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S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/04/1999
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<PAGE>   1
 
   
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1999
    
 
                                                      REGISTRATION NO. 333-83887
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
   
                               AMENDMENT NO. 5 TO
    
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                          CHARTER COMMUNICATIONS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 

<TABLE>
<S>                                  <C>                                  <C>
              DELAWARE                               4841                              43-1857213
  (STATE OR OTHER JURISDICTION OF        (PRIMARY STANDARD INDUSTRIAL              (FEDERAL EMPLOYER
   INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)             IDENTIFICATION NUMBER)
</TABLE>

 
                            ------------------------
 
                            12444 POWERSCOURT DRIVE
                           ST. LOUIS, MISSOURI 63131
                                 (314) 965-0555
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                    REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
                            ------------------------
 
                              CURTIS S. SHAW, ESQ.
              SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                          CHARTER COMMUNICATIONS, INC.
                            12444 POWERSCOURT DRIVE
                           ST. LOUIS, MISSOURI 63131
                                 (314) 965-0555
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
                            ------------------------
 
                                   COPIES TO:
 

<TABLE>
<S>                                 <C>                                 <C>
     DANIEL G. BERGSTEIN, ESQ.             ALVIN G. SEGEL, ESQ.                RICHARD D. BOHM, ESQ.
      THOMAS R. POLLOCK, ESQ.               IRELL & MANELLA LLP               PETER J. LOUGHRAN, ESQ.
     PATRICIA M. CARROLL, ESQ.      1800 AVENUE OF THE STARS, SUITE 900        DEBEVOISE & PLIMPTON
          PAUL, HASTINGS,           LOS ANGELES, CALIFORNIA 90067-4276           875 THIRD AVENUE
       JANOFSKY & WALKER LLP                  (310) 277-1010                 NEW YORK, NEW YORK 10022
          399 PARK AVENUE                                                         (212) 909-6000
     NEW YORK, NEW YORK 10022
          (212) 318-6000
</TABLE>

 
                            ------------------------
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after this registration statement becomes effective.
 
    If any of the securities being registered on this form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
 
    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
 
    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
 
    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
                            ------------------------
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   2
 
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
   
                 SUBJECT TO COMPLETION. DATED NOVEMBER 4, 1999.
    
 
                         [CHARTER COMMUNICATIONS LOGO]
                               170,000,000 Shares
 
                          CHARTER COMMUNICATIONS, INC.
 
                              Class A Common Stock
 
                             ----------------------
 
     This is an initial public offering of shares of Class A common stock of
Charter Communications, Inc. This prospectus relates to an offering of
144,500,000 shares in the United States and Canada. In addition, 25,500,000
shares are being offered outside the United States and Canada. All of the shares
of Class A common stock are being sold by Charter Communications, Inc.
 
   
     Prior to the offering, there has been no public market for the Class A
common stock. It is currently estimated that the initial public offering price
per share will be between $17 and $19. The Class A common stock has been
approved for quotation on the Nasdaq National Market under the symbol "CHTR".
    
 
     See "Risk Factors" beginning on page 15 to read about factors you should
consider before buying shares of the Class A common stock.
 
                             ----------------------
 
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
 
                             ----------------------
 

<TABLE>
<CAPTION>
                                                                Per Share       Total
                                                                ---------       -----
<S>                                                             <C>          <C>
Initial public offering price...............................     $           $
Underwriting discount.......................................     $           $
Proceeds, before expenses, to us............................     $           $
</TABLE>

 
     To the extent that the underwriters sell more than 170,000,000 shares of
Class A common stock, the underwriters have the option to purchase up to an
additional 25,500,000 shares from Charter Communications, Inc. at the initial
public offering price less the underwriting discount.
 
                             ----------------------
 
     The underwriters expect to deliver shares in New York, New York on
           , 1999.
 
GOLDMAN, SACHS & CO.     BEAR, STEARNS & CO. INC.     MORGAN STANLEY DEAN WITTER
 
DONALDSON, LUFKIN & JENRETTE       MERRILL LYNCH & CO.      SALOMON SMITH BARNEY
 
            A.G. EDWARDS & SONS, INC.            M.R. BEAL & COMPANY
 
                             ----------------------
 
                    Prospectus dated                 , 1999.

<PAGE>   3
 
[INSIDE FRONT COVER]
 
     [Text:]
 
     Cable Television
 
     High Speed Internet Access
 
     Internet TV
 
     Interactive TV
 
     [Map of the United States with locations of cable systems marked with dots]
 
     The map above shows the locations of Charter Communications' cable systems,
after giving effect to our pending acquisitions.
 
     [Charter logo]

<PAGE>   4
 

                               PROSPECTUS SUMMARY
 
     The following summary contains a general discussion of our business, the
offering of Class A common stock and summary financial information. It likely
does not contain all the information that is important to you in making a
decision to purchase shares of the Class A common stock. For a more complete
understanding of the offering, you should read this entire prospectus and other
documents to which we refer. The discussion of our business in this prospectus
includes Charter Communications, Inc., Charter Communications Holding Company,
LLC and the direct and indirect subsidiaries of Charter Communications Holding
Company, unless we indicate otherwise. Unless otherwise stated, the information
in this prospectus assumes that the underwriters do not exercise their option to
purchase additional shares in the offering.
 
                                  OUR BUSINESS
 
   
     We are a holding company whose principal asset after completion of the
offering will be an approximate 31% equity interest and a 100% voting interest
in Charter Communications Holding Company. The only business of Charter
Communications, Inc. will be to act as the sole manager of Charter
Communications Holding Company. Charter Communications Holding Company is also a
holding company and is the indirect owner of all of our cable systems. To manage
Charter Communications Holding Company and its subsidiaries, Charter
Communications, Inc. will initially have only twelve executive officers, all of
whom are also executive officers of Charter Investment, Inc., an affiliated
company, and will receive other necessary personnel and services from Charter
Investment, Inc.
    
 
     We are the fourth largest operator of cable television systems in the
United States, serving approximately 6.2 million customers, after giving effect
to our pending acquisitions. We currently serve approximately 3.7 million
customers.
 
     We offer a full range of traditional cable television services and have
begun to offer digital cable television services to customers in some of our
systems. Digital cable television is cable television service provided through
digital technology. Digital technology enables cable operators to increase the
channel capacity of cable systems by permitting a significantly increased number
of video signals to be transmitted over a cable system's existing bandwidth.
Channel capacity is the number of channels that can be simultaneously carried on
the cable system and is generally defined in terms of the number of analog
channels. Analog channels refer to communication channels on which the
information is transmitted in a non-digital format, which means data is
transmitted in a manner similar to the original signals. Bandwidth is a measure
of the information-carrying capacity of a communication channel. It is the range
of usable frequencies that can be carried by a cable system.
 
     We have also started to introduce a number of other new products and
services, including interactive video programming, which allows information to
flow in both directions, and high-speed Internet access to the World Wide Web.
We are also exploring opportunities in telephony, which will integrate telephone
services with the Internet through the use of cable. The introduction of these
new services represents an
                                        1

<PAGE>   5
 
important step toward the realization of our Wired World(TM) vision, where
cable's ability to transmit voice, video and data at high speeds will enable it
to serve as the primary platform for the delivery of new services to the home
and workplace. We are accelerating the upgrade of our systems to more quickly
provide these new services.
 
     We have grown rapidly over the past five years. During this period, our
management team has successfully completed 28 acquisitions, including eight
acquisitions closed in 1999. We have also expanded our customer base through
significant internal growth. In 1998, our internal customer growth, without
giving effect to the cable systems we acquired in that year, was 4.8%, more than
twice the national industry average of 1.7%.
 
     Paul G. Allen, through his ownership of Charter Communications, Inc.'s high
vote Class B common stock and his indirect ownership of Charter Communications
Holding Company membership units, will control approximately 95% of the voting
power of all of Charter Communications, Inc.'s capital stock immediately
following the offering. As a result, Mr. Allen will control Charter
Communications, Inc. and, accordingly, Charter Communications Holding Company
and its direct and indirect subsidiaries.
 
     Our principal executive offices are located at 12444 Powerscourt Drive, St.
Louis, Missouri 63131. Our telephone number is (314) 965-0555 and our web site
is located at www.chartercom.com. The information on our web site is not part of
this prospectus.
 
                                        2

<PAGE>   6
 
                               BUSINESS STRATEGY
 
     Our objective is to increase our operating cash flow by increasing our
customer base and the amount of cash flow per customer. To achieve this
objective, we are pursuing the following strategies:
 
     - rapidly integrate acquired cable systems and apply our core operating
       strategies to raise the financial and operating performance of these
       acquired systems;
 
     - expand the array of services we offer to our customers through the
       implementation of our Wired World vision;
 
     - upgrade the bandwidth capacity of our systems to 550 megahertz or greater
       to enable greater channel capacity and add two-way capability to
       facilitate interactive communication. Two-way capability is the ability
       to have bandwidth available for upstream or two-way communication;
 
     - maximize customer satisfaction by providing reliable, high-quality
       service offerings, superior customer service and attractive programming
       choices at reasonable rates;
 
     - employ innovative marketing programs tailored to local customer
       preferences to generate additional revenues;
 
     - emphasize local management autonomy to better serve our customers while
       providing support from regional and corporate offices and maintaining
       centralized financial controls; and
 
     - improve the geographic clustering of our cable systems by selectively
       trading or acquiring systems to increase operating efficiencies and
       improve operating margins. Clusters refer to cable systems under common
       ownership which are located within geographic proximity to each other.
 
                                        3

<PAGE>   7
 
                                  ORGANIZATION
 
     The chart on the following page sets forth our corporate structure as of
the date of the completion of the offering and assumes that:
 
     - Mr. Allen, through Vulcan Cable III Inc., has purchased a total of
       43,402,778 membership units from Charter Communications Holding Company
       for $750 million at a price per membership unit equal to the net initial
       public offering price per share;
 
     - Mr. Allen has purchased a total of 50,000 shares of high vote Class B
       common stock of Charter Communications, Inc. at a price per share equal
       to the initial public offering price per share;
 
     - all of our pending acquisitions have been completed;
 
     - specified sellers in our pending Falcon and Bresnan acquisitions have
       received $425 million and $1.0 billion, respectively, of their purchase
       price in Charter Communications Holding Company membership units rather
       than in cash and these membership units have not been exchanged for
       shares of Class A common stock of Charter Communications, Inc. For the
       unaudited pro forma financial statements, however, these amounts are
       reflected as short-term debt;
 
     - the preferred membership units of Charter Communications Holding Company
       issued to a number of the sellers in our recent Rifkin acquisition remain
       outstanding, have not been exchanged for shares of Class A common stock
       of Charter Communications, Inc. and have not been reflected as equity;
 
     - none of the options to purchase membership units that have been granted
       under the Charter Communications Holding Company option plan or granted
       to our chief executive officer have been exercised; and
 
     - the initial public offering price per share is $18.00, which is the
       mid-point of the range appearing on the cover page of this prospectus.
 
                                        4

<PAGE>   8
 
                            ORGANIZATIONAL STRUCTURE
 
              [CHARTER COMMUNICATIONS HOLDING COMPANY FLOW CHART]
 
     For a more detailed description of each entity and how it relates to us,
see "Business -- Organizational Structure".
 
                                        5

<PAGE>   9
 
                                 RECENT EVENTS
 
RECENT ACQUISITIONS
 
     In the second, third and fourth quarters of 1999, we completed eight
acquisitions of cable systems. One of these acquisitions included the exchange
of certain of our cable systems and a commitment to transfer an additional cable
system. The combined fair market value of these systems is $0.4 billion. For the
year ended December 31, 1998, the systems we acquired had revenues of
approximately $527.7 million. The following table is a breakdown of our recent
acquisitions:
 

<TABLE>
<CAPTION>
                                                                                    AS OF AND FOR
                                                                                 THE SIX MONTHS ENDED
                                                           PURCHASE PRICE           JUNE 30, 1999
                                                             (INCLUDING       --------------------------
                                          ACQUISITION      ASSUMED DEBT)                     REVENUE
          RECENT ACQUISITIONS             CLOSING DATE     (IN MILLIONS)      CUSTOMERS   (IN THOUSANDS)
          -------------------             ------------   ------------------   ---------   --------------
<S>                                       <C>            <C>                  <C>         <C>
Renaissance Media Group LLC.............      4/99                $ 459         129,000      $ 30,807
American Cable Entertainment, LLC.......      5/99                  240          69,000        17,958
Cable systems of Greater Media
  Cablevision, Inc. ....................      6/99                  500         175,000        42,348
Helicon Partners I, L.P. and
  affiliates............................      7/99                  550         173,000        42,956
Vista Broadband Communications,
  L.L.C.................................      7/99                  126          28,000         7,101
Cable system of Cable Satellite of South
  Miami, Inc............................      8/99                   22           9,000         2,056
Rifkin Acquisition Partners, L.L.L.P.
  and InterLink Communications Partners,
  LLLP..................................      9/99                1,460         461,000       105,592
Cable systems of InterMedia
  Capital Partners IV, L.P.,                                        904+        412,000
  InterMedia Partners                                       system swap        (144,000)(a)
                                                                              ---------
  and affiliates........................     10/99                              268,000       100,644
                                                            -----------       ---------      --------
  Total.................................                         $4,261       1,312,000      $349,462
                                                            ===========       =========      ========
</TABLE>

 
---------------
(a) Represents the number of customers served by cable systems that we agreed to
    transfer to InterMedia in connection with the InterMedia acquisition. This
    number includes 30,000 customers served by an Indiana cable system that we
    did not transfer at the time of the InterMedia closing because some of the
    necessary regulatory approvals were still pending. We are obligated to
    transfer this system to InterMedia upon receipt of regulatory approvals. See
    "Business -- Acquisitions".
 
PENDING ACQUISITIONS
 
     In addition to the recent acquisitions described above, since the beginning
of 1999, we have entered into agreements to acquire additional cable systems.
For the year ended
 
                                        6

<PAGE>   10
 
December 31, 1998, these systems had revenues of approximately $728.8 million.
The following table is a breakdown of our pending acquisitions:
 

<TABLE>
<CAPTION>
                                                                     PURCHASE           AS OF AND FOR THE SIX
                                                                       PRICE          MONTHS ENDED JUNE 30, 1999
                                                                    (INCLUDING        --------------------------
                                           ANTICIPATED             ASSUMED DEBT)                     REVENUES
PENDING ACQUISITIONS                 ACQUISITION CLOSING DATE      (IN MILLIONS)      CUSTOMERS   (IN THOUSANDS)
--------------------                 ------------------------   -------------------   ---------   --------------
<S>                                  <C>                        <C>                   <C>         <C>
Avalon Cable LLC...................      4th Quarter 1999             $  845            260,000      $ 51,769
Cable systems of Fanch Cablevision
  L.P. and affiliates..............      4th Quarter 1999              2,400            537,000        98,931
Falcon Communications, L.P. .......      4th Quarter 1999              3,550          1,008,000       212,205
Bresnan Communications Company
  Limited Partnership..............      1st Quarter 2000              3,100            656,000       137,291
                                                                -------------         ---------      --------
     Total.........................                                      $9,895       2,461,000      $500,196
                                                                -------------         ---------   ------------
                                                                -------------         ---------   ------------
</TABLE>

 
   
     We expect to finance these pending acquisitions with the proceeds of this
offering, Mr. Allen's equity contribution through Vulcan Cable III Inc. to
Charter Communications Holding Company, borrowings under credit facilities and
equity issued to specified sellers in our pending Falcon and Bresnan
acquisitions. These available and committed sources of funds will not be
sufficient to consummate our pending acquisitions and fund related obligations.
In connection with our acquisitions, we may need to raise additional amounts up
to a total of approximately $5.41 billion.
    
 
     We will need to raise approximately $1.72 billion by borrowing under credit
facilities at Bresnan that have not yet been arranged and/or by issuing debt or
equity securities of Charter Communications, Inc. or Charter Communications
Holding Company, to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facility
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
     - approximately $0.35 billion in Bresnan notes that we expect to be put to
       us in connection with required change of control offers for these notes.
 
   
     In addition, we will have to raise approximately $3.69 billion of
additional financing if we are required to pay:
    
 
     - approximately $0.71 billion to repurchase outstanding notes of Falcon if
       committed bridge loan financing does not close;
 
   
     - approximately $0.17 billion if the Avalon credit facilities do not close;
    
 
   
     - approximately $0.88 billion if the Fanch credit facilities do not close;
    
 
     - approximately $0.27 billion to repurchase outstanding notes of Avalon;
 
   
     - approximately $1.57 billion to repurchase equity interests issued or to
       be issued to specified sellers in connection with a number of our
       acquisitions because of possible violations of Section 5 of the
       Securities Act of 1933; and
    
 
                                        7

<PAGE>   11
 
     - approximately $0.09 billion to InterMedia if we do not obtain timely
       regulatory approvals for our transfer to InterMedia of an Indiana cable
       system and we are unable to transfer replacement systems.
 
     We cannot assure you that we will be able to raise the financing necessary
to consummate our pending acquisitions and to satisfy the obligations described
above. If we are unable to raise the financing necessary to satisfy any or all
of these obligations, we may be unable to close our pending acquisitions and
could be in default under one or more other obligations. In any such case, the
relevant sellers or creditors could initiate legal proceedings against us,
including under bankruptcy and reorganization laws, for any damages they suffer
as a result of our non-performance. Any such action could trigger defaults under
our obligations, including our credit facilities and debt instruments.
 
MERGER WITH MARCUS HOLDINGS
 
     On April 23, 1998, Mr. Allen acquired approximately 99% of the non-voting
economic interests in Marcus Cable Company, L.L.C., and agreed to acquire the
remaining interests in Marcus Cable. The aggregate purchase price was
approximately $1.4 billion, excluding $1.8 billion in assumed debt. On February
22, 1999, Marcus Holdings was formed, and all of Mr. Allen's interests in Marcus
Cable were transferred to Marcus Holdings on March 15, 1999. On March 31, 1999,
Mr. Allen completed the acquisition of all remaining interests of Marcus Cable.
On April 7, 1999, Mr. Allen merged Marcus Holdings into Charter Communications
Holdings, L.L.C. Charter Holdings survived the merger. The operating
subsidiaries of Marcus Holdings became subsidiaries of Charter Operating.
 
                                        8

<PAGE>   12
 
                                  THE OFFERING
 

<TABLE>
<S>                                                           <C>
Total Class A common stock offered:
   U.S. offering............................................  144,500,000
   International offering...................................   25,500,000
                                                              -----------
      Total.................................................  170,000,000
                                                              ===========
Shares of common stock to be outstanding after the offering:
   Class A common stock.....................................  170,000,000
   Class B common stock.....................................       50,000
</TABLE>

 
     If the underwriters exercise their over-allotment option in full, the total
number of shares of Class A common stock offered and the total number of shares
of Class A common stock outstanding after the offering will be 195,500,000.
 
     In this prospectus, in calculating the number of shares of each class of
Charter Communications, Inc. common stock and the membership units in Charter
Communications Holding Company that will be outstanding after the offering and
ownership and voting percentages, we have made the same assumptions described on
page 4 with respect to our organizational chart, unless we otherwise indicate.
 
   
     After the offering and excluding 53,476,326 membership units to be issued
in connection with the Falcon and Bresnan acquisitions, there will be
324,905,052 outstanding Charter Communications Holding Company common membership
units owned by persons or entities other than Charter Communications, Inc.
Membership units are exchangeable for shares of Class A common stock on a
one-for-one basis, except that Mr. Allen and his affiliates may exchange
membership units for shares of Class B common stock on a one-for-one basis.
Class B common stock is convertible into shares of Class A common stock at any
time on a one-for-one basis. If Mr. Allen and his affiliates converted and
exchanged all Class B common stock and membership units held by them for Class A
common stock, they together would own approximately 65.7% of our Class A common
stock or 62.4% if the underwriters exercise their over-allotment option in full.
    
 
                                        9

<PAGE>   13
 
Use of Proceeds...............   By Charter Communications, Inc.: To acquire
                                 170,000,000 common membership units in Charter
                                 Communications Holding Company at a price per
                                 membership unit equal to the net initial public
                                 offering price per share of Class A common
                                 stock.
 
                                 By Charter Communications Holding Company: To
                                 partially fund, together with the proceeds from
                                 the $750 million equity contribution from
                                 Vulcan Cable III Inc., a number of our pending
                                 acquisitions. See "Use of Proceeds".
 
Voting Rights.................   Each holder of Class A common stock is entitled
                                 to one vote per share.
 
                                 Each holder of Class B common stock is entitled
                                 to a number of votes determined by a formula
                                 based on the number of outstanding shares of
                                 Class B common stock and outstanding membership
                                 units exchangeable for Class B common stock.
                                 The result of this formula is that Mr. Allen is
                                 entitled to ten votes for each share of Class B
                                 common stock and each membership unit held by
                                 him or his affiliates.
 
                                 Mr. Allen will control approximately 95% of the
                                 voting power of all of Charter Communications,
                                 Inc.'s capital stock following the offering or
                                 94.3% if the underwriters exercise their
                                 over-allotment option in full.
 
Control by Paul G. Allen......   Mr. Allen will own all of the outstanding
                                 shares of Charter Communications, Inc.'s Class
                                 B common stock following the offering. By
                                 virtue of Mr. Allen's ownership of all of
                                 Charter Communications, Inc.'s Class B common
                                 stock and the ownership by Mr. Allen's
                                 affiliates of Charter Communications Holding
                                 Company membership units, Mr. Allen will be
                                 able to control the corporate actions of
                                 Charter Communications, Inc., such as electing
                                 its board of directors, amending its
                                 certificate of incorporation and controlling
                                 all fundamental corporate decisions.
 
   
Nasdaq National Market
    
   Symbol.....................   "CHTR".
 
                                       10

<PAGE>   14
 

                                  RISK FACTORS
 
     You should carefully consider all of the information in this prospectus. In
particular, you should evaluate the specific risk factors under "Risk Factors"
for a discussion of risks associated with purchasing the Class A common stock
offered in this prospectus.
 
                                       11

<PAGE>   15
 
                   UNAUDITED SUMMARY PRO FORMA FINANCIAL DATA
 
     You should read the following unaudited summary pro forma financial data of
Charter Communications, Inc. in conjunction with the historical financial
statements and other financial information appearing elsewhere in this
prospectus, including "Capitalization", "Unaudited Pro Forma Financial
Statements" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
 
   

<TABLE>
<CAPTION>
                                                     UNAUDITED SUMMARY PRO FORMA STATEMENT OF OPERATIONS
                                                               SIX MONTHS ENDED JUNE 30, 1999
                            -----------------------------------------------------------------------------------------------------
                                CHARTER
                            COMMUNICATIONS       RECENT                      PENDING      REFINANCING    OFFERING
                            HOLDING COMPANY   ACQUISITIONS    SUBTOTAL     ACQUISITIONS   ADJUSTMENTS   ADJUSTMENTS      TOTAL
                            ---------------   ------------   -----------   ------------   -----------   -----------   -----------
                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                         <C>               <C>            <C>           <C>            <C>           <C>           <C>
Revenues..................    $  594,173       $  315,541    $   909,714    $  522,334     $     --     $       --    $ 1,432,048
                              ----------       ----------    -----------    ----------     --------     -----------   -----------
Operating expenses:
 Operating, general and
   administrative.........       310,325          160,519        470,844       267,170           --             --        738,014
 Depreciation and
   amortization...........       313,621          161,876        475,497       361,952           --             --        837,449
 Stock option compensation
   expense................        38,194               --         38,194            --                                     38,194
 Corporate expense
   charges(a).............        11,073           20,059         31,132        16,595           --             --         47,727
 Management fees..........            --            5,572          5,572         3,168           --             --          8,740
                              ----------       ----------    -----------    ----------     --------     -----------   -----------
   Total operating
     expenses.............       673,213          348,026      1,021,239       648,885           --             --      1,670,124
                              ----------       ----------    -----------    ----------     --------     -----------   -----------
Loss from operations......       (79,040)         (32,485)      (111,525)     (126,551)          --             --       (238,076)
Interest expense..........      (183,869)        (114,588)      (298,457)     (255,682)       4,300             --       (549,839)
Interest income...........        10,189              456         10,645           788           --             --         11,433
Other income (expense)....         2,682             (905)         1,777           (15)          --             --          1,762
                              ----------       ----------    -----------    ----------     --------     -----------   -----------
Loss before minority
 interest.................      (250,038)        (147,522)      (397,560)     (381,460)       4,300             --       (774,720)
Minority interest.........            --               --             --            --           --        508,552        508,552
                              ----------       ----------    -----------    ----------     --------     -----------   -----------
Loss before extraordinary
 item.....................    $ (250,038)      $ (147,522)   $  (397,560)   $ (381,460)    $  4,300     $  508,552    $  (266,168)
                              ==========       ==========    ===========    ==========     ========     ===========   ===========
Basic loss per share(b)...                                                                                            $     (1.57)
                                                                                                                      ===========
Diluted loss per
 share(b).................                                                                                            $     (1.57)
                                                                                                                      ===========
Weighted average shares
 outstanding:
 Basic....................                                                                                            170,050,000
 Diluted..................                                                                                            170,050,000
OTHER FINANCIAL DATA:
EBITDA(c).................    $  237,263       $  128,486    $   365,749    $  235,386                                $   601,135
EBITDA margin(d)..........          39.9%            40.7%          40.2%         45.1%                                      42.0%
Adjusted EBITDA(e)........    $  283,848       $  155,022    $   438,870    $  255,164                                $   694,034
Cash flows from operating
 activities...............       172,770           89,238        262,008       189,042                                    451,050
Cash flows used in
 investing activities.....      (271,191)        (111,785)      (382,976)      (67,411)                                  (450,387)
Cash flows from financing
 activities...............       207,131          188,571        395,702       455,277                                    850,979
Cash interest expense.....                                                                                                401,319
Capital expenditures......       262,507          101,127        363,634       116,268                                    479,902
BALANCE SHEET DATA (AT END
 OF PERIOD):
Total assets..............    $8,687,474       $3,231,280    $11,918,754    $9,994,753     $     --     $       --    $21,913,507
Total debt................     5,134,310        1,824,852      6,959,162     6,117,195           --             --     13,076,357
Minority interest.........            --               --             --            --           --      5,368,064      5,368,064
Members' equity...........     3,204,122        1,325,000      4,529,122       750,000           --     (5,279,122)            --
Stockholders' equity......            --               --             --            --           --      2,809,558      2,809,558
OPERATING DATA (AT END OF
 PERIOD, EXCEPT FOR
 AVERAGES):
Homes passed(f)...........     4,509,000        1,446,000      5,955,000     3,793,000                                  9,748,000
Basic customers(g)........     2,734,000          969,000      3,703,000     2,463,000                                  6,166,000
Basic penetration(h)......          60.6%            67.0%          62.2%         64.9%                                      63.3%
Premium units(i)..........     1,676,000          543,000      2,219,000       856,000                                  3,075,000
Premium penetration(j)....          61.3%            56.0%          59.9%         34.8%                                      49.9%
Average monthly revenue
 per basic customer(k)....                                                                                            $     38.71
</TABLE>

    
 
                                       12

<PAGE>   16
   

<TABLE>
<CAPTION>
                                            UNAUDITED SUMMARY PRO FORMA STATEMENT OF OPERATIONS
                                                        YEAR ENDED DECEMBER 31, 1998
                                          --------------------------------------------------------
                                             CHARTER
                                          COMMUNICATIONS
                                             HOLDING                       RECENT
                                             COMPANY         MARCUS     ACQUISITIONS    SUBTOTAL
                                          --------------   ----------   ------------   -----------
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                       <C>              <C>          <C>            <C>
Revenues................................    $  601,953     $  457,929    $  608,953    $ 1,668,835
                                            ----------     ----------    ----------    -----------
Operating expenses:
 Operating, general and
   administrative.......................       304,555        236,595       307,447        848,597
 Depreciation and amortization..........       370,406        258,348       335,799        964,553
 Stock option compensation expense......           845             --            --            845
 Corporate expense charges(a)...........        16,493         17,042        10,991         44,526
 Management fees........................            --             --        14,668         14,668
                                            ----------     ----------    ----------    -----------
   Total operating expenses.............       692,299        511,985       668,905      1,873,189
                                            ----------     ----------    ----------    -----------
Loss from operations....................       (90,346)       (54,056)      (59,952)      (204,354)
Interest expense........................      (204,770)      (140,651)     (271,450)      (616,871)
Other income (expense)..................           518             --        (5,825)        (5,307)
                                            ----------     ----------    ----------    -----------
Loss before minority interest...........      (294,598)      (194,707)     (337,227)      (826,532)
Minority interest.......................            --             --            --             --
                                            ----------     ----------    ----------    -----------
Loss before extraordinary item..........    $ (294,598)    $ (194,707)   $ (337,227)   $  (826,532)
                                            ==========     ==========    ==========    ===========
Basic loss per share(b).................
Diluted loss per share(b)...............
Weighted average shares outstanding:
 Basic..................................
 Diluted................................
OTHER FINANCIAL DATA:
EBITDA(c)...............................    $  280,578     $  204,292    $  270,022    $   754,892
EBITDA margin(d)........................          46.6%          44.6%         44.3%          45.2%
Adjusted EBITDA(e)......................    $  297,398     $  221,334    $  301,506    $   820,238
Cash flows from operating activities....       141,602        135,466       194,041        471,109
Cash flows used in investing
 activities.............................      (206,607)      (217,729)     (233,161)      (657,497)
Cash flows from financing activities....       210,306        109,924        23,252        343,482
Cash interest expense...................
Capital expenditures....................       213,353        224,723        96,025        534,101
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................    $4,335,527     $2,900,129    $4,375,267    $11,610,923
Total debt..............................     2,002,206      1,520,995     2,932,342      6,455,543
Minority interest.......................            --             --            --             --
Members' equity.........................     2,147,379      1,281,912     1,325,000      4,764,291
Stockholders' equity....................            --             --            --             --
OPERATING DATA (AT END OF PERIOD, EXCEPT
 FOR AVERAGES):
Homes passed(f).........................     2,149,000      1,743,000     1,922,000      5,814,000
Basic customers(g)......................     1,255,000      1,061,000     1,325,000      3,641,000
Basic penetration(h)....................          58.4%          60.9%         68.9%          62.6%
Premium units(i)........................       845,000        411,000       777,000      2,033,000
Premium penetration(j)..................          67.3%          38.7%         58.6%          55.8%
Average monthly revenue per basic
 customer(k)............................
 
<CAPTION>
                                           UNAUDITED SUMMARY PRO FORMA STATEMENT OF OPERATIONS
                                                       YEAR ENDED DECEMBER 31, 1998
                                          ------------------------------------------------------
 
                                            PENDING      REFINANCING    OFFERING
                                          ACQUISITIONS   ADJUSTMENTS   ADJUSTMENTS      TOTAL
                                          ------------   -----------   -----------   -----------
                                              (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                       <C>            <C>           <C>           <C>
Revenues................................  $ 1,022,669     $     --     $       --    $ 2,691,504
                                          -----------     --------     ----------    -----------
Operating expenses:
 Operating, general and
   administrative.......................      511,118           --             --      1,359,715
 Depreciation and amortization..........      743,845           --             --      1,708,398
 Stock option compensation expense......           --           --             --            845
 Corporate expense charges(a)...........       37,090           --             --         81,616
 Management fees........................        6,135           --             --         20,803
                                          -----------     --------     ----------    -----------
   Total operating expenses.............    1,298,188           --             --      3,171,377
                                          -----------     --------     ----------    -----------
Loss from operations....................     (275,519)          --             --       (479,873)
Interest expense........................     (457,586)       7,000             --     (1,067,457)
Other income (expense)..................       (5,637)          --             --        (10,944)
                                          -----------     --------     ----------    -----------
Loss before minority interest...........     (738,742)       7,000             --     (1,558,274)
Minority interest.......................           --           --      1,022,903      1,022,903
                                          -----------     --------     ----------    -----------
Loss before extraordinary item..........  $  (738,742)    $  7,000     $1,022,903    $  (535,371)
                                          ===========     ========     ==========    ===========
Basic loss per share(b).................                                                  $(3.15)
                                                                                           -----
                                                                                           -----
Diluted loss per share(b)...............                                                  $(3.15)
                                                                                           -----
                                                                                           -----
Weighted average shares outstanding:
 Basic..................................                                             170,050,000
 Diluted................................                                             170,050,000
OTHER FINANCIAL DATA:
EBITDA(c)...............................  $   462,689                                $ 1,217,581
EBITDA margin(d)........................         45.2%                                      45.2%
Adjusted EBITDA(e)......................  $   511,551                                $ 1,331,789
Cash flows from operating activities....      254,086                                    725,195
Cash flows used in investing
 activities.............................     (274,405)                                  (931,902)
Cash flows from financing activities....      115,779                                    459,261
Cash interest expense...................                                                 772,124
Capital expenditures....................      219,045                                    753,146
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................  $10,091,809     $125,000     $       --    $21,827,732
Total debt..............................    6,279,764      128,604             --     12,863,911
Minority interest.......................           --           --      5,513,507      5,513,507
Members' equity.........................      750,000       (3,604)    (5,500,687)            --
Stockholders' equity....................           --           --      2,885,680      2,885,680
OPERATING DATA (AT END OF PERIOD, EXCEPT
 FOR AVERAGES):
Homes passed(f).........................    3,787,000                                  9,601,000
Basic customers(g)......................    2,453,000                                  6,094,000
Basic penetration(h)....................         64.8%                                      63.5%
Premium units(i)........................      862,000                                  2,895,000
Premium penetration(j)..................         35.1%                                      47.5%
Average monthly revenue per basic
 customer(k)............................                                             $     36.81
</TABLE>

    
 
-------------------------
 
(a) Charter Investment, Inc. provided corporate management and consulting
    services to subsidiaries of Charter Operating during 1998 and 1999 and to
    subsidiaries of Marcus Holdings beginning in October 1998. See "Certain
    Relationships and Related Transactions".
 
(b) Basic loss per share assumes none of the membership units of Charter
    Communications Holding Company are exchanged for Charter Communications,
    Inc. common stock and none of the outstanding options to purchase membership
    units of Charter Communications Holding Company that are automatically
    exchanged for Charter Communications, Inc. common stock are exercised. Basic
    loss per share equals loss applicable to equity holders divided by weighted
    average shares outstanding. If the membership units were exchanged or
    options exercised, the effects would be antidilutive.
 
