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S-4
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form S-4 on 01/25/2000
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<PAGE>   648
                          FALCON COMMUNICATIONS, L.P.
                   (SUCCESSOR TO FALCON HOLDING GROUP, L.P.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  (i) Extraordinary Item
 
     Fees and expenses incurred in connection with the repurchase of the Notes
on May 19, 1998 and the retirement of the remaining Notes on September 15, 1998
were $19.7 million in the aggregate. In addition, the unamortized portion of
deferred loan costs related to the Notes and the Amended and Restated Credit
Agreement, which amounted to $10.9 million in the aggregate, were written off as
an extraordinary charge upon the extinguishment of the related debt.
 
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
 
     The Partnership leases land, office space and equipment under operating
leases expiring at various dates through the year 2039. See Note 9.
 
     Future minimum rentals for operating leases at December 31, 1998 are as
follows:
 

<TABLE>
<CAPTION>
                          YEAR                                 TOTAL
                          ----                              -----------
                                                            (DOLLARS IN
                                                            THOUSANDS)
<S>                                                         <C>
1999....................................................      $ 2,758
  2000..................................................        2,545
  2001..................................................        2,264
  2002..................................................        1,919
  2003..................................................        1,119
Thereafter..............................................        4,449
                                                              -------
                                                              $15,054
                                                              =======
</TABLE>

 
     In most cases, management expects that, in the normal course of business,
these leases will be renewed or replaced by other leases. Rent expense amounted
to $2.1 million in 1996, $2.4 million in 1997 and $3.1 million in 1998.
 
     In addition, the Partnership rents line space on utility poles in some of
the franchise areas it serves. These rentals amounted to $2.8 million for 1996,
$3.1 million for 1997 and $3.9 million for 1998. Generally, such pole rental
agreements are short-term; however, the Partnership anticipates such rentals
will continue in the future.
 
     Beginning in August 1997, the Partnership elected to self-insure its cable
distribution plant and subscriber connections against property damage as well as
possible business interruptions caused by such damage. The decision to
self-insure was made due to significant increases in the cost of insurance
coverage and decreases in the amount of insurance coverage available. In October
1998, the Partnership reinstated third party insurance coverage against damage
to its cable distribution plant and subscriber connections and against business
interruptions resulting from such damage. This coverage is subject to a
significant annual deductible and is intended to limit the Partnership's
exposure to catastrophic losses, if any, in future periods. Management believes
that the relatively small size of the Partnership's markets in any one
geographic area, coupled with their geographic separation, will mitigate the
risk that the Partnership could sustain losses due to seasonal weather
conditions or other events that, in the aggregate, could have a material adverse
effect on the Partnership's liquidity and cash flows. The Partnership continues
to purchase insurance coverage in amounts management views as appropriate for
all other property, liability, automobile, workers' compensation and other types
of insurable risks.
 
                                      F-419