilities as of March 31, 2006
      would have been approximately $1.3 billion, although actual covenanted availability
      of $516 million would remain unchanged.





An
      event
      of default under the credit facilities or indentures, if not waived, could
      result in the acceleration of those debt obligations and, consequently, our
      and
      our parent companies’ other debt obligations. Such acceleration could result in
      exercise of remedies by our creditors and could force us to seek the protection
      of the bankruptcy laws,




29




which
      could materially adversely impact our ability to operate our business and to
      make payments under our debt instruments. In addition, an event of default
      under
      the credit facilities, such as the failure to maintain the applicable required
      financial ratios, would prevent additional borrowing under our credit
      facilities, which could materially adversely affect our ability to operate
      our
      business and to make payments under our and our parent companies’ debt
      instruments.





***Because
      of our holding company structure, our outstanding notes are structurally
      subordinated in right of payment to all liabilities of our subsidiaries.
      Restrictions in our subsidiaries’ debt instruments limit their ability to
      provide funds to us.***





Our
      sole
      assets are our equity interests in our subsidiaries. Our operating subsidiaries
      are separate and distinct legal entities and are not obligated to make funds
      available to us for payments on our notes or other obligations in the form
      of
      loans, distributions or otherwise. Our subsidiaries’ ability to make
      distributions to us is subject to their compliance with the terms of their
      credit facilities and indentures. Our direct or indirect subsidiaries include
      the borrowers and guarantors under the Charter Operating credit facilities.
      Two
      of our subsidiaries are also obligors under other senior high yield notes.
      See
“Item 2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations — Liquidity and Capital Resources — Debt Covenants.” Our notes are
      structurally subordinated in right of payment to all of the debt and other
      liabilities of our subsidiaries. As of March 31, 2006, our total debt was
      approximately $8.7 billion, of which $7.3 billion was structurally senior to
      the
      CCO Holdings notes.





In
      the
      event of bankruptcy, liquidation or dissolution of one or more of our
      subsidiaries, that subsidiary’s assets would first be applied to satisfy its own
      obligations, and following such payments, such subsidiary may not have
      sufficient assets remaining to make payments to us as an equity holder or
      otherwise. In that event:





·
            the
                lenders under Charter Operating’s credit facilities and the holders of our
                subsidiaries’ other debt instruments will have the right to be paid in
                full before us from any of our subsidiaries’ assets;
                and


·
            the
                holders of preferred membership interests in our subsidiary, CC VIII,
                would have a claim on a portion of its assets that may reduce the
                amounts
                available for repayment to holders of our outstanding notes.





In
      addition, our outstanding notes are unsecured and therefore will be effectively
      subordinated in right of payment to all existing and future secured debt we
      may
      incur to the extent of the value of the assets securing such debt.





***Any
      failure by our parent companies to satisfy their substantial debt obligations
      could have a material adverse effect on us.***





Because
      Charter is our sole manager and because we are indirectly or directly wholly
      owned by Charter Holdings, CIH, CCH I and CCH II, their financial or liquidity
      problems could cause serious disruption to our business and could have a
      material adverse effect on our operations and results. A failure by certain
      of
      our parent companies to satisfy their debt payment obligations or a bankruptcy
      filing by certain of our parent companies 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 indentures governing our outstanding notes. In addition, if any of
      our
      parent companies were to default on their debt obligations and that default
      were
      to result in a change of control of any of them (whether through a bankruptcy,
      receivership or other reorganization, or otherwise), such a change of control
      could result in an event of default under the Charter Operating credit
      facilities and our outstanding notes and require a change of control repurchase
      offer under our and our parent companies’ outstanding notes.





Furthermore,
      the Charter Operating credit facilities provide that an event of default would
      occur if certain of Charter Operating’s parent companies have indebtedness in
      excess of $500 million aggregate principal amount which remains undefeased
      three
      months prior to its final maturity. Our and our parent company indebtedness
      that
      may be subject to this provision includes indebtedness that matures in 2010
      and
      2011. Our and our parent companies’ inability to refinance or repay our and our
      parent companies’ indebtedness would result in a default under the Charter
      Operating credit facilities.