(c) EBITDA represents earnings (loss) before interest, income taxes,
    depreciation and amortization. EBITDA is presented because it is a widely
    accepted financial indicator of a cable television company's ability to
    service indebtedness. However, EBITDA should not be considered as an
    alternative to income from operations or to cash flows from operating,
    investing or financing activities, as determined in accordance with
    generally accepted accounting principles. EBITDA should also not be
    construed as an indication of a company's operating performance or as a
    measure of liquidity. Management's discretionary use
 
                                       13

<PAGE>   17
 
    of funds depicted by EBITDA may be limited by working capital, debt service
    and capital expenditure requirements and by restrictions related to legal
    requirements, commitments and uncertainties.
 
(d) EBITDA margin represents EBITDA as a percentage of revenues.
 
(e) Adjusted EBITDA means EBITDA before stock option compensation expense,
    corporate expenses, management fees and other income (expense). Adjusted
    EBITDA is presented because it is a widely accepted financial indicator of a
    cable company's ability to service its indebtedness. However, Adjusted
    EBITDA should not be considered as an alternative to income from operations
    or to cash flows from operating, investing or financing activities, as
    determined in accordance with generally accepted accounting principles.
    Adjusted EBITDA should also not be construed as an indication of a company's
    operating performance or as a measure of liquidity. In addition, because
    Adjusted EBITDA is not calculated identically by all companies, the
    presentation here may not be comparable to other similarly titled measures
    of other companies. Management's discretionary use of funds depicted by
    Adjusted EBITDA may be limited by working capital, debt service and capital
    expenditure requirements and by restrictions related to legal requirements,
    commitments and uncertainties.
 
(f) Homes passed are the number of living units, such as single residence homes,
    apartments and condominium units, passed by the cable television
    distribution network in a given cable system service area.
 
(g) Basic customers are customers who receive basic cable service.
 
(h) Basic penetration represents basic customers as a percentage of homes
    passed.
 
(i) Premium units represent the total number of subscriptions to premium
    channels.
 
(j) Premium penetration represents premium units as a percentage of basic
    customers.
 
(k) Average monthly revenue per basic customer represents revenues divided by
    the number of months in the period divided by the number of basic customers
    at period end.
 
                                       14

<PAGE>   18
 

                                  RISK FACTORS
 
     An investment in our Class A common stock entails the following risks. You
should carefully consider these risk factors, as well as the other information
in this prospectus.
 
                                 OUR STRUCTURE
 
MR. ALLEN HAS THE ABILITY TO CONTROL MATTERS ON WHICH ALL OF CHARTER
COMMUNICATIONS, INC.'S STOCKHOLDERS MAY VOTE AND HAS THE EXCLUSIVE RIGHT TO VOTE
ON SPECIFIC MATTERS.
 
     Following the offering, Mr. Allen will control approximately 95% of the
voting power of Charter Communications, Inc.'s capital stock. Accordingly, Mr.
Allen will control Charter Communications, Inc. which, in turn, will control
Charter Communications Holding Company. As Class A common stockholders, you will
have only a very limited voting interest in Charter Communications, Inc. and a
limited indirect equity interest in Charter Communications Holding Company,
although Class A common stockholders will have an equity interest in Charter
Communications, Inc. of more than 99.9%. The purposes of our structure are,
among other things, to enable Mr. Allen to take advantage for tax purposes of
the losses expected to be generated by Charter Communications Holding Company
and to enable him to maintain control of our business.
 
     Mr. Allen will have the ability to control fundamental corporate
transactions requiring equity holder approval, including, but not limited to,
the election of all of our directors, approval of merger transactions involving
us and the sale of all or substantially all of our assets. Mr. Allen's control
may continue in the future through the high vote Class B common stock even if
Mr. Allen owns a minority economic interest in our business.
 
     As the owner of all of the Class B common stock, Mr. Allen will be entitled
to elect all but one member of Charter Communications, Inc.'s board of
directors. Because of the exclusive voting rights granted to holders of Class B
common stock for specific matters, he will have the sole power to amend a number
of important provisions of Charter Communications, Inc.'s certificate of
incorporation, including provisions restricting the scope of our business
activities. See "Description of Capital Stock and Membership Units".
 
MR. ALLEN MAY HAVE INTERESTS THAT CONFLICT WITH YOUR INTERESTS.
 
     Mr. Allen's control over our management and affairs could create conflicts
of interest if he is faced with decisions that could have implications both for
him and for us and the holders of Class A common stock. Further, through his
effective control, Mr. Allen could cause us to enter into contracts with another
entity in which he owns an interest or cause us to decline a transaction that he
or an entity in which he owns an interest ultimately enters into.
 
     Mr. Allen may engage in other businesses involving the operation of cable
television systems, video programming, high-speed Internet access, telephony or
electronic commerce, which is business and financial transactions conducted
through broadband interactivity and Internet services. Mr. Allen may also engage
in other businesses that
 
                                       15

<PAGE>   19
 
compete or may in the future compete with us. In addition, Mr. Allen currently
engages and may engage in the future in businesses that are complementary to our
cable television business.
 
     Accordingly, conflicts could arise with respect to the allocation of
corporate opportunities between us and Mr. Allen. Current or future agreements
between us and 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. Further, many past and future transactions with Mr. Allen or his
affiliates are informal in nature. As a result, there will be some discretion
left to the parties, who are subject to the potentially conflicting interests
described above. We have not instituted any formal plans to address conflicts of
interest that may arise.
 
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. THIS COULD ADVERSELY AFFECT OUR ABILITY TO
OFFER NEW PRODUCTS AND SERVICES OUTSIDE OF THE CABLE TRANSMISSION BUSINESS AND
ENTER INTO NEW BUSINESSES, WHICH COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
 
     Charter Communications, Inc.'s certificate of incorporation and Charter
Communications Holding Company's limited liability company agreement will
provide that, until all of the shares of Class B common stock have converted
into shares of Class A common stock, Charter Communications, Inc. and Charter
Communications Holding Company, including their subsidiaries, cannot engage in
any business activity outside the cable transmission business except for the
joint venture with Broadband Partners, LLC and incidental businesses engaged in
as of the closing of the offering. This will be the case unless the opportunity
to pursue the particular business activity is first offered to Mr. Allen, he
decides not to pursue it and he 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.
Consequently, our ability to offer new products and services outside of the
cable transmission business and enter into new businesses could be adversely
affected, resulting in an adverse effect on our growth, financial condition and
results of operations. See "Certain Relationships and Related
Transactions -- Allocation of Business Opportunities with Mr. Allen".
 
MR. ALLEN'S CONTROL AND CHARTER COMMUNICATIONS, INC.'S ORGANIZATIONAL DOCUMENTS
MAY INHIBIT OR PREVENT A TAKEOVER OR A CHANGE IN MANAGEMENT THAT COULD RESULT IN
A CHANGE OF CONTROL PREMIUM OR FAVORABLY IMPACT THE MARKET PRICE OF THE CLASS A
COMMON STOCK.
 
     As a result of his controlling voting interest, Mr. Allen will have the
ability to delay or prevent a change of control or changes in our management
that our other stockholders, including the holders of our Class A common stock,
may consider
 
                                       16

<PAGE>   20
 
favorable or beneficial. Provisions in our organizational documents may also
have the effect of delaying or preventing these changes, including provisions:
 
     - authorizing the issuance of "blank check" preferred stock;
 
     - restricting the calling of special meetings of stockholders; and
 
     - requiring advanced notice for proposals for stockholder meetings.
 
If a change of control or change in management is delayed or prevented, the
market price of our Class A common stock could suffer or holders may not receive
a change of control premium over the then-current market price of the Class A
common stock.
 
CHARTER COMMUNICATIONS, INC. IS A HOLDING COMPANY WHICH HAS NO OPERATIONS AND
WILL DEPEND ON ITS OPERATING SUBSIDIARIES FOR CASH. OUR SUBSIDIARIES MAY BE
LIMITED IN THEIR ABILITY TO MAKE FUNDS AVAILABLE FOR THE PAYMENT OF OUR DEBT AND
OTHER OBLIGATIONS.
 
     As holding companies, Charter Communications, Inc. and Charter
Communications Holding Company will depend entirely on cash from our operating
subsidiaries to satisfy their obligations. These operating subsidiaries may not
be able to make funds available to Charter Communications, Inc. and Charter
Communications Holding Company.
 
     Charter Communications, Inc. is a holding company whose principal asset
after the closing of the offering will be an approximate 31% equity interest and
a 100% voting interest in Charter Communications Holding Company. Charter
Communications Holding Company is also a holding company whose operations are
conducted through its direct and indirect subsidiaries. Neither of them will
hold any significant assets other than their direct and indirect interests in
our subsidiaries which conduct all of our operations. Charter Communications,
Inc.'s and Charter Communications Holding Company's cash flow will depend upon
the cash flow of Charter Communications Holding Company's operating subsidiaries
and the payment of funds by these operating subsidiaries to Charter
Communications Holding Company and Charter Communications, Inc. This will affect
the ability of Charter Communications, Inc and Charter Communications Holding
Company to meet their obligations, including:
 
     - debt or preferred equity obligations that we may issue in the future;
 
     - obligations under employment and consulting agreements;
 
     - obligations under the mutual services agreement with Charter Investment,
       Inc. under which Charter Investment, Inc. provides Charter
       Communications, Inc. with personnel and services; and
 
     - dividends or other distributions to holders of Class A common stock.
 
     Our operating subsidiaries are not obligated to make funds available for
payment of these obligations in the form of loans, distributions or otherwise.
In addition, our operating subsidiaries' ability to make any such loans,
distributions or other payments to Charter Communications Holding Company or to
Charter Communications, Inc. will depend on their earnings, business and tax
considerations and legal restrictions. Covenants in the indentures and credit
agreements governing the indebtedness of Charter Communications Holding
Company's operating subsidiaries restrict their ability to make
 
                                       17

<PAGE>   21
 
loans, distributions or other payments to Charter Communications Holding Company
or to us.
 
WE COULD BE DEEMED AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT OF
1940. THIS WOULD IMPOSE SIGNIFICANT RESTRICTIONS ON US AND WOULD BE LIKELY TO
HAVE A MATERIAL ADVERSE IMPACT ON OUR GROWTH, FINANCIAL CONDITION AND RESULTS OF
OPERATION.
 
     If anything were to happen which would cause us to be deemed an investment
company, the Investment Company Act would impose significant restrictions on us,
including severe limitations on our ability to borrow money, to issue additional
capital stock and to transact business with affiliates. In addition, because our
operations are very different from those of the typical registered investment
company, regulation under the Investment Company Act could affect us in other
ways that are extremely difficult to predict. In sum, if we were deemed to be an
investment company it could become impractical for us to continue our business
as currently conducted and our growth, our financial condition and our results
of operations could suffer materially.
 
     Following the offering, our principal asset will be our equity interest in
Charter Communications Holding Company. If our membership interest in Charter
Communications Holding Company were to constitute less than 50% of the voting
securities issued by Charter Communications Holding Company, then our interest
in Charter Communications Holding Company could be deemed an "investment
security" for purposes of the Investment Company Act. This may occur, for
example, if a court determines that the Class B common stock is no longer
entitled to special voting rights and, in accordance with the terms of the
Charter Communications Holding Company limited liability company agreement, our
membership units in this company were to lose their special voting privileges. A
determination that such investment was an investment security could cause us to
be deemed to be an investment company under the Investment Company Act, unless
an exclusion from registration were available or we were to obtain an order of
the Securities and Exchange Commission excluding or exempting us from
registration under this Act.
 
IF A COURT DETERMINES THAT THE CLASS B COMMON STOCK IS NO LONGER ENTITLED TO
SPECIAL VOTING RIGHTS, CHARTER COMMUNICATIONS, INC. WOULD LOSE ITS RIGHTS TO
MANAGE CHARTER COMMUNICATIONS HOLDING COMPANY. IN ADDITION TO THE INVESTMENT
COMPANY RISKS DISCUSSED ABOVE, THIS COULD MATERIALLY IMPACT THE VALUE OF YOUR
INVESTMENT IN THE CLASS A COMMON STOCK.
 
     If a court determines that the Class B common stock is no longer entitled
to special voting rights, Charter Communications, Inc. would no longer have a
controlling voting interest in, and would lose its right to manage, Charter
Communications Holding Company. If this were to occur:
 
     - Charter Communications, Inc. would retain its proportional equity
       interest in Charter Communications Holding Company but would lose all of
       its powers to direct the management and affairs of Charter Communications
       Holding Company and its subsidiaries;
 
                                       18

<PAGE>   22
 
     - Class A common stockholders would lose any right they had at that time or
       might have had in the future to direct, through equity ownership in
       Charter Communications, Inc., the management and affairs of Charter
       Communications Holding Company; and
 
     - Charter Communications, Inc. would become strictly a passive investment
       vehicle.
 
     This result, as well as the impact of being treated by investors as an
investment company, could materially adversely impact:
 
     - the liquidity of the Class A common stock;
 
     - how it trades in the marketplace;
 
     - the price that purchasers would be willing to pay for the Class A common
       stock in a change of control transaction or otherwise; and
 
     - the market price of the Class A common stock which could experience a
       significant decline as a result.
 
Uncertainties that may arise with respect to the nature of Charter
Communications, Inc.'s management role and voting power and organizational
documents, including legal actions or proceedings relating thereto, may also
materially adversely impact the value of the Class A common stock.
 
WE ARE DEPENDENT ON CHARTER INVESTMENT, INC. FOR NECESSARY PERSONNEL AND
SERVICES.
 
   
     Charter Communications, Inc. will initially have only twelve executive
officers, all of whom are also executive officers of Charter Investment, Inc. It
will receive from Charter Investment, Inc. other personnel and services
necessary to perform its obligations as Charter Communications Holding Company's
sole manager, pursuant to a mutual services agreement. As Charter
Communications, Inc. is restricted from holding any significant assets other
than Charter Communications Holding Company membership units, Charter
Communications, Inc. will be substantially dependent upon Charter Investment,
Inc. for personnel and support services. The termination or breach by Charter
Investment, Inc. of the mutual services agreement could adversely affect our
ability to manage Charter Communications Holding Company and, in turn, our cable
systems.
    
 
THE SPECIAL TAX ALLOCATION PROVISIONS OF THE CHARTER COMMUNICATIONS HOLDING
COMPANY LIMITED LIABILITY COMPANY AGREEMENT MAY CAUSE CHARTER COMMUNICATIONS,
INC. IN SOME CIRCUMSTANCES TO PAY MORE TAXES THAN IF THE SPECIAL TAX ALLOCATION
PROVISIONS WERE NOT IN EFFECT.
 
     Charter Communications Holding Company's limited liability company
agreement provides that through the end of 2003, tax losses of Charter
Communications Holding Company that would otherwise have been allocated to
Charter Communications, Inc. based generally on its percentage of outstanding
membership units of Charter Communications Holding Company will instead be
allocated to the membership units held by Vulcan Cable III Inc. and Charter
Investment, Inc. The purpose of these special
 
                                       19

<PAGE>   23
 
tax allocation provisions is to allow Mr. Allen to take advantage for tax
purposes of the losses expected to be generated by Charter Communications
Holding Company. The limited liability company agreement further provides that
beginning at the time that Charter Communications Holding Company first becomes
profitable (as determined under the applicable federal income tax rules for
determining book profits), tax profits that would otherwise have been allocated
to Charter Communications, Inc. based generally on its percentage of outstanding
membership units of Charter Communications Holding Company will instead be
allocated to membership units held by Vulcan Cable III Inc. and Charter
Investment, Inc. In some situations, the special tax allocation provisions could
result in Charter Communications, Inc. having to pay taxes in an amount that is
more than if Charter Communications Holding Company had allocated losses and
profits to Charter Communications, Inc. based generally on its percentage of
outstanding membership units from the time of the completion of the offering.
See "Description of Capital Stock and Membership Units -- Special Allocation of
Losses".
 
                                OUR ACQUISITIONS
 
WE MAY BE UNABLE TO OBTAIN CAPITAL SUFFICIENT TO CONSUMMATE OUR PENDING
ACQUISITIONS AND FUND RELATED OBLIGATIONS. IF THIS OCCURRED, WE COULD BE IN
DEFAULT UNDER OUR ACQUISITION AGREEMENTS AND DEBT OBLIGATIONS WHICH COULD LEAD
TO LEGAL PROCEEDINGS BEING INITIATED AGAINST US. THIS IN TURN COULD LEAD TO
DEFAULTS UNDER OUR OTHER OBLIGATIONS.
 
   
     Available and committed sources of funds will not be sufficient to
consummate our pending acquisitions. In connection with our acquisitions, we may
need to raise a total of $5.41 billion.
    
 
     We will need to raise approximately $1.72 billion by borrowing under credit
facilities at Bresnan that have not yet been arranged and/or by issuing debt or
equity securities of Charter Communications, Inc. or Charter Communications
Holding Company to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facility
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
     - approximately $0.35 billion in Bresnan notes that we expect to be put to
       us in connection with required change of control offers for these notes.
 
   
     In addition, we will have to raise approximately $3.69 billion of
additional financing if we are required to pay:
    
 
     - approximately $0.71 billion to repurchase outstanding notes of Falcon if
       committed bridge loan financing does not close;
 
   
     - approximately $0.17 billion if the Avalon credit facilities do not close;
    
 
   
     - approximately $0.88 billion if the Fanch credit facilities do not close;
    
 
     - approximately $0.27 billion to repurchase outstanding notes of Avalon;
 
                                       20

<PAGE>   24
 
   
     - approximately $1.57 billion to repurchase equity interests issued or to
       be issued to specified sellers in connection with a number of our
       acquisitions because of possible violations of Section 5 of the
       Securities Act of 1933; and
    
 
     - approximately $0.09 billion to InterMedia if we do not obtain regulatory
       approvals to transfer an Indiana cable system that we are required to
       transfer to InterMedia and we are unable to transfer replacement systems.
 
     We cannot assure you that we will be able to raise the financing necessary
to consummate our pending acquisitions and to satisfy the obligations described
above. If we are unable to raise the financing necessary to satisfy any or all
of these obligations, we may be unable to close our pending acquisitions and
could be in default under one or more other obligations. The relevant sellers or
creditors could initiate legal proceedings against us, including under
bankruptcy and reorganization laws, for any damages they suffer as a result of
our non-performance. Any such action could trigger defaults under our other
obligations, including our credit facilities and debt instruments.
 
     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and the following five
risk factors for more information on our potential funding shortfall.
 
THE PROSPECTIVE LENDERS' COMMITMENTS TO LEND TO US UNDER THE FALCON BRIDGE LOAN
FACILITY AND THE FANCH AND AVALON CREDIT FACILITIES ARE SUBJECT TO A NUMBER OF
CONDITIONS. IF THESE CONDITIONS ARE NOT MET, THESE SOURCES OF FUNDS WILL NOT BE
AVAILABLE TO US. AS A RESULT, WE MAY BE UNABLE TO CONSUMMATE THESE PENDING
ACQUISITIONS OR FUND REQUIRED DEBT REPURCHASES WHICH COULD TRIGGER DEFAULTS
UNDER OUR ACQUISITION AGREEMENTS AND OUR DEBT OBLIGATIONS. THE RELEVANT SELLERS
OR CREDITORS COULD INITIATE LEGAL PROCEEDINGS AGAINST US.
 
   
     The Falcon bridge loan facility and the Fanch and Avalon credit facilities,
for which we have received commitments, will not close unless specified closing
conditions are satisfied. Some of these closing conditions are not under our
control, and we cannot assure you that all closing conditions will be satisfied.
For example, the closing conditions for these facilities include:
    
 
     - the absence of various types of material adverse changes, including
       material adverse changes in the financial and capital markets; and
 
     - receipt of required approvals from third parties.
 
See "Description of Certain Indebtedness" for a description of the material
closing conditions for each of these facilities.
 
     If we are not able to obtain financing under these facilities, we will need
to arrange other sources of financing to meet our obligations, including our
obligations to consummate our pending acquisitions. We would need to raise
approximately $1.8 billion to replace these facilities, and we cannot assure you
that alternate financing sources will be available to us. We may as a result be
unable to consummate our pending Fanch and Avalon acquisitions and may be in
default under the related acquisition agreements. If we do not obtain funding
under the Falcon bridge loan facility, we may be in default
 
                                       21

<PAGE>   25
 
under the Falcon debentures and notes that we may be required to repurchase. The
relevant sellers or creditors could initiate legal proceedings against us,
including under bankruptcy and reorganization laws, for any damages they suffer
as a result of our non-performance. Any such action could trigger defaults under
our other obligations, including our credit facilities and debt instruments.
 
WE MAY BE UNABLE TO OBTAIN SUFFICIENT CAPITAL TO REPURCHASE THE EXISTING PUBLIC
DEBT OF THE CABLE OPERATORS THAT WE ARE ACQUIRING. WE MAY AS A RESULT BE IN
DEFAULT ON THIS DEBT WHICH COULD LEAD TO LEGAL PROCEEDINGS BEING INITIATED
AGAINST US. THIS COULD IN TURN LEAD TO DEFAULTS UNDER OUR OTHER OBLIGATIONS.
 
     Following the closings of the Falcon, Avalon and Bresnan acquisitions, we
will be required to make offers to repurchase public notes issued by Falcon,
Avalon and Bresnan under the terms of the indentures governing these notes.
Because the trading prices of the Falcon and Bresnan notes have increased
considerably since the announcement of the respective acquisitions and these
notes are currently trading near the change of control price that we would have
to pay, we believe that it is likely that holders of all or substantially all of
the Falcon and Bresnan notes will tender these notes in response to the change
of control offers that we will have to make. As a result, we assume that we will
be required to repurchase the public Falcon and Bresnan notes. The total
principal amount and accreted value of these notes as of June 30, 1999 was $1.05
billion. In addition, we may also be required to repurchase the public Avalon
notes. The total principal amount and accreted value of the Avalon notes as of
June 30, 1999 was $268 million. We cannot assure you that we will be able to
obtain capital sufficient to fulfill all of these repurchase obligations. If we
fail to satisfy these repurchase obligations, the holders of these notes could
initiate legal proceedings against us, including under bankruptcy and
reorganization laws, for any damages they suffer as a result of our non-
performance. This could trigger defaults under our other obligations, including
our credit facilities and debt instruments.
 
WE MAY BE UNABLE TO OBTAIN SUFFICIENT CAPITAL TO REPAY DEBT OUTSTANDING UNDER
THE BRESNAN CREDIT FACILITIES. WE MAY AS A RESULT BE IN DEFAULT UNDER OUR
BRESNAN ACQUISITION AGREEMENT AND THE BRESNAN CREDIT FACILITIES WHICH COULD LEAD
TO LEGAL PROCEEDINGS BEING INITIATED AGAINST US. THIS COULD IN TURN LEAD TO
DEFAULTS UNDER OUR OTHER OBLIGATIONS.
 
     Our acquisition of Bresnan will constitute an event of default under
Bresnan's credit facilities, permitting the lenders to declare all amounts
outstanding to be immediately due and payable. As of June 30, 1999, there were
$500.0 million in borrowings outstanding under these facilities. We cannot
assure you that we will able to obtain waivers of the events of default from the
Bresnan lenders or assume and amend the existing Bresnan credit facilities or
obtain capital sufficient to refinance the debt outstanding under these credit
facilities. If we fail to so obtain waivers, assume and amend, or refinance, we
may be unable to close the Bresnan acquisition and the Bresnan sellers and/or
the lenders under the Bresnan credit facilities could initiate legal proceedings
against us, including under bankruptcy and reorganization laws, for any
 
                                       22

<PAGE>   26
 
damages they suffer as a result of our non-performance. This could trigger
defaults under our other obligations, including our credit facilities and debt
instruments.
 
SPECIFIED FORMER OWNERS OF RIFKIN ARE ENTITLED TO CAUSE US TO REDEEM THEIR
PREFERRED MEMBERSHIP UNITS OF CHARTER COMMUNICATIONS HOLDING COMPANY. IF WE DO
NOT HAVE SUFFICIENT CAPITAL TO FUND ANY OR ALL OF THESE REDEMPTIONS, THESE
RIFKIN SELLERS COULD INITIATE LEGAL PROCEEDINGS AGAINST US. THIS COULD IN TURN
LEAD TO DEFAULTS UNDER OUR OTHER OBLIGATIONS.
 
     The Rifkin sellers who hold preferred membership units of Charter
Communications Holding Company issued in connection with the Rifkin acquisition
have the right to cause Charter Communications Holding Company to redeem these
preferred membership units at any time prior to September 15, 2004. If Charter
Communications Holding Company becomes obligated to redeem all of these
preferred membership units under the terms of these securities, Charter
Communications Holding Company would be obligated to redeem these preferred
membership units for $133.3 million plus 8% accretion from September 14, 1999,
the date of the Rifkin acquisition, through the date of redemption. We cannot
guarantee that any or all of these holders of preferred membership units will
not exercise their redemption rights, or that we will have sufficient capital to
fund any or all of these redemptions. If we fail to satisfy any redemption
demand, we would be in breach of the terms of these securities and the relevant
holders could initiate legal proceedings against us, including under bankruptcy
and reorganization laws, for any damages they suffer as a result of our
non-performance. Any such action could trigger defaults under other obligations,
including our credit facilities and debt instruments.
 
SPECIFIED FORMER OWNERS OF RIFKIN AND SPECIFIED OWNERS OF FALCON, BRESNAN AND
HELICON WHO ACQUIRE EQUITY INTERESTS MAY BE ENTITLED TO CAUSE US TO REPURCHASE
THEIR EQUITY INTERESTS BECAUSE OF POSSIBLE VIOLATIONS OF SECTION 5 OF THE
SECURITIES ACT OF 1933. IF WE DO NOT HAVE SUFFICIENT CAPITAL TO FUND ANY OR ALL
OF THESE REPURCHASES, ANY OF THE OWNERS OF THESE EQUITY INTERESTS COULD INITIATE
LEGAL PROCEEDINGS AGAINST US. THIS COULD LEAD TO DEFAULTS UNDER OUR OTHER
OBLIGATIONS.
 
     The Rifkin sellers who received preferred membership units in connection
with the Rifkin acquisition, the Falcon and Bresnan sellers who acquire
membership units in the Falcon and Bresnan acquisitions and the Helicon sellers
acquiring shares of Class A common stock in our directed share program may have
rescission rights against Charter Communications, Inc. and Charter
Communications Holding Company arising out of possible violations of Section 5
of the Securities Act of 1933 in connection with the offers and sales of these
equity interests. If all of these equity holders successfully exercised their
possible rescission rights and Charter Communications, Inc. or Charter
Communications Holding Company became obligated to repurchase all of their
equity interests, the total repurchase obligations would be approximately $1.6
billion as follows:
 
     - up to a maximum of $133.3 million to repurchase all of the Rifkin
       sellers' equity interests;
 
                                       23

<PAGE>   27
 
     - up to a maximum of $425 million to repurchase all of the Falcon sellers'
       equity interests. This amount would increase to $550 million if the
       Falcon sellers exercise their right to receive up to an additional $125
       million of membership units in connection with the Falcon acquisition;
 
     - up to a maximum of $1.0 billion to repurchase all of the Bresnan sellers'
       equity interests; and
 
     - up to a maximum of $12 million to repurchase the shares of Class A common
       stock purchased by Helicon sellers in our directed share program.
 
     We cannot assure you that we would be able to obtain capital sufficient to
fund any required repurchases. If we failed to satisfy these obligations, these
acquisition-related equity holders, as general unsecured creditors, could
initiate legal proceedings against us, including under bankruptcy and
reorganization laws, for any damages they suffer as a result of our
non-performance. Any such action could trigger defaults under our other
obligations, including our credit facilities and debt instruments.
 
WE MAY NOT HAVE THE ABILITY TO INTEGRATE THE NEW SYSTEMS THAT WE ACQUIRE AND THE
CUSTOMERS THEY SERVE WITH OUR EXISTING SYSTEMS. THIS COULD ADVERSELY AFFECT OUR
OPERATING RESULTS AND GROWTH STRATEGY.
 
     Upon the completion of our pending acquisitions, we will own and operate
cable systems serving approximately 6.2 million customers, as compared to the
cable systems we currently own which serve approximately 3.7 million customers.
In addition, we may acquire more cable systems in the future, through direct
acquisition, system swaps or otherwise. The integration of our new cable systems
poses a number of significant risks, including:
 
     - our acquisitions may not have a positive impact on our cash flows from
       operations;
 
     - the integration of these new systems and customers will place significant
       demands on our management and our operations, information services, and
       financial, legal and marketing resources. Our current operating and
       financial systems and controls and information services may not be
       adequate, and any steps taken to improve these systems and controls may
       not be sufficient;
 
     - our current information systems may be incompatible with the information
       systems we have acquired or plan to acquire. We may be unable to
       integrate these information systems at a reasonable cost or in a timely
       manner;
 
     - acquired businesses sometimes result in unexpected liabilities and
       contingencies which could be significant; and
 
     - our continued growth will also increase our need for qualified personnel.
       We may not be able to hire such additional qualified personnel.
 
     We cannot assure you that we will successfully integrate any acquired
systems into our operations.
 
                                       24

<PAGE>   28
 
THE FAILURE TO OBTAIN NECESSARY REGULATORY APPROVALS, OR TO SATISFY OTHER
CLOSING CONDITIONS, COULD IMPEDE THE CONSUMMATION OF A PENDING ACQUISITION. THIS
WOULD PREVENT OR DELAY OUR STRATEGY TO EXPAND OUR BUSINESS AND INCREASE
REVENUES.
 
     Our pending acquisitions are subject to federal, state and local regulatory
approvals. We cannot assure you that we will be able to obtain any necessary
approvals. These pending acquisitions are also subject to a number of other
closing conditions. We cannot assure you as to when, or if, each such
acquisition will be consummated. Any delay, prohibition or modification could
adversely affect the terms of a pending acquisition or could require us to
abandon an otherwise attractive opportunity and possibly forfeit earnest money.
 
OUR PENDING ACQUISITIONS MAY NOT BE CONSUMMATED AND IF NOT CONSUMMATED, OUR
MANAGEMENT WILL HAVE BROAD DISCRETION WITH RESPECT TO THE USE OF THE PROCEEDS
ALLOCATED TO SUCH ACQUISITIONS.
 
     The consummation of each of our pending acquisitions is subject to a number
of conditions. If these conditions are not materially met, the relevant
acquisition may not be consummated. We cannot assure you that any or all of
these acquisitions will be consummated on the terms described in this
prospectus, or at all. This offering is not contingent or in any way dependent
on the consummation of any or all of these acquisitions. If any of these
acquisitions is not consummated, a significant portion of the net proceeds from
the offering will not be designated for a specific use. In these circumstances,
our management will have broad discretion with respect to the use of the
proceeds of the offering and you will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used
appropriately.
 
                                  OUR BUSINESS
 
WE HAVE SUBSTANTIAL EXISTING DEBT AND WILL INCUR SUBSTANTIAL ADDITIONAL DEBT,
WHICH COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND AFFECT OUR ABILITY TO
OBTAIN FINANCING IN THE FUTURE AND REACT TO CHANGES IN OUR BUSINESS.
 
     We have a significant amount of debt. As of June 30, 1999, pro forma for
our pending acquisitions and acquisitions completed since that date, our total
debt was approximately $13.1 billion and our total stockholders' equity was
approximately $2.8 billion. Our significant amount of debt could have important
consequences to you. For example, it could:
 
     - make it more difficult for us to satisfy our obligations under our credit
       facilities and to our noteholders;
 
     - increase our vulnerability to general adverse economic and cable industry
       conditions, including interest rate fluctuations, because much of our
       borrowings are and will continue to be at variable rates of interest;
 
     - require us to dedicate a substantial portion of our cash flow from
       operations to payments on our debt, which will reduce our funds available
       for working capital,
 
                                       25

<PAGE>   29
 
       capital expenditures, acquisitions of additional systems and other
       general corporate expenses;
 
     - limit our flexibility in planning for, or reacting to, changes in our
       business and the cable industry generally;
 
     - place us at a disadvantage compared to our competitors that have
       proportionately less debt; and
 
     - limit our ability to borrow additional funds in the future, if we need
       them, due to applicable financial and restrictive covenants in such debt.
 
     We anticipate incurring significant additional debt in the future to fund
the expansion, maintenance and upgrade of our systems. We will also incur debt
to finance pending acquisitions and related debt repayments, and may incur debt
to finance additional acquisitions. If new debt is added to our current debt
levels, the related risks that we and you now face could intensify.
 
THE AGREEMENTS AND INSTRUMENTS GOVERNING OUR DEBT CONTAIN RESTRICTIONS AND
LIMITATIONS WHICH COULD SIGNIFICANTLY IMPACT OUR ABILITY TO OPERATE OUR
BUSINESS.
 
     Our credit facilities and the indentures governing our notes contain a
number of significant covenants that could adversely impact our business. These
covenants, among other things, restrict the ability of our subsidiaries to:
 
     - pay dividends;
 
     - pledge assets;
 
     - dispose of assets or merge;
 
     - incur additional debt;
 
     - issue equity;
 
     - repurchase or redeem equity interests and debt;
 
     - create liens; and
 
     - make certain investments or acquisitions.
 
     Furthermore, in accordance with our credit facilities, we are required to
maintain specified financial ratios and meet financial tests. The ability to
comply with these provisions may be affected by events beyond our control. The
breach of any of these covenants will result in a default under the applicable
debt agreement or instrument.
 
OUR ABILITY TO GENERATE THE SIGNIFICANT AMOUNT OF CASH NEEDED TO SERVICE OUR
DEBT AND GROW OUR BUSINESS DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
 
     Our ability to make payments on our debt and to fund our planned capital
expenditures for upgrading our cable systems and for other purposes will depend
on our ability to generate cash and secure financing in the future. This, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors beyond our control. If our business
does not generate sufficient cash flow from
 
                                       26

<PAGE>   30
 
operations, and sufficient future borrowings are not available to us under our
credit facilities or from other sources of financing, we may not be able to
repay our debt, to grow our business or to fund our other liquidity needs.
 
WE HAVE GROWN RAPIDLY AND HAVE A LIMITED HISTORY OF OPERATING OUR CURRENT
SYSTEMS. THIS MAKES IT DIFFICULT FOR YOU TO COMPLETELY EVALUATE OUR PERFORMANCE.
 
     We commenced active operations in 1994 and have grown rapidly since then
through acquisitions of cable systems. As of June 30, 1999, giving effect to
pending acquisitions and recent acquisitions closed since June 30, 1999, our
systems served approximately 392% more customers than were served as of December
31, 1998. As a result, historical financial information about us may not be
indicative of the future or of results that we can achieve with the cable
systems which will be under our control. Our recent growth in revenue over our
short operating history is not necessarily indicative of future performance.
 
