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SEC Filings

S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 09/28/1999
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<PAGE>   717
                        BRESNAN COMMUNICATIONS GROUP LLC
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 1999
                                  (UNAUDITED)
                                 (IN THOUSANDS)
 
    June 30, 1998 and 1999 was not significant. The expiration dates of the
    Interest Rate Swaps ranges from August 25, 1999 to April 3, 2000. The
    difference between the fair market value and book value of long-term debt
    and the Interest Rate Swaps at June 30, 1998 and 1999 is not significant.
 
(4) TRANSACTIONS WITH RELATED PARTIES
 
     BCG and its predecessor purchased, at TCI's cost, substantially all of its
pay television and other programming from affiliates of TCI. Charges for such
programming were $28,118 and $30,810 for the six months ended June 30, 1998 and
1999, respectively, and are included in programming expenses in the accompanying
consolidated financial statements.
 
     Prior to February 2, 1999, certain affiliates of the predecessor to BCG
provided administrative services to BCG and assumed managerial responsibility of
BCG's cable television system operations and construction. As compensation for
these services, BCG paid a monthly fee calculated pursuant to certain agreed
upon formulas. Subsequent to the TCI Transaction on February 2, 1999, certain
affiliates of BCG provide administrative services and have assumed managerial
responsibilities of BCG. As compensation for these services BCG pays a monthly
fee equal to approximately 3% of gross revenues. Such aggregate charges totaled
$5,961 and $5,040 and have been included in selling, general and administrative
expenses for the six months ended June 30, 1998 and 1999, respectively.
 
(5) COMMITMENTS AND CONTINGENCIES
 
     The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") imposed certain rate regulations on the cable television
industry. Under the 1992 Cable Act, all cable systems are subject to rate
regulation, unless they face "effective competition," as defined by the 1992
Cable Act and expanded in the Telecommunications Act of 1996 (the "1996 Act"),
in their local franchise area.
 
     Although the Federal Communications Commission (the "FCC") has established
regulations required by the 1992 Cable Act, local government units (commonly
referred to as local franchising authorities) are primarily responsible for
administering the regulation of a cable system's basic service tier ("BST"). The
FCC itself directly administered rate regulation of any cable programming
service tier ("CPST"). The FCC's authority to regulate CPST rates expired on
March 31, 1999. The FCC has taken the position that it will still adjudicate
CPST complaints filed after this sunset date (but no later than 180 days after
the last CPST rate increase imposed prior to March 31, 1999), and will strictly
limit its review (and possible refund orders) to the time period predating the
sunset date.
 
     Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price structure that allows for the recovery
of inflation and certain associated costs, as well as providing some incentive
for expanding channel carriage. Operators also have the opportunity to bypass
this "benchmark" regulatory structure in favor of the traditional "cost-of-
service" regulation in cases where the latter methodology appears favorable.
Premium cable service offered on a per-channel or per-program basis remain
unregulated, as do affirmatively marketed packages consisting entirely of new
programming product.
 
                                      F-472