30


***We
      and our parent companies have a significant amount of existing debt and may
      incur significant additional debt, including secured debt, in the future, which
      could adversely affect our and our parent companies’ financial health and our
      and their ability to react to changes in our
      business.***





We
      and
      our parent companies have a significant amount of debt and may (subject to
      applicable restrictions in their debt instruments) incur additional debt in
      the
      future.





As
      of
      March 31, 2006, our parent companies had outstanding approximately $883 million
      aggregate principal amount of convertible notes, $20 million and $863 million
      of
      which matures in 2006 and 2009, respectively, and approximately $9.9 billion
      principal amount of high-yield notes outstanding with approximately $105
      million, $0, $684 million and $9.1 billion maturing in 2007, 2008, 2009 and
      thereafter, respectively. Our parent companies will need to raise additional
      capital and/or receive distributions or payments from us in order to satisfy
      their debt obligations in 2007 and beyond. However, because of their significant
      indebtedness, our and our parent companies’ ability to raise additional capital
      at reasonable rates or at all is uncertain, and our and our parent companies’
ability to make distributions or payments to our and their respective parent
      companies is subject to availability of funds and restrictions under our
      applicable debt instruments. If we or our parent companies were to engage in
      a
      recapitalization or other similar transaction, our noteholders might not receive
      principal and interest to which they are contractually entitled.





Our
      and
      our parent companies’ significant amount of debt could have other important
      consequences. For example, the debt will or could:





·
            require
                us to dedicate a significant portion of our cash flow from operating
                activities to make payments on our and our parent companies’ debt, which
                will reduce our funds available for working capital, capital expenditures
                and other general corporate
                expenses;





·
            limit
                our flexibility in planning for, or reacting to, changes in our business,
                the cable and telecommunications industries and the economy at
                large;





·
            place
                us at a disadvantage as compared to our competitors that have
                proportionately less debt;





·
            make
                us vulnerable to interest rate increases, because a significant portion
                of
                our borrowings are, and will continue to be, at variable rates of
                interest;





·
            expose
                us to increased interest expense as we refinance existing lower interest
                rate instruments;





·
            adversely
                affect our relationship with customers and
                suppliers;





·
            limit
                our and our parent companies’ ability to borrow additional funds in the
                future, if we need them, due to applicable financial and restrictive
                covenants in our and our parent companies’ debt;
                and





·
            make
                it more difficult for us to satisfy our obligations to the holders
                of our
                notes and to the lenders under our credit facilities as well as our
                parent
                companies’ ability to satisfy their obligations to their
                noteholders.





A
      default
      by us or one of our parent companies under our or its debt obligations could
      result in the acceleration of those obligations and the obligations under our
      and our parent companies’ other notes. We and our parent companies may incur
      substantial additional debt in the future. If current debt levels increase,
      the
      related risks that we now face will intensify.





***The
      agreements and instruments governing our and our parent companies’ debt contain
      restrictions and limitations that could significantly affect our ability to
      operate our business, as well as significantly affect our and our parent
      companies’ liquidity.***





The
      Charter Operating credit facilities and the indentures governing our and our
      parent companies’ debt contain a number of significant covenants that could
      adversely affect our ability to operate our business, as well as significantly
      affect our and our parent companies’ liquidity, and therefore could adversely
      affect our results of operations. These covenants will restrict, among other
      things, our and our parent companies’ ability to:





31


·
              incur
                  additional debt;


·
            repurchase
                or redeem equity interests and
                debt;





·
            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,
      Charter Operating’s credit facilities require our subsidiaries to, among other
      things, maintain specified financial ratios, meet specified financial tests
      and
      provide annual audited financial statements, with an unqualified opinion from
      our independent auditors. Charter Operating’s ability to comply with these
      provisions may be affected by events beyond our control.