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. We expect our net losses to increase as a
result of the merger of Charter Holdings with Marcus Holdings and our recent and
pending acquisitions. We reported net losses from continuing operations before
extraordinary items of $5 million for 1997, $23 million for 1998 and $216
million for the six months ended June 30, 1999. On a pro forma basis, giving
effect to the merger of Charter Holdings and Marcus Holdings and our recent and
pending acquisitions, we had net losses from continuing operations before
extraordinary item and minority interest of $1.6 billion for 1998. For the six
months ended June 30, 1999, on the same pro forma basis, we had net losses from
continuing operations before extraordinary item and minority interest of $775
million. We cannot predict what impact, if any, continued losses will have on
our ability to finance our operations in the future.
 
IF WE ARE UNSUCCESSFUL IN IMPLEMENTING OUR GROWTH STRATEGY, OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED.
 
     If we are unable to grow our cash flow sufficiently, we may be unable to
repay our debt, to grow our business or to fund our other liquidity needs. We
expect that a substantial portion of our future growth will be achieved through
revenues from new products and services and the acquisition of additional cable
systems. We may not be able to offer these new products and services
successfully to our customers and these new products and services may not
generate adequate revenues.
 
     In addition, we cannot predict the success of our acquisition strategy. In
the past year, the cable television industry has undergone dramatic
consolidation which has reduced the number of future acquisition prospects. This
consolidation may increase the purchase price of future acquisitions, and we may
not be successful in identifying attractive acquisition targets in the future.
Additionally, those acquisitions we do
 
                                       27

<PAGE>   31
 
complete are not likely to have a positive net impact on our operating results
in the near future.
 
OUR PROGRAMMING COSTS ARE INCREASING. WE MAY NOT HAVE THE ABILITY TO PASS THESE
INCREASES 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 single
expense item. In recent years, the cable industry has experienced a rapid
escalation in the cost of programming, particularly sports programming. This
escalation may continue, and we may not be able to pass programming cost
increases on to our customers. The inability to pass these programming cost
increases on to our customers would have an adverse impact on our cash flow and
operating margins. In addition, as we upgrade the channel capacity of our
systems, add programming to our basic and expanded basic programming tiers and
reposition premium services to the basic tier, we may face additional market
constraints on our ability to pass programming costs on to our customers. Basic
programming includes a variety of entertainment and local programming. Expanded
basic programming offers more services than basic programming. Premium service
includes unedited, commercial-free movies, sports and other special event
entertainment programming.
 
WE MAY NOT BE ABLE TO OBTAIN CAPITAL SUFFICIENT TO FUND OUR PLANNED UPGRADES AND
OTHER CAPITAL EXPENDITURES. THIS COULD ADVERSELY AFFECT OUR ABILITY TO OFFER NEW
PRODUCTS AND SERVICES, WHICH COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
 
     We intend to upgrade a significant portion of our cable systems over the
coming years and make other capital investments. For the three years ending
December 31, 2002, we plan to spend approximately $5.5 billion for capital
expenditures, approximately $2.9 billion of which will be used to upgrade and
rebuild our systems to bandwidth capacity of 550 megahertz or greater and add
two-way capability so that we may offer advanced services. The remaining $2.6
billion will be used for extensions of systems, development of new products and
services, purchases of converters and system maintenance.
 
     We cannot assure you that these amounts will be sufficient to accomplish
our planned system upgrades, maintenance and expansion. If we cannot obtain the
necessary funds from increases in our operating cash flow, additional borrowings
or other sources, we may not be able to fund our planned upgrades and expansion
and offer new products and services on a timely basis. Consequently, our growth,
our financial condition and the results of our operations could suffer
materially.
 
WE MAY NOT BE ABLE TO FUND THE CAPITAL EXPENDITURES NECESSARY TO KEEP PACE WITH
TECHNOLOGICAL DEVELOPMENTS OR OUR CUSTOMERS' DEMAND FOR NEW PRODUCTS AND
SERVICES. THIS COULD LIMIT OUR ABILITY TO COMPETE EFFECTIVELY.
 
     The cable 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
 
                                       28

<PAGE>   32
 
fund the capital expenditures necessary to keep pace with technological
developments, or that we will successfully anticipate the demand of our
customers for products and services requiring new technology. This type of rapid
technological change could adversely affect our plans to upgrade or expand our
systems and respond to competitive pressures. Our inability to upgrade, maintain
and expand our systems and provide enhanced services in a timely manner, or to
anticipate the demands of the market place, could adversely affect our ability
to compete. Consequently, our growth, results of operations and financial
condition could suffer materially.
 
WE MAY BE UNABLE TO NEGOTIATE CONSTRUCTION CONTRACTS ON FAVORABLE TERMS AND OUR
CONSTRUCTION COSTS MAY INCREASE SIGNIFICANTLY. THIS COULD ADVERSELY AFFECT OUR
GROWTH, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
     The expansion and upgrade of our existing systems and the systems we plan
to acquire in our pending acquisitions will require us to hire contractors and
enter into a number of construction agreements. We may have difficulty hiring
civil contractors, and the contractors we hire may encounter cost overruns or
delays in construction. Our construction costs may increase significantly over
the next few years as existing contracts expire and as demand for cable
construction services continues to grow. We cannot assure you that we will be
able to construct new systems or expand or upgrade existing or acquired systems
in a timely manner or at a reasonable cost. This may adversely affect our
growth, financial condition and results of operations.
 
THERE SHOULD BE NO EXPECTATION THAT MR. ALLEN WILL FUND OUR OPERATIONS OR
OBLIGATIONS IN THE FUTURE.
 
     Other than as described in this prospectus, there should be no expectation
that Mr. Allen or his affiliates will contribute funds to us or to our
subsidiaries in the future. In the past, Mr. Allen and/or his affiliates have
contributed equity to Charter Investment, Inc. and Charter Communications
Holding Company. Pursuant to a membership interests purchase agreement, Mr.
Allen, through Vulcan Cable III Inc., contributed to Charter Communications
Holding Company $500 million in cash in August 1999 and an additional $825
million in cash and equity interests acquired in the Rifkin acquisition in
September 1999. In addition, Mr. Allen, through Vulcan Cable III Inc., has
agreed to purchase an additional $750 million of membership units of Charter
Communications Holding Company at the closing of the offering.
 
A SALE BY MR. ALLEN OF HIS DIRECT OR INDIRECT EQUITY INTERESTS COULD ADVERSELY
AFFECT OUR ABILITY TO MANAGE OUR BUSINESS.
 
     Mr. Allen is not prohibited by any agreement from selling his shares of
Class B common stock of Charter Communications, Inc. or causing Charter
Investment, Inc. or Vulcan Cable III Inc. to sell their membership units in
Charter Communications Holding Company after the lapse of a 180-day lock-up
period following completion of this offering. We cannot assure you that Mr.
Allen will maintain all or any portion of his direct or indirect ownership
interest in us. In the event he sells all or any portion of his direct or
indirect ownership interest in Charter Communications, Inc. or Charter
 
                                       29

<PAGE>   33
 
Communications Holding Company, we cannot assure you that he would continue as
Chairman of Charter Communications, Inc.'s board of directors or otherwise
participate in our management. The disposition by Mr. Allen or any of his
affiliates of their equity interests or the loss of his services could adversely
affect our growth, financial condition and results of operations, or adversely
impact the market price of the Class A common stock.
 
WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT WHICH CAN ADVERSELY AFFECT
OUR BUSINESS AND OPERATIONS.
 
     The industry in which we operate is highly competitive. In some instances,
we compete against companies with fewer regulatory burdens, easier access to
financing, greater personnel resources, greater brand name recognition and
long-standing relationships with regulatory authorities. Mergers, joint ventures
and alliances among any of the following businesses could result in providers
capable of offering cable television, Internet and other telecommunications
services in direct competition with us:
 
     - cable television operators;
 
     - regional telephone companies;
 
     - long distance telephone service providers;
 
     - electric utilities;
 
     - local exchange carriers, which are local phone companies that provide
       local area telephone services and access to long distance services to
       customers;
 
     - providers of cellular and other wireless communications services; and
 
     - Internet service providers.
 
     We face competition within the subscription television industry, which
includes providers of paid television service employing technologies other than
cable and excludes broadcast companies that transmit their signal to customers
without assessing a subscription fee. We also face competition from broadcast
companies distributing television broadcast signals without assessing a
subscription fee and from other communications and entertainment media,
including the following:
 
     - conventional off-air television and radio broadcasting services;
 
     - newspapers;
 
     - movie theaters;
 
     - the Internet;
 
     - live sports events; and
 
     - home video products.
 
We cannot assure you that upgrading our cable systems will allow us to compete
effectively. Additionally, as we expand and introduce new and enhanced services,
including Internet and telecommunications services, we will be subject to
competition
 
                                       30

<PAGE>   34
 
from telecommunications providers and Internet service providers. We cannot
predict the extent to which this competition may affect our business and
operations in the future.
 
DATA PROCESSING FAILURES AFTER DECEMBER 31, 1999 COULD SIGNIFICANTLY DISRUPT OUR
OPERATIONS, CAUSING A DECLINE IN CASH FLOW AND REVENUES AND OTHER DIFFICULTIES.
 
     The year 2000 problem affects our owned and licensed computer systems and
equipment used in connection with internal operations. It also affects our non-
information technology systems, including embedded systems in our buildings and
other infrastructure. Additionally, since we rely directly and indirectly, in
the regular course of business, on the proper operation and compatibility of
third-party systems, the year 2000 problem could cause these systems to fail,
err or become incompatible with our systems.
 
     Much of our assessment efforts regarding the year 2000 problem have
involved, and depend on, inquiries to third party service providers. Some of
these third parties that have certified the readiness of their products will not
certify that such products have operating compatibility with our systems. If we,
or significant third parties with whom we communicate and do business through
computers, fail to become year 2000 ready, or if the year 2000 problem causes
our systems to become internally incompatible or incompatible with key third
party systems, our business could suffer material disruptions. We could also
face disruptions if the year 2000 problem causes general widespread problems or
an economic crisis. We cannot now estimate the extent of these potential
disruptions. We cannot assure you that our efforts to date and our ongoing
efforts to prepare for the year 2000 problem will be sufficient to prevent a
material disruption of our operations, particularly with respect to systems we
may acquire prior to December 31, 1999. As a result of any such disruption, our
growth, financial condition and results of operations could suffer materially.
 
THE LOSS OF KEY EXECUTIVES COULD ADVERSELY AFFECT OUR ABILITY TO MANAGE OUR
BUSINESS.
 
     Our success is substantially dependent upon the retention, and the
continued performance of the Chairman of our board of directors, Mr. Allen, and
our Chief Executive Officer, Jerald L. Kent. The loss of the services of Mr.
Allen or Mr. Kent could adversely affect our financial condition and results of
operations.
 
                       REGULATORY AND LEGISLATIVE MATTERS
 
OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL LEGISLATION AND REGULATION.
THE APPLICABLE LEGISLATION AND REGULATIONS, AND CHANGES TO THEM, COULD ADVERSELY
AFFECT OUR BUSINESS BY INCREASING OUR EXPENSES.
 
     Regulation of the cable industry has increased the administrative and
operational expenses and limited the revenues of cable systems. Cable operators
are subject to, among other things:
 
     - limited rate regulation;
 
     - requirements that, under specified circumstances, a cable system carry a
       local broadcast station or obtain consent to carry a local or distant
       broadcast station;
 
                                       31

<PAGE>   35
 
     - 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 state and local regulation of some
of our cable systems, which may compound the regulatory risks we already face.
We cannot predict whether in response to these efforts any of the states or
localities in which we now operate will expand regulation of our cable systems
in the future or how they will do so.
 
WE MAY BE REQUIRED TO PROVIDE ACCESS TO OUR NETWORKS TO OTHER INTERNET SERVICE
PROVIDERS. THIS COULD SIGNIFICANTLY INCREASE OUR COMPETITION AND ADVERSELY
AFFECT THE UPGRADE OF OUR SYSTEMS OR OUR ABILITY TO PROVIDE NEW PRODUCTS AND
SERVICES.
 
     There are proposals before the United States Congress and the Federal
Communications Commission to require all cable operators to make a portion of
their cable systems' bandwidth available to other Internet service providers,
such as telephone companies. Certain local franchising authorities are
considering or have already approved such "open access" requirements. Recently,
a number of companies, including telephone companies and Internet service
providers, have requested local authorities and the Federal Communications
Commission to require cable operators to provide access to cable's broadband
infrastructure, which allows cable to deliver a multitude of channels and/or
services, so that these companies may deliver Internet services directly to
customers over cable facilities. For example, Broward County, Florida granted
open access to an Internet service provider as a condition to a cable operator's
transfer of its franchise for cable service. The cable operator has commenced
legal action at the federal district court level. A federal district court in
Portland, Oregon has also upheld the legality of an open access requirement.
 
     We believe that allocating a portion of our bandwidth capacity to other
Internet service providers:
 
     - would impair our ability to use our bandwidth in ways that would generate
       maximum revenues;
 
     - would strengthen our Internet service provider competitors; and
 
     - may cause us to decide not to upgrade our systems which would prevent us
       from introducing our planned new products and services.
 
     In addition, we cannot assure you that if we were required to provide
access in this manner, it would not have a significant adverse impact on our
profitability. This could impact us in many ways, including by:
 
     - increasing competition;
 
     - increasing the expenses we incur to maintain our systems; and/or
 
     - increasing the expense of upgrading and/or expanding our systems.
 
                                       32

<PAGE>   36
 
OUR CABLE SYSTEMS ARE OPERATED UNDER FRANCHISES WHICH ARE SUBJECT TO NON-RENEWAL
OR TERMINATION. THE FAILURE TO RENEW A FRANCHISE COULD ADVERSELY AFFECT OUR
BUSINESS IN A KEY MARKET.
 
     Our cable systems generally operate pursuant to franchises, permits or
licenses typically granted by a municipality or other state or local government
controlling the public rights-of-way. Many franchises establish comprehensive
facilities and service requirements, as well as specific customer service
standards and establish monetary penalties for non-compliance. In many cases,
franchises are terminable if the franchisee fails to comply with material
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, which have been and may continue to be costly to us. In
some instances, franchises have not been renewed at expiration, and we have
operated under either temporary operating agreements or without a license while
negotiating renewal terms with the local franchising authorities.
 
     We cannot assure you that we will be able to comply with all material
provisions of our franchise agreements or that we will be able to renew our
franchises in the future. A termination of and/or a sustained failure to renew a
franchise could adversely affect our business in the affected geographic area.
 
WE OPERATE OUR CABLE SYSTEMS UNDER FRANCHISES WHICH ARE NON-EXCLUSIVE. LOCAL
FRANCHISING AUTHORITIES CAN GRANT ADDITIONAL FRANCHISES AND CREATE COMPETITION
IN MARKET AREAS WHERE NONE EXISTED PREVIOUSLY.
 
     Our cable systems are operated under franchises granted by local
franchising authorities. These franchises are non-exclusive. Consequently, such
local franchising authorities can grant additional franchises to competitors in
the same geographic area. 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. 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 increasing
competition or creating competition where none existed previously.
 
LOCAL FRANCHISE AUTHORITIES HAVE THE ABILITY TO IMPOSE ADDITIONAL REGULATORY
CONSTRAINTS ON OUR BUSINESS. THIS CAN FURTHER INCREASE OUR EXPENSES.
 
     In addition to the franchise document, cable authorities have also adopted
in some jurisdictions cable regulatory ordinances that further regulate the
operation of cable systems. This additional regulation increases our expenses in
operating our business. We cannot assure you that the local franchising
authorities will not impose new and more restrictive requirements.
 
                                       33

<PAGE>   37
 
     Local franchising authorities also have the power to reduce rates and order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. Basic service tier
rates are the prices charged for basic programming services. As of June 30,
1999, we have refunded a total of approximately $50,000 since our inception. We
may be required to refund additional amounts in the future.
 
DESPITE RECENT DEREGULATION OF EXPANDED BASIC CABLE PROGRAMMING PACKAGES, WE ARE
CONCERNED THAT CABLE RATE INCREASES COULD GIVE RISE TO FURTHER REGULATION. THIS
COULD IMPAIR OUR ABILITY TO RAISE RATES TO COVER OUR INCREASING COSTS OR CAUSE
US TO DELAY OR CANCEL SERVICE OR PROGRAMMING ENHANCEMENTS.
 
     On March 31, 1999, the pricing guidelines of expanded basic cable
programming packages were deregulated, permitting cable operators to set their
own rates. This deregulation was not applicable to basic services. However, the
Federal Communications Commission and the United States Congress continue to be
concerned that cable rate increases are exceeding inflation. It is possible that
either the Federal Communications Commission or the United States Congress will
again restrict the ability of cable television 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 financial
condition and results of operations could be materially adversely affected.
 
IF WE OFFER TELECOMMUNICATIONS SERVICES, WE MAY BE SUBJECT TO ADDITIONAL
REGULATORY BURDENS CAUSING US TO INCUR ADDITIONAL COSTS.
 
     If we enter the business of offering telecommunications services, we may be
required to obtain federal, state and local licenses or other authorizations to
offer these services. We may not be able to obtain such authorizations in a
timely manner, or at all, and conditions could be imposed upon such licenses or
authorizations that may not be favorable to us. Furthermore, telecommunications
companies, including Internet protocol telephony companies, generally are
subject to significant regulation as well as higher fees for pole attachments.
Internet protocol telephony companies are companies that have the ability to
offer telephone services over the Internet, and pole attachments are cable wires
that are attached to poles.
 
     In particular, cable operators who provide telecommunications services and
cannot reach agreement with local utilities over pole attachment rates in states
that do not regulate pole attachment rates will be subject to a methodology
prescribed by the Federal Communications Commission for determining the rates.
These rates may be higher than those paid by cable operators who do not provide
telecommunications services. The rate increases are to be phased in over a
five-year period beginning on February 8, 2001. If we become subject to
telecommunications regulation or higher pole attachment rates, we may incur
additional costs which may be material to our business.
 
                                       34

<PAGE>   38
 
                                  THE OFFERING
 
RISKS OF EXTREME VOLATILITY OF MARKET PRICE OF CLASS A COMMON STOCK.
 
     The initial public offering price that we determine, with the assistance of
the underwriters, may have no relation to the price at which the Class A common
stock trades after completion of the offering. We and the underwriters will
consider many factors in determining the initial public offering price of the
shares of Class A common stock, including:
 
     - our historical performance;
 
     - estimates of our business potential and our earnings prospects;
 
     - an assessment of our management; and
 
     - the consideration of the above factors in relation to market valuation of
       companies in related businesses.
 
     The market price of the Class A common stock may be extremely volatile for
many reasons, including:
 
     - actual or anticipated variations in our revenues and operating results;
 
     - a public market for the Class A common stock may not develop;
 
     - announcements of the development of improved or competitive technologies;
 
     - the use of new products or promotions by us or our competitors;
 
     - the offer and sale by us in the future of additional shares of Class A
       common stock or other equity securities;
 
     - changes in financial forecasts by securities analysts;
 
     - new conditions or trends in the cable industry; and
 
     - market conditions.
 
A SALE OF CONVERTIBLE DEBT, CONVERTIBLE PREFERRED STOCK OR OTHER EQUITY
SECURITIES BY US OR THE PERCEPTION THAT ANY SUCH SALE COULD OCCUR COULD
ADVERSELY AFFECT THE MARKET PRICE OF THE CLASS A COMMON STOCK BECAUSE THESE
SALES COULD CAUSE THE AMOUNT OF OUR STOCK AVAILABLE FOR SALE IN THE MARKET TO
EXCEED THE AMOUNT OF DEMAND FOR OUR CLASS A COMMON STOCK.
 
     Charter Communications, Inc. and Charter Communications Holding Company
each have the right to sell convertible debt, convertible preferred stock or
other equity securities even though they have agreed not to sell shares of Class
A common stock for 180 days following this offering. Any such sale, for example,
a sale by us to fund a portion of the Bresnan acquisition purchase price, could
cause the market price for our Class A common stock to decline if we sold more
equity-related securities than demand existed in the market for the Class A
common stock.
 
                                       35

<PAGE>   39
 
THE MARKET PRICE FOR OUR CLASS A COMMON STOCK COULD BE ADVERSELY AFFECTED BY THE
LARGE NUMBER OF ADDITIONAL SHARES ELIGIBLE FOR ISSUANCE IN THE FUTURE.
 
   
     Immediately following the offering, 170,000,000 shares of Class A common
stock will be issued and outstanding. An additional 407,023,486 shares of Class
A common stock will be issuable under the circumstances described in the section
"Shares Eligible for Future Sale". Substantially all of the shares of Class A
common stock issuable upon exchange of Charter Communications Holding Company
membership units and all shares of Class A common stock issuable upon conversion
of shares of our Class B common stock will have "demand" and/or "piggyback"
registration rights attached to them, including those issuable to Mr. Allen
through Charter Investment, Inc. and Vulcan Cable III Inc. The sale of a
substantial number of shares of Class A common stock or the perception that such
sales could occur could adversely affect the market price for shares of our
Class A common stock because these sales could cause the amount of our stock
available for sale in the market to exceed the amount of demand for our stock
and could also make it more difficult for us to sell equity securities or
equity-related securities in the future at a time and price that we deem
appropriate. This could adversely affect our ability to fund our current and
future obligations. See "Shares Eligible For Future Sale".
    
 
     "Demand" rights enable the holders to demand that their shares be
registered and may require us to file a registration statement under the
Securities Act at our expense. "Piggyback" rights provide for notice to the
relevant holders of our stock if we propose to register any of our securities
under the Securities Act, and grant such holders the right to include their
shares in the registration statement. Shares of Class A common stock not held by
our affiliates will be freely saleable at the end of the relevant restricted
period pursuant to Rule 144 of the Securities Act.
 
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION RESULTING IN YOUR STOCK
BEING WORTH LESS ON A NET TANGIBLE BOOK VALUE BASIS THAN THE AMOUNT YOU
INVESTED.
 
     Purchasers of the Class A common stock offered hereby will experience an
immediate dilution in net tangible book value of $75.50 per share of Class A
common stock purchased. Accordingly, in the event we are liquidated, investors
may not receive the full amount of their investment. See "Dilution".
 
                                       36

<PAGE>   40
 
                           FORWARD-LOOKING STATEMENTS
 
     This prospectus includes forward-looking statements regarding, among other
things, our plans, strategies and prospects, both business and financial.
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. Important factors that could cause actual results to differ
materially from the forward-looking statements we make in this prospectus are
set forth under the caption "Risk Factors" and elsewhere in this prospectus and
include, but are not limited to:
 
     - our plans to achieve growth by offering new products and services and
       through acquisitions;
 
     - our anticipated capital expenditures for our planned upgrades and the
       ability to fund these expenditures;
 
     - our failure to obtain financing sufficient to complete our pending
       acquisitions and related obligations;
 
     - our beliefs regarding the effects of governmental regulation on our
       business;
 
     - our ability to effectively compete in a highly competitive environment;
       and
 
     - our expectations to be ready for any year 2000 problem.
 
     All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by those cautionary statements.
 
                                       37

<PAGE>   41
 

                                USE OF PROCEEDS
 
   
     We estimate that the net proceeds from our sale of 170,000,000 shares of
Class A common stock will be $2.94 billion, after deducting underwriting
discounts. This assumes an initial public offering price of $18.00 per share,
which is the mid-point of the range appearing on the cover page of this
prospectus. The estimated offering expenses of approximately $40 million will be
paid by Charter Communications Holding Company. If the underwriters exercise
their over-allotment option in full, we estimate that the net proceeds from our
sale of 195,500,000 shares will be $3.38 billion. In addition, concurrently with
the closing of the offering, Charter Communications Holding Company will receive
proceeds of $750 million from an equity purchase by Mr. Allen, through Vulcan
Cable III Inc., for membership units at a purchase price per membership unit
equal to the net initial public offering price per share, which is the initial
public offering price less the underwriting discount.
    
 
     Concurrently with the closing of the offering, Charter Communications, Inc.
will contribute to Charter Communications Holding Company the net proceeds of
the offering, except for a portion of the proceeds which will be retained by
Charter Communications, Inc. to acquire a portion of the equity interests in the
Avalon acquisition. Charter Communications, Inc. has committed to contribute
these equity interests to Charter Communications Holding Company. In exchange
for the contribution of the net proceeds of the offering by Charter
Communications, Inc. and Charter Communications, Inc.'s obligation to contribute
to Charter Communications Holding Company equity interests acquired in
connection with the Avalon acquisition, Charter Communications Holding Company
will issue to Charter Communications, Inc. 170,000,000 membership units
concurrently with the closing of the offering. See "Description of Capital Stock
and Membership Units -- Membership Units".
 
     The membership units of Charter Communications Holding Company acquired by
Charter Communications, Inc. will represent an approximate 31% equity interest
in Charter Communications Holding Company. If the underwriters exercise their
over-allotment option in full, this percentage would be approximately 34%. The
price per membership unit to be acquired by Charter Communications, Inc. will be
equal to the net initial public offering price per share.
 
     Charter Communications Holding Company will use the cash proceeds from the
sale of the membership units to Charter Communications, Inc., together with the
proceeds from the $750 million equity purchase described above, to pay a portion
of the cash purchase prices of the pending acquisitions. These sources, together
with other currently available sources, will not be sufficient to consummate
these acquisitions, and we will require additional financing. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Acquisitions" and the
accompanying sources and uses table for more information. We expect, but cannot
guarantee, that these acquisitions will be completed by the end of the first
quarter of 2000. See "Business -- Acquisitions" for further information on these
acquisitions.
 
                                       38

<PAGE>   42
 
     Pending Charter Communications Holding Company's use of the net proceeds of
this offering as described above, we may invest the funds in appropriate
short-term investments as determined by us or repay amounts outstanding under
Charter Operating's revolving credit facilities.
 

                                DIVIDEND POLICY
 
     We do not expect to pay any cash dividends on our Class A common stock in
the foreseeable future. Charter Communications Holding Company is required under
certain circumstances to pay distributions pro rata to all its common members to
the extent necessary for any common member to pay taxes incurred with respect to
its share of taxable income attributed to Charter Communications Holding
Company. Covenants in the indentures and credit agreements governing the
indebtedness of Charter Communications Holding Company's subsidiaries restrict
their ability to make distributions to us and, accordingly, limit our ability to
declare or pay cash dividends. We intend to cause Charter Communications Holding
Company and its subsidiaries to retain future earnings, if any, to finance the
expansion of the business of Charter Communications Holding Company and its
subsidiaries.
 
                                       39

<PAGE>   43
 

                                 CAPITALIZATION
 
     The following table sets forth as of June 30, 1999 on a consolidated basis:
 
     - the actual capitalization of Charter Communications Holding Company;
 
     - the pro forma capitalization of Charter Communications, Inc., assuming
       that as of June 30, 1999:
 
         (1) Mr. Allen, through Vulcan Cable III Inc., had made a total equity
             contribution of $1.325 billion to Charter Communications Holding
             Company for membership units at a price per membership unit of
             $20.73;
 
         (2) Mr. Allen, through Vulcan Cable III Inc., had purchased membership
             units from Charter Communications Holding Company for $750 million
             at a price per membership unit equal to the net initial public
             offering price per share;
 
   
         (3) all acquisitions closed since June 30, 1999 and all of our pending
             acquisitions, including the completion of the swap transaction
             agreed in the InterMedia acquisition, had been completed and the
             credit facilities committed for Falcon had closed;
    
 
         (4) all of the Helicon and Rifkin notes had been called or repurchased
             through tender offers;
 
         (5) the Avalon notes had not been put to us as permitted under the
             change of control provisions in the indentures for these notes.
             Because the Avalon notes are puttable to us, they have been
             classified as short-term debt. We assume that we will repurchase
             all of the Falcon and Bresnan notes and debentures at a price equal
             to 101% of their aggregate principal amounts, plus accrued
             interest, or their accreted value, as applicable. The repurchase of
             the Falcon notes is expected to be financed by a bridge loan
             facility for which we have received a commitment. However, due to
             the closing conditions of the Falcon bridge loan facility that are
             outside of our control, we have classified the debt as short-term;
 
   
         (6) $169 million of the Avalon purchase price and $875 million of the
             Fanch purchase price had been funded with new credit facilities at
             these entities. However, due to closing conditions of those credit
             facilities that are outside of our control, we have classified the
             debt as short-term;
    
 
   
         (7) no membership units in Charter Communications Holding Company had
             been exchanged for Class A or Class B common stock of Charter
             Communications, Inc.;
    
 
   
         (8) the Bresnan acquisition and related obligations had been funded
             with additional debt of $1.7 billion, consisting of borrowings
             under credit facilities at Bresnan that have not yet been arranged.
             Accordingly, this debt is classified as short-term; and
    
 
                                       40

<PAGE>   44
 
   
         (9) none of the options to purchase membership units granted under the
             Charter Communications Holding Company option plan or granted to
             our chief executive officer had been exercised.
    
 
     - the pro forma as adjusted capitalization of Charter Communications, Inc.
       to reflect:
 
   
         (1) the issuance and sale by Charter Communications, Inc. of the shares
             of Class A common stock offered in this prospectus for net proceeds
             of $2.9 billion, after deducting underwriting discounts and
             estimated offering expenses totaling $162 million, of which
             approximately $40 million will be paid by Charter Communications
             Holding Company;
    
 
         (2) an initial public offering price per share of $18.00, which is the
             mid-point of the range appearing on the cover page of this
             prospectus;
 
         (3) the issuance and sale by Charter Communications, Inc. of 50,000
             shares of high vote Class B common stock to Mr. Allen for proceeds
             of $0.9 million; and
 
         (4) the purchase by Charter Communications, Inc. of 170.05 million
             membership units in Charter Communications Holding Company
             resulting in the consolidation of Charter Communications Holding
             Company by Charter Communications, Inc.
 
     This table should be read in conjunction with the "Unaudited Pro Forma
Financial Statements" and the accompanying notes included elsewhere in this
prospectus. See also "Use of Proceeds".
 
                                       41

<PAGE>   45
 
   

<TABLE>
<CAPTION>
                                                                 AS OF JUNE 30, 1999
                                                    ----------------------------------------------
                                                       CHARTER
                                                    COMMUNICATIONS    CHARTER COMMUNICATIONS, INC.
                                                       HOLDING        ----------------------------
                                                       COMPANY                         PRO FORMA
                                                        ACTUAL         PRO FORMA      AS ADJUSTED
                                                    --------------    ------------    ------------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                 <C>               <C>             <C>
Current liabilities:
  Notes -- Avalon(a)..............................            --          346,000         346,000
  8% liability to Falcon sellers(b)...............            --          425,000         425,000
  8% liability to Rifkin sellers(b)...............            --          133,312         133,312
  8% liability to Bresnan sellers(b)..............            --        1,000,000       1,000,000
  Bridge loan facility -- Falcon(c)...............            --          705,687         705,687
  Pending acquisitions payable(d).................            --        2,898,500              --
  Credit facilities(e)............................            --        1,044,000       1,044,000
  Other(f)........................................            --        1,715,267       1,715,267
                                                      ----------      -----------     -----------
                                                              --        8,267,666       5,369,266
  Net unamortized discount........................            --          (67,375)        (67,375)
                                                      ----------      -----------     -----------
     Total current liabilities(g).................            --        8,200,391       5,301,891
                                                      ----------      -----------     -----------
Long-term debt:
  Credit facilities(h)............................     2,025,000        4,640,156       4,640,156
  8.250% senior notes -- Charter Holdings.........       600,000          600,000         600,000
  8.625% senior notes -- Charter Holdings.........     1,500,000        1,500,000       1,500,000
  9.920% senior discount notes -- Charter
     Holdings.....................................     1,475,000        1,475,000       1,475,000
  10% senior discount notes -- Renaissance........       114,413          114,413         114,413
  Other(i)........................................         1,010           26,010          26,010
                                                      ----------      -----------     -----------
                                                       5,715,423        8,355,579       8,355,579
     Net unamortized discount.....................      (581,113)        (581,113)       (581,113)
                                                      ----------      -----------     -----------
     Total long-term debt.........................     5,134,310        7,774,466       7,774,466
                                                      ----------      -----------     -----------
Members' equity(j)................................     3,204,122        5,279,122              --
                                                      ----------      -----------     -----------
Minority interest(j)(k)...........................            --               --       5,368,064
                                                      ----------      -----------     -----------
Stockholders' equity:
  Class A common stock; $.001 par value;
     1.5 billion shares authorized; 170 million
     shares issued and outstanding on a pro forma
     basis........................................            --               --             170
  Class B common stock; $.001 par value;
     750 million shares authorized; 50,000 shares
     issued and outstanding on a pro forma
     basis........................................            --               --              --
  Preferred stock; $.001 par value; 250 million
     shares authorized; no shares issued and
     outstanding..................................            --               --              --
  Additional paid-in capital......................                             --       2,809,388
                                                      ----------      -----------     -----------
     Total stockholders' equity(k)(l).............            --               --       2,809,558
                                                      ----------      -----------     -----------
          Total capitalization....................    $8,338,432      $21,253,979     $21,253,979
                                                      ==========      ===========     ===========
</TABLE>

    
 
---------------
(a)  Consists of 9.375% senior subordinated notes of $150 million and 11.875%
     senior discount notes of $196 million, which are puttable to us based on
     change of control provisions.
 
(b)  This represents the potential obligations to repurchase the equity
     interests issued to Rifkin, Falcon and Bresnan sellers arising from
     possible violations of Section 5 of the Securities Act. We have
 
                                       42

<PAGE>   46
 
     classified these obligations as short-term debt because these obligations
     could be put to us as unsecured creditor claims.
 
(c)  The Falcon bridge loan facility has an average variable interest rate of
     10.04% per year, with total borrowing capacity of $750 million. Proceeds
     will be used to repurchase the Falcon notes and debentures that are put to
     us under applicable change of control provisions.
 
(d)  Pending acquisitions payable represents a portion of the purchase prices of
     the pending acquisitions to be funded by the proceeds of the offering.
 
   
(e)  Credit facilities consist of $169.0 million of bank debt at Avalon and
     $875.0 million of bank debt at Fanch.
    
 
   
(f)  Pro forma as adjusted represents $1.7 billion of additional debt that we
     expect to raise prior to the closing of the Bresnan acquisition to fund a
     portion of the purchase price of this acquisition.
    
 
   
(g)  Pro forma as adjusted represents our $5.3 billion estimated shortfall. This
     shortfall could further increase by $0.1 billion if we were required to pay
     InterMedia such amount for a cable system that we did not transfer in our
     swap with InterMedia because the necessary regulatory approvals were still
     pending.
    
