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S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 09/28/1999
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<PAGE>   322
                                   CCA GROUP
 
             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Deferred taxes are comprised of the following at December 31, 1997:
 

<TABLE>
<S>                                                           <C>
Deferred income tax assets:
  Accounts receivable.......................................  $     252
  Other assets..............................................      7,607
  Accrued expenses..........................................      4,740
  Deferred revenue..........................................        624
  Deferred management fees..................................      1,654
  Tax loss carryforwards....................................     80,681
  Tax credit carryforward...................................      1,360
  Valuation allowance.......................................    (40,795)
                                                              ---------
          Total deferred income tax assets..................     56,123
                                                              ---------
Deferred income tax liabilities:
  Property, plant and equipment.............................    (38,555)
  Franchise costs...........................................   (117,524)
  Other.....................................................    (11,407)
                                                              ---------
          Total deferred income tax liabilities.............   (167,486)
                                                              ---------
          Net deferred income tax liability.................  $(111,363)
                                                              =========
</TABLE>

 
     At December 31, 1997, the Company had net operating loss (NOL)
carryforwards for regular income tax purposes aggregating $204,400, which expire
in various years from 1999 through 2012. Utilization of the NOLs carryforwards
is subject to certain limitations.
 
15.  EMPLOYEE BENEFIT PLANS:
 
     The Company's employees may participate in the Charter Communications, Inc.
401(k) Plan (the "401(k) Plan"). Employees that qualify for participation can
contribute up to 15% of their salary, on a before tax basis, subject to a
maximum contribution limit as determined by the Internal Revenue Service. The
Company contributes an amount equal to 50% of the first 5% of contributions by
each employee. For the period from January 1, 1998, through December 23, 1998,
the Company contributed $585 to the 401(k) plan. During 1997 and 1996, the
Company contributed approximately $499 and $435 to the 401(k) Plan,
respectively.
 
     Certain employees of the Company are participants in the 1996 Charter
Communications/ Kelso Group Appreciation Rights Plan (the "Plan"). The Plan
covers certain key employees and consultants within the group of companies and
partnerships controlled by affiliates of Kelso and managed by Charter. The Plan
permits the granting of up to 1,000,000 units, of which 705,000 were outstanding
at December 31, 1997. Unless otherwise provided in a particular instance, units
vest at a rate of 20% per annum. The Plan entitles participants to receive
payment of the appreciated unit value for vested units, upon the occurrence of
certain events specified in the Plan (i.e. change in control, employee
termination) The units do not represent a right to an equity interest to any
entities within the CCA Group. Compensation expense is based on the appreciated
unit value and is amortized over the vesting period.
 
     As a result of the acquisition of Charter and the Company, the Plan was
terminated, all outstanding units became 100% vested and all amounts were paid
by Charter in 1999. For the period from January 1, 1998, through December 23,
1998, the Company recorded $5,684 of expense, included in management fees, and a
contribution from Charter related to the Appreciation Rights Plan.
 
                                      F-77