The
      breach of any covenants or obligations in our or our parent companies’ 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 and our parent companies’ long-term indebtedness.
      In addition, the secured lenders under the Charter Operating credit facilities
      and the holders of the Charter Operating senior second-lien notes could
      foreclose on their collateral, which includes equity interests in our
      subsidiaries, and exercise other rights of secured creditors. Any default under
      those credit facilities, the indentures governing our or our parent companies’
notes could adversely affect our growth, our financial condition and our results
      of operations and our ability to make payments on our notes and Charter
      Operating’s credit facilities and other debt of our subsidiaries.





***All
      of our and our parent companies’ outstanding debt is subject to change of
      control provisions. We and our parent companies may not have the ability to
      raise the funds necessary to fulfill our and our parent companies’ obligations
      under our and our parent companies’ indebtedness following a change of control,
      which would place us and our parent companies in default under the applicable
      debt instruments.***





We
      and
      our parent companies may not have the ability to raise the funds necessary
      to
      fulfill our obligations under our and our parent companies’ notes and our credit
      facilities following a change of control. Under the indentures governing our
      and
      our parent companies’ 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, we and 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
      company to fund any required repurchase. In addition, a change of control under
      our credit facilities would result in a default under those credit facilities.
      Because such credit facilities and our subsidiaries’ notes are obligations of
      our subsidiaries, the credit facilities and our subsidiaries’ notes would have
      to be repaid by our subsidiaries before their assets could be available to
      us or
      our parent companies to repurchase our and our 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 our subsidiaries
      to make a change of control offer or repay the amounts accelerated under their
      credit facilities would place them in default.





***Paul
      G. Allen and his affiliates are not obligated to purchase equity from,
      contribute to or loan funds to us or any of our parent
      companies.***





Paul
      G.
      Allen and his affiliates are not obligated to purchase equity from, contribute
      to or loan funds to us or any of our parent companies.





32


**Risks
      Related to Our Business**





***We
      operate in a very competitive business environment, which affects our ability
      to
      attract and retain customers and can adversely affect our business and
      operations. We have lost a significant number of video customers to direct
      broadcast satellite competition and further loss of video customers could have
      a
      material negative impact on our business.***





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 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 us, 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 service
      a
      higher concentration of such areas than those of other major cable service
      providers.





Local
      telephone companies and electric utilities can offer video and other services
      in
      competition with us and they increasingly may do so in the future. Certain
      telephone companies have begun more extensive deployment of fiber in their
      networks that enable them to begin providing video services, as well as
      telephone and high bandwidth Internet access services, to residential and
      business customers and they are now offering such service in limited areas.
      Some
      of these telephone companies have obtained, and are now seeking, franchises
      or
      operating 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 Internet 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 DSL and “dial-up”. DSL service is competitive with high-speed
      Internet service over cable systems. In addition, DBS providers have entered
      into joint marketing arrangements with Internet access providers to offer
      bundled video and Internet service, which competes with our ability to provide
      bundled services to our customers. Moreover, as we expand our telephone
      offerings, we will face considerable competition from established telephone
      companies and other carriers, including VoIP providers.





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 a material adverse effect on our business and financial results.





Mergers,
      joint ventures and alliances among franchised, wireless or private cable
      operators, satellite television providers, local exchange carriers and others,
      may provide additional benefits to some of our competitors, either through
      access to financing, resources or efficiencies of scale, or the ability to
      provide multiple services in direct competition with us.





We
      cannot
      assure you that our cable systems will allow us to compete effectively.
      Additionally, as we expand our offerings to include other telecommunications
      services, and to introduce new and enhanced services, we will be subject to
      competition from other providers of the services we offer. We cannot predict
      the
      extent to which competition may affect our business and operations in the
      future.