 
   
     If we are unable to arrange additional financing to fund the amounts
     described in this note (g) and in notes (a), (b), (c), (e) and (f) above,
     we may be unable to close our pending acquisitions and could be in default
     under one or more other obligations. If we are so in default, the relevant
     sellers or creditors could initiate legal proceedings against us, including
     under bankruptcy and reorganization laws, for any damages they suffer as a
     result of our non-performance. Any such action could trigger defaults under
     our other obligations, including our credit facilities and debt
     instruments.
    
 
   
(h)  Pro forma and pro forma as adjusted credit facilities consist of $3.6
     billion of existing credit facilities at Charter Operating and $1.0 billion
     of committed credit facilities at Falcon.
    
 
   
(i) Represents the notes of certain subsidiaries of Charter Communications
    Holding Company and preferred equity interests issued in the Helicon
    acquisition.
    
 
   
(j)  Minority interest represents total members' equity of Charter
     Communications Holding Company multiplied by 66% (pro forma as adjusted),
     the estimated ownership percentages of Charter Communications Holding
     Company not held by Charter Communications, Inc. See "Unaudited Pro Forma
     Financial Statements". Pro forma members' equity includes additional equity
     contributions to Charter Communications Holding Company by Mr. Allen,
     through Vulcan Cable III Inc., of $2.075 billion. Gains (losses) arising
     from issuances by Charter Communications Holding Company of its membership
     units will be recorded as capital transactions in our consolidated
     financial statements thereby increasing (decreasing) our total
     stockholders' equity.
    
 
   
(k)  Approximately 66% of the membership units of Charter Communications Holding
     Company are exchangeable for Class A and Class B common stock of Charter
     Communications, Inc. at the option of the equity holders. We assume in this
     table that none of these membership units are exchanged for Charter
     Communications, Inc. common stock. If all equity holders in Charter
     Communications Holding Company exchanged all of their membership units for
     common stock, total stockholders' equity would increase by $5.4 billion and
     minority interest would decrease by $5.4 billion.
    
 
   
(l)  Assuming the underwriters' option to purchase additional shares of Class A
     common stock is exercised and the net proceeds are used to purchase
     approximately an additional 3% of the membership units of Charter
     Communications Holding Company, total stockholders' equity would increase
     by $428.5 million.
    
 
                                       43

<PAGE>   47
 
                                    DILUTION
 
     The following table illustrates the dilution in pro forma net tangible book
value (total tangible assets less total liabilities) on a per share basis. In
calculating the dilution, we have made the same assumptions that we made with
respect to our unaudited pro forma financial statements. We have also assumed
the issuance of 170 million shares of Class A common stock offered in this
prospectus and the purchase of 50,000 shares of Class B common stock by Mr.
Allen.
 

<TABLE>
<S>                                                           <C>        <C>
Assumed initial public offering price per share......................    $ 18.00
  Pro forma net tangible book value per share at June 30,
     1999...................................................  $(38.99)
  Decrease in pro forma net tangible book value per share
     attributable to new investors purchasing shares in the
     offering...............................................   (18.51)
                                                              -------
Pro forma net tangible book value per share after the offering(a)....     (57.50)
                                                                         -------
Pro forma dilution per share to new investors(b).....................    $ 75.50
                                                                         =======
</TABLE>

 
---------------
 
(a) Represents pro forma total stockholders' equity of $2.8 billion less
    intangible assets of $12.6 billion divided by pro forma shares outstanding
    of 170,050,000.
 
(b) Assuming the exercise of the underwriters' over-allotment option, pro forma
    dilution per share to new investors would be $65.75.
 
     The table above and related discussion assumes no exercise of any options
to purchase membership units exchangeable for common stock of Charter
Communications, Inc. As of October 15, 1999, there were options outstanding to
purchase 16,250,408 Charter Communications Holding Company membership units at
exercise prices ranging from $20.00 to $20.73 per unit. Membership units
received upon exercise of these options will be automatically exchanged for
shares of Class A common stock on a one-for-one basis. To the extent that all of
these options are exercised, no additional pro forma dilution per share to the
new investors would occur.
 
     The following table summarizes the relative investment in Charter
Communications, Inc. by the existing holders of Charter Communications, Inc.
common stock and by the investors in the offering, giving pro forma effect to
the offering and treating all exchangeable membership units of Charter
Communications Holding Company as common stock of Charter Communications, Inc.
 

<TABLE>
<CAPTION>
                                           SHARES PURCHASED        TOTAL CONSIDERATION      AVERAGE
                                        ----------------------    ---------------------    PRICE PER
                                          NUMBER       PERCENT      AMOUNT      PERCENT      SHARE
                                        -----------    -------    ----------    -------    ---------
                                                                     (IN
                                                                  THOUSANDS)
<S>                                     <C>            <C>        <C>           <C>        <C>
Existing holders......................  324,955,052       66%     $5,633,200       65%      $17.34
New investors.........................  170,000,000       34%      3,060,000       35%       18.00
                                        -----------      ---      ----------      ---
          Total.......................  494,955,052      100%     $8,693,200      100%
                                        ===========      ===      ==========      ===
</TABLE>

 
 
                                       44

<PAGE>   48
 
                    UNAUDITED PRO FORMA FINANCIAL STATEMENTS
 
     The following Unaudited Pro Forma Financial Statements of Charter
Communications, Inc. are based on the pro forma financial statements of Charter
Communications Holding Company. Prior to the issuance and sale by Charter
Communications, Inc. of Class A common stock in the offering, Charter
Communications, Inc. is a holding company with no material assets or operations.
The net proceeds from the initial public offering will be used to purchase
membership units in Charter Communications Holding Company, including a
controlling voting interest. As a result, Charter Communications, Inc. will
consolidate the financial statements of Charter Communications Holding Company.
Our consolidated financial statements will include the assets and liabilities of
Charter Communications Holding Company at their historical carrying values since
both Charter Communications, Inc. and Charter Communications Holding Company are
under the control of Mr. Allen before and after the offering. Since January 1,
1999, Charter Communications Holding Company has closed numerous acquisitions
and has several pending acquisitions. In addition, a subsidiary of Charter
Communications Holding Company merged with Marcus Holdings in April 1999. Our
financial statements, on a consolidated basis with Charter Communication Holding
Company, are adjusted on a pro forma basis to illustrate the estimated effects
of pending acquisitions and acquisitions closed since June 30, 1999 as if such
transactions had occurred on June 30, 1999 for the Unaudited Pro Forma Balance
Sheet and to illustrate the estimated effects of the following transactions as
if they had occurred on January 1, 1998 for the Unaudited Pro Forma Statements
of Operations:
 
     (1) the acquisition of Charter Communications Holding Company on December
         23, 1998 by Mr. Allen;
 
     (2) the acquisition of certain cable systems from Sonic Communications Inc.
         on May 20, 1998 by Charter Communications Holding Company for an
         aggregate purchase price net of cash acquired, of $228.4 million,
         comprised of $167.5 million in cash and $60.9 million in a note payable
         to the seller;
 
     (3) the acquisition of Marcus Cable by Mr. Allen and Marcus Holdings'
         merger with and into Charter Holdings effective March 31, 1999;
 
     (4) the acquisitions and dispositions during 1998 by Marcus Cable;
 
     (5) Charter Communications Holding Company's and its subsidiaries'
         acquisitions completed since January 1, 1999 and pending acquisitions;
         and
 
     (6) the refinancing of all the debt of our subsidiaries through the
         issuance of notes and funding under our credit facilities.
 
     The Unaudited Pro Forma Financial Statements also illustrate the estimated
effects of the issuance and sale by us of 170 million shares of Class A common
stock using an initial offering price of $18.00, after deducting underwriting
discounts and estimated offering expenses, and the equity contribution of the
net proceeds to Charter Communications Holding Company. We have assumed that the
underwriters have not exercised their over-allotment option and none of the
options to purchase membership units granted under the Charter Communications
Holding Company option plan or granted to our chief executive officer have been
exercised. We have assumed the net proceeds would purchase
 
                                       45

<PAGE>   49
 
170 million common membership units in Charter Communications Holding Company,
representing a 44% economic interest and a 100% voting interest, prior to the
equity contributions from Mr. Allen and the closing of any of the pending
acquisitions. Prior to the initial public offering, Charter Investment, Inc.
owned approximately 217.6 million common membership units of Charter
Communications Holding Company.
 
   
     After considering additional membership units issued by Charter
Communications Holding Company to Mr. Allen, through Vulcan Cable III Inc., and
to the sellers of Falcon and Bresnan, the economic interest held by Charter
Communications, Inc. in Charter Communications Holding Company is reduced to
31%. Based on the terms of the agreements with the sellers of Falcon and
Bresnan, we estimate they will receive 16.4 million and 37.1 million membership
units, respectively, at a price per membership unit of $25.90 and $26.98,
respectively. The number of membership units could vary based on the value of
Charter Communications Holding Company at the closing of the acquisitions;
however, we believe the effects of any change in this number of membership units
would not have a material impact on the Unaudited Pro Forma Financial
Statements. Because of possible violations of Section 5 of the Securities Act,
the holders of these equity interests may have unsecured creditor rights to
require us to repurchase all of these equity interests in connection with the
issuance of membership units to the Falcon and Bresnan sellers. We have
classified these potential obligations as short-term debt in the Unaudited Pro
Forma Financial Statements. Accordingly, we have increased Charter
Communications, Inc.'s equity interest in Charter Communications Holding Company
to 34%.
    
 
     Mr. Allen will receive 43.4 million membership units for the $750 million
equity investment he is making at the time of the offering. Prior to the initial
public offering Mr. Allen contributed $1.325 billion and received 63.9 million
membership units. As such, the consolidated pro forma financial statements of
Charter Communications, Inc. reflect a minority interest equal to 66% of the
equity of Charter Communications Holding Company after the investment by Charter
Communications, Inc. and depict 66% of the net losses applicable to the common
members of Charter Communications Holding Company being allocated to the
minority interest.
 
     The Unaudited Pro Forma Financial Statements reflect the application of the
principles of purchase accounting to the transactions listed in items (1)
through (5) above. The allocation of purchase price is based, in part, on
preliminary information which is subject to adjustment upon obtaining complete
valuation information of intangible assets. We believe that finalization of the
purchase price will not have a material impact on the results of operations or
financial position of Charter Communications, Inc. or Charter Communications
Holding Company.
 
     The unaudited pro forma adjustments are based upon available information
and certain assumptions that we believe are reasonable. In particular, the pro
forma adjustments assume the following:
 
     - We will transfer to InterMedia the Indiana cable system that was retained
       at the time of the InterMedia closing pending receipt of necessary
       regulatory approvals.
 
     - The holders of the public notes and debentures of Avalon will not require
       us to repurchase these notes and debentures as required by change of
       control provisions in the indentures for these notes and debentures. We
       will repurchase the Falcon
 
                                       46

<PAGE>   50
 
and the Bresnan notes at a price equal to 101% of the aggregate principal
amount, plus accrued interest. The repurchase of the Falcon notes is expected to
be financed by a bridge loan for which we have received a commitment. However,
       due to closing conditions of the bridge loan facility that are outside of
       our control, we have classified the debt as short-term.
 
   
     - A portion of the Fanch and Avalon purchase prices had been funded with
       new credit facilities at these entities. However, due to closing
       conditions of these credit facilities that are outside our control, we
       have classified the debt as short-term.
    
 
     - We will pay $425 million of Falcon's purchase price in the form of
       membership units in Charter Communications Holding Company. A portion of
       the purchase price, ranging from a minimum with an estimated value of
       $425 million to a maximum with a fixed value of $550 million, will be
       payable in the form of membership units in Charter Communications Holding
       Company. The exact minimum amount of purchase price payable in membership
       units will be determined by reference to a formula in the Falcon
       acquisition purchase agreement. The Falcon sellers have the right to
       determine the amount of the purchase price payable in membership units
       within the minimum and maximum range.
 
     - As of the closing of the offering, approximately 66% of the membership
       units of Charter Communications Holding Company will be exchangeable for
       Class A and Class B common stock of Charter Communications, Inc. at the
       option of the holders. We assume none of these membership units are
       exchanged for Charter Communications, Inc.'s common stock.
 
   
     - We will fund the Bresnan acquisition and related obligations with
       additional debt of $1.7 billion with an assumed interest rate of 10%. The
       10% rate is a current market rate approximating the rate on debt similar
       to our 9.92% senior discount notes issued in March 1999. These additional
       funds have not been arranged. We have classified this shortfall as
       short-term debt.
    
 
     The estimated impacts of alternative outcomes of the events described above
are disclosed in the notes to the Unaudited Pro Forma Financial Statements.
 
   
     We plan to fund the Avalon, Fanch and Falcon acquisitions with the proceeds
of the offering, Mr. Allen's equity contribution through Vulcan Cable III Inc.,
borrowings under committed credit facilities and equity issued to specified
sellers in the Falcon acquisition. If the new Fanch and Avalon credit facilities
do not close as anticipated, we will need to arrange other sources of financing
to consummate these acquisitions. We can not assure you that alternate financing
sources will be available. We may as a result be unable to consummate these
acquisitions and may be in default under the related acquisition agreements. We
plan to fund any repurchases of Falcon debentures and notes that are put to us
with borrowings under the committed Falcon bridge loan facility, or other debt
financing if available. If we do not obtain funding under the Falcon bridge loan
facility or other debt financing, we may be in default under the Falcon
debentures and notes that we may be required to repurchase.
    
 
                                       47

<PAGE>   51
 
   
     Available and committed sources of funds will not be sufficient to
consummate our pending acquisitions and fund related obligations. In connection
with our acquisitions, we may need to raise additional amounts up to a total of
approximately $5.41 billion.
    
 
     We will need to raise approximately $1.72 billion by borrowing under credit
facilities at Bresnan that have not yet been arranged and/or by issuing debt or
equity securities of Charter Communications, Inc. or Charter Communications
Holding Company to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facility
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
     - approximately $0.35 billion in Bresnan notes that we expect to be put to
       us in connection with required change of control offers for these notes.
 
   
     In addition, we will have to raise approximately $3.69 billion of
additional financing if we are required to pay:
    
 
     - approximately $0.71 billion to repurchase outstanding notes of Falcon if
       committed bridge loan financing does not close;
 
   
     - approximately $0.17 billion if the Avalon credit facilities do not close;
    
 
   
     - approximately $0.88 billion if the Fanch credit facilities do not close;
    
 
     - approximately $0.27 billion to repurchase outstanding notes of Avalon;
 
   
     - approximately $1.57 billion to repurchase equity interests issued or to
       be issued to specified sellers in connection with a number of our
       acquisitions because of possible violations of Section 5 of the
       Securities Act of 1933; and
    
 
     - approximately $0.09 billion to InterMedia if we do not obtain timely
       regulatory approvals for our transfer to InterMedia of an Indiana cable
       system and we are unable to transfer replacement systems.
 
     We cannot assure you that we will be able to raise the financing necessary
to consummate our pending acquisitions and to satisfy the obligations described
above. If we are unable to raise the financing necessary to satisfy any or all
of these obligations, we may be unable to close our pending acquisitions and
could be in default under one or more other obligations. In any such case, the
relevant sellers or creditors could initiate legal proceedings against us,
including under bankruptcy and reorganization laws, for any damages they suffer
as a result of our non-performance. Any such action could trigger defaults under
our other obligations, including our credit facilities and debt instruments.
 
     The Unaudited Pro Forma Financial Statements of Charter Communications,
Inc. do not purport to be indicative of what our financial position or results
of operations would actually have been had the transactions described above been
completed on the dates indicated or to project our results of operations for any
future date.
 
                                       48

<PAGE>   52

<TABLE>
<CAPTION>
                                        UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                               SIX MONTHS ENDED JUNE 30, 1999 ------------------------------
                                  CHARTER
                               COMMUNICATIONS
                                  HOLDING          RECENT                       PENDING
                               COMPANY (NOTE    ACQUISITIONS                  ACQUISITIONS
                               A) -----------   (NOTE B) ---   SUBTOTAL -   (NOTE B) -------
                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                            <C>              <C>            <C>          <C>
Revenues.....................    $  594,173      $ 315,541     $  909,714      $  522,334
                                 ----------      ---------     ----------      ----------
Operating expenses:
  Operating, general and
    administrative...........       310,325        160,519        470,844         267,170
  Depreciation and
    amortization.............       313,621        161,876        475,497         361,952
  Stock option compensation
    expense..................        38,194             --         38,194              --
  Corporate expense charges
    (Note E).................        11,073         20,059         31,132          16,595
  Management fees............            --          5,572          5,572           3,168
                                 ----------      ---------     ----------      ----------
    Total operating
      expenses...............       673,213        348,026      1,021,239         648,885
                                 ----------      ---------     ----------      ----------
Loss from operations.........       (79,040)       (32,485)      (111,525)       (126,551)
Interest expense.............      (183,869)      (114,588)      (298,457)       (255,682)
Interest income..............        10,189            456         10,645             788
Other income (expense).......         2,682           (905)         1,777             (15)
                                 ----------      ---------     ----------      ----------
Income (loss) before minority
  interest...................      (250,038)      (147,522)      (397,560)       (381,460)
Minority interest............            --             --             --              --
                                 ----------      ---------     ----------      ----------
Loss before extraordinary
  item.......................    $ (250,038)     $(147,522)    $ (397,560)     $ (381,460)
                                 ==========      =========     ==========      ==========
Basic loss per share (Note
  F).........................
Diluted loss per share (Note
  F).........................
Weighted average shares
  outstanding:
  Basic......................
  Diluted....................
OTHER FINANCIAL DATA:
EBITDA (Note G)..............    $  237,263      $ 128,486     $  365,749      $  235,386
EBITDA margin (Note H).......          39.9%          40.7%          40.2%           45.1%
Adjusted EBITDA (Note I).....    $  283,848      $ 155,022     $  438,870      $  255,164
Cash flows from operating
  activities.................       172,770         89,238        262,008         189,042
Cash flows used in investing
  activities.................      (271,191)      (111,785)      (382,976)        (67,411)
Cash flows from (used in)
  financing activities.......       207,131        188,571        395,702         455,277
Cash interest expense........
Capital expenditures.........       262,507        101,127        363,634         116,268
 
OPERATING DATA (AT END OF
  PERIOD, EXCEPT FOR
  AVERAGES):
Homes passed (Note J)........     4,509,000      1,446,000      5,955,000       3,793,000
Basic customers (Note K).....     2,734,000        969,000      3,703,000       2,463,000
Basic penetration (Note L)...          60.6%          67.0%          62.2%           64.9%
Premium units (Note M).......     1,676,000        543,000      2,219,000         856,000
Premium penetration (Note
  N).........................          61.3%          56.0%          59.9%           34.8%
Average monthly revenue per
  basic customer (Note O)....
 
<CAPTION>
                               UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                               ----------------------------------------
 
                               REFINANCING    OFFERING
                               ADJUSTMENTS   ADJUSTMENTS
                               (NOTE C) --   (NOTE D) --   TOTAL ------
                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                            <C>           <C>           <C>
Revenues.....................   $     --      $     --     $  1,432,048
                                --------      --------     ------------
Operating expenses:
  Operating, general and
    administrative...........         --            --          738,014
  Depreciation and
    amortization.............         --            --          837,449
  Stock option compensation
    expense..................         --            --           38,194
  Corporate expense charges
    (Note E).................         --            --           47,727
  Management fees............         --            --            8,740
                                --------      --------     ------------
    Total operating
      expenses...............         --            --        1,670,124
                                --------      --------     ------------
Loss from operations.........         --            --         (238,076)
Interest expense.............      4,300            --         (549,839)
Interest income..............         --            --           11,433
Other income (expense).......         --            --            1,762
                                --------      --------     ------------
Income (loss) before minority
  interest...................      4,300            --         (774,720)
Minority interest............         --       508,552          508,552
                                --------      --------     ------------
Loss before extraordinary
  item.......................   $  4,300      $508,552     $   (266,168)
                                ========      ========     ============
Basic loss per share (Note
  F).........................                                    $(1.57)
                                                           ============
Diluted loss per share (Note
  F).........................                                    $(1.57)
                                                           ============
Weighted average shares
  outstanding:
  Basic......................                               170,050,000
  Diluted....................                               170,050,000
OTHER FINANCIAL DATA:
EBITDA (Note G)..............                              $    601,135
EBITDA margin (Note H).......                                      42.0%
Adjusted EBITDA (Note I).....                              $    694,034
Cash flows from operating
  activities.................                                   451,050
Cash flows used in investing
  activities.................                                  (450,387)
Cash flows from (used in)
  financing activities.......                                   850,979
Cash interest expense........                                   401,319
Capital expenditures.........                                   479,902
OPERATING DATA (AT END OF
  PERIOD, EXCEPT FOR
  AVERAGES):
Homes passed (Note J)........                                 9,748,000
Basic customers (Note K).....                                 6,166,000
Basic penetration (Note L)...                                      63.3%
Premium units (Note M).......                                 3,075,000
Premium penetration (Note
  N).........................                                      49.9%
Average monthly revenue per
  basic customer (Note O)....                              $      38.71
</TABLE>

 
                                       49

<PAGE>   53
 
              NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
     NOTE A:  Pro forma operating results for Charter Communications Holding
Company consist of the following (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                   HISTORICAL
                                                         ------------------------------
                                                             1/1/99
                                                             THROUGH          1/1/99
                                                             6/30/99          THROUGH
                                                             CHARTER          3/31/99
                                                         COMMUNICATIONS       MARCUS        PRO FORMA
                                                         HOLDING COMPANY    HOLDINGS(A)    ADJUSTMENTS      TOTAL
                                                         ---------------    -----------    -----------    ---------
<S>                                                      <C>                <C>            <C>            <C>
Revenues...............................................     $ 468,993        $125,180        $    --      $ 594,173
                                                            ---------        --------        -------      ---------
Operating expenses:
  Operating, general and administrative................       241,341          68,984             --        310,325
  Depreciation and amortization........................       249,952          51,688         11,981(b)     313,621
  Stock option compensation expense....................        38,194              --             --         38,194
  Corporate expense charges............................        11,073              --             --         11,073
  Management fees......................................            --           4,381         (4,381)(c)         --
                                                            ---------        --------        -------      ---------
    Total operating expenses...........................       540,560         125,053          7,600        673,213
                                                            ---------        --------        -------      ---------
Income (loss) from operations..........................       (71,567)            127         (7,600)       (79,040)
Interest expense.......................................      (157,669)        (27,067)           867(d)    (183,869)
Interest income........................................        10,085             104             --         10,189
Other income (expense).................................         2,840            (158)            --          2,682
                                                            ---------        --------        -------      ---------
Loss before extraordinary item.........................     $(216,311)       $(26,994)       $(6,733)     $(250,038)
                                                            =========        ========        =======      =========
</TABLE>

 
---------------
 
(a) Marcus Holdings represents the results of operations of Marcus Holdings
    through March 31, 1999, the date of its merger with Charter Holdings.
 
(b) As a result of Mr. Allen acquiring a controlling interest in Marcus Cable, a
    large portion of the purchase price was recorded as franchises ($2.5
    billion) that are amortized over 15 years. This resulted in additional
    amortization for the period from January 1, 1999 through March 31, 1999. The
    adjustment to depreciation and amortization expense consists of the
    following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                                            WEIGHTED AVERAGE
                                                                              USEFUL LIFE       DEPRECIATION/
                                                              FAIR VALUE       (IN YEARS)       AMORTIZATION
                                                              ----------    ----------------    -------------
<S>                                                           <C>           <C>                 <C>
Franchises..................................................   $2,500.0            15              $ 40.8
Cable distribution systems..................................      720.0             8                21.2
Land, buildings and improvements............................       28.3            10                 0.7
Vehicles and equipment......................................       13.6             3                 1.0
                                                                                                   ------
  Total depreciation and amortization.......................                                         63.7
  Less -- historical depreciation and amortization of Marcus
    Cable...................................................                                        (51.7)
                                                                                                   ------
    Adjustment..............................................                                       $ 12.0
                                                                                                   ======
</TABLE>

 
(c) Reflects the elimination of management fees.
 
(d) As a result of the acquisition of Marcus Cable by Mr. Allen, the carrying
    value of outstanding debt was recorded at estimated fair value, resulting in
    a debt premium that is to be amortized as an offset to interest expense over
    the term of the debt. This resulted in a reduction of interest expense.
 
                                       50

<PAGE>   54
 
     NOTE B:  Pro forma operating results for our recent acquisitions and
pending acquisitions consist of the following (dollars in thousands):
 
   

<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED JUNE 30, 1999
                                                                  RECENT ACQUISITIONS -- HISTORICAL
                                     --------------------------------------------------------------------------------------------
                                                                 GREATER
                                                      AMERICAN    MEDIA                           INTERMEDIA              TOTAL
                                     RENAISSANCE(A)   CABLE(A)   SYSTEMS   HELICON    RIFKIN(A)    SYSTEMS      OTHER     RECENT
                                     --------------   --------   -------   --------   ---------   ----------   -------   --------
<S>                                  <C>              <C>        <C>       <C>        <C>         <C>          <C>       <C>
Revenues............................    $20,396       $12,311    $42,348   $ 42,956   $105,592     $100,644    $ 9,157   $333,404
                                        -------       -------    -------   --------   --------     --------    -------   --------
Operating expenses:
  Operating, general and
    administrative..................      9,382         6,465    26,067      26,927     60,458       55,248      4,921    189,468
  Depreciation and amortization.....      8,912         5,537     5,195      13,584     54,250       52,309      2,919    142,706
  Management fees...................         --           369        --       2,148      1,701        1,566        298      6,082
                                        -------       -------    -------   --------   --------     --------    -------   --------
    Total operating expenses........     18,294        12,371    31,262      42,659    116,409      109,123      8,138    338,256
                                        -------       -------    -------   --------   --------     --------    -------   --------
Income (loss) from operations.......      2,102           (60)   11,086         297    (10,817)      (8,479)     1,019     (4,852)
Interest expense....................     (6,321)       (3,218)     (565)    (15,831)   (23,781)     (11,757)    (1,653)   (63,126)
Interest income.....................        122            32        --         105         --          163         --        422
Other income (expense)..............         --             2      (398)         --         --           (6)       (30)      (432)
                                        -------       -------    -------   --------   --------     --------    -------   --------
Income (loss) before income tax
  expense...........................     (4,097)       (3,244)   10,123     (15,429)   (34,598)     (20,079)      (664)   (67,988)
Income tax expense..................        (65)            5     4,535          --     (1,239)      (2,690)        --        546
                                        -------       -------    -------   --------   --------     --------    -------   --------
Income (loss) before extraordinary
  item..............................    $(4,032)      $(3,249)   $5,588    $(15,429)  $(33,359)    $(17,389)   $  (664)  $(68,534)
                                        =======       =======    =======   ========   ========     ========    =======   ========
</TABLE>

    
 

<TABLE>
<CAPTION>
                                                                           SIX MONTHS ENDED JUNE 30, 1999
                                                                         PENDING ACQUISITIONS -- HISTORICAL
                                                               ------------------------------------------------------
                                                                                                              TOTAL
                                                                AVALON     FALCON     FANCH(B)   BRESNAN     PENDING
                                                               --------   ---------   --------   --------   ---------
<S>                                                            <C>        <C>         <C>        <C>        <C>
Revenues....................................................   $ 51,769   $ 212,205   $98,931    $137,291   $ 500,196
                                                               --------   ---------   -------    --------   ---------
Operating expenses:
  Operating, general and administrative.....................     29,442     112,557    44,758      84,256     271,013
  Depreciation and amortization.............................     22,096     110,048    32,303      26,035     190,482
  Equity-based deferred compensation........................         --      44,600        --          --      44,600
  Management fees...........................................         --          --     2,644          --       2,644
                                                               --------   ---------   -------    --------   ---------
    Total operating expenses................................     51,538     267,205    79,705     110,291     508,739
                                                               --------   ---------   -------    --------   ---------
Income (loss) from operations...............................        231     (55,000)   19,226      27,000      (8,543)
Interest expense............................................    (23,246)    (64,852)     (666)    (31,941)   (120,705)
Interest income.............................................        708          --         6          --         714
Other income (expense)......................................         --       9,970        89        (607)      9,452
                                                               --------   ---------   -------    --------   ---------
Income (loss) before income tax expense (benefit)...........    (22,307)   (109,882)   18,655      (5,548)   (119,082)
Income tax expense (benefit)................................     (1,362)     (2,459)      118          --      (3,703)
                                                               --------   ---------   -------    --------   ---------
Income (loss) before extraordinary item.....................   $(20,945)  $(107,423)  $18,537    $ (5,548)  $(115,379)
                                                               ========   =========   =======    ========   =========
</TABLE>

 
                                       51

<PAGE>   55
   

<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED JUNE 30, 1999
                                  ------------------------------------------------------------------------
                                                            RECENT ACQUISITIONS
                                  ------------------------------------------------------------------------
                                                                        PRO FORMA
                                               -----------------------------------------------------------
                                  HISTORICAL   ACQUISITIONS(C)   DISPOSITIONS(D)   ADJUSTMENTS     TOTAL
                                  ----------   ---------------   ---------------   -----------   ---------
<S>                               <C>          <C>               <C>               <C>           <C>
Revenues........................   $333,404        $ 7,881          $(25,744)       $     --     $ 315,541
                                   --------        -------          --------        --------     ---------
Operating expenses:
 Operating, general and
   administrative...............    189,468          4,147           (12,566)        (20,530)(f)   160,519
 Depreciation and
   amortization.................    142,706          1,075           (10,135)         28,230(g)    161,876
 Equity-based deferred
   compensation.................         --             --                --              --            --
 Corporate expense charges......         --             --                --          20,059(f)     20,059
 Management fees................      6,082            375              (885)             --         5,572
                                   --------        -------          --------        --------     ---------
 Total operating expenses.......    338,256          5,597           (23,586)         27,759       348,026
                                   --------        -------          --------        --------     ---------
Income (loss) from operations...     (4,852)         2,284            (2,158)        (27,759)      (32,485)
Interest expense................    (63,126)        (1,361)                4         (50,105)(i)  (114,588)
Interest income.................        422             34                --              --           456
Other income (expense)..........       (432)             5                (5)           (473)(j)      (905)
                                   --------        -------          --------        --------     ---------
Income (loss) before income tax
 expense (benefit)..............    (67,988)           962            (2,159)        (78,337)     (147,522)
Income tax (benefit) expense....        546           (114)               --            (432)(k)        --
                                   --------        -------          --------        --------     ---------
Income (loss) before
 extraordinary item.............   $(68,534)       $ 1,076          $ (2,159)       $(77,905)    $(147,522)
                                   ========        =======          ========        ========     =========
 
<CAPTION>
                                                       SIX MONTHS ENDED JUNE 30, 1999
                                  -------------------------------------------------------------------------
                                                            PENDING ACQUISITIONS
                                  -------------------------------------------------------------------------
                                                                        PRO FORMA
                                               ------------------------------------------------------------
                                  HISTORICAL   ACQUISITIONS(C)   DISPOSITIONS(E)   ADJUSTMENTS      TOTAL
                                  ----------   ---------------   ---------------   -----------    ---------
<S>                               <C>          <C>               <C>               <C>            <C>
Revenues........................  $ 500,196        $29,378           $(7,240)       $      --     $ 522,334
                                  ---------        -------           -------        ---------     ---------
Operating expenses:
 Operating, general and
   administrative...............    271,013         16,317            (3,565)         (16,595)(f)   267,170
 Depreciation and
   amortization.................    190,482          6,444            (3,524)         168,550(g)    361,952
 Equity-based deferred
   compensation.................     44,600             --                --          (44,600)(h)        --
 Corporate expense charges......         --             --                --           16,595(f)     16,595
 Management fees................      2,644            757              (233)              --         3,168
                                  ---------        -------           -------        ---------     ---------
 Total operating expenses.......    508,739         23,518            (7,322)         123,950       648,885
                                  ---------        -------           -------        ---------     ---------
Income (loss) from operations...     (8,543)         5,860                82         (123,950)     (126,551)
Interest expense................   (120,705)          (567)               27         (134,437)(i)  (255,682)
Interest income.................        714             74                --               --           788
Other income (expense)..........      9,452         48,844            (2,555)         (55,756)(j)       (15)
                                  ---------        -------           -------        ---------     ---------
Income (loss) before income tax
 expense (benefit)..............   (119,082)        54,211            (2,446)        (314,143)     (381,460)
Income tax (benefit) expense....     (3,703)            97                --            3,606(k)         --
                                  ---------        -------           -------        ---------     ---------
Income (loss) before
 extraordinary item.............  $(115,379)       $54,114           $(2,446)       $(317,749)    $(381,460)
                                  =========        =======           =======        =========     =========
</TABLE>

    
 
---------------
 
(a) Renaissance represents the results of operations of Renaissance through
    April 30, 1999, the date of acquisition by Charter Communications Holding
    Company. American Cable represents the results of operations of American
    Cable through May 7, 1999, the date of acquisition by Charter Communications
    Holding Company. Rifkin includes the results of operations for the six
    months ended June 30, 1999 of Rifkin Acquisition Partners, L.L.L.P., Rifkin
    Cable Income Partners L.P., Indiana Cable Associates, Ltd. and R/N South
    Florida Cable Management Limited Partnership, all under common ownership as
    follows (dollars in thousands):
 
   

<TABLE>
<CAPTION>
                                       RIFKIN         RIFKIN      INDIANA    SOUTH
                                     ACQUISITION   CABLE INCOME    CABLE    FLORIDA     OTHER     TOTAL
                                     -----------   ------------   -------   --------   -------   --------
<S>                                  <C>           <C>            <C>       <C>        <C>       <C>
Revenues...........................   $ 48,584        $2,708      $ 4,251   $ 12,274   $37,775   $105,592
Income (loss) from operations......     (2,602)          166         (668)    (9,214)    1,501    (10,817)
Income (loss) before extraordinary
  item.............................    (13,197)           69       (1,072)   (10,449)   (8,710)   (33,359)
</TABLE>

    
 
(b) Fanch includes the results of operations for the six months ended June 30,
    1999, of Fanch cable systems as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                              FANCH CABLE
                                                                SYSTEMS      OTHER      TOTAL
                                                              -----------    ------    -------
<S>                                                           <C>            <C>       <C>
Revenues....................................................    $90,357      $8,574    $98,931
Income from operations......................................     17,825       1,401     19,226
Income before extraordinary item............................     17,929         608     18,537
</TABLE>

 
(c) Represents the historical results of operations for the period from January
    1, 1999 through the date of purchase for acquisitions completed by Rifkin,
    Fanch and Bresnan.
 
