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S-1
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1 on 07/28/1999
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                              FANCH CABLE SYSTEMS
        (COMPRISED OF COMPONENTS OF TWFANCH-ONE CO. AND TWFANCH-TWO CO.)
 
             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
Combined Systems' net distributions to partners in the combined statements of
cash flows. The Partnerships maintain external debt to fund and manage
operations on a centralized basis. Debt, unamortized loan costs and interest
expense of the Partnerships have not been allocated to the Combined Systems. As
such, the debt, unamortized loan costs, and related interest are not
representative of the debt that would be required or interest expense incurred
if the Combined Systems were a separate legal entity.
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
PROPERTY, PLANT AND EQUIPMENT
 
     The Combined Systems record additions to property, plant and equipment at
cost, which in the case of assets constructed includes amounts for material,
labor and overhead. Maintenance and repairs are charged to expense as incurred.
 
     For financial reporting purposes, the Combined Systems use the
straight-line method of depreciation over the estimated useful lives of the
assets as follows:
 

<TABLE>
<S>                                                           <C>
Transmission and distribution systems and related             3 to 20 years
  equipment...............................................
Furniture and equipment...................................    4 to 8 1/2 years
</TABLE>

 
INCOME TAXES
 
     The Partnerships as entities pay no income taxes, except for an immaterial
amount in Michigan. No provision or benefit for income taxes is reported by any
of the Combined Systems because the Combined Systems are currently owned by
various partnerships and, as such, the tax effects of the Combined Systems'
results of operations accrue to the partners.
 
USE OF ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
disclosures made in the accompanying notes to the financial statements. Actual
results could differ from those estimates.
 
REVENUE RECOGNITION
 
     The Combined Systems recognize revenue when services have been delivered.
Revenues on long-term contracts are recognized over the term of the contract
using the straight-line method.
 
INTANGIBLES
 
     Intangibles are recorded at cost and are amortized on a straight-line basis
over their estimated useful lives. The estimated useful lives are as follows:
 

<TABLE>
<CAPTION>
                                                               LIVES
                                                               -----
<S>                                                    <C>
Goodwill...........................................    20 years (10 in 1997)
Subscriber list....................................           5 years
Other, including franchise costs...................        4 -- 10 years
</TABLE>

 
     The estimated useful life of goodwill was changed from 10 years in 1997 to
20 years effective January 1, 1998 to better match the amortization period to
anticipated economic lives of
 
                                      F-454