33




***We
      have a history of net losses and expect to continue to experience net losses.
      Consequently, we may not have the ability to finance future
      operations.***





We
      have
      had a history of net losses and expect to continue to report net losses for
      the
      foreseeable future. Our net losses are principally attributable to insufficient
      revenue to cover the combination of operating costs and interest costs we incur
      because of our debt and the depreciation expenses that we incur resulting from
      the capital investments we have made in our cable properties. We expect that
      these expenses will remain significant, and we expect to continue to report
      net
      losses for the foreseeable future. We reported net losses of $181 million and
      $91 million for the three months ended March 31, 2006 and 2005, respectively.
      Continued losses would reduce our cash available from operations to service
      our
      indebtedness, as well as limit our ability to finance our operations.





***We
      may not have the ability to pass our increasing programming costs on to our
      customers, which would adversely affect our cash flow and operating
      margins.***





Programming
      has been, and is expected to continue to be, our largest operating expense
      item.
      In recent years, the cable industry has experienced a rapid escalation in the
      cost of programming, particularly sports programming. We expect 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 has had
      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 March 31, 2006, approximately
      12%
      of our current programming contracts were expired, and approximately another
      6%
      were scheduled to expire at or before the end of 2006. There can be no assurance
      that these agreements will be renewed on favorable or comparable terms. Our
      programming costs increased by approximately 9% in the three months ended March
      31, 2006 compared to the corresponding period in 2005. We expect our programming
      costs in 2006 to continue to increase at a higher rate than in 2005. 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.





***If
      our required capital expenditures exceed our projections, we may not have
      sufficient funding, which could adversely affect our growth, financial condition
      and results of operations.***





During
      the three months ended March 31, 2006, we spent approximately $241 million
      on
      capital expenditures. During 2006, we expect capital expenditures to be
      approximately $1.0 billion to $1.1 billion. The actual amount of our capital
      expenditures depends on the level of growth in high-speed Internet and telephone
      customers and in the delivery of other advanced services, as well as the cost
      of
      introducing any new services. We may need additional capital if there is
      accelerated growth in high-speed Internet customers, telephone customers or
      in
      the delivery of other advanced services. If we cannot obtain such capital from
      increases in our cash flow from operating activities, additional borrowings,
      proceeds from asset sales or other sources, our growth, financial condition
      and
      results of operations could suffer materially.





***Our
      inability to respond to technological developments and meet customer demand
      for
      new products and services could limit our ability to compete
      effectively.***





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





***Malicious
      and abusive Internet practices could impair our high-speed Internet
      services***





Our
      high-speed Internet customers utilize our network to access the Internet and,
      as
      a consequence, we or they may become victim to common malicious and abusive
      Internet activities, such as unsolicited mass advertising (i.e., “spam”) and
      dissemination of viruses, worms and other destructive or disruptive software.
      These activities could




34




have
      adverse consequences on our network and our customers, including degradation
      of
      service, excessive call volume to call centers and damage to our or our
      customers’ equipment and data. Significant incidents could lead to customer
      dissatisfaction and, ultimately, loss of customers or revenue, in addition
      to
      increased costs to us to service our customers and protect our network. Any
      significant loss of high-speed Internet customers or revenue or significant
      increase in costs of serving those customers could adversely affect our growth,
      financial condition and results of operations.





**Risks
      Related to Mr. Allen’s Controlling Position**





***The
      failure by Mr. Allen to maintain a minimum voting and economic interest in
      us
      could trigger a change of control default under our subsidiary’s credit
      facilities.***





The
      Charter Operating credit facilities provide that the failure by (a) Mr. Allen,
      (b) his estate, spouse, immediate family members and heirs and (c) any trust,
      corporation, partnership or other entity, the beneficiaries, stockholders,
      partners or other owners of which consist exclusively of Mr. Allen or such
      other
      persons referred to in (b) above or a combination thereof, to maintain a 35%
      direct or indirect voting interest in the applicable borrower would result
      in a
      change of control default. Such a default could result in the acceleration
      of
      repayment of our and our subsidiaries’ indebtedness, including borrowings under
      the Charter Operating credit facilities.