                                       52

<PAGE>   56
 
     These acquisitions were accounted for using the purchase method of
accounting. The purchase price in millions and closing dates for significant
acquisitions are as follows:
 

<TABLE>
<CAPTION>
                                                    RIFKIN            FANCH          BRESNAN
                                                 ACQUISITIONS     ACQUISITIONS     ACQUISITIONS
                                                 -------------    -------------    ------------
<S>                                              <C>              <C>              <C>
Purchase price...............................    $165.0           $42.2            $40.0
Closing date.................................    February 1999    February 1999    January 1999
Purchase price...............................    $53.8            $248.0           $27.0
Closing date.................................    July 1999        February 1999    March 1999
Purchase price...............................                     $70.5
Closing date.................................                     March 1999
Purchase price...............................                     $50.0
Closing date.................................                     June 1999
</TABLE>

 
(d) Represents the elimination of the operating results related to the cable
    systems transferred to InterMedia as part of a swap of cable systems in
    October 1999. The fair value of our systems transferred to InterMedia was
    $331.8 million. No material gain or loss is anticipated on the disposition
    as these systems were recently acquired and recorded at fair value at that
    time.
 
(e) Represents the elimination of the operating results related to the Indiana
    cable system that we are required to transfer to InterMedia as part of a
    swap and to the sale of several smaller cable systems. A definitive written
    agreement exists for the disposition of the Indiana system. The fair value
    of the Indiana system is $88.2 million. No material gain or loss is
    anticipated on the disposition as this system was recently acquired and
    recorded at fair value at that time.
 
(f)  Reflects a reclassification of expenses representing corporate expenses
     that would have occurred at Charter Investment, Inc.
 
(g) Represents additional amortization of franchises as a result of our recent
    and pending acquisitions. A large portion of the purchase price was
    allocated to franchises ($12.4 billion) that are amortized over 15 years.
    The adjustment to depreciation and amortization expense consists of the
    following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                                    WEIGHTED AVERAGE    DEPRECIATION/
                                                      FAIR VALUE      USEFUL LIFE       AMORTIZATION
                                                      ----------    ----------------    -------------
<S>                                                   <C>           <C>                 <C>
Franchises..........................................  $12,356.5            15              $400.2
Cable distribution systems..........................    1,729.1             8               108.3
Land, buildings and improvements....................       53.9            10                 2.6
Vehicles and equipment..............................       89.1             3                12.7
                                                                                           ------
     Total depreciation and amortization............................................        523.8
     Less-historical depreciation and amortization..................................       (327.0)
                                                                                           ------
          Adjustment................................................................       $196.8
                                                                                           ======
</TABLE>

 
(h) Reflects the elimination of an estimated $44.6 million of change in control
    payments under the terms of Falcon's equity-based compensation plans that
    are triggered by the acquisition of Falcon. These plans will be terminated
    by us and the employees will participate in our stock option plan. As such,
    these costs will not recur.
 
(i)  Reflects additional interest expense on borrowings, which will be used to
     finance the acquisitions as follows (dollars in millions):
 
   

<TABLE>
<S>                                                           <C>
$1.6 billion credit facilities (at composite current rate of
  7.4%).....................................................  $  59.3
$114.4 million 10.0% senior discount notes ($82.6 million
  carrying value) -- Renaissance............................      4.1
$150.0 million 9.375% senior subordinated notes -- Avalon...      7.0
$196.0 million 11.875% senior discount notes ($128.6 million
  carrying value) -- Avalon.................................      6.6
$1.0 billion credit facilities for Falcon acquisition (at
  composite current rate of 7.4%)...........................     37.4
$0.9 billion senior credit facilities for Fanch acquisition
  (at composite rate of 7.4%)...............................     32.4
$0.2 billion senior credit facilities for Avalon acquisition
  (at composite rate of 7.4%)...............................      6.2
$1.7 billion anticipated financing (at 10.0%)...............     85.7
$705.7 million 10.04% bridge loan facility -- Falcon........     35.4
</TABLE>

    
 
                                       53

<PAGE>   57

<TABLE>
<S>                                                           <C>
$1.0 billion 8% liability to sellers -- Bresnan.............     40.0
$425.0 million 8% liability to sellers -- Falcon............     17.0
$133.3 million 8% liability to sellers -- Rifkin............      5.3
Interest expense prior to acquisition:
  $381.1 million of credit facilities for Renaissance
     acquisition (acquired April 30, 1999) at composite
     current rate of 7.4%...................................      9.4
  $240.0 million of credit facilities for American Cable
     acquisition (acquired May 7, 1999) at composite current
     rate of 7.4%...........................................      5.9
  $500.0 million of credit facilities for Greater Media
     acquisition (acquired June 30, 1999) at composite
     current rate of 7.4%...................................     18.5
                                                              -------
     Total pro forma interest expense.......................    370.2
     Less-historical interest expense from acquired
      companies.............................................   (185.7)
                                                              -------
          Adjustment........................................  $ 184.5
                                                              =======
</TABLE>

 
     The amounts shown above as liabilities to the Rifkin, Falcon and Bresnan
     sellers represent the possible obligations that we may owe to these sellers
     based on the possible violations of Section 5 of the Securities Act in
     connection with the issuance of equity interests to these sellers. The
     possible liability to the Falcon sellers would increase to $550 million if
     the Falcon sellers exercise their right to receive up to an additional $125
     million of equity interests.
 
   
     We have assumed we will fund certain pending acquisitions prior to closing
     with additional financing of $1.7 billion. An interest rate of 10% reflects
     the anticipated borrowing rate available to Charter Communications Holding
     Company. An increase in the interest rate of 0.125% on this assumed debt
     would result in an increase in interest expense of $1.1 million. Should the
     Avalon notes be put to us based on change of control provisions and should
     we become obligated to purchase Rifkin, Falcon and Bresnan sellers' equity
     interests, the estimated shortfall would increase to $3.6 billion and
     interest expense will increase by $14.9 million. If we do not close on the
     Avalon credit facilities, the estimated shortfall would increase to $3.7
     billion and interest expense will increase by $2.2 million. If we do not
     close on the Fanch credit facilities, the estimated shortfall would
     increase to $4.6 billion and interest expense will increase by $11.4
     million. If we do not close on the Falcon bridge loan facility, the
     estimated shortfall would increase to $5.3 billion and interest expense
     would not change. Should we be required to pay InterMedia $0.1 billion for
     a system that we did not transfer in our swap with InterMedia because
     necessary regulatory approvals were still pending, interest expense would
     increase by $4.4 million. Principal approximates carrying value for all
     undiscounted debt.
    
 
(j)  Represents the elimination of gain (loss) on sale of cable television
     systems whose results of operations have been eliminated in (d) above.
 
(k) Reflects the elimination of income tax expense (benefit) as a result of
    expected recurring future losses. The losses will not be tax benefited and
    no net deferred tax assets will be recorded.
 
     NOTE C:  In March 1999, we extinguished substantially all of our long-term
debt, excluding borrowings of our previous credit facilities, and refinanced all
previous credit facilities. See "Capitalization". The refinancing adjustment of
lower interest expense consists of the following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                              INTEREST
                        DESCRIPTION                           EXPENSE
                        -----------                           --------
<S>                                                           <C>
$600 million 8.25% senior notes.............................  $  24.8
$1.5 billion 8.625% senior notes............................     64.7
$1.475 billion ($932 million carrying value) 9.92% senior
  discount notes............................................     45.4
Credit facilities ($652 million at composite current rate of
  7.4%).....................................................     24.9
Amortization of debt issuance costs.........................      7.8
Commitment fee on unused portion of our credit facilities
  ($1.6 billion at 0.375%)..................................      3.0
                                                              -------
  Total pro forma interest expense..........................    170.6
  Less -- historical interest expense (net of Renaissance
     and American Cable interest expense consolidated in
     Charter Communications Holding Company)................   (174.9)
                                                              -------
     Adjustment.............................................  $  (4.3)
                                                              =======
</TABLE>

 
                                       54

<PAGE>   58
 
     An increase in the interest rate of 0.125% on all variable rate debt would
     result in an increase in interest expense of $6.1 million.
 
     NOTE D:  Represents the allocation of 66% of the net loss applicable to
common members of Charter Communications Holding Company to the minority
interest.
 
     NOTE E:  Charter Investment, Inc. has provided corporate management and
consulting services to Charter Operating. In connection with the offering, the
existing management agreement will be assigned to Charter Communications, Inc.
and Charter Communications, Inc. will enter into a new management agreement with
Charter Communications Holding Company. See "Certain Relationships and Related
Transactions".
 
     NOTE F:  Basic loss per share assumes none of the membership units of
Charter Communications Holding Company are exchanged for Charter Communications,
Inc. common stock and none of the outstanding options to purchase membership
units of Charter Communications Holding Company that will be automatically
exchanged for Charter Communications, Inc. common stock are exercised. Basic
loss per share equals the loss applicable to common equity holders divided by
weighted average shares outstanding. If all of the membership units were
exchanged or options exercised, the effects would be antidilutive.
 
     NOTE G:   EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator of a cable television company's ability to service
indebtedness. However, EBITDA should not be considered as an alternative to
income from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. EBITDA should also not be construed as an indication of a company's
operating performance or as a measure of liquidity. In addition, because EBITDA
is not calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted by EBITDA may be limited by working capital,
debt service and capital expenditure requirements and by restrictions related to
legal requirements, commitments and uncertainties.
 
     NOTE H:  EBITDA margin represents EBITDA as a percentage of revenues.
 
     NOTE I:   Adjusted EBITDA means EBITDA before stock option compensation
expense, corporate expenses, management fees and other income (expense).
Adjusted EBITDA is presented because it is a widely accepted financial indicator
of a cable company's ability to service indebtedness. However, Adjusted EBITDA
should not be considered as an alternative to income from operations or to cash
flows from operating, investing or financing activities, as determined in
accordance with generally accepted accounting principles. Adjusted EBITDA should
also not be construed as an indication of a company's operating performance or
as a measure of liquidity. In addition, because Adjusted EBITDA is not
calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted by Adjusted EBITDA may be limited by working
capital, debt service and capital expenditure requirements and by restrictions
related to legal requirements, commitments and uncertainties.
 
     NOTE J:   Homes passed are the number of living units, such as single
residence homes, apartments and condominium units, passed by the cable
television distribution network in a given cable system service area.
 
     NOTE K:   Basic customers are customers who receive basic cable service.
 
     NOTE L:   Basic penetration represents basic customers as a percentage of
homes passed.
 
     NOTE M:  Premium units represent the total number of subscriptions to
premium channels.
 
     NOTE N:   Premium penetration represents premium units as a percentage of
basic customers.
 
     NOTE O:   Average monthly revenue per basic customer represents revenues
divided by the number of months in the period divided by the number of basic
customers at June 30, 1999.
 
                                       55

<PAGE>   59

<TABLE>
<CAPTION>
                                                 UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                                                        YEAR ENDED DECEMBER 31, 1998
                                            -----------------------------------------------------
                                              CHARTER
                                             COMMUNI-
                                              CATIONS
                                              HOLDING                      RECENT
                                              COMPANY       MARCUS      ACQUISITIONS
                                             (NOTE A)      (NOTE B)       (NOTE C)      SUBTOTAL
                                            -----------   -----------   ------------   ----------
                                                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<S>                                         <C>           <C>           <C>            <C>
Revenues..................................  $   601,953   $   457,929    $ 608,953     $1,668,835
                                            -----------   -----------    ---------     ----------
Operating expenses:
 Operating, general and administrative....      304,555       236,595      307,447        848,597
 Depreciation and amortization............      370,406       258,348      335,799        964,553
 Stock option compensation expense........          845            --           --            845
 Corporate expense charges (Note F).......       16,493        17,042       10,991         44,526
 Management fees..........................           --            --       14,668         14,668
                                            -----------   -----------    ---------     ----------
    Total operating expenses..............      692,299       511,985      668,905      1,873,189
                                            -----------   -----------    ---------     ----------
Loss from operations......................      (90,346)      (54,056)     (59,952)      (204,354)
Interest expense..........................     (204,770)     (140,651)    (271,450)      (616,871)
Other income (expense)....................          518            --       (5,825)        (5,307)
                                            -----------   -----------    ---------     ----------
Income (loss) before minority interest....     (294,598)     (194,707)    (337,227)      (826,532)
Minority interest.........................           --            --           --             --
                                            -----------   -----------    ---------     ----------
Loss before extraordinary item............  $  (294,598)  $  (194,707)   $(337,227)    $ (826,532)
                                            ===========   ===========    =========     ==========
Basic loss per share (Note G).............
Diluted loss per share (Note G)...........
Weighted average shares outstanding:
  Basic...................................
  Diluted.................................
OTHER FINANCIAL DATA:
EBITDA (Note H)...........................  $   280,578   $   204,292    $ 270,022     $  754,892
EBITDA margin (Note I)....................         46.6%         44.6%        44.3%          45.2%
Adjusted EBITDA (Note J)..................  $   297,398   $   221,334    $ 301.506     $  820,238
Cash flows from operating activities......      141,602       135,466      194,041        471,109
Cash flows used in investing activities...     (206,607)     (217,729)    (233,161)      (657,497)
Cash flows from (used in) financing
  activities..............................      210,306       109,924       23,252        343,482
Cash interest expense.....................
Capital expenditures......................      213,353       224,723       96,025        534,101
OPERATING DATA (AT END OF PERIOD, EXCEPT
  FOR AVERAGES):
Homes passed (Note K).....................    2,149,000     1,743,000    1,922,000      5,814,000
Basic customers (Note L)..................    1,255,000     1,061,000    1,325,000      3,641,000
Basic penetration (Note M)................         58.4%         60.9%        68.9%          62.6%
Premium units (Note N)....................      845,000       411,000      777,000      2,033,000
Premium penetration (Note O)..............         67.3%         38.7%        58.6%          55.8%
Average monthly revenue per basic customer
  (Note P)................................
 
<CAPTION>
                                                  UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                                                         YEAR ENDED DECEMBER 31, 1998
                                            -------------------------------------------------------
 
                                              PENDING      REFINANCING    OFFERING
                                            ACQUISITIONS   ADJUSTMENTS   ADJUSTMENTS
                                              (NOTE C)      (NOTE D)      (NOTE E)        TOTAL
                                            ------------   -----------   -----------   ------------
                                                   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<S>                                         <C>            <C>           <C>           <C>
Revenues..................................   $1,022,669      $   --      $       --    $  2,691,504
                                             ----------      ------      ----------    ------------
Operating expenses:
 Operating, general and administrative....      511,118          --              --       1,359,715
 Depreciation and amortization............      743,845          --              --       1,708,398
 Stock option compensation expense........           --          --              --             845
 Corporate expense charges (Note F).......       37,090          --              --          81,616
 Management fees..........................        6,135          --              --          20,803
                                             ----------      ------      ----------    ------------
    Total operating expenses..............    1,298,188          --              --       3,171,377
                                             ----------      ------      ----------    ------------
Loss from operations......................     (275,519)         --              --        (479,873)
Interest expense..........................     (457,586)      7,000              --      (1,067,457)
Other income (expense)....................       (5,637)         --              --         (10,944)
                                             ----------      ------      ----------    ------------
Income (loss) before minority interest....     (738,742)      7,000              --      (1,558,274)
Minority interest.........................           --                   1,022,903       1,022,903
                                             ----------      ------      ----------    ------------
Loss before extraordinary item............   $ (738,742)     $7,000      $1,022,903    $   (535,371)
                                             ==========      ======      ==========    ============
Basic loss per share (Note G).............                                             $      (3.15)
                                                                                       ============
Diluted loss per share (Note G)...........                                             $      (3.15)
                                                                                       ============
Weighted average shares outstanding:
  Basic...................................                                              170,050,000
  Diluted.................................                                              170,050,000
OTHER FINANCIAL DATA:
EBITDA (Note H)...........................      462,689                                $  1,217,581
EBITDA margin (Note I)....................         45.2%                                       45.2%
Adjusted EBITDA (Note J)..................   $  511,551                                $  1,331,789
Cash flows from operating activities......      254,086                                     725,195
Cash flows used in investing activities...     (274,405)                                   (931,902)
Cash flows from (used in) financing
  activities..............................      115,779                                     459,261
Cash interest expense.....................                                                  772,124
Capital expenditures......................      219,045                                     753,146
OPERATING DATA (AT END OF PERIOD, EXCEPT
  FOR AVERAGES):
Homes passed (Note K).....................    3,787,000                                   9,601,000
Basic customers (Note L)..................    2,453,000                                   6,094,000
Basic penetration (Note M)................         64.8%                                       63.5%
Premium units (Note N)....................      862,000                                   2,895,000
Premium penetration (Note O)..............         35.1%                                       47.5%
Average monthly revenue per basic customer
  (Note P)................................                                             $      36.81
</TABLE>

 
                                       56

<PAGE>   60
 
            NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
     NOTE A:  Pro forma operating results for Charter Communications Holding
Company, including the acquisition of us on December 23, 1998 by Mr. Allen and
the acquisition of Sonic Communications, Inc., consist of the following (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                     12/24/98   1/1/98
                                                                     THROUGH    THROUGH
                                     1/1/98 THROUGH 12/23/98         12/31/98   5/20/98
                                ----------------------------------   --------   -------
                                                                CHARTER
                                   CCA      CHARTERCOMM     COMMUNICATIONS
                                  GROUP      HOLDINGS       HOLDING COMPANY      SONIC    ELIMINATIONS     SUBTOTAL
                                ---------   -----------   -------------------   -------   ------------     ---------
<S>                             <C>         <C>           <C>        <C>        <C>       <C>              <C>
Revenues......................  $ 324,432    $196,801     $ 49,731   $13,713    $17,276     $    --        $ 601,953
                                ---------    --------     --------   -------    -------     -------        ---------
Operating expenses:
  Operating, general and
    administrative............    164,145      98,331       25,952     7,134      8,993          --          304,555
  Depreciation and
    amortization..............    136,689      86,741       16,864     8,318      2,279          --          250,891
  Stock option compensation
    expense...................         --          --           --       845         --          --              845
  Management fees/corporate
    expense charges...........     17,392      14,780        6,176       473         --          --           38,821
                                ---------    --------     --------   -------    -------     -------        ---------
    Total operating
      expenses................    318,226     199,852       48,992    16,770     11,272          --          595,112
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) from
  operations..................      6,206      (3,051)         739    (3,057)     6,004          --            6,841
Interest expense..............   (113,824)    (66,121)     (17,277)   (2,353)    (2,624)      1,900(c)      (200,299)
Other income (expense)........      4,668      (1,684)        (684)      133        (15)     (1,900)(c)          518
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) before income
  taxes.......................   (102,950)    (70,856)     (17,222)   (5,277)     3,365          --         (192,940)
Provision for income taxes....         --          --           --        --      1,346          --            1,346
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) before
  extraordinary item..........  $(102,950)   $(70,856)    $(17,222)  $(5,277)   $ 2,019     $    --        $(194,286)
                                =========    ========     ========   =======    =======     =======        =========
 
<CAPTION>
 
                                        PRO FORMA
                                --------------------------
 
                                ADJUSTMENTS        TOTAL
                                -----------      ---------
<S>                             <C>              <C>
Revenues......................   $      --       $ 601,953
                                 ---------       ---------
Operating expenses:
  Operating, general and
    administrative............          --         304,555
  Depreciation and
    amortization..............     119,515(a)      370,406
  Stock option compensation
    expense...................          --             845
  Management fees/corporate
    expense charges...........     (22,328)(b)      16,493
                                 ---------       ---------
    Total operating
      expenses................      97,187         692,299
                                 ---------       ---------
Income (loss) from
  operations..................     (97,187)        (90,346)
Interest expense..............      (4,471)(d)    (204,770)
Other income (expense)........          --             518
                                 ---------       ---------
Income (loss) before income
  taxes.......................    (101,658)       (294,598)
Provision for income taxes....      (1,346)(e)          --
                                 ---------       ---------
Income (loss) before
  extraordinary item..........   $(100,312)      $(294,598)
                                 =========       =========
</TABLE>

 
-------------------------
 
(a)  Represents additional amortization of franchises as a result of the
     acquisition of us by Mr. Allen. A large portion of the purchase price was
     allocated to franchises ($3.6 billion) that are amortized over 15 years.
     The adjustment to depreciation and amortization expense consists of the
     following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                                          WEIGHTED AVERAGE       DEPRECIATION/
                                                         FAIR VALUE    USEFUL LIFE (IN YEARS)    AMORTIZATION
                                                         ----------    ----------------------    -------------
    <S>                                                  <C>           <C>                       <C>
    Franchises.........................................   $3,600.0               15                 $240.0
    Cable distribution systems.........................    1,439.2               12                  115.3
    Land, buildings and improvements...................       41.3               11                    3.5
    Vehicles and equipment.............................       61.2                5                   11.6
                                                                                                    ------
      Total depreciation and amortization..............                                              370.4
      Less-historical depreciation and amortization....                                             (250.9)
                                                                                                    ------
         Adjustment....................................                                             $119.5
                                                                                                    ======
</TABLE>

 
(b) Reflects the reduction in corporate expense charges of approximately $8.2
    million to reflect the actual costs incurred. Management fees charged to CCA
    Group and CharterComm Holdings, companies not controlled by Charter
    Investment, Inc. at that time, exceeded the allocated costs incurred by
    Charter Investment, Inc. on behalf of those companies by $8.2 million. Also
    reflects the elimination of approximately $14.4 million of change of control
    payments under the terms of then-existing equity appreciation rights plans.
    Such payments were triggered by the acquisition of us by Mr. Allen. Such
    payments were made by Charter Investment, Inc. and were not subject to
    reimbursement by us, but were allocated to us for financial reporting
    purposes. The equity appreciation rights plans were terminated in connection
    with the acquisition of us by Mr. Allen, and these costs will not recur.
 
(c)  Represents the elimination of intercompany interest on a note payable from
     Charter Communications Holding Company to CCA Group.
 
                                       57

<PAGE>   61
(d) Reflects additional interest expense on $228.4 million of borrowings under
    our previous credit facilities used to finance the Sonic acquisition by us
    using a composite current rate of 7.4% as follows (dollars in millions):
 

<TABLE>
    <S>                                                           <C>
    $228.4 million under previous credit facilities.............  $ 7.1
    Less-historical Sonic interest expense......................   (2.6)
                                                                  -----
      Adjustment................................................  $ 4.5
                                                                  =====
</TABLE>

 
 (e) Reflects the elimination of provision for income taxes, as a result of
     expected recurring future losses. The losses will not be tax benefited and
     no net deferred tax assets will be recorded.
 
     NOTE B:  Pro forma operating results for Marcus Holdings consist of the
following (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                      YEAR ENDED                              PRO FORMA
                                                     DECEMBER 31,   -------------------------------------------------------------
                                                         1998       ACQUISITIONS(a)   DISPOSITIONS(b)    ADJUSTMENTS      TOTAL
                                                     ------------   ---------------   ---------------    -----------    ---------
<S>                                                  <C>            <C>               <C>                <C>            <C>
Revenues...........................................   $ 499,820         $2,620           $ (44,511)       $      --     $ 457,929
                                                      ---------         ------           ---------        ---------     ---------
Operating expenses:
  Operating, general and administrative............     271,638          1,225             (20,971)         (15,297)(c)   236,595
  Depreciation and amortization....................     215,789             --                  --           42,559(d)    258,348
  Corporate expense charges........................          --             --                  --           17,042(c)     17,042
  Management fees..................................       3,341             --                  --           (3,341)(c)        --
  Transaction and severance costs..................     135,379             --                  --         (135,379)(e)        --
                                                      ---------         ------           ---------        ---------     ---------
    Total operating expenses.......................     626,147          1,225             (20,971)         (94,416)      511,985
                                                      ---------         ------           ---------        ---------     ---------
Income (loss) from operations......................    (126,327)         1,395             (23,540)          94,416       (54,056)
Interest expense...................................    (159,985)            --                  --           19,334(d)   (140,651)
Other income (expense).............................     201,278             --            (201,278)              --            --
                                                      ---------         ------           ---------        ---------     ---------
Income (loss) before extraordinary item............   $ (85,034)        $1,395           $(224,818)       $ 113,750     $(194,707)
                                                      =========         ======           =========        =========     =========
</TABLE>

 
-------------------------
(a) Represents the results of operations of acquired cable systems prior to
    their acquisition in 1998 by Marcus Holdings.
 
(b) Represents the elimination of the operating results and corresponding gain
    on sale of cable systems sold by Marcus Holdings during 1998.
 
(c) Represents a reclassification to reflect the expenses totaling $15.3 million
    from operating, general and administrative to corporate expenses. Also
    reflects the elimination of management fees and the addition of corporate
    expense charges of $1.7 million for actual costs incurred by Charter
    Investment, Inc. on behalf of Marcus Holdings. Management fees charged to
    Marcus Holdings exceeded the costs incurred by Charter Investment, Inc. by
    $1.3 million.
 
(d) As a result of the acquisition of Marcus Holdings by Mr. Allen, a large
    portion of the purchase price was recorded as franchises ($2.5 billion) that
    are amortized over 15 years. This resulted in additional amortization for
    year ended December 31, 1998. The adjustment to depreciation and
    amortization expense consists of the following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                              WEIGHTED AVERAGE
                                                                USEFUL LIFE       DEPRECIATION/
                                                FAIR VALUE       (IN YEARS)       AMORTIZATION
                                                ----------    ----------------    -------------
<S>                                             <C>           <C>                 <C>
Franchises....................................   $2,500.0            15              $ 167.2
Cable distribution systems....................      720.0             8                 84.5
Land, buildings and improvements..............       28.3            10                  2.7
Vehicles and equipment........................       13.6             3                  4.0
                                                                                     -------
     Total depreciation and amortization......                                         258.4
     Less-historical depreciation and
       amortization...........................                                        (215.8)
                                                                                     -------
       Adjustment.............................                                       $  42.6
                                                                                     =======
</TABLE>

 
    Additionally, the carrying value of outstanding debt was recorded at
    estimated fair value, resulting in a debt premium that is to be amortized as
    an offset to interest expense over the term of the debt. This resulted in a
    reduction in interest expense for the year ended December 31, 1998.
 
                                       58

<PAGE>   62
 
(e) As a result of the acquisition of Marcus Holdings by Mr. Allen, Marcus
    Holdings recorded transaction costs of approximately $135.4 million. These
    costs were primarily comprised of approximately $90.2 million in
    compensation paid to employees of Marcus Holdings in settlement of specially
    designated Class B membership units approximately $24.0 million of
    transaction fees paid to certain equity partners for investment banking
    services and $5.2 million of transaction fees paid primarily for
    professional fees. In addition, Marcus Holdings recorded costs related to
    employee and officer stay-bonus and severance arrangements of approximately
    $16.0 million.
 
     NOTE C:  Pro forma operating results for our recently completed and pending
acquisitions consist of the following (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                    RECENT ACQUISITIONS -- HISTORICAL
                                        -----------------------------------------------------------------------------------------
                                                                      YEAR ENDED DECEMBER 31, 1998
                                        -----------------------------------------------------------------------------------------
                                                                 GREATER
                                                      AMERICAN    MEDIA                           INTERMEDIA              TOTAL
                                        RENAISSANCE    CABLE     SYSTEMS   HELICON    RIFKIN(a)    SYSTEMS      OTHER     RECENT
                                        -----------   --------   -------   --------   ---------   ----------   -------   --------
<S>                                     <C>           <C>        <C>       <C>        <C>         <C>          <C>       <C>
Revenues..............................   $ 41,524     $15,685    $78,635   $ 75,577   $124,382     $176,062    $15,812   $527,677
                                         --------     -------    -------   --------   --------     --------    -------   --------
Operating expenses:
  Operating, general and
    administrative....................     21,037       7,441     48,852     40,179     63,815       86,753      7,821    275,898
  Depreciation and amortization.......     19,107       6,784      8,612     24,290     47,657       85,982      4,732    197,164
  Corporate expense charges...........         --          --         --         --         --           --         --         --
  Management fees.....................         --         471         --      3,496      4,106        3,147         --     11,220
                                         --------     -------    -------   --------   --------     --------    -------   --------
    Total operating expenses..........     40,144      14,696     57,464     67,965    115,578      175,882     12,553    484,282
                                         --------     -------    -------   --------   --------     --------    -------   --------
Income from operations................      1,380         989     21,171      7,612      8,804          180      3,259     43,395
Interest expense......................    (14,358)     (4,501)      (535)   (27,634)   (30,482)     (25,449)    (4,023)  (106,982)
Interest income.......................        158         122         --         93         --          341         --        714
Other income (expense)................         --          --       (493)        --     36,279       23,030          5     58,821
                                         --------     -------    -------   --------   --------     --------    -------   --------
Income (loss) before income tax
  expense.............................    (12,820)     (3,390)    20,143    (19,929)    14,601       (1,898)      (759)    (4,052)
Income tax expense....................        135          --      7,956         --     (4,178)       1,623                 5,536
                                         --------     -------    -------   --------   --------     --------    -------   --------
Income (loss) before extraordinary
  item................................   $(12,955)    $(3,390)   $12,187   $(19,929)  $ 18,779     $ (3,521)   $  (759)  $ (9,588)
                                         ========     =======    =======   ========   ========     ========    =======   ========
</TABLE>

 

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31, 1998
                                                              ------------------------------------------------------
                                                                        PENDING ACQUISITIONS -- HISTORICAL
                                                              ------------------------------------------------------
                                                                                                             TOTAL
                                                               AVALON     FALCON     FANCH(b)   BRESNAN     PENDING
                                                              --------   ---------   --------   --------   ---------
<S>                                                           <C>        <C>         <C>        <C>        <C>
Revenues....................................................  $ 18,187   $ 307,558   $141,104   $261,964   $ 728,813
                                                              --------   ---------   --------   --------   ---------
Operating expenses:.........................................
  Operating, general and administrative.....................    10,067     161,233     62,977    150,750     385,027
  Depreciation and amortization.............................     8,183     152,585     45,886     54,308     260,962
  Corporate expense charges.................................       655          --        105         --         760
  Management fees...........................................        --          --      3,998         --       3,998
                                                              --------   ---------   --------   --------   ---------
        Total operating expenses............................    18,905     313,818    112,966    205,058     650,747
                                                              --------   ---------   --------   --------   ---------
Income (loss) from operations...............................      (718)     (6,260)    28,138     56,906      78,066
Interest expense............................................    (8,223)   (102,591)    (1,873)   (18,296)   (130,983)
Interest income.............................................       173          --         17         --         190
Other income (expense)......................................      (463)     (3,093)    (6,628)    26,754      16,570
                                                              --------   ---------   --------   --------   ---------
Income (loss) before income tax expense (benefit)...........    (9,231)   (111,944)    19,654     65,364     (36,157)
Income tax expense (benefit)................................       186       1,897        286         --       2,369
                                                              --------   ---------   --------   --------   ---------
Income (loss) before extraordinary item.....................  $ (9,417)  $(113,841)  $ 19,368   $ 65,364   $ (38,526)
                                                              ========   =========   ========   ========   =========
</TABLE>

 
                                       59

<PAGE>   63

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31, 1998
                              -------------------------------------------------------------------------
                                                         RECENT ACQUISITIONS
                              -------------------------------------------------------------------------
                                                                    PRO FORMA
                                           ------------------------------------------------------------
                                                                                                TOTAL
                              HISTORICAL   ACQUISITIONS(c)   DISPOSITIONS(d)   ADJUSTMENTS     RECENT
                              ----------   ---------------   ---------------   -----------    ---------
<S>                           <C>          <C>               <C>               <C>            <C>
Revenues....................  $ 527,677       $127,429          $(46,153)       $      --     $ 608,953
                              ---------       --------          --------        ---------     ---------
Operating expenses:
 Operating, general and
   administrative...........    275,898         66,641           (24,101)         (10,991)(f)   307,447
 Depreciation and
   amortization.............    197,164         31,262           (29,773)         137,146(g)    335,799
 Corporate expense
   charges..................         --             --                --           10,991(f)     10,991
 Management fees............     11,220          4,042              (594)              --        14,668
                              ---------       --------          --------        ---------     ---------
   Total operating
     expenses...............    484,282        101,945           (54,468)         137,146       668,905
                              ---------       --------          --------        ---------     ---------
Income (loss) from
 operations.................     43,395         25,484             8,315         (137,146)      (59,952)
Interest expense............   (106,982)       (30,354)           16,923         (151,037)(h)  (271,450)
Interest income.............        714            323                --               --         1,037
Other income (expense)......     58,821           (178)              235          (65,740)(i)    (6,862)
                              ---------       --------          --------        ---------     ---------
Income (loss) before income
 tax expense (benefit)......     (4,052)        (4,725)           25,473         (353,923)     (337,227)
Income tax expense
 (benefit)..................      5,536          2,431                10           (7,977)(j)        --
                              ---------       --------          --------        ---------     ---------
Income (loss) before
 extraordinary item.........  $  (9,588)      $ (7,156)         $ 25,463        $(345,946)    $(337,227)
                              =========       ========          ========        =========     =========
 
<CAPTION>
                                                     YEAR ENDED DECEMBER 31, 1998
                              --------------------------------------------------------------------------
                                                         PENDING ACQUISITIONS
                              --------------------------------------------------------------------------
                                                                     PRO FORMA
                                           -------------------------------------------------------------
                                                                                                TOTAL
                              HISTORICAL   ACQUISITIONS(c)   DISPOSITIONS(e)   ADJUSTMENTS     PENDING
                              ----------   ---------------   ---------------   -----------    ----------
<S>                           <C>          <C>               <C>               <C>            <C>
Revenues....................  $  728,813      $319,072          $ (25,216)      $      --     $1,022,669
                              ----------      --------          ---------       ---------     ----------
Operating expenses:
 Operating, general and
   administrative...........     385,027       160,438            (12,979)        (21,368)(f)    511,118
 Depreciation and
   amortization.............     260,962        88,436             (9,355)        403,802(g)     743,845
 Corporate expense
   charges..................         760        14,962                 --          21,368(f)      37,090
 Management fees............       3,998         2,175                (38)             --          6,135
                              ----------      --------          ---------       ---------     ----------
   Total operating
     expenses...............     650,747       266,011            (22,372)        403,802      1,298,188
                              ----------      --------          ---------       ---------     ----------
Income (loss) from
 operations.................      78,066        53,061             (2,844)       (403,802)      (275,519)
Interest expense............    (130,983)      (23,667)               742        (303,678)(h)   (457,586)
Interest income.............         190           801                 --              --            991
Other income (expense)......      16,570         4,446             (1,080)        (26,564)(i)     (6,628)
                              ----------      --------          ---------       ---------     ----------
Income (loss) before income
 tax expense (benefit)......     (36,157)       34,641             (3,182)       (734,044)      (738,742)
Income tax expense
 (benefit)..................       2,369        (1,762)                --            (607)(j)         --
                              ----------      --------          ---------       ---------     ----------
Income (loss) before
 extraordinary item.........  $  (38,526)     $ 36,403          $  (3,182)      $(733,437)    $ (738,742)
                              ==========      ========          =========       =========     ==========
</TABLE>

 
-------------------------
(a) Rifkin includes the results of operations of Rifkin Acquisition Partners,
    L.L.L.P., as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                          RIFKIN
                                                        ACQUISITION     OTHER      TOTAL
                                                        -----------    -------    --------
<S>                                                     <C>            <C>        <C>
Revenues..............................................    $89,921      $34,461    $124,382
Income from operations................................      1,040        7,764       8,804
Income before extraordinary item......................     24,419       (5,640)     18,779
</TABLE>

 
(b) Fanch includes the results of operations of Fanch cable systems as follows
    (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                       FANCH CABLE
                                                         SYSTEMS      OTHERS      TOTAL
                                                       -----------    -------    --------
<S>                                                    <C>            <C>        <C>
Revenues.............................................   $124,555      $16,549    $141,104
Income from operations...............................     25,241        2,897      28,138
Income before extraordinary item.....................     18,814          554      19,368
</TABLE>

 
(c) Represents the historical results of operations for the period from January
    1, 1998 through the date of purchase for acquisitions completed by
    Renaissance, the InterMedia systems, Helicon, Rifkin, Avalon, Falcon, Fanch
    and Bresnan and for the period from January 1, 1998 through December 31,
    1998 for acquisitions to be completed in 1999.
 