***Mr.
      Allen controls us and may have interests that conflict with your
      interests.***





Mr.
      Allen
      has the ability to control us. Through his control as of March 31, 2006 of
      approximately 90% of the voting power of the capital stock of our manager,
      Charter, Mr. Allen is entitled to elect all but one of Charter’s board members
      and effectively has the voting power to elect the remaining board member as
      well. Mr. Allen thus has the ability to control fundamental corporate
      transactions requiring equity holder approval, including, but not limited to,
      the election of all of Charter’s directors, approval of merger transactions
      involving us and the sale of all or substantially all of our assets.





Mr.
      Allen
      is not restricted from investing in, and has invested in, and engaged in, other
      businesses involving or related to the operation of cable television systems,
      video programming, high-speed Internet service, telephone or business and
      financial transactions conducted through broadband interactivity and Internet
      services. Mr. Allen may also engage in other businesses that compete or may
      in
      the future compete with us.





Mr.
      Allen’s control over our management and affairs could create conflicts of
      interest if he is faced with decisions that could have different implications
      for him, us and the holders of our notes. Further, Mr. Allen could effectively
      cause us to enter into contracts with another entity in which he owns an
      interest or to decline a transaction into which he (or another entity in which
      he owns an interest) ultimately enters.





Current
      and future agreements between us and either Mr. Allen or his affiliates may
      not
      be the result of arm’s-length negotiations. Consequently, such agreements may be
      less favorable to us than agreements that we could otherwise have entered into
      with unaffiliated third parties.





***We
      are not permitted to engage in any business activity other than the cable
      transmission of video, audio and data unless Mr. Allen authorizes us to pursue
      that particular business activity, which could adversely affect our ability
      to
      offer new products and services outside of the cable transmission business
      and
      to enter into new businesses, and could adversely affect our growth, financial
      condition and results of operations.***





Charter’s
      certificate of incorporation and Charter Holdco’s limited liability company
      agreement provide that Charter and Charter Holdco and their subsidiaries,
      including us, cannot engage in any business activity outside the cable
      transmission business except for specified businesses. This will be the case
      unless Mr. Allen consents to our engaging in the business activity. The cable
      transmission business means the business of transmitting video, audio (including
      telephone services), and data over cable television systems owned, operated
      or
      managed by us from time to time. These provisions may limit our ability to
      take
      advantage of attractive business opportunities.





35


***The
      loss of Mr. Allen’s services could adversely affect our ability to manage our
      business.***





Mr.
      Allen
      is Chairman of Charter’s board of directors and provides strategic guidance and
      other services to Charter. If Charter were to lose his services, our growth,
      financial condition and results of operations could be adversely impacted.





**Risks
      Related to Regulatory and Legislative Matters**





***Our
      business is subject to extensive governmental legislation and regulation, which
      could adversely affect our business.***





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





·
            rules
                governing the provision of cable equipment and compatibility with
                new
                digital technologies;





·
            rules
                and regulations relating to subscriber
                privacy;





·
            limited
                rate regulation;





·
            requirements
                governing when a cable system must carry a particular broadcast station
                and when it must first obtain consent to carry a broadcast
                station;





·
            rules
                for franchise renewals and transfers;
                and





·
            other
                requirements covering a variety of operational areas such as equal
                employment opportunity, technical standards and customer service
                requirements.





Additionally,
      many aspects of these regulations are currently the subject of judicial
      proceedings and administrative or legislative proposals. There are also ongoing
      efforts to amend or expand the federal, state and local regulation of some
      of
      our cable systems, which may compound the regulatory risks we already face.
      Certain states and localities are considering new telecommunications taxes
      that
      could increase operating expenses.