                                       60

<PAGE>   64
 
     These acquisitions were accounted for using the purchase method of
     accounting. Purchase prices and the closing dates or anticipated closing
     dates for significant acquisitions are as follows (dollars in millions):

<TABLE>
<CAPTION>
                                             RENAISSANCE     INTERMEDIA        HELICON         RIFKIN          AVALON
                                            -------------   -------------   -------------   -------------   -------------
   <S>                                      <C>             <C>             <C>             <C>             <C>
   Purchase price.........................  $309.5          $29.1           $26.1           $165.0          $30.5
   Closing date...........................  April 1998      December 1998   December 1998   February 1999   July 1998
   Purchase price.........................                                                  $53.8           $431.6
   Closing date...........................                                                  July 1999       November 1998
   Purchase price.........................
   Closing date...........................
   Purchase price.........................
   Closing date...........................
 
<CAPTION>
                                                FALCON           FANCH           BRESNAN
                                            --------------   --------------   -------------
   <S>                                      <C>              <C>              <C>
   Purchase price.........................  $86.2            $42.2            $17.0
   Closing date...........................  July 1998        February 1999    February 1998
   Purchase price.........................  $158.6           $248.0           $11.8
   Closing date...........................  September 1998   February 1999    October 1998
   Purchase price.........................  $513.3           $70.5            $40.0
   Closing date...........................  September 1998   March 1999       January 1999
   Purchase price.........................                   $50.0            $27.0
   Closing date...........................                   June 1999        March 1999
</TABLE>

 
    The InterMedia acquisition above was part of a "swap".
 
(d) Represents the elimination of the operating results primarily related to the
    cable systems transferred to InterMedia as part of a swap of cable systems
    in October 1999. The fair value of the systems transferred to InterMedia was
    $331.8 million. No material gain or loss is anticipated on the disposition
    as these systems were recently acquired and recorded at fair value at that
    time.
 
(e) Represents the elimination of the operating results related to the Indiana
    cable system that we are required to transfer to InterMedia as part of a
    swap and to the sale of several smaller cable systems. A definitive written
    agreement exists for the disposition of the Indiana system. The fair value
    of the system is $88.2 million. No material gain or loss is anticipated on
    the disposition as this system was recently acquired and recorded at fair
    value at that time.
 
(f) Reflects a reclassification of expenses representing corporate expenses that
    would have occurred at Charter Investment, Inc.
 
(g) Represents additional amortization of franchises as a result of our recently
    completed and pending acquisitions. A large portion of the purchase price
    was allocated to franchises ($12.4 billion) that are amortized over 15
    years. The adjustments to depreciation and amortization expense consists of
    the following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                    FAIR      WEIGHTED AVERAGE   DEPRECIATION/
                                                    VALUE       USEFUL LIFE      AMORTIZATION
                                                  ---------   ----------------   -------------
<S>                                               <C>         <C>                <C>
Franchises......................................  $12,356.5          15            $  823.8
Cable distribution systems......................    1,729.1           8               223.7
Land, building and improvements.................       53.9          10                 5.2
Vehicles and equipment..........................       89.1           3                26.9
                                                                                   --------
  Total depreciation and amortization...........                                    1,079.6
  Less-historical depreciation and
     amortization...............................                                     (538.7)
                                                                                   --------
     Adjustment.................................                                   $  540.9
                                                                                   ========
</TABLE>

 
                                       61

<PAGE>   65
 
(h) Reflects additional interest expense on borrowings which will be used to
    finance the acquisitions as follows (dollars in millions):
 
   

<TABLE>
<S>                                                           <C>
$1.2 billion of credit facilities at composite current rate
  of 7.4% drawn down in March 1999 included in Charter
  Communications Holding Company's historical cash..........  $  85.9
$1.6 billion of credit facilities at composite current rate
  of 7.4%...................................................    118.4
$114.4 million 10% senior discount notes ($78.1 million
  carrying value) -- Renaissance............................      8.0
$150.0 million 9.375% senior subordinated notes -- Avalon...     14.1
$196.0 million 11.875% senior discount notes ($123.5 million
  carrying value) -- Avalon.................................     13.6
$1.0 billion credit facilities for Falcon acquisition (at
  composite current rate of 7.4%)...........................     60.0
$0.9 billion credit facilities for Fanch acquisition (at
  composite current rate of 7.4%)...........................     51.9
$0.2 billion credit facilities for Avalon acquisition (at
  composite current rate of 7.4%)...........................     10.0
$1.7 billion anticipated financing (at 10%).................    171.5
$705.7 million 10.04% bridge loan facility -- Falcon........     70.9
$1.0 billion 8% liability to sellers -- Bresnan.............     80.0
$425.0 million 8% liability to sellers -- Falcon............     34.0
$133.3 million 8% liability to sellers -- Rifkin............     10.7
                                                              -------
  Total pro forma interest expenses.........................    729.0
  Less-historical interest expense from acquired
     companies..............................................   (274.3)
                                                              -------
     Adjustment.............................................  $ 454.7
                                                              =======
</TABLE>

    
 
     The liabilities to the Bresnan, Falcon and Rifkin sellers represents the
     potential obligations to repurchase equity interests issued to the sellers
     arising from possible violations of the Securities Act in connection with
     the issuance of equity interests to these sellers. The possible liability
     to the Falcon sellers would increase to $550 million if the Falcon sellers
     exercise their right to receive up to an additional $125 million of equity
     interests.
 
   
     We have assumed we will fund certain pending acquisitions prior to closing
     with additional financing of $1.7 billion. An interest rate of 10% reflects
     the anticipated borrowing rate available to Charter Communications Holding
     Company. An increase in the interest rate of 0.125% on this assumed debt
     would result in an increase in interest expense of $2.1 million. Should the
     Avalon notes be put to us based on change of control provisions and should
     we become obligated to purchase Rifkin, Falcon and Bresnan seller's equity
     interests, the estimated shortfall would increase to $3.6 billion and
     interest expense would increase by an additional $29.7 million. If we do
     not close on the Avalon credit facilities, the estimated shortfall would
     increase to $3.7 billion and interest expense will increase by $4.4
     million. If we do not close on the Fanch credit facilities, the estimated
     shortfall would increase to $4.6 billion and interest expense will increase
     by $22.8 million. If we do not close on the Falcon bridge loan facility,
     the estimated shortfall would increase to $5.3 billion and interest expense
     would not change. Should we be required to pay InterMedia $0.1 billion for
     a system that did not transfer in our swap with InterMedia because
     necessary regulatory approvals were still pending, interest expense would
     increase by $8.8 million. Principal approximates carrying value for all
     undiscounted debt.
    
 
(i) Represents the elimination of gain (loss) on the sale of cable television
    systems whose results of operations have been eliminated in (c) above.
 
(j) Reflects the elimination of income tax expense (benefit) as a result of
    expected recurring future losses. The losses will not be tax benefited and
    no net deferred tax assets will be recorded.
 
                                       62

<PAGE>   66
 
     NOTE D:  In March 1999, we extinguished substantially all of our long-term
debt, excluding borrowings of our previous credit facilities, and refinanced all
previous credit facilities. In addition, we incurred and plan to incur
additional debt in connection with our pending and recently completed
acquisitions. See "Capitalization". The refinancing adjustment to interest
expense consists of the following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                              INTEREST
DESCRIPTION                                                    EXPENSE
-----------                                                   ---------
<S>                                                           <C>
$600 million 8.25% senior notes.............................  $    49.6
$1.5 billion 8.625% senior notes............................      129.4
$1.475 billion ($906 carrying value) 9.92% senior discount
  notes.....................................................       90.0
Credit facilities ($652 at composite current rate of
  7.4%).....................................................       48.2
Amortization of debt issuance costs.........................       16.0
Commitment fee on unused portion of credit facilities ($1.4
  billion at 0.375%)........................................        5.2
                                                              ---------
  Total pro forma interest expense..........................      338.4
  Less -- interest expense (including Marcus Cable).........     (345.4)
                                                              ---------
     Adjustment.............................................  $    (7.0)
                                                              =========
</TABLE>

 
     An increase in the interest rate on all variable rate debt of 0.125% would
result in an increase in interest expense of $12.1 million.
 
     NOTE E:  Represents the allocation of 66% of the net loss of Charter
Communications Holding Company to the minority interest.
 
     NOTE F:  Charter Investment, Inc. provided corporate management and
consulting services to Charter Operating in 1998 and to Marcus Holdings
beginning in October 1998. See "Certain Relationships and Related Transactions".
 
     NOTE G:  Basic loss per share assumes none of the membership units of
Charter Communications Holding Company are exchanged for Charter Communications,
Inc. common stock and none of the outstanding options to purchase membership
units of Charter Communications Holding Company that are automatically exchanged
for Charter Communications, Inc. common stock are exercised. Basic loss per
share equals the loss applicable to common equity holders divided by weighted
average shares outstanding. If all of the membership units were exchanged or
options exercised, the effects would be antidilutive.
 
     NOTE H:  EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator of a cable television company's ability to service
indebtedness. However, EBITDA should not be considered as an alternative to
income from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. EBITDA should also not be construed as an indication of a company's
operating performance or as a measure of liquidity. In addition, because EBITDA
is not calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted by EBITDA may be limited by working capital,
debt service and capital expenditure requirements and by restrictions related to
legal requirements, commitments and uncertainties.
 
     NOTE I:  EBITDA margin represents EBITDA as a percentage of revenues.
 
     NOTE J:   Adjusted EBITDA means EBITDA before stock option compensation
expense, corporate expenses, management fees and other income (expense).
Adjusted EBITDA is presented because it is a widely accepted financial indicator
of a cable company's ability to service indebtedness. However, Adjusted EBITDA
should not be considered as an alternative to income from operations or to cash
flows from operating, investing or financing activities, as determined in
accordance with generally accepted accounting principles. Adjusted EBITDA should
also not be construed as an indication of a company's operating performance or
as a measure of liquidity. In addition, because Adjusted EBITDA is not
calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. Management's
discretionary use of funds depicted
 
                                       63

<PAGE>   67
 
by Adjusted EBITDA may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.
 
     NOTE K:  Homes passed are the number of living units, such as single
residence homes, apartments and condominium units, passed by the cable
television distribution network in a given cable system service area.
 
     NOTE L:  Basic customers are customers who receive basic cable service.
 
     NOTE M: Basic penetration represents basic customers as a percentage of
homes passed.
 
     NOTE N:  Premium units represent the total number of subscriptions to
premium channels.
 
     NOTE O:  Premium penetration represents premium units as a percentage of
basic customers.
 
     NOTE P:  Average monthly revenue per basic customer represents revenues
divided by the number of months in the period divided by the number of basic
customers at December 31, 1998.
 
                                       64

<PAGE>   68
 
   

<TABLE>
<CAPTION>
                                                  UNAUDITED PRO FORMA BALANCE SHEET
                                                         AS OF JUNE 30, 1999
                              -------------------------------------------------------------------------
                                  CHARTER          RECENT                      PENDING       OFFERING
                              COMMUNICATIONS    ACQUISITIONS                 ACQUISITIONS   ADJUSTMENTS    PRO FORMA
                              HOLDING COMPANY     (NOTE A)      SUBTOTAL       (NOTE A)      (NOTE B)        TOTAL
                              ---------------   ------------   -----------   ------------   -----------   -----------
                                                       (DOLLARS IN THOUSANDS)
<S>                           <C>               <C>            <C>           <C>            <C>           <C>
ASSETS
Cash and cash equivalents...    $  109,626       $    9,289    $   118,915   $    15,756    $        --   $   134,671
Accounts receivable, net....        32,487           22,520         55,007        36,660             --        91,667
Prepaid expenses and
  other.....................        10,181            5,507         15,688        36,828             --        52,516
                                ----------       ----------    -----------   -----------    -----------   -----------
     Total current assets...       152,294           37,316        189,610        89,244             --       278,854
Property, plant and
  equipment.................     1,764,499          580,311      2,344,810     1,198,047             --     3,542,857
Franchises..................     6,591,972        2,614,034      9,206,006     8,749,216             --    17,955,222
Other assets................       178,709             (381)       178,328       (41,754)            --       136,574
                                ----------       ----------    -----------   -----------    -----------   -----------
     Total assets...........    $8,687,474       $3,231,280    $11,918,754   $ 9,994,753    $        --   $21,913,507
                                ==========       ==========    ===========   ===========    ===========   ===========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt.............    $       --       $  133,312    $   133,312   $ 5,168,579    $        --   $ 5,301,891
Accounts payable and accrued
  expenses..................       273,987           79,072        353,059       229,058             --       582,117
Current deferred revenue....            --            2,356          2,356            --             --         2,356
Payables to manager of cable
  television systems........        21,745               --         21,745            --             --        21,745
Pending acquisitions
  payable...................            --               --             --     2,898,500     (2,898,500)           --
                                ----------       ----------    -----------   -----------    -----------   -----------
     Total current
       liabilities..........       295,732          214,740        510,472     8,296,137     (2,898,500)    5,908,109
Long-term debt..............     5,134,310        1,691,540      6,825,850       948,616             --     7,774,466
Other long-term
  liabilities...............        53,310               --         53,310            --             --        53,310
Minority interest...........            --               --             --            --      5,368,064     5,368,064
Members' equity.............     3,204,122        1,325,000      4,529,122       750,000     (5,279,122)           --
                                ----------       ----------    -----------   -----------    -----------   -----------
Common stock................            --               --             --            --            170           170
Additional paid-in
  capital...................            --               --             --            --      2,809,388     2,809,388
                                ----------       ----------    -----------   -----------    -----------   -----------
     Total stockholders'
       equity...............            --               --             --            --      2,809,558     2,809,558
                                ----------       ----------    -----------   -----------    -----------   -----------
     Total liabilities and
       stockholders'
       equity...............    $8,687,474       $3,231,280    $11,918,754   $ 9,994,753    $        --   $21,913,507
                                ==========       ==========    ===========   ===========    ===========   ===========
</TABLE>

    
 
                                       65

<PAGE>   69
 
                 NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET
 
     NOTE A:  Pro forma balance sheet for our recently completed acquisitions
and pending acquisitions consists of the following (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                                AS OF JUNE 30, 1999
                                                              --------------------------------------------------------
                                                                         RECENT ACQUISITIONS -- HISTORICAL
                                                              --------------------------------------------------------
                                                                                     INTERMEDIA               TOTAL
                                                               HELICON     RIFKIN     SYSTEMS      OTHER      RECENT
                                                              ---------   --------   ----------   -------   ----------
<S>                                                           <C>         <C>        <C>          <C>       <C>
Cash and cash equivalents...................................  $   6,894   $  7,156          --    $    73   $   14,123
Accounts receivable, net....................................      1,859     13,118      16,009      1,619       32,605
Receivable from related party...............................          6         --       5,250         --        5,256
Prepaid expenses and other..................................      2,172      2,271         719        155        5,317
                                                              ---------   --------    --------    -------   ----------
  Total current assets......................................     10,931     22,545      21,978      1,847       57,301
Property, plant and equipment...............................     88,252    297,318     231,382     20,610      637,562
Franchises..................................................      5,610    437,479     226,040     54,956      724,085
Deferred income taxes.......................................         --         --      15,288         --       15,288
Other assets................................................     87,165         --       5,535        126       92,826
                                                              ---------   --------    --------    -------   ----------
  Total assets..............................................  $ 191,958   $757,342    $500,223    $77,539   $1,527,062
                                                              =========   ========    ========    =======   ==========
Accounts payable and accrued expenses.......................  $  14,288   $ 46,777    $ 19,874    $ 1,699   $   82,638
Current deferred revenue....................................         --         --      11,778      1,076       12,854
Note payable to related party...............................         --         --       4,607         --        4,607
                                                              ---------   --------    --------    -------   ----------
  Total current liabilities.................................     14,288     46,777      36,259      2,775      100,099
Deferred income taxes.......................................         --      6,703          --         --        6,703
Long-term debt..............................................    299,076    546,575          --     40,687      886,338
Note payable to related party, including accrued interest...      5,000         --     414,493         --      419,493
Other long-term liabilities, including redeemable preferred
  shares....................................................     21,162         --      18,168         --       39,330
Equity......................................................   (147,568)   157,287      31,303     34,077       75,099
                                                              ---------   --------    --------    -------   ----------
  Total liabilities and equity..............................  $ 191,958   $757,342    $500,223    $77,539   $1,527,062
                                                              =========   ========    ========    =======   ==========
</TABLE>

 
                                       66

<PAGE>   70
 

<TABLE>
<CAPTION>
                                                                                AS OF JUNE 30, 1999
                                                              --------------------------------------------------------
                                                                         PENDING ACQUISITIONS -- HISTORICAL
                                                              --------------------------------------------------------
                                                                                                              TOTAL
                                                               AVALON      FALCON     FANCH(a)   BRESNAN     PENDING
                                                              --------   ----------   --------   --------   ----------
<S>                                                           <C>        <C>          <C>        <C>        <C>
Cash and cash equivalents...................................  $  3,457   $   11,852   $    785   $  2,826   $   18,920
Accounts receivable, net....................................     6,158       19,102      2,814      8,917       36,991
Receivable from related party...............................        --        6,949         --         --        6,949
Prepaid expenses and other..................................       415       35,007      1,249         --       36,671
                                                              --------   ----------   --------   --------   ----------
  Total current assets......................................    10,030       72,910      4,848     11,743       99,531
Property, plant and equipment...............................   116,587      522,587    241,169    330,876    1,211,219
Franchises..................................................   470,041      384,197      4,602    324,990    1,183,830
Other assets................................................        32      457,148    606,851     23,515    1,087,546
                                                              --------   ----------   --------   --------   ----------
  Total assets..............................................  $596,690   $1,436,842   $857,470   $691,124   $3,582,126
                                                              ========   ==========   ========   ========   ==========
Current maturities of long-term debt........................  $     25   $       --   $    754   $     --   $      779
Accounts payable and accrued expenses.......................    13,983      144,892     27,156     43,518      229,549
Current deferred revenue....................................     3,136        2,630         --         --        5,766
Other current liabilities...................................     3,160           --         --      3,698        6,858
                                                              --------   ----------   --------   --------   ----------
  Total current liabilities.................................    20,304      147,522     27,910     47,216      242,952
Deferred income taxes.......................................        --        2,287         --         --        2,287
Long-term debt..............................................   446,079    1,665,676     12,728    846,364    2,970,847
Note payable to related party, including accrued interest...        --           --      1,457         --        1,457
Other long-term liabilities, including redeemable preferred
  shares....................................................        --      400,471        197      6,015      406,683
Equity......................................................   130,307     (779,114)   815,178   (208,471)     (42,100)
                                                              --------   ----------   --------   --------   ----------
  Total liabilities and equity..............................  $596,690   $1,436,842   $857,470   $691,124   $3,582,126
                                                              ========   ==========   ========   ========   ==========
</TABLE>

 
                                       67

<PAGE>   71
   

<TABLE>
<CAPTION>
                                                           AS OF JUNE 30, 1999
                                -------------------------------------------------------------------------
                                                           RECENT ACQUISITIONS
                                -------------------------------------------------------------------------
                                                                      PRO FORMA
                                             ------------------------------------------------------------
                                HISTORICAL   ACQUISITIONS(B)   DISPOSITIONS(C)   ADJUSTMENTS     TOTAL
                                ----------   ---------------   ---------------   -----------   ----------
<S>                             <C>          <C>               <C>               <C>           <C>
Cash and cash equivalents.....  $   14,123       $   54           $  (4,888)     $       --    $    9,289
Accounts receivable, net......      32,605          830              (1,493)         (9,422)(d)     22,520
Receivable from related
 party........................       5,256            3                  --          (5,259)(e)         --
Prepaid expenses and other....       5,317          348                (158)             --         5,507
                                ----------       ------           ---------      ----------    ----------
 Total current assets.........      57,301        1,235              (6,539)        (14,681)       37,316
Property, plant and
 equipment....................     637,562        4,208             (61,459)             --       580,311
Franchises....................     724,085            6            (267,781)      2,157,724(f)  2,614,034
Deferred income taxes.........      15,288           --                  --         (15,288)(g)         --
Other assets..................      92,826           90                (381)        (92,916)(h)       (381)
                                ----------       ------           ---------      ----------    ----------
 Total assets.................  $1,527,062       $5,539           $(336,160)     $2,034,839    $3,231,280
                                ==========       ======           =========      ==========    ==========
Current maturities of
 long-term debt...............  $       --       $   --           $      --              --            --
Short-term debt...............          --           --                  --      $  133,312(j) $  133,312
Accounts payable and accrued
 expenses.....................      82,638          796              (4,362)             --        79,072
Current deferred revenue......      12,854           --                  --         (10,498)(d)      2,356
Note payable to related
 party........................       4,607           --                  --          (4,607)(i)         --
Pending acquisitions
 payable......................          --           --                  --              --            --
Other current liabilities.....          --           --                  --              --            --
                                ----------       ------           ---------      ----------    ----------
 Total current liabilities....     100,099          796              (4,362)        118,207       214,740
Deferred revenue..............          --          170                  --            (170)(d)         --
Deferred income taxes.........       6,703           --                  --          (6,703)(g)         --
Long-term debt................     886,338        1,063            (331,798)      1,135,937(j)  1,691,540
Note payable to related party,
 including accrued interest...     419,493           --                  --        (419,493)(i)         --
Other long-term liabilities,
 including redeemable
 preferred shares.............      39,330           --                  --         (39,330)(k)         --
Equity........................      75,099        3,510                  --       1,246,391(l)  1,325,000
                                ----------       ------           ---------      ----------    ----------
 Total liabilities and
   equity.....................  $1,527,062       $5,539           $(336,160)     $2,034,839    $3,231,280
                                ==========       ======           =========      ==========    ==========
 
<CAPTION>
                                                            AS OF JUNE 30, 1999
                                ----------------------------------------------------------------------------
                                                            PENDING ACQUISITIONS
                                ----------------------------------------------------------------------------
                                                                        PRO FORMA
                                             ---------------------------------------------------------------
                                HISTORICAL   ACQUISITIONS(B)   DISPOSITIONS(C)   ADJUSTMENTS        TOTAL
                                ----------   ---------------   ---------------   -----------      ----------
<S>                             <C>          <C>               <C>               <C>              <C>
Cash and cash equivalents.....  $   18,920       $   755          $ (3,919)      $        --      $   15,756
Accounts receivable, net......      36,991            55              (386)               --          36,660
Receivable from related
 party........................       6,949           591                --            (7,540)(e)          --
Prepaid expenses and other....      36,671           196               (39)               --          36,828
                                ----------       -------          --------       -----------      ----------
 Total current assets.........      99,531         1,597            (4,344)           (7,540)         89,244
Property, plant and
 equipment....................   1,211,219         7,188           (20,360)               --       1,198,047
Franchises....................   1,183,830           359           (64,362)        7,629,389(f)    8,749,216
Deferred income taxes.........          --            --                --                --              --
Other assets..................   1,087,546         1,242               (88)       (1,130,454)(h)     (41,754)
                                ----------       -------          --------       -----------      ----------
 Total assets.................   3,582,126       $10,386          $(89,154)      $ 6,491,395      $9,994,753
                                ==========       =======          ========       ===========      ==========
Current maturities of
 long-term debt...............  $      779       $    --                --       $      (779)(j)  $       --
Short-term debt...............          --            --                --         5,168,579(j)    5,168,579
Accounts payable and accrued
 expenses.....................     229,549           461              (952)               --         229,058
Current deferred revenue......       5,766           263                --            (6,029)(d)          --
Note payable to related
 party........................          --        (2,561)               --             2,561(i)           --
Pending acquisitions
 payable......................          --            --                --         2,898,500(j)    2,898,500
Other current liabilities.....       6,858            --                --            (6,858)(i)          --
                                ----------       -------          --------       -----------      ----------
 Total current liabilities....     242,952        (1,837)             (952)        8,055,974       8,296,137
Deferred revenue..............          --            --                --                --              --
Deferred income taxes.........       2,287           359                --            (2,646)(g)          --
Long-term debt................   2,970,847         2,815           (88,202)       (1,936,844)(j)     948,616
Note payable to related party,
 including accrued interest...       1,457            --                --            (1,457)(i)          --
Other long-term liabilities,
 including redeemable
 preferred shares.............     406,683            10                --          (406,693)(k)          --
Equity........................     (42,100)        9,039                --           783,061(l)      750,000
                                ----------       -------          --------       -----------      ----------
 Total liabilities and
   equity.....................  $3,582,126       $10,386          $(89,154)      $ 6,491,395      $9,994,753
                                ==========       =======          ========       ===========      ==========
</TABLE>

    
 
                                       68

<PAGE>   72
 
-------------------------
 
(a) Fanch includes the balance sheet of Fanch cable systems as follows (dollars
    in thousands):
 

<TABLE>
<CAPTION>
                                                             FANCH CABLE
                                                               SYSTEMS      OTHERS      TOTAL
                                                             -----------    -------    --------
    <S>                                                      <C>            <C>        <C>
    Total current assets...................................   $  3,482      $ 1,366    $  4,848
    Total assets...........................................    833,265       24,205     857,470
    Total current liabilities..............................     24,124        3,786      27,910
    Equity.................................................    809,141        6,037     815,178
    Total liabilities and equity...........................    833,265       24,205     857,470
</TABLE>

 
(b) Represents the historical balance sheets as of June 30, 1999 for
    acquisitions to be completed subsequent to June 30, 1999.
 
(c) Represents the historical assets and liabilities as of June 30, 1999 of
    cable systems transferred to InterMedia on October 1, 1999 and one Indiana
    cable system we are required to transfer to InterMedia as part of a swap of
    cable systems. The cable system being swapped will be accounted for at fair
    value. No material gain or loss is anticipated in conjunction with the swap.
    See "Business -- Acquisitions -- InterMedia Systems".
 
(d) Represents the offset of advance billings against deferred revenue to be
    consistent with Charter Communications Holding Company accounting policy and
    the elimination of deferred revenue.
 
(e) Reflects assets retained by the seller.
 
(f) Substantial amounts of the purchase price have been allocated to franchises
    based on estimated fair values. This results in an allocation of purchase
    price as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                  INTERMEDIA
                                                                   SYSTEMS     HELICON      RIFKIN
                                                                  ----------   --------   ----------
    <S>                                                           <C>          <C>        <C>
    Working capital.............................................   $(20,493)   $ (3,363)  $  (23,796)
    Property, plant and equipment...............................    149,563      88,252      301,526
    Franchises..................................................    775,399     465,111    1,182,270
    Other.......................................................       (469)         --           --
                                                                   --------    --------   ----------
                                                                   $904,000    $550,000   $1,460,000
                                                                   ========    ========   ==========
</TABLE>

 

<TABLE>
<CAPTION>
                                         AVALON        FALCON       FANCH       BRESNAN      OTHER        TOTAL
                                       -----------   ----------   ----------   ----------   --------   -----------
    <S>                                <C>           <C>          <C>          <C>          <C>        <C>
    Working capital..................   $ (3,396)    $  (78,943)  $  (22,308)  $  (31,775)  $    148   $  (183,926)
    Property, plant and equipment....    121,470        524,892      241,169      330,876     20,610     1,778,358
    Franchises.......................    741,101      3,095,581    2,181,139    2,795,757    126,892    11,363,250
    Other............................         --          8,334           --           --         --         7,865
                                        --------     ----------   ----------   ----------   --------   -----------
                                        $859,175     $3,549,864   $2,400,000   $3,094,858   $147,650   $12,965,547
                                        ========     ==========   ==========   ==========   ========   ===========
</TABLE>

 
                                       69

<PAGE>   73
 
     The sources of cash for the recent and pending acquisitions are as follows
(dollars in millions):
 
   

<TABLE>
    <S>                                                       <C>         <C>         <C>
    CASH SHORTFALL:
    Current liabilities:
      8% liability to Falcon sellers........................  $  425.0
      8% liability to Bresnan sellers.......................   1,000.0
      8% liability to Rifkin sellers........................     133.3    $1,558.3
                                                              --------
    Publicly held debt, at fair market value:
      9.375% senior subordinated notes -- Avalon............     150.0
      11.875% senior discount notes -- Avalon...............     128.6       278.6
                                                              --------
    Falcon bridge loan facility.............................                 705.7
    Expected credit facilities draw down of acquisitions:
         Avalon.............................................     169.0
         Fanch..............................................     875.0     1,044.0
                                                              --------
    Anticipated financing to be arranged in connection with
      Bresnan acquisition...................................               1,715.3
                                                                          --------
      Total cash shortfall..................................                          $ 5,301.9
    AVAILABLE AND COMMITTED SOURCES:
    Escrow deposit -- Avalon................................                  50.0
    Funded or expected equity contributions:
      Mr. Allen equity contributions........................   1,325.0
      Mr. Allen committed equity contribution...............     750.0
      Net proceeds from sale of Class B shares..............       0.9
      Net proceeds from the offering........................   2,897.6     4,973.5
                                                              --------
    Expected credit facilities draw down:
      Charter Operating's credit facilities.................               1,604.1
      Falcon credit facilities..............................               1,011.0
    Helicon preferred limited liability company interests...                  25.0
                                                                          --------
      Total available and committed sources.................                            7,663.6
                                                                                      ---------
                                                                                      $12,965.5
                                                                                      =========
</TABLE>

    
 
     The cash shortfall is included in short-term debt in the pro forma balance
sheet.
 
   
     Available and committed sources of funds will not be sufficient to
consummate our pending acquisitions and fund related obligations. In connection
with our pending acquisitions, we may need to raise additional amounts up to a
total of approximately $5.41 billion.
    
 
     We will need to raise approximately $1.72 billion by borrowing under credit
facilities at Bresnan that have not yet been arranged and/or by issuing debt or
equity securities of Charter Communications, Inc. or Charter Communications
Holding Company to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facility
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
     - approximately $0.35 billion in Bresnan notes that we expect to be put to
       us in connection with required change of control offers for these notes.
 
                                       70

<PAGE>   74
 
   
     In addition, we will have to raise approximately $3.69 billion of
additional financing if we are required to pay:
    
 
     - approximately $0.71 billion to repurchase outstanding notes of Falcon if
       committed bridge loan financing does not close;
 
   
     - approximately $0.17 billion if the Avalon credit facilities do not close;
    
 
   
     - approximately $0.88 billion if the Fanch credit facilities do not close;
    
 
     - approximately $0.27 billion to repurchase outstanding notes of Avalon;
 
   
     - approximately $1.57 billion to repurchase equity interests issued or to
       be issued to specified sellers in connection with a number of our
       acquisitions because of possible violations of Section 5 of the
       Securities Act of 1933; and
    
 
     - approximately $0.09 billion to InterMedia if we do not obtain timely
       regulatory approvals for our transfer to InterMedia of an Indiana cable
       system and we are unable to transfer replacement systems.
 
   
     The Avalon, Fanch and Falcon acquisitions are expected to close in the
fourth quarter of 1999. We plan to fund these acquisitions with the proceeds of
the offering, Mr. Allen's equity contribution through Vulcan Cable III Inc.,
borrowings under committed credit facilities and equity issued to specified
sellers in the Falcon acquisition. If the new Fanch and Avalon credit facilities
do not close as anticipated, we will need to arrange other sources of financing
to consummate these acquisitions. We cannot assure you that alternate financing
sources will be available. We may as a result be unable to consummate these
acquisitions and may be in default under the related acquisition agreements. We
plan to fund any repurchases of Falcon debentures and notes that are put to us
with the committed Falcon bridge loan facility. If we do not obtain funding
under the Falcon bridge loan facility, we may be in default under the Falcon
debentures and notes that we may be required to repurchase. The Bresnan
acquisition is expected to close in the first quarter of 2000. We will need to
raise the $1.7 billion shortfall by borrowing under credit facilities at Bresnan
that have not yet been arranged and/or by issuing debt or equity securities of
Charter Communications, Inc. or Charter Communications Holding Company.
    
 
     We cannot assure you that we will be able to raise the financing necessary
to consummate our pending acquisitions and to satisfy the obligations described
above. If we are unable to raise the financing necessary to satisfy any or all
of these obligations, we may be unable to close our pending acquisitions and
could be in default under one or more other obligations. In any such case, the
relevant sellers or creditors could initiate legal proceedings against us,
including under bankruptcy and reorganization laws, for any damages they suffer
as a result of our non-performance. Any such action could trigger defaults under
our other obligations, including our credit facilities and debt instruments.
 
     The amounts shown above as current liabilities to Rifkin, Falcon and
Bresnan sellers represent the possible obligations that we may owe to these
sellers based on the possible violations of Section 5 of the Securities Act in
connection with the issuance of membership units to these sellers.
 
(g) Represents the elimination of deferred income tax assets and liabilities.
 