***Our
      cable systems are operated under franchises that are subject to non-renewal
      or
      termination. The failure to renew a franchise in one or more key markets could
      adversely affect our business.***





Our
      cable
      systems generally operate pursuant to franchises, permits and similar
      authorizations issued by a state or local governmental authority controlling
      the
      public rights-of-way. Many franchises establish comprehensive facilities and
      service requirements, as well as specific customer service standards and
      monetary penalties for non-compliance. In many cases, franchises are terminable
      if the franchisee fails to comply with significant provisions set forth in
      the
      franchise agreement governing system operations. Franchises are generally
      granted for fixed terms and must be periodically renewed. Local franchising
      authorities may resist granting a renewal if either past performance or the
      prospective operating proposal is considered inadequate. Franchise authorities
      often demand concessions or other commitments as a condition to renewal. In
      some
      instances, franchises have not been renewed at expiration, and we have operated
      and are operating under either temporary operating agreements or without a
      license while negotiating renewal terms with the local franchising authorities.
      Approximately 11% of our franchises, covering approximately 12% of our analog
      video customers, were expired as of March 31, 2006. Approximately 6% of
      additional franchises, covering approximately an additional 7% of our analog
      video customers, will expire on or before December 31, 2006, if not renewed
      prior to expiration.





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





36




***Our
      cable systems are operated under franchises that are non-exclusive. Accordingly,
      local franchising authorities can grant additional franchises and create
      competition in market areas where none existed previously, resulting in
      overbuilds, which could adversely affect results of
      operations.***





Our
      cable
      systems are operated under non-exclusive franchises granted by local franchising
      authorities. Consequently, local franchising authorities can grant additional
      franchises to competitors in the same geographic area or operate their own
      cable
      systems. In addition, certain telephone companies are seeking authority to
      operate in local communities without first obtaining a local franchise. As
      a
      result, competing operators may build systems in areas in which we hold
      franchises. In some cases municipal utilities may legally compete with us
      without obtaining a franchise from the local franchising authority.





Different
      legislative proposals have been introduced in the United States Congress and
      in
      some state legislatures that would greatly streamline cable franchising. This
      legislation is intended to facilitate entry by new competitors, particularly
      local telephone companies. Such legislation has passed in at least four states
      in which we have operations and one of these newly enacted statutes is subject
      to court challenge. Although various legislative proposals provide some
      regulatory relief for incumbent cable operators, these proposals are generally
      viewed as being more favorable to new entrants due to a number of varying
      factors including efforts to withhold streamlined cable franchising from
      incumbents until after the expiration of their existing franchises. To the
      extent incumbent cable operators are not able to avail themselves of this
      streamlined franchising process, such operators may continue to be subject
      to
      more onerous franchise requirements at the local level than new entrants. The
      Federal Communications Commission ("FCC'') recently initiated a proceeding
      to
      determine whether local franchising authorities are impeding the deployment
      of
      competitive cable services through unreasonable franchising requirements and
      whether such impediments should be preempted. At this time, we are not able
      to
      determine what impact such proceeding may have on us.





The
      existence of more than one cable system operating in the same territory is
      referred to as an overbuild. These overbuilds could adversely affect our growth,
      financial condition and results of operations by creating or increasing
      competition. As of March 31, 2006, we are aware of overbuild situations
      impacting approximately 6% of our estimated homes passed, and potential
      overbuild situations in areas servicing approximately an additional 4% of our
      estimated homes passed. Additional overbuild situations may occur in other
      systems.





***Local
      franchise authorities have the ability to impose additional regulatory
      constraints on our business, which could further increase our
      expenses.***





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





***Further
      regulation of the cable industry could cause us to delay or cancel service
      or
      programming enhancements or impair our ability to raise rates to cover our
      increasing costs, resulting in increased losses.***





Currently,
      rate regulation is strictly limited to the basic service tier and associated
      equipment and installation activities. However, the FCC and the U.S. Congress
      continue to be concerned that cable rate increases are exceeding inflation.
      It
      is possible that either the FCC or the U.S. Congress will again restrict the
      ability of cable system operators to implement rate increases. Should this
      occur, it would impede our ability to raise our rates. If we are unable to
      raise
      our rates in response to increasing costs, our losses would increase.





There
      has
      been considerable legislative and regulatory interest in requiring cable
      operators to offer historically bundled programming services on an á la carte
      basis or to at least offer a separately available child-friendly “Family Tier.”
It is possible that new marketing restrictions could be adopted in the future.
      Such restrictions could adversely affect our operations.





***Actions
      by pole owners might subject us to significantly increased pole attachment
      costs.***





Pole
      attachments are cable wires that are attached to poles. Cable system attachments
      to public utility poles historically have been regulated at the federal or
      state
      level, generally resulting in favorable pole attachment rates for




37




attachments
      used to provide cable service. The FCC clarified that a cable operator’s
      favorable pole rates are not endangered by the provision of Internet access,
      and
      that approach ultimately was upheld by the Supreme Court of the United States.
      Despite the existing regulatory regime, utility pole owners in many areas are
      attempting to raise pole attachment fees and impose additional costs on cable
      operators and others. In addition, the favorable pole attachment rates afforded
      cable operators under federal law can be increased by utility companies if
      the
      operator provides telecommunications services, as well as cable service, over
      cable wires attached to utility poles. Any significant increased costs could
      have a material adverse impact on our profitability and discourage system
      upgrades and the introduction of new products and services.





***We
      may be required to provide access to our networks to other Internet service
      providers, which could significantly increase our competition and adversely
      affect our ability to provide new products and
      services.***





A
      number
      of companies, including independent Internet service providers, or ISPs, have
      requested local authorities and the FCC to require cable operators to provide
      non-discriminatory access to cable’s broadband infrastructure, so that these
      companies may deliver Internet services directly to customers over cable
      facilities. In a June 2005 ruling, commonly referred to as *Brand
      X* ,
      the
      Supreme Court upheld an FCC decision (and overruled a conflicting Ninth Circuit
      opinion) making it much less likely that any nondiscriminatory “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 how recently *Brand
      X* was
      decided, however, the nature of any legislative or regulatory response remains
      uncertain. The imposition of open access requirements could materially affect
      our business.





If
      we
      were required to allocate a portion of our bandwidth capacity to other Internet
      service providers, we believe that it would impair our ability to use our
      bandwidth in ways that would generate maximum revenues.





***Changes
      in channel carriage regulations could impose significant additional costs on
      us.***





Cable
      operators also face significant regulation of their channel carriage. They
      currently can be required to devote substantial capacity to the carriage of
      programming that they would not carry voluntarily, including certain local
      broadcast signals, local public, educational and government access programming,
      and unaffiliated commercial leased access programming. This carriage burden
      could increase in the future, particularly if cable systems were required to
      carry both the analog and digital versions of local broadcast signals (dual
      carriage) or to carry multiple program streams included with a single digital
      broadcast transmission (multicast carriage). Additional government-mandated
      broadcast carriage obligations could disrupt existing programming commitments,
      interfere with our preferred use of limited channel capacity and limit our
      ability to offer services that would maximize customer appeal and revenue
      potential. Although the FCC issued a decision in February 2005, confirming
      an
      earlier ruling against mandating either dual carriage or multicast carriage,
      that decision has been appealed. In addition, the FCC could reverse its own
      ruling or Congress could legislate additional carriage obligations.