                                       71

<PAGE>   75
 
(h) Represents the elimination of the unamortized historical cost of various
    assets based on the allocation of purchase price (see (e) above) as follows
    (dollars in thousands):
 

<TABLE>
<S>                                                           <C>
Subscriber lists............................................  $  (528,890)
Noncompete agreements.......................................      (14,871)
Deferred financing costs....................................      (59,746)
Goodwill....................................................     (738,127)
Escrow deposit -- Avalon....................................      (50,000)
Other assets................................................      (94,268)
                                                              -----------
                                                               (1,485,902)
Less-accumulated amortization...............................      262,532
                                                              -----------
                                                              $(1,223,370)
                                                              ===========
</TABLE>

 
(i) Represents liabilities retained by the seller.
 
(j) Represents the following (dollars in millions):
 
   

<TABLE>
<S>                                                           <C>
Long-term debt not assumed..................................  $ (2,155.1)
Helicon notes (to be called)................................      (115.0)
Rifkin notes (to be tendered)...............................      (125.0)
Falcon notes and debentures (to be put).....................      (698.7)
Bresnan notes (to be put)...................................      (348.0)
                                                              ----------
     Total pro forma debt not assumed.......................    (3,441.8)
Short-term debt:
  8% liability to Falcon sellers............................       425.0
  8% liability to Rifkin sellers............................       133.3
  8% liability to Bresnan sellers...........................     1,000.0
  Falcon bridge loan facility...............................       705.7
  Avalon credit facilities..................................       169.0
  Fanch credit facilities...................................       875.0
  Anticipated financing.....................................     1,715.3
  Avalon notes..............................................       278.6
                                                              ----------
     Total short-term debt..................................     5,301.9
Long-term debt:
  Charter Operating's credit facilities.....................     1,604.1
  Falcon credit facilities..................................     1,011.0
  Helicon preferred limited liability company interests.....        25.0
                                                              ----------
     Total long-term debt...................................     2,640.1
Pending acquisitions payable................................     2,898.5
                                                              ----------
                                                              $  7,398.7
                                                              ==========
</TABLE>

    
 
     The liabilities to the Bresnan, Falcon and Rifkin sellers represent the
potential obligations to repurchase equity interests issued to the sellers
arising from possible violations of the Securities Act in connection with the
issuance of equity interests to these sellers. The pending acquisitions payable
represents a portion of the purchase price of the pending acquisitions to be
funded by the proceeds of the offering.
 
(k) Represents the elimination of historical liabilities retained by the seller
    and the elimination of Falcon's historical redeemable preferred shares.
 
                                       72

<PAGE>   76
 
(l) Represents the following (dollars in thousands):
 

<TABLE>
<S>                                                           <C>
Elimination of historical equity............................  $  (45,548)
Additional contributions into Charter Communications
  Holding Company:
     Mr. Allen's equity contributions.......................   1,325,000
     Mr. Allen's committed equity contribution..............     750,000
                                                              ----------
                                                              $2,029,452
                                                              ==========
</TABLE>

 
     NOTE B: Offering adjustments include the issuance and sale by Charter
Communications, Inc. of Class A common stock for net proceeds of $2.90 billion,
after deducting underwriting discounts and commissions and estimated offering
expenses, and proceeds of $0.9 million from the sale of Class B common stock,
all applied to reduce the pending acquisition payable. Also included as an
offering adjustment is the effect of consolidating Charter Communications
Holding Company into Charter Communications, Inc. using historical carrying
values based on Charter Communications, Inc.'s purchase of membership units,
including voting control, in Charter Communications Holding Company. This
results in the $5.4 billion of member's equity in Charter Communications Holding
Company becoming minority interest in the consolidated balance sheet of Charter
Communications, Inc.
 
     Minority interest is calculated as follows (dollars in thousands):
 

<TABLE>
<S>                                                           <C>
Historical member's equity..................................  $3,204,122
Expected equity contributions...............................   4,973,500
                                                              ----------
     Pro forma members' equity..............................   8,177,622
     Minority interest percentage...........................          66%
                                                              ----------
Minority interest...........................................  $5,368,064
                                                              ==========
</TABLE>

 
     Total stockholders' equity is calculated as follows (dollars in thousands):
 

<TABLE>
<S>                                                           <C>
Net proceeds from sale of common stock......................  $2,898,500
Reductions in net equity allocated to minority interest.....     (88,942)
                                                              ----------
                                                              $2,809,558
                                                              ==========
</TABLE>

 
     Certain equity interests in Charter Communications Holding Company are
exchangeable into common stock of Charter Communications, Inc. We assume no such
equity interests are exchanged. If all equity holders (other than Charter
Communications, Inc.) in Charter Communications Holding Company exchanged all of
their units for common stock, total stockholders' equity would increase by $5.4
billion and minority interest would decrease by $5.4 billion.
 
                                       73

<PAGE>   77
 
                       SELECTED HISTORICAL FINANCIAL DATA
 
     On July 22, 1999, Charter Communications, Inc. was formed. Charter
Communications, Inc. will be a holding company whose sole asset, upon closing of
the offering and before the closing of the Falcon and Bresnan acquisitions, will
be an approximate 34% economic interest and a 100% voting interest in Charter
Communications Holding Company. This results in the consolidation of Charter
Communications Holding Company and Charter Communications, Inc. Therefore, we
have included below selected historical financial data for Charter
Communications Holding Company.
 
     The selected historical financial data below for the years ended December
31, 1996 and 1997, for the periods from January 1, 1998 through December 23,
1998, from December 24, 1998 through December 31, 1998, and January 1, 1999
through June 30, 1999 are derived from the consolidated financial statements of
Charter Communications Holding Company. The consolidated financial statements of
Charter Communications Holding Company for the years ended December 31, 1996 and
1997, for the periods from January 1, 1998 through December 23, 1998 and from
December 24, 1998 through December 31, 1998, have been audited by Arthur
Andersen LLP, independent public accountants, and are included elsewhere in this
prospectus. The selected historical financial data for the period from October
1, 1995 through December 31, 1995, are derived from the predecessor of Charter
Communications Holding Company's unaudited financial statements and are not
included elsewhere in this prospectus. The selected historical financial data
for the year ended December 31, 1994 and for the period from January 1, 1995
through September 30, 1995 are derived from the unaudited financial statements
of Charter Communications Holding Company's predecessor business and are not
included elsewhere in this prospectus. The information presented below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical financial statements of
Charter Communications Holding Company and related notes included elsewhere in
this prospectus.
 
                                       74

<PAGE>   78
 

<TABLE>
<CAPTION>
                                           PREDECESSOR OF
                                              CHARTER
                                           COMMUNICATIONS
                                          HOLDING COMPANY              CHARTER COMMUNICATIONS HOLDING COMPANY
                                       ----------------------   ----------------------------------------------------
                                                                              YEAR ENDED
                                        YEAR ENDED    1/1/95    10/1/95      DECEMBER 31,       1/1/98     12/24/98      1/1/99
                                       DECEMBER 31,   THROUGH   THROUGH    -----------------   THROUGH     THROUGH      THROUGH
                                           1994       9/30/95   12/31/95    1996      1997     12/23/98    12/31/98     6/30/99
                                       ------------   -------   --------   -------   -------   --------   ----------   ----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                    <C>            <C>       <C>        <C>       <C>       <C>        <C>          <C>
STATEMENT OF OPERATIONS:
Revenues.............................    $  6,584     $5,324    $ 1,788    $14,881   $18,867   $49,731    $   13,713   $  468,993
                                         --------     -------   -------    -------   -------   --------   ----------   ----------
Operating expenses:
  Operating, general and
    administrative...................       3,247      2,581        931      8,123    11,767    25,952         7,134      241,341
  Depreciation and amortization......       2,508      2,137        648      4,593     6,103    16,864         8,318      249,952
  Stock option compensation
    expense..........................          --         --         --         --        --        --           845       38,194
  Management fees/corporate expense
    charges..........................         106        224         54        446       566     6,176           473       11,073
                                         --------     -------   -------    -------   -------   --------   ----------   ----------
    Total operating expenses.........       5,861      4,942      1,633     13,162    18,436    48,992        16,770      540,560
                                         --------     -------   -------    -------   -------   --------   ----------   ----------
Income (loss) from operations........         723        382        155      1,719       431       739        (3,057)     (71,567)
Interest expense.....................          --         --       (691)    (4,415)   (5,120)  (17,277)       (2,353)    (157,669)
Interest income......................          26         --          5         20        41        44           133       10,085
Other income (expense)...............          --         38         --        (47)       25      (728)           --        2,840
                                         --------     -------   -------    -------   -------   --------   ----------   ----------
Income (loss) before extraordinary
  item...............................    $    749     $  420    $  (531)   $(2,723)  $(4,623)  $(17,222)  $   (5,277)  $ (216,311)
                                         ========     =======   =======    =======   =======   ========   ==========   ==========
BALANCE SHEET DATA (AT END OF
  PERIOD):
Total assets.........................    $ 25,511     $26,342   $31,572    $67,994   $55,811   $281,969   $4,335,527   $8,687,474
Total debt...........................      10,194     10,480     28,847     59,222    41,500   274,698     2,002,206    5,134,310
Member's equity (deficit)............      14,822     15,311        971      2,648    (1,975)   (8,397)    2,147,379    3,204,122
</TABLE>

 
                                       75

<PAGE>   79
 

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
 
     Reference is made to the "-- Certain Trends and Uncertainties" section
below in this Management's Discussion and Analysis for a discussion of important
factors that could cause actual results to differ from expectations and
non-historical information contained herein.
 
INTRODUCTION
 
     We do not believe that our historical financial condition and results of
operations are accurate indicators of future results because of recent and
pending significant events, including:
 
     (1) the acquisition by Mr. Allen of CCA Group, Charter Communications
         Properties Holdings, LLC and CharterComm Holdings LLC, referred to
         together with their subsidiaries as the Charter companies;
 
     (2) the merger of Marcus Holdings with and into Charter Holdings;
 
     (3) the recent and pending acquisitions of Charter Communications Holding
         Company and its direct and indirect subsidiaries;
 
     (4) the refinancing of the previous credit facilities of the Charter
         companies; and
 
     (5) the purchase of publicly held notes that had been issued by several of
         the direct and indirect subsidiaries of Charter Communications Holding
         Company.
 
Provided below is a discussion of our organizational history consisting of:
 
     (1) the operation and development of the Charter companies prior to the
         acquisition by Mr. Allen, together with the acquisition of the Charter
         companies by Mr. Allen;
 
     (2) the merger of Marcus Holdings with and into Charter Holdings;
 
     (3) the recent and pending acquisitions of Charter Communications Holding
         Company and its direct and indirect subsidiaries; and
 
     (4) the formation of Charter Communications, Inc.
 
ORGANIZATIONAL HISTORY
 
     Prior to the acquisition of the Charter companies by Mr. Allen on December
23, 1998, and the merger of Marcus Holdings with and into Charter Holdings on
April 7, 1999, the cable systems of the Charter and Marcus companies were
operated under four groups of companies. Three of these groups were comprised of
companies that were managed by Charter Investment, Inc. prior to the acquisition
of the Charter companies by Mr. Allen and the fourth group was comprised of
companies that were subsidiaries of Marcus Holdings.
 
                                       76

<PAGE>   80
 
     The following is an explanation of how:
 
     (1) Charter Communications Properties; the operating companies that
         formerly comprised CCA Group; CharterComm Holdings; and the Marcus
         companies became wholly owned subsidiaries of Charter Operating;
 
     (2) Charter Operating became a wholly owned subsidiary of Charter Holdings;
 
     (3) Charter Holdings became a wholly owned subsidiary of Charter
         Communications Holding Company; and
 
     (4) Charter Communications Holding Company became a wholly owned subsidiary
         of Charter Investment, Inc.
 
THE CHARTER COMPANIES
 
     Prior to Charter Investment, Inc. acquiring the remaining interests that it
did not previously own in two of the three groups of Charter companies, namely
CCA Group and CharterComm Holdings, as described below, the operating
subsidiaries of the three groups of Charter companies were parties to separate
management agreements with Charter Investment, Inc. under which Charter
Investment, Inc. provided management and consulting services. Prior to our
acquisition by Mr. Allen, the Charter companies were as follows:
 
     (1) Charter Communications Properties Holdings, LLC
 
         Charter Communications Properties Holdings, LLC was a wholly owned
     subsidiary of Charter Investment, Inc. The primary subsidiary of Charter
     Communications Properties Holdings, which owned the cable systems, was
     Charter Communications Properties. In connection with Mr. Allen's
     acquisition on December 23, 1998, Charter Communications Properties
     Holdings was merged out of existence. Charter Communications Properties
     became a direct, wholly owned subsidiary of Charter Investment, Inc. In May
     1998, Charter Communications Properties acquired certain cable systems from
     Sonic Communications, Inc. for a total purchase price, net of cash
     acquired, of $228.4 million, including $60.9 million of assumed debt.
 
     (2) CCA Group
 
         The controlling interests in CCA Group were held by affiliates of Kelso
     & Co. Charter Investment, Inc. had only a minority interest. On December
     21, 1998, prior to Mr. Allen's acquisition, the remaining interests it did
     not previously own in CCA Group were acquired by Charter Investment, Inc.
     from the Kelso affiliates. Consequently, the companies comprising CCA Group
     became wholly owned subsidiaries of Charter Investment, Inc.
 
         CCA Group consisted of the following three sister companies:
 
              (a) CCT Holdings, LLC,
 
              (b) CCA Holdings, LLC, and
 
              (c) Charter Communications Long Beach, LLC.
 
                                       77

<PAGE>   81
 
         The cable systems were owned by the various subsidiaries of these three
     sister companies. The financial statements for these three sister companies
     historically were combined and the term "CCA Group" was assigned to these
     combined entities. In connection with Mr. Allen's acquisition on December
     23, 1998, the three sister companies and some of the non-operating
     subsidiaries were merged out of existence, leaving certain of the operating
     subsidiaries owning all of the cable systems under this former group. These
     operating subsidiaries became indirect, wholly owned subsidiaries of
     Charter Investment, Inc.
 
     (3) CharterComm Holdings, LLC
 
         The controlling interests in CharterComm Holdings were held by
     affiliates of Charterhouse Group International Inc. Charter Investment,
     Inc. had only a minority interest. On December 21, 1998, prior to Mr.
     Allen's acquisition, the remaining interests it did not previously own in
     CharterComm Holdings were acquired by Charter Investment, Inc. from the
     Charterhouse affiliates. Consequently, CharterComm Holdings became a wholly
     owned subsidiary of Charter Investment, Inc.
 
         The cable systems were owned by the various subsidiaries of CharterComm
     Holdings. In connection with Mr. Allen's acquisition on December 23, 1998,
     some of the non-operating subsidiaries were merged out of existence,
     leaving certain of the operating subsidiaries owning all of the cable
     systems under this former group. CharterComm Holdings was merged out of
     existence. Charter Communications, LLC became a direct, wholly owned
     subsidiary of Charter Investment, Inc.
 
     The acquisition by Mr. Allen became effective on December 23, 1998, through
a series of transactions in which Mr. Allen acquired approximately 94% of the
equity interests of Charter Investment, Inc. for an aggregate purchase price of
$2.2 billion, excluding $2.0 billion in assumed debt. Charter Communications
Properties, the operating companies that formerly comprised CCA Group and
CharterComm Holdings were contributed to Charter Operating subsequent to Mr.
Allen's acquisition. Charter Communications Properties is deemed to be our
predecessor. Consequently, the contribution of Charter Communications Properties
was accounted for as a reorganization under common control. Accordingly, the
accompanying financial statements for periods prior to December 24, 1998 include
the accounts of Charter Communications Properties. The contributions of the
operating companies that formerly comprised CCA Group and CharterComm Holdings
were accounted for in accordance with purchase accounting. Accordingly, the
financial statements for periods after December 23, 1998 include the accounts of
Charter Communications Properties, CCA Group and CharterComm Holdings.
 
     In February 1999, Charter Holdings was formed as a wholly owned subsidiary
of Charter Investment, Inc., and Charter Operating was formed as a wholly owned
subsidiary of Charter Holdings. All of Charter Investment, Inc.'s direct
interests in the entities described above were transferred to Charter Operating.
All of the prior management agreements were terminated and a new management
agreement was entered into between Charter Investment, Inc. and Charter
Operating.
 
                                       78

<PAGE>   82
 
     In May 1999, Charter Communications Holding Company was formed as a wholly
owned subsidiary of Charter Investment, Inc. All of Charter Investment, Inc.'s
interests in Charter Holdings were transferred to Charter Communications Holding
Company.
 
MARCUS COMPANIES
 
     In April 1998, Mr. Allen acquired approximately 99% of the non-voting
economic interests in Marcus Cable, and agreed to acquire the remaining
interests. The owner of the remaining partnership interests retained voting
control of Marcus Cable. In October 1998, Marcus Cable entered into a management
consulting agreement with Charter Investment, Inc., pursuant to which Charter
Investment, Inc. provided management and consulting services to Marcus Cable and
its subsidiaries which own the cable systems. This agreement placed the Marcus
cable systems under common management with the cable systems of the Charter
companies acquired by Mr. Allen in December 1998.
 
     In March 1999, all of Mr. Allen's interests in Marcus Cable were
transferred to Marcus Holdings, a then newly formed company. Later in March
1999, Mr. Allen acquired the remaining interests in Marcus Cable, including
voting control, which interests were transferred to Marcus Holdings. In April
1999, Mr. Allen merged Marcus Holdings into Charter Holdings, and the operating
subsidiaries of Marcus Holdings and all of the cable systems they owned came
under the ownership of Charter Holdings and, in turn, Charter Operating. For
financial reporting purposes, the merger of Marcus Holdings with and into
Charter Holdings was accounted for as an acquisition of Marcus Holdings
effective March 31, 1999, and accordingly, the results of operations of Marcus
Holdings have been included in the financial statements of Charter
Communications Holding Company since that date.
 
ACQUISITIONS
 
     In the second, third and fourth quarters of 1999, direct or indirect
subsidiaries of Charter Holdings acquired Renaissance, American Cable, Greater
Media systems, Helicon, Vista, a cable system of Cable Satellite, Rifkin and
InterMedia for a total purchase price of approximately $4.3 billion which
included assumed debt of $351 million. See "Business -- Acquisitions" and
"Description of Certain Indebtedness". These acquisitions were funded through
excess cash from the issuance by Charter Holdings of senior notes, borrowings
under our credit facilities, capital contributions to Charter Communications
Holding Company by Mr. Allen and the assumption of the outstanding Renaissance,
Helicon and Rifkin notes.
 
     As part of the transaction with InterMedia, we agreed to "swap" some of our
non-strategic cable systems located in Indiana, Montana, Utah and northern
Kentucky, representing 144,000 customers. The InterMedia systems serve
approximately 412,000 customers in Georgia, North Carolina, South Carolina and
Tennessee. We have transferred 114,000 customers to InterMedia in connection
with this swap. Approximately 30,000 customers are yet to be transferred pending
the necessary regulatory approvals. See "Business -- Acquisitions -- InterMedia
Systems".
 
                                       79

<PAGE>   83
 
     In addition to these acquisitions, since the beginning of 1999, Charter
Communications Holding Company and its subsidiaries have entered into definitive
agreements to acquire the Avalon, Fanch, Falcon and Bresnan cable systems. All
of these acquisitions are set forth in the table below. These acquisitions are
expected to be funded through the net proceeds of the offering, borrowings under
credit facilities, additional equity and debt financings and the assumption of
outstanding notes issued by Avalon and Bresnan. Not all of the funding necessary
to complete these acquisitions has been arranged. See "-- Liquidity and Capital
Resources" and "Description of Certain Indebtedness".
 
     Under the Falcon purchase agreement, specified Falcon sellers have agreed
to receive a portion of the Falcon purchase price in the form of membership
units in Charter Communications Holding Company ranging from a minimum with an
estimated value of $425 million to a maximum of $550 million. Under the Bresnan
purchase agreement, the Bresnan sellers have agreed to receive $1.0 billion of
the Bresnan purchase price in the form of membership units in Charter
Communications Holding Company, which, as of the closing of the offering, would
equal approximately 6.7% of the total membership units in Charter Communications
Holding Company. See "Business -- Acquisitions". In addition, certain Rifkin
sellers received $133.3 million of the purchase price in the form of preferred
equity of Charter Communications Holding Company. Under the Helicon purchase
agreement, $25 million of the purchase price was paid in the form of preferred
limited liability company interests of Charter-Helicon, LLC, a direct wholly
owned subsidiary of Charter Communications, LLC, itself an indirect subsidiary
of Charter Communications Holding Company.
 

<TABLE>
<CAPTION>
                                                                                 AS OF AND FOR
                                                                              THE SIX MONTHS ENDED
                                                                                 JUNE 30, 1999
                                        ACTUAL OR                         ----------------------------
                                       ANTICIPATED        PURCHASE
                                       ACQUISITION          PRICE                          REVENUE
ACQUISITION                                DATE         (IN MILLIONS)      CUSTOMERS    (IN THOUSANDS)
-----------                            -----------      -------------      ---------    --------------
<S>                                  <C>               <C>                <C>           <C>
Renaissance........................        4/99        $           459       129,000       $ 30,807
American Cable.....................        5/99                    240        69,000         17,958
Greater Media systems..............        6/99                    500       175,000         42,348
Helicon............................        7/99                    550       173,000         42,956
Vista..............................        7/99                    126        28,000          7,101
Cable Satellite....................        8/89                     22         9,000          2,056
Rifkin.............................        9/99                  1,460       461,000        105,592
InterMedia systems.................       10/99                   904+       412,000        100,644
                                                          systems swap      (144,000)(a)
                                                                          -----------
                                                                             268,000
Avalon.............................  4th Quarter 1999              845       260,000         51,769
Fanch..............................  4th Quarter 1999            2,400       537,000         98,931
Falcon.............................  4th Quarter 1999            3,550     1,008,000        212,205
Bresnan............................  1st Quarter 2000            3,100       656,000        137,291
                                                       ---------------     ---------       --------
     Total.........................                    $        14,156     3,773,000       $849,658
                                                       ===============     =========       ========
</TABLE>

 
---------------
 
(a) Represents the number of customers served by cable systems that we agreed to
    transfer to InterMedia. This number includes 30,000 customers served by an
    Indiana cable system that we did
 
                                       80

<PAGE>   84
 
    not transfer at the time of the InterMedia closing because the necessary
    regulatory approvals were still pending.
 
     The systems acquired pursuant to these recent and pending acquisitions
served, in the aggregate, approximately 3.8 million customers as of June 30,
1999. In addition, we are negotiating with several other potential acquisition
and swapping candidates whose systems would further complement our regional
operating clusters.
 
CHARTER COMMUNICATIONS, INC.
 
     Charter Communications, Inc. was formed as a holding company in July 1999.
In connection with the offering, Charter Communications, Inc. will issue:
 
     - 170,000,000 shares of Class A common stock in the offering, and an
       additional 25,500,000 shares of Class A common stock if the underwriters
       exercise their over-allotment option in full; and
 
     - 50,000 shares of high vote Class B common stock to Mr. Allen.
 
     Charter Communications, Inc. will use all of the net proceeds of the
offering and the sale of shares of Class B common stock to purchase Charter
Communications Holding Company membership units, except for a portion of the net
proceeds of the offering which will be retained by Charter Communications, Inc.
to acquire a portion of the equity interests in the Avalon acquisition. Charter
Communications, Inc. has committed to contribute these equity interests to
Charter Communications Holding Company in exchange for membership interests in
Charter Communications Holding Company. See "Use of Proceeds". Immediately
following the offering, Mr. Allen will control approximately 95% of the total
voting power of Charter Communications, Inc.'s outstanding capital stock and
will control Charter Communications Holding Company and its direct and indirect
subsidiaries.
 
     The sale of shares of Class A common stock in the offering and the sale of
the shares of Class B common stock as described above will affect us in many
ways, including the following:
 
     - Our Management.   The current management agreement between Charter
       Operating and Charter Investment, Inc. will be amended and assigned from
       Charter Investment, Inc. to Charter Communications, Inc. Charter
       Communications, Inc. and Charter Communications Holding Company will
       enter into a new agreement relating to the management of the cable
       systems of the subsidiaries of Charter Communications Holding Company. In
       addition, Charter Investment, Inc. and Charter Communications, Inc. will
       enter into a mutual services agreement. These agreements are described
       under the heading "Certain Relationships and Related Transactions".
 
     - Option Plan.   After the offering, each membership unit in Charter
       Communications Holding Company received as a result of an exercise of an
       option issued under the Charter Communications Holding Company option
       plan will automatically be exchanged for one share of Class A common
       stock of Charter
 
                                       81

<PAGE>   85
 
       Communications, Inc. See "Management -- Option Plan" for additional
       information regarding the option plan.
 
     - Business Activities.   Upon the completion of the offering, we will not
       be permitted to engage in any business activity other than the cable
       transmission of video, audio and data unless Mr. Allen first consents to
       our pursuing that particular business activity. See "Risk Factors -- 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" and "Certain Relationships and
       Related Transactions -- Allocation of Business Opportunities with Mr.
       Allen".
 
     - Special Loss Allocation.   Charter Communications Holding Company's
       limited liability company agreement provides that through the end of
       2003, tax losses of Charter Communications Holding Company that would
       otherwise have been allocated to Charter Communications, Inc. based
       generally on its percentage of outstanding membership units will be
       allocated instead to the membership units held by Vulcan Cable III Inc.
       and Charter Investment, Inc. The limited liability company agreement also
       provides that beginning at the time that Charter Communications Holding
       Company first becomes profitable, as determined under applicable federal
       income tax rules for determining book profits, tax profits that would
       otherwise have been allocated to Charter Communications, Inc. based
       generally on its percentage of outstanding membership units will instead
       be allocated to the membership units held by Vulcan Cable III Inc. and
       Charter Investment, Inc. The purpose of these arrangements is to allow
       Mr. Allen to take advantage, for tax purposes, of the losses expected to
       be generated by Charter Communications Holding Company. These
       arrangements should not materially affect our results of operations. See
       "Description of Capital Stock and Membership Units -- Special Allocation
       of Losses".
 
OVERVIEW
 
     Approximately 85% of our historical revenues for the six months ended June
30, 1999 are attributable to monthly subscription fees charged to customers for
our basic, expanded basic and premium cable television programming services,
equipment rental and ancillary services provided by our cable television
systems. In addition, we derive other revenues from installation and
reconnection fees charged to customers to commence or reinstate service,
pay-per-view programming, where users are charged a fee for individual programs
requested, advertising revenues and commissions related to the sale of
merchandise by home shopping services. We have generated increased revenues in
each of the past three fiscal years, primarily through internal customer growth,
basic and expanded tier rate increases and acquisitions as well as innovative
marketing, such as our MVP package of premium services. The MVP package entitles
customers to receive a substantial discount on bundled premium services of HBO,
Showtime, Cinemax and The Movie Channel. The MVP package has increased premium
revenue by 3.4% and premium cash flow by 5.5% in the initial nine months of this
program. We are beginning to offer our customers several other services, which
are expected to significantly
 
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<PAGE>   86
 
contribute to our revenues. One of these services is digital cable, which
provides subscribers with additional programming options. We are also offering
high speed Internet access to the World Wide Web through cable modems. Cable
modems can be attached to personal computers so that users can send and receive
data over cable systems. Our television based Internet access allows us to offer
the services provided by WorldGate Communications, Inc., which provides users
with TV based e-mail and other Internet access.
 
     Our expenses primarily consist of operating costs, general and
administrative expenses, depreciation and amortization expense and management
fees/corporate expense charges. Operating costs primarily include programming
costs, cable service related expenses, marketing and advertising costs,
franchise fees and expenses related to customer billings. Programming costs
account for approximately 46% of our operating costs. Programming costs have
increased in recent years and are expected to continue to increase due to
additional programming being provided to customers, increased cost to produce or
purchase cable programming, inflation and other factors affecting the cable
television industry. In each year we have operated, our costs to acquire
programming have exceeded customary inflationary increases. Significant factors
with respect to increased programming costs are the rate increases and
surcharges imposed by national and regional sports networks directly tied to
escalating costs to acquire programming for professional sports packages in a
competitive market. We have benefited in the past from our membership in an
industry cooperative that provides members with volume discounts from
programming networks. We believe our membership has kept increases in our
programming costs below what the increases would otherwise have been. We also
believe that we should derive additional discounts from programming networks due
to our increased size. Finally, we were able to negotiate favorable terms with
premium networks in conjunction with the premium packages we offer, which
minimized the impact on margins and provided substantial volume incentives to
grow the premium category. Although we believe that we will be able to pass
future increases in programming costs through to customers, there can be no
assurance that we will be able to do so.
 
     General and administrative expenses primarily include accounting and
administrative personnel and professional fees. Depreciation and amortization
expense relates to the depreciation of our tangible assets and the amortization
of our franchise costs. Management fees/corporate expense charges are fees paid
to or charges from Charter Investment, Inc. for corporate management and
consulting services. Charter Holdings records actual corporate expense charges
incurred by Charter Investment, Inc. on behalf of Charter Holdings. Prior to the
acquisition of us by Mr. Allen, the CCA Group and CharterComm Holdings recorded
management fees payable to Charter Investment, Inc. equal to 3.0% to 5.0% of
gross revenues plus certain expenses. In October 1998, Charter Investment, Inc.
began managing the cable operations of Marcus Holdings under a management
agreement, which was terminated in February 1999 and replaced by a master
management fee arrangement. The Charter Operating credit facilities limit
management fees to 3.5% of gross revenues.
 
     In connection with the offering, the existing management agreement between
Charter Investment, Inc. and Charter Operating will be assigned to Charter
Communica-
 
                                       83

<PAGE>   87
 
tions, Inc. and Charter Communications, Inc. will enter into a new management
agreement with Charter Communications Holding Company. This management agreement
will be substantially similar to the existing management agreement with Charter
Operating except that Charter Communications, Inc. will only be entitled to
receive reimbursement of its expenses as consideration for its providing
management services. See "Certain Relationships and Related Transactions".
 
     We have had a history of net losses and expect to continue to report net
losses for the foreseeable future. The principal reasons for our prior and
anticipated net losses include depreciation and amortization expenses associated
with our acquisitions, capital expenditures related to construction and
upgrading of our systems, and interest costs on borrowed money. We cannot
predict what impact, if any, continued losses will have on our ability to
finance our operations in the future.
 
RESULTS OF OPERATIONS
 
     The following discusses the results of operations for:
 
     (1) Charter Communications Holding Company, comprised of Charter
         Communications Properties, for the six months ended June 30, 1998, and
 
     (2) Charter Communications Holding Company, comprised of the following for
         the six months ended June 30, 1999:
 
         - Charter Communications Properties, CCA Group and CharterComm Holdings
           for the entire period;
 
         - Marcus Holdings for the period from March 31, 1999 (the date Mr.
           Allen acquired voting control) through June 30, 1999;
 
         - Renaissance for the period from May 1, 1999 (the acquisition date)
           through June 30, 1999; and
 
         - American Cable for the period from May 8, 1999 (the acquisition date)
           through June 30, 1999.
 
                                       84

<PAGE>   88
 
     The following table sets forth the percentages of revenues that items in
the statements of operations constitute for the indicated periods.
 

<TABLE>
<CAPTION>
                                                                  SIX MONTHS ENDED
                                                     ------------------------------------------
                                                          6/30/99                 6/30/98
                                                     ------------------      ------------------
                                                               (DOLLARS IN THOUSANDS)
<S>                                                  <C>         <C>         <C>         <C>
STATEMENTS OF OPERATIONS
Revenues...........................................  $ 468,993    100.0%     $ 15,129     100.0%
                                                     ---------   ------      --------    ------
Operating expenses:
  Operating, general and administrative............    241,341     51.5         8,378      55.4
  Depreciation and amortization....................    249,952     53.3         5,312      35.1
  Stock option compensation expense................     38,194      8.1            --        --
  Management fees/corporate expense charges........     11,073      2.4           628       4.1
                                                     ---------   ------      --------    ------
          Total operating expenses.................    540,560    115.3        14,318      94.6
                                                     ---------   ------      --------    ------
Income (loss) from operations......................    (71,567)   (15.3)          811       5.4
Interest income....................................     10,085      2.2            14       0.1
Interest expense...................................   (157,669)   (33.6)       (5,618)    (37.1)
Other income.......................................      2,840      0.6             3        --
                                                     ---------   ------      --------    ------
Loss before extraordinary item.....................   (216,311)   (46.1)       (4,790)    (31.6)
Extraordinary item-loss from early extinguishment
  of debt..........................................      7,794      1.7            --        --
                                                     ---------   ------      --------    ------
          Net loss.................................  $(224,105)   (47.8)%    $ (4,790)    (31.6)%
                                                     =========   ======      ========    ======
</TABLE>

 
PERIOD FROM JANUARY 1, 1999 THROUGH JUNE 30, 1999
COMPARED TO PERIOD FROM JANUARY 1, 1998 THROUGH JUNE 30, 1998
 
     REVENUES.   Revenues increased by $453.9 million, or 3,000%, from $15.1
million for the period from January 1, 1998 through June 30, 1998 to $469.0
million for the period from January 1, 1999 through June 30, 1999. The increase
in revenues primarily resulted from the acquisitions of CCA Group, CharterComm
Holdings, Sonic, Marcus Holdings and Renaissance. Additional revenues from these
entities included for the period ended June 30, 1999 were $185.1 million, $108.9
million, $26.2 million, $128.1 million and $10.4 million, respectively.
 
     OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES.   Operating, general and
administrative expenses increased by $232.9 million, or 2,781%, from $8.4
million for the period from January 1, 1998 through June 30, 1998 to $241.3
million for the period from January 1, 1999 through June 30, 1999. This increase
was due primarily to the acquisitions of the CCA Group, CharterComm Holdings,
Sonic, Marcus Holdings and Renaissance. Additional operating, general and
administrative expenses from these entities included for the period from January
1, 1999 through June 30, 1999 were $93.4 million, $54.2 million, $13.7 million,
$69.5 million and $4.9 million, respectively.
 
     DEPRECIATION AND AMORTIZATION.   Depreciation and amortization expense
increased by $244.7 million, or 4,605%, from $5.3 million for the period from
January 1, 1998 through June 30, 1998 to $250.0 million for the period from
January 1, 1999 through June 30, 1999. There was a significant increase in
amortization expense resulting from the acquisitions of the CCA Group,
CharterComm Holdings, Sonic, Marcus Holdings
 
                                       85

<PAGE>   89
 
and Renaissance. Additional depreciation and amortization expense from these
entities included for the period ended June 30, 1999 were $100.7 million, $67.4
million, $5.3 million, $65.6 million and $5.8 million, respectively.
 