***Offering
      voice communications service may subject us to additional regulatory burdens,
      causing us to incur additional costs.***





In
      2002,
      we began to offer voice communications services on a limited basis over our
      broadband network. We continue to explore development and deployment of Voice
      over Internet Protocol or VoIP services. The regulatory requirements applicable
      to VoIP service are unclear although the FCC has declared that certain VoIP
      services are not subject to traditional state public utility regulation. The
      full extent of the FCC preemption of VoIP services is not yet clear. Expanding
      our offering of these services may require us to obtain certain authorizations,
      including federal, state and local licenses. We may not be able to obtain such
      authorizations in a timely manner, or conditions could be imposed upon such
      licenses or authorizations that may not be favorable to us. Furthermore,
      telecommunications companies generally are subject to significant regulation,
      including payments to the Federal Universal Service Fund and the intercarrier
      compensation regime. In addition, pole attachment rates are higher for providers
      of telecommunications services than for providers of cable service. If there
      were to be a final legal determination by the FCC, a state Public Utility
      Commission, or appropriate court that VoIP services are subject to these higher
      rates, our pole attachment costs could increase significantly, which could
      adversely affect our financial condition and results of operations.





38




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





At
      its
      meeting held on February 7, 2006, the Board of Directors of Charter approved
      the
      metrics for the 2006 Executive Bonus Plan participants. A description of the
      specific performance metrics and bonus target is attached hereto as Exhibit
      10.2.





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





The
      index
      to the exhibits begins on page 41 of this quarterly report.







39


**SIGNATURES**





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





CCO
      HOLDINGS, LLC


Registrant


By:
      CHARTER COMMUNICATIONS, INC., Sole Manager





Dated:
      May 12, 2006




By: /s/
      Kevin D. Howard


Name:
      Kevin D. Howard


Title: *Vice
      President and*


*Chief
      Accounting Officer*



















CCO
      HOLDINGS CAPITAL CORP.


Registrant







Dated:
      May 12, 2006




By: /s/
      Kevin D. Howard


Name:
      Kevin D. Howard


Title: *Vice
      President and*


*Chief
      Accounting Officer*














40


**EXHIBIT
      INDEX**








Exhibit
              Number
            Description
                of Document2.1
            Asset
                Purchase Agreement, dated February 27, 2006, by and between Charter
                Communications Operating, LLC and Cebridge Acquisition Co., LLC(incorporated
                by reference to Exhibit 2.2 to the quarterly report on Form 10-Q
                of
                Charter Communications, Inc. filed on May 2, 2006 (File No.
                000-27927)).3.1(a)
            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)).3.1(b)
            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)).3.2
            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)).3.3(1)
            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)).3.3(b)
            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)).3.4
            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)).10.1(a)
            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(b)
            Waiver
                and Amendment Agreement to the Senior Bridge Loan Agreement dated
                as of
                January 26, 2006 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 10.2 to the current report on Form 8-K of Charter
                Communications, Inc. filed on January 27, 2006
                (File No. 000-27927)).10.2+
            Description
                of Charter Communications, Inc. 2006 Executive Bonus Plan (incorporated
                by
                reference to Exhibit 10.2 on the quarterly report on Form 10-Q of
                Charter
                Communications, Inc. filed May 2, 2006 (File No.
                000-27927)).10.3+
            Retention
                Agreement dated as of January 9, 2006, 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 January 10, 2006 (File
                No. 000-27927)).10.4+
            Employment
                Agreement dated as of January 20, 2006 by and between Jeffrey T.
                Fisher
                and Charter Communications, Inc. (incorporated by reference to Exhibit
                10.1 to the current report on Form 8-K of Charter Communications,
                Inc.
                filed on January 27, 2006 (File No. 000-27927)).10.5+
            Employment
                Agreement dated as of February 28, 2006 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 on March 3, 2006 (File No. 000-27927)).10.6+
            Separation
                Agreement of Wayne H. Davis, dated as of March 23, 2006 (incorporated
                by
                reference to Exhibit 99.1 to the current report on Form 8-K of
                Charter Communications, Inc. filed on April 6, 2006 (File No.
                000-27927)).10.7+
            Consulting
                Agreement of Wayne H. Davis, dated as of March 23, 2006 (incorporated
                by
                reference to Exhibit 99.2 to the current report on Form 8-K of Charter
                Communications, Inc. filed on April 6, 2006









(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 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 (Chief Financial
                Officer).





*
      Document attached





+
      Management compensatory plan or arrangement








41