     STOCK OPTION COMPENSATION EXPENSE.   Stock option compensation expense for
the period from January 1, 1999 through June 30, 1999 was $38.2 million due to
the granting of options to employees in December 1998, February 1999 and April
1999. The exercise prices of the options are less than the estimated fair values
of the underlying membership units on the date of grant, resulting in
compensation expense accrued over the vesting period of each grant that varies
from four to five years.
 
     MANAGEMENT FEES/CORPORATE EXPENSE CHARGES.   Management fees/corporate
expense charges increased by $10.5 million, or 1,663%, from $0.6 million for the
period from January 1, 1998 through June 30, 1998 to $11.1 million for the
period from January 1, 1999 through June 30, 1999. The increase from the period
from January 1, 1998 through June 30, 1998 compared to the period from January
1, 1999 through June 30, 1999 was the result of the acquisitions of CCA Group,
CharterComm Holdings, Sonic, Marcus Holdings, Renaissance and American Cable.
 
     INTEREST INCOME.   Interest income increased by $10.1 million from $14,000
for the period from January 1, 1998 to June 30, 1998 to $10.1 million for the
period from January 1, 1999 to June 30, 1999. The increase was primarily due to
investing excess cash that resulted from required credit facilities draw downs.
 
     INTEREST EXPENSE.   Interest expense increased by $152.1 million, or
2,706%, from $5.6 million for the period from January 1, 1998 through June 30,
1998 to $157.7 million for the period from January 1, 1999 through June 30,
1999. This increase resulted primarily from interest on the notes at Charter
Holdings, the credit facilities at Charter Operating and the financing of the
acquisitions of CCA Group and CharterComm Holdings. The interest expenses
resulting from each of these transactions were $68.7 million, $44.9 million,
$12.8 million and $11.3 million, respectively.
 
     OTHER INCOME.   Other income increased by $2.8 million from $3,000 for the
period from January 1, 1998 to June 30, 1998 to $2.8 million for the period from
January 1, 1999 to June 30, 1999. The increase was primarily due to the gain on
the sale of certain aircrafts.
 
     NET LOSS.   Net loss increased by $219.3 million, or 4,579%, from $4.8
million for the period from January 1, 1998 through June 30, 1998 to $224.1
million for the period from January 1, 1998 through June 30, 1999. The increase
in revenues that resulted from the acquisitions of CCA Group, CharterComm
Holdings, Sonic and Marcus Holdings was not sufficient to offset the operating
expenses associated with the acquired systems and loss from early extinguishment
of debt.
 
                                       86

<PAGE>   90
 
RESULTS OF OPERATIONS
 
     The following discusses the results of operations for:
 
     (1) Charter Communications Holding Company, comprised of Charter
         Communications Properties, for the period from January 1, 1998 through
         December 23, 1998 and for the years ended December 31, 1997 and 1996,
         and
 
     (2) Charter Communications Holding Company, comprised of Charter
         Communications Properties, CCA Group and CharterComm Holdings, for the
         period from December 24, 1998 through December 31, 1998.
 
     The following table sets forth the percentages of revenues that items in
the statements of operations constitute for the indicated periods.
 

<TABLE>
<CAPTION>
                                                               YEAR ENDED
                                                              DECEMBER 31,                     1/1/98              12/24/98
                                                  ------------------------------------         THROUGH             THROUGH
                                                        1996                1997              12/23/98             12/31/98
                                                  ----------------    ----------------    -----------------    ----------------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                               <C>        <C>      <C>        <C>      <C>         <C>      <C>        <C>
STATEMENTS OF OPERATIONS
Revenues........................................  $14,881    100.0%   $18,867    100.0%   $ 49,731    100.0%   $13,713    100.0%
                                                  -------    -----    -------    -----    --------    -----    -------    -----
Operating expenses:
 Operating costs................................    5,888     39.5%     9,157     48.5%     18,751     37.7%     6,168     45.0%
 General and administrative costs...............    2,235     15.0%     2,610     13.8%      7,201     14.5%       966      7.0%
 Depreciation and amortization..................    4,593     30.9%     6,103     32.4%     16,864     33.9%     8,318     60.7%
 Stock option compensation expense..............       --       --         --       --          --       --        845      6.2%
 Management fees/corporate expense charges......      446      3.0%       566      3.0%      6,176     12.4%       473      3.4%
                                                  -------    -----    -------    -----    --------    -----    -------    -----
 Total operating expenses.......................   13,162     88.4%    18,436     97.7%     48,992     98.5%    16,770    122.3%
                                                  -------    -----    -------    -----    --------    -----    -------    -----
Income (loss) from operations...................    1,719     11.6%       431      2.3%        739      1.5%    (3,057)   (22.3%)
Interest income.................................       20      0.1%        41      0.2%         44      0.1%       133      1.0%
Interest expense................................   (4,415)   (29.7%)   (5,120)   (27.1%)   (17,277)   (34.7%)   (2,353)   (17.2%)
Other income (expense)..........................      (47)    (0.3%)       25      0.1%       (728)    (1.5%)       --       --
                                                  -------    -----    -------    -----    --------    -----    -------    -----
Net loss........................................  $(2,723)   (18.3%)  $(4,623)   (24.5%)  $(17,222)   (34.6%)  $(5,277)   (38.5%)
                                                  =======    =====    =======    =====    ========    =====    =======    =====
</TABLE>

 
PERIOD FROM DECEMBER 24, 1998 THROUGH DECEMBER 31, 1998
 
     This period is not comparable to any other period presented. The financial
statements represent eight days of operations. This period not only contains the
results of operations of Charter Communications Properties, but also the results
of operations of those entities purchased in the acquisition of the Charter
companies by Mr. Allen. As a result, no comparison of the operating results for
this eight-day period is presented.
 
PERIOD FROM JANUARY 1, 1998 THROUGH DECEMBER 23, 1998 COMPARED TO 1997
 
     REVENUES.   Revenues increased by $30.8 million, or 163.6%, from $18.9
million in 1997 to $49.7 million for the period from January 1, 1998 through
December 23, 1998. The increase in revenues primarily resulted from the
acquisition of Sonic whose revenues for that period were $29.8 million.
 
     OPERATING EXPENSES.   Operating expenses increased by $9.6 million, or
104.8%, from $9.2 million in 1997 to $18.8 million for the period from January
1, 1998 through December 23, 1998. This increase was due primarily to the
acquisition of Sonic, whose
 
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<PAGE>   91
 
operating expenses for that period were $9.4 million, partially offset by the
loss of $1.4 million on the sale of a cable system in 1997.
 
     GENERAL AND ADMINISTRATIVE EXPENSES.   General and administrative expenses
increased by $4.6 million, or 175.9%, from $2.6 million in 1997 to $7.2 million
for the period from January 1, 1998 through December 23, 1998. This increase was
due primarily to the acquisition of Sonic whose general and administrative
expenses for that period were $6.0 million.
 
     DEPRECIATION AND AMORTIZATION.   Depreciation and amortization expense
increased by $10.8 million, or 176.3%, from $6.1 million in 1997 to $16.9
million for the period from January 1, 1998 through December 23, 1998. There was
a significant increase in amortization resulting from the acquisition of Sonic.
Incremental depreciation and amortization expenses of the acquisition of Sonic
were $9.9 million.
 
     MANAGEMENT FEES/CORPORATE EXPENSE CHARGES.   Corporate expense charges
increased by $5.6 million, or 991.2% from $0.6 million in 1997 to $6.2 million
for the period from January 1, 1998 through December 23, 1998. The increase from
1997 compared to the period from January 1, 1998 through December 23, 1998 was
the result of additional Charter Investment, Inc. charges related to equity
appreciation rights plans of $3.8 million for the period from January 1, 1998
through December 23, 1998 and an increase of $0.9 million in management services
provided by Charter Investment, Inc. as a result of the acquisition of Sonic.
 
     INTEREST EXPENSE.   Interest expense increased by $12.2 million, or 237.4%,
from $5.1 million in 1997 to $17.3 million for the period from January 1, 1998
through December 23, 1998. This increase resulted primarily from the
indebtedness of $220.6 million, including a note payable for $60.9 million,
incurred in connection with the acquisition of Sonic resulting in additional
interest expense.
 
     NET LOSS.   Net loss increased by $12.6 million, or 272.5%, from $4.6
million in 1997 to $17.2 million for the period from January 1, 1998 through
December 23, 1998. The increase in revenues that resulted from cable television
customer growth was not sufficient to offset the operating expenses related to
the acquisition of Sonic.
 
1997 COMPARED TO 1996
 
     REVENUES.   Revenues increased by $4.0 million, or 26.8%, from $14.9
million in 1996 to $18.9 million in 1997. The primary reason for this increase
is the acquisition of five cable systems in 1996 that increased customers by
58.9%.
 
     Revenues of Charter Communications Properties, excluding the activity of
any other systems acquired during the periods, increased by $0.7 million, or
8.9%, from $7.9 million in 1996 to $8.6 million in 1997.
 
     OPERATING EXPENSES.   Operating expenses increased by $3.3 million, or
55.5%, from $5.9 million in 1996 to $9.2 million in 1997. This increase was
primarily due to the acquisitions of the cable systems in 1996 and the loss of
$1.4 million on the sale of a cable system in 1997.
 
                                       88

<PAGE>   92
 
     GENERAL AND ADMINISTRATIVE EXPENSES.   General and administrative expenses
increased by $0.4 million, or 16.8%, from $2.2 million in 1996 to $2.6 million
in 1997. This increase was primarily due to the acquisitions of the cable
systems in 1996.
 
     DEPRECIATION AND AMORTIZATION.   Depreciation and amortization expense
increased by $1.5 million, or 32.9%, from $4.6 million in 1996 to $6.1 million
in 1997. There was a significant increase in amortization resulting from the
acquisitions of the cable systems in 1996.
 
     MANAGEMENT FEES/CORPORATE EXPENSE CHARGES.   Corporate expense charges
increased by $0.2 million, or 26.9%, from $0.4 million in 1996 to $0.6 million
in 1997. These fees were 3.0% of revenues in both 1996 and 1997.
 
     INTEREST EXPENSE.   Interest expense increased by $0.7 million, or 16.0%,
from $4.4 million in 1996 to $5.1 million in 1997. This increase resulted
primarily from the indebtedness incurred in connection with the acquisitions of
several cable systems in 1996.
 
     NET LOSS.   Net loss increased by $1.9 million, or 69.8%, from $2.7 million
in 1996 to $4.6 million in 1997. The increase in net loss is primarily related
to the $1.4 million loss on the sale of a cable system.
 
OUTLOOK
 
     Our business strategy emphasizes the increase of our operating cash flow by
increasing our customer base and the amount of cash flow per customer. We
believe that there are significant advantages in increasing the size and scope
of our operations, including:
 
     - improved economies of scale in management, marketing, customer service,
       billing and other administrative functions;
 
     - reduced costs for our cable systems and our infrastructure in general;
 
     - increased leverage for negotiating programming contracts; and
 
     - increased influence on the evolution of important new technologies
       affecting our business.
 
     We seek to "cluster" cable systems in suburban and ex-urban areas
surrounding selected metropolitan markets. We believe that such "clustering"
offers significant opportunities to increase operating efficiencies and to
improve operating margins and cash flow by spreading fixed costs over an
expanding subscriber base. In addition, we believe that by concentrating
"clusters" in markets, we will be able to generate higher growth in revenues and
operating cash flow. Through strategic acquisitions and "swaps" of cable
systems, we seek to enlarge the coverage of our current areas of operations,
and, if feasible, develop "clusters" in new geographic areas within existing
regions. Swapping of cable systems allows us to trade systems that do not
coincide with our operating strategy while gaining systems that meet our
objectives. Several significant swaps have been announced. These swaps have
demonstrated the industry's trend to cluster operations. To date, Charter
Holdings has participated in one swap in connection with
 
                                       89

<PAGE>   93
 
the transaction with InterMedia. We are currently negotiating other possible
swap transactions.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Our business requires significant cash to fund acquisitions, capital
expenditures, debt service costs and ongoing operations. We have historically
funded and expect to fund future liquidity and capital requirements through cash
flows from operations, equity contributions, borrowings under our credit
facilities and debt and equity financings.
 
     Our historical cash flows from operating activities for 1998 were $30.2
million, and for the six months ended June 30, 1999 were $145.8 million. Pro
forma for our recent and pending acquisitions and the merger of Marcus Holdings
with Charter Holdings, our cash flows from operating activities for 1998 were
$725.2 million, and for the six months ended June 30, 1999 were $451.1 million.
 
CAPITAL EXPENDITURES
 
     We have substantial ongoing capital expenditure requirements. We make
capital expenditures primarily to upgrade, rebuild and expand our cable systems,
as well as for system maintenance, the development of new products and services,
and converters. Converters are set-top devices added in front of a subscriber's
television receiver to change the frequency of the cable television signals to a
suitable channel. The television receiver is then able to tune and to allow
access to premium service.
 
     Upgrading our cable systems will enable us to offer new products and
services, including digital television, additional channels and tiers, expanded
pay-per-view options, high-speed Internet access and interactive services.
 
     For the period from January 1, 2000 to December 31, 2002, we plan to spend
approximately $5.5 billion for capital expenditures, approximately $2.9 billion
of which will be used to upgrade and rebuild our systems to bandwidth capacity
of 550 megahertz or greater and add two-way capability, so that we may offer
advanced services. The remaining $2.6 billion will be used for extensions of
systems, development of new products and services, converters and system
maintenance. Capital expenditures for 2000, 2001 and 2002 are expected to be
approximately $1.5 billion, $2.0 billion and $2.0 billion, respectively. We
currently expect to finance approximately 80% of the anticipated capital
expenditures with cash generated from operations and approximately 20% with
additional borrowings under credit facilities. We cannot assure you that these
amounts will be sufficient to accomplish our planned system upgrade, expansion
and maintenance. See "Risk Factors -- We may not be able to obtain capital
sufficient to fund our planned upgrades and other capital expenditures". This
could adversely affect our ability to offer new products and services and
compete effectively, and could adversely affect our growth, financial condition
and results of operations.
 
     Capital expenditures for 1999, pro forma for recent and pending
acquisitions, are expected to be approximately $1.048 billion. For the six
months ended June 30, 1999, we made capital expenditures, excluding the
acquisition of cable systems, of $206 million. Those expenditures were funded
from cash flows from operations and credit facilities
 
                                       90

<PAGE>   94
 
borrowings. The majority of the capital expenditures related to rebuilding
existing cable systems.
 
FINANCING ACTIVITIES
 
     As of June 30, 1999, pro forma for the pending acquisitions and
acquisitions completed since that date, our total debt was approximately $13.1
billion. Our significant amount of debt may adversely affect our ability to
obtain financing in the future and react to changes in our business. Our debt
and credit facilities contain and the credit facilities that we expect to enter
into and debt that we expect to assume in connection with the pending
acquisitions will contain, various financial and operating covenants that could
adversely impact our ability to operate our business, including restrictions on
the ability of operating subsidiaries to distribute cash to their parents. See
"-- Certain Trends and Uncertainties -- Restrictive Covenants" and "Description
of Certain Indebtedness", for further information and a more detailed
description of our debt and the debt that we will assume or refinance in
connection with our pending acquisitions.
 
     CHARTER HOLDINGS NOTES.   On March 17, 1999, Charter Holdings issued $3.6
billion principal amount of senior notes. The net proceeds of approximately
$2.99 billion, combined with the borrowings under our credit facilities, were
used to consummate tender offers for publicly held debt of several of our
subsidiaries, as described below, to refinance borrowings under our previous
credit facilities, for working capital purposes and to finance a number of
recent acquisitions.
 
     Semi-annual interest payments with respect to the 8.250% notes and the
8.625% notes will be approximately $89.4 million, commencing on October 1, 1999.
No interest on the 9.920% notes will be payable prior to April 1, 2004.
Thereafter, semi-annual interest payments on the three series of senior notes
will be approximately $162.6 million in the aggregate, commencing on October 1,
2004. Charter Holdings and its wholly owned subsidiary, Charter Communications
Capital Corporation, recently completed an offer to exchange the senior notes
they issued in March 1999 for senior notes with substantially similar terms,
except that the new notes are registered and are not subject to restrictions on
transfer. With the exception of $120,000 principal amount of the 8.625% notes,
all of the Charter Holdings notes were exchanged for new notes. As of June 30,
1999, $2.1 billion was outstanding under the 8.250% and 8.625% notes, and the
accreted value of the 9.920% notes was $931.6 million.
 
     Concurrently with the issuance of the Charter Holdings notes, we refinanced
substantially all of our previous credit facilities and Marcus Cable Operating
Company, L.L.C.'s credit facilities with new credit facilities entered into by
Charter Operating. In February and March 1999, we commenced cash tender offers
to purchase the 14% senior discount notes issued by Charter Communications
Southeast Holdings, LLC, the 11.25% senior notes issued by Charter
Communications Southeast, LLC, the 13.50% senior subordinated discount notes
issued by Marcus Cable Operating Company, L.L.C., and the 14.25% senior discount
notes issued by Marcus Cable. All notes, except for $1.1 million in principal
amount, were paid off for an aggregate amount of $1.0 billion.
 
                                       91

<PAGE>   95
 
     CHARTER OPERATING CREDIT FACILITIES.   Charter Operating's credit
facilities provide for two term facilities, one with a principal amount of $1.0
billion that matures September 2007 (Term A), and the other with the principal
amount of $1.85 billion that matures on March 2008 (Term B). Our credit
facilities also provide for a $1.25 billion revolving credit facility with a
maturity date of September 2007. As of June 30, 1999, approximately $2.025
billion was outstanding and $2.075 billion was available for borrowing under
Charter Operating's credit facilities. In addition, an uncommitted incremental
term facility of up to $500 million with terms similar to the terms of Charter
Operating's credit facilities is permitted under these credit facilities, but
will be conditioned on receipt of additional new commitments from existing and
new lenders.
 
     Amounts under Charter Operating's credit facilities bear interest at a base
rate or a eurodollar rate, plus a margin up to 2.75%. A quarterly commitment fee
of between 0.25% and 0.375% per annum is payable on the unborrowed balance of
Term A and the revolving credit facility. The weighted average interest rate for
outstanding debt on June 30, 1999 was 7.4%. Furthermore, Charter Operating has
entered into interest rate protection agreements to reduce the impact of changes
in interest rates on our debt outstanding under its credit facilities. See
"-- Interest Rate Risk".
 
     RENAISSANCE NOTES.   We acquired Renaissance in April 1999. The Renaissance
10% senior discount notes due 2008 had a $163.2 million principal amount at
maturity outstanding and $100.0 million accreted value upon issuance. The
Renaissance notes do not require the payment of interest until April 15, 2003.
From and after April 15, 2003, the Renaissance notes bear interest, payable
semi-annually in cash, on each April 15 and October 15, commencing October 15,
2003. The Renaissance notes are due on April 15, 2008. Due to the change of
control of Renaissance, an offer to purchase the Renaissance notes was made at
101% of their accreted value, plus accrued and unpaid interest, on June 28,
1999. Of the $163.2 million face amount of Renaissance notes outstanding, $48.8
million were repurchased. As of June 30, 1999, the accreted value of the
Renaissance notes was approximately $82.6 million.
 
     HELICON NOTES.   We acquired Helicon in July 1999. As of June 30, 1999,
Helicon had outstanding $115.0 million in principal amount of 11% senior secured
notes due 2003. On November 1, 1999, we redeemed all of the Helicon notes at a
purchase price equal to 103% of their principal amount, plus accrued interest,
for $124.8 million.
 
     RIFKIN NOTES.   We acquired Rifkin in September 1999. As of June 30, 1999,
Rifkin had outstanding $125.0 million in principal amount of 11 1/8% senior
subordinated notes due 2006. Interest on the Rifkin subordinated notes is
payable semi-annually on January 15 and July 15 of each year. In September 1999,
we commenced an offer to purchase any and all of the outstanding Rifkin notes,
together with a $3.0 million promissory note payable to Monroe Rifkin, for cash
at a premium over the principal amounts. In conjunction with this tender offer,
we sought and obtained the consent of a majority in principal amount of the
holders of the outstanding Rifkin notes to proposed amendments to the indenture
governing the Rifkin notes, which eliminated substantially all of the
restrictive covenants. We purchased notes with a total outstanding principal
amount of $124.1 million for a total of $140.6 million, including a consent fee
of $30 per
 
                                       92

<PAGE>   96
 
$1,000 to the holders who delivered timely consents to amending the indenture.
We repurchased the promissory note issued to Monroe Rifkin for $3.4 million.
 
     FALCON DEBENTURES AND NOTES.   Falcon has outstanding publicly held debt
comprised of 8.375% senior debentures due 2010 and 9.285% senior discount
debentures due 2010, as well as 11.56% subordinated notes due 2001. As of June
30, 1999, $375.0 million total principal amount of senior debentures and
approximately $15.0 million principal amount of subordinated notes were
outstanding and the accreted value of the Falcon senior discount debentures was
approximately $308.7 million. Interest on the Falcon senior debentures is
payable semi-annually on April 15 and October 15 of each year. No interest on
the Falcon senior discount debentures will be payable prior to April 15, 2003.
From and after April 15, 2003, the issuers of the senior discount debentures may
elect to commence accrual of cash interest payment on any date, and the interest
will be payable semi-annually in cash on each April 15 and October 15
thereafter. Interest on the subordinated notes is payable semi-annually on March
31 and September 30 of each year. Our acquisition of Falcon will trigger change
of control provisions under the Falcon debentures that will require us to make
offers to repurchase these notes at prices equal to 101% of the outstanding
principal amounts, plus accrued interest. In addition, our acquisition of Falcon
will constitute an event of default under the terms of the Falcon subordinated
notes and will give rise, if written notice is given by holders of a majority in
outstanding principal amount, to an obligation to repay all outstanding
principal and accrued interest on the Falcon subordinated notes, plus a
specified premium.
 
   
     We intend to finance required repayments of Falcon debentures and notes
with additional debt financing that has not yet been arranged. We have obtained
a commitment from a group of lenders to provide to Falcon bridge loans of up to
$750 million to finance these repayments until additional debt financing can be
arranged or if additional debt financing is unavailable. Goldman Sachs Credit
Partners L.P. is the administrative agent under this facility. For a description
of this bridge loan facility, see "Description of Certain Indebtedness".
    
 
   
     FALCON CREDIT FACILITIES.   In connection with the Falcon acquisition, we
have amended and restated, effective upon the closing of the acquisition, the
existing Falcon credit facilities providing for available borrowing capacity of
$1.25 billion. As of June 30, 1999, $967.0 million was outstanding, $175.3
million was committed and available for borrowing and an additional $110.0
million supplemental revolving facility was committed and will be available for
borrowing upon completion of the Falcon acquisition under these credit
facilities. It is also our intention to raise commitments for an additional
supplemental revolving credit facility in the maximum amount of $240.0 million.
    
 
     AVALON NOTES.   Avalon has 11 7/8% senior discount notes due 2008 and
9 3/8% senior subordinated notes due 2008. As of June 30, 1999, the accreted
value of the Avalon 11 7/8% senior discount notes was $118.1 and $150.0 million
in total principal 9 3/8% senior subordinated notes remained outstanding. Before
December 1, 2003, there will be no payments of cash interest on the 11 7/8%
senior discount notes. After December 1, 2003, cash interest on the 11 7/8%
senior discount notes will be payable semi-annually on June 1
 
                                       93

<PAGE>   97
 
and December 1 of each year, commencing June 1, 2004. Interest on the 9 3/8%
senior subordinated notes is payable semi-annually on June 1 and December 1 of
each year. Our acquisition of Avalon will trigger change of control provisions
under the Avalon notes that will require us to make an offer to repurchase them
at a price equal to 101% of the outstanding principal amounts, plus accrued
interest.
 
   
     AVALON CREDIT FACILITIES.   We are not assuming debt in connection with the
Avalon acquisition. We have received commitments from a group of lenders for
credit facilities for Avalon providing for borrowings of up to $300 million, of
which we expect to use $169 million to fund a portion of the Avalon purchase
price. The closing of these facilities is expected to occur with the closing of
the Avalon acquisition.
    
 
     BRESNAN NOTES.   Bresnan has 8% senior notes due 2009 and 9 1/4% senior
discount notes due 2009. As of June 30, 1999, $170.0 million in total principal
8% Bresnan senior notes was outstanding and the accreted value of the Bresnan
9 1/4% senior discount notes was $181.8 million. Interest on the 8% senior notes
is payable semi-annually on February 1 and August 1 of each year. On and after
August 1, 2004, interest on the 9 1/4% senior discount notes will be payable
semi-annually in cash on February 1 and August 1 of each year. Our acquisition
of Bresnan will trigger change of control provisions under the Bresnan notes
that will require us to make an offer to repurchase these notes at a price equal
to 101% of the outstanding principal amounts plus accrued interest. We expect
that the Bresnan notes will be tendered and that we will repurchase the Bresnan
notes with borrowings under credit facilities to be arranged at Bresnan.
 
     BRESNAN CREDIT FACILITIES.   Bresnan has credit facilities providing for
borrowings of up to $650.0 million. As of June 30, 1999, $500.0 million was
outstanding and $150.0 million was available for borrowing under these credit
facilities. Because our acquisition of Bresnan will trigger change of control
and other provisions under the Bresnan credit facilities, we intend to assume
and amend these credit facilities. If we cannot assume and amend these credit
facilities, we will be required to refinance the Bresnan credit facilities and
repay all outstanding borrowings.
 
     FANCH CREDIT FACILITIES.   We are not assuming debt in connection with the
Fanch acquisition. We have received commitments from a group of lenders for
credit facilities for Fanch providing for borrowings of up to $1.2 billion, of
which we expect to use $0.9 billion to fund a portion of the purchase price. The
closing of these facilities is expected to occur concurrently with the closing
of the Fanch acquisition.
 
ACQUISITIONS
 
     In the second, third and fourth quarters of 1999, we acquired the
Renaissance, American Cable, Greater Media, Helicon, Vista, Cable Satellite,
Rifkin and InterMedia cable systems. The total purchase price for these
acquisitions was $4.3 billion, including $351 million of assumed debt. We
financed the cash portion of the purchase prices for these acquisitions through
excess cash from the issuance of the Charter Operating senior notes, borrowings
under our credit facilities, capital contributions by Mr. Allen through Vulcan
Cable III Inc., and, in the case of InterMedia, through a swap of cable systems
 
                                       94

<PAGE>   98
 
valued at $331.8 million and a commitment to transfer an additional cable system
valued at $88.2 million.
 
   
     We have agreed to purchase the Avalon, Fanch, Falcon and Bresnan cable
systems. The total purchase price for these acquisitions is $9.9 billion. This
amount includes assumed debt of $2.8 billion as of June 30, 1999. The debt
consists of $1.3 billion aggregate principal amount of notes and debentures and
$1.5 billion of credit facility borrowings that are subject to change of control
provisions which will be triggered by these pending acquisitions. We intend to
finance these acquisitions and required debt repayments, in part, with the
proceeds of the offering, Mr. Allen's equity contribution through Vulcan Cable
III Inc. to Charter Communications Holding Company, borrowings under committed
credit facilities at Fanch, Avalon and Falcon, and the issuance to certain
Falcon and Bresnan sellers of between $1.425 and $1.55 billion in membership
units of Charter Communications Holding Company.
    
 
     In August 1999, Vulcan Cable III Inc. contributed to Charter Communications
Holding Company $500 million in cash and, in September 1999, an additional $825
million, of which approximately $644.3 million was in cash and approximately
$180.7 million was in the form of equity interests acquired by Vulcan Cable III
Inc. in connection with the Rifkin acquisition. In addition, Mr. Allen has
agreed to make a $750 million equity investment in Charter Communications
Holding Company at the closing of the offering for membership units at the
initial public offering price less the underwriting discount. We plan to fund
required repurchases of the approximately $0.7 billion of outstanding Falcon
debentures and notes that are put to us with borrowings under the committed
Falcon bridge loan facility, or other debt financing if available.
 
   
     Available and committed sources of funds will not be sufficient to
consummate our pending acquisitions and fund related obligations. In connection
with our acquisitions, we may need to raise additional amounts up to a total of
approximately $5.41 billion.
    
 
     We will need to raise approximately $1.72 billion by borrowing under credit
facilities at Bresnan that have not yet been arranged and/or by issuing debt or
equity securities of Charter Communications, Inc. or Charter Communications
Holding Company to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facility
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
     - approximately $0.35 billion in Bresnan notes that we expect to be put to
       us in connection with required change of control offers for these notes.
 
   
     In addition, we will have to raise approximately $3.69 billion of
additional financing if we are required to pay:
    
 
     - approximately $0.71 billion to repurchase outstanding notes of Falcon if
       committed bridge loan financing does not close;
 
   
     - approximately $0.17 billion if the Avalon credit facilities do not close;
    
 
                                       95

<PAGE>   99
 
   
     - approximately $0.88 billion if the Fanch credit facilities do not close;
    
 
     - approximately $0.27 billion to repurchase outstanding notes of Avalon;
 
   
     - approximately $1.57 billion to repurchase equity interests issued or to
       be issued to specified sellers in connection with a number of our
       acquisitions because of possible violations of Section 5 of the
       Securities Act of 1933; and
    
 
     - approximately $0.09 billion to InterMedia if we do not obtain timely
       regulatory approvals for our transfer to InterMedia of an Indiana cable
       system and we are unable to transfer replacement systems.
 
     We cannot assure you that we will be able to raise the financing necessary
to consummate our pending acquisitions and to satisfy the obligations described
above. If we are unable to raise the financing necessary to satisfy any or all
of these obligations, we may be unable to close our pending acquisitions and
could be in default under one or more other obligations. In any such case, the
relevant sellers or creditors could initiate legal proceedings against us,
including under bankruptcy and reorganization laws, for any damages they suffer
as a result of our non-performance. Any such action could trigger defaults under
our other obligations, including our credit facilities and debt instruments.
 
     For a description of our recently completed and pending acquisitions, see
"Business -- Acquisitions".
 
     The following table sets forth the anticipated sources and uses of funds
(in millions) as of the anticipated closing dates for our pending acquisitions
and acquisitions closed since June 30, 1999 based on the following assumptions:
 
         (1) Mr. Allen, through Vulcan Cable III Inc., had made a total equity
             contribution of $1.325 billion to Charter Communications Holding
             Company in exchange for membership units;
 
         (2) Mr. Allen, through Vulcan Cable III Inc., had purchased membership
             units from Charter Communications Holding Company for $750 million;
 
         (3) the initial public offering price per share is $18.00, which is the
             mid-point of the range appearing on the cover of this prospectus;
 
         (4) all of the Helicon and Rifkin notes had been purchased through
             tender offers;
 
         (5) we had arranged new credit facilities at Falcon, Avalon and Fanch
             for which we have received commitments;
 
         (6) we had raised additional financing by borrowing under credit
             facilities at Bresnan that have not yet been arranged;
 
         (7) the Avalon notes had not been put to us as permitted by the
             indentures pursuant to change of control provisions;
 
         (8) the Falcon bridge loan facility will close;
 
         (9) all of the Falcon and Bresnan notes and debentures had been put to
             us as permitted by the respective indentures pursuant to change of
             control
                                       96

<PAGE>   100
 
             provisions. We expect to repurchase the Falcon notes and debentures
             with proceeds from the Falcon bridge loan facility. We expect to
             repurchase the Bresnan notes with proceeds from new credit
             facilities that we assume will be arranged at Bresnan;
 
         (8) $425 million of Falcon's purchase price had been paid in the form
             of membership units in Charter Communications Holding Company. Up
             to $550 million of the purchase price may, at the option of
             specified Falcon sellers, be paid in the form of membership units;
             and
 
         (9) pending acquisitions had been funded with additional debt that is
             not arranged at this time.
 
                                       97

<PAGE>   101
 
   

<TABLE>
<CAPTION>
           SOURCES:
           --------
<S>                              <C>     <C>
Borrowings under Charter
  Operating's credit
  facilities...................          $ 1,579
Publicly held debt (anticipated
  principal amount and accreted
  value at closing of
  acquisitions):
  9.375% senior subordinated
    notes -- Avalon............  $ 150
  11.875% senior discount
    notes -- Avalon............    123       273
                                 -----
Anticipated borrowings under
  Falcon's committed credit
  facilities at closing date of
  acquisition..................  1,011
                                 -----
Anticipated financing to be
  arranged by Bresnan and
  Charter Communications
  Holding Company or Charter
  Communications, Inc. in
  connection with the Bresnan
  acquisition..................            1,732
Anticipated borrowings under
  acquired companies' credit
  facilities at closing date of
  acquisitions:
  Avalon.......................    169
  Fanch........................    875     1,044
                                 -----
Falcon bridge loan facility....              712
Gross proceeds from offering...            3,060
Helicon preferred limited
  liability company interest...               25
Funded and expected equity
  contributions:
  Rifkin preferred equity......    133
  Falcon equity................    425
  Bresnan equity...............  1,000
  Mr. Allen contributed
    equity.....................  1,325
  Mr. Allen committed equity...    750     3,633
                                 -----   -------
                                         $13,069
                                         =======
</TABLE>

    
 

<TABLE>
<CAPTION>
             USES:
             -----
<S>                              <C>     <C>
Payments for pending acquisitions and
acquisitions closed since June 30,
1999:
  Helicon.............................   $   550
  Vista and Cable Satellite...........       148
  Rifkin..............................     1,460
  InterMedia..........................       904
  Avalon (less escrow deposit of
    $50)..............................       795
  Fanch...............................     2,400
  Falcon..............................     3,550
  Bresnan.............................     3,100
Underwriting discounts and estimated
  offering expenses...................       162
 
                                         -------
                                         $13,069
                                         =======
</TABLE>

 
                                       98

<PAGE>   102
 
CERTAIN TRENDS AND UNCERTAINTIES
 
     The following discussion highlights a number of trends and uncertainties,
in addition to those discussed elsewhere in this prospectus, including in "Risk
Factors" and "Business", that could materially impact our business, results of
operations and financial condition.
 
     SUBSTANTIAL LEVERAGE.   As of June 30, 1999, pro forma for our pending
acquisitions and acquisitions completed since that date, our total debt was
approximately $13.1 billion and our total stockholders' equity was approximately
$2.8 billion. We anticipate incurring substantial additional debt in the future
to fund the expansion, maintenance and the upgrade of our systems.
 
     Our ability to make payments on our debt and to fund our planned capital
expenditures for upgrading our cable systems, our pending acquisitions and our
ongoing operations will depend on our ability to generate cash and secure
financing in the future. This, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. There can be no assurance that our business will
generate sufficient cash flow from operations, or that future borrowings will be
available to us under our existing credit facilities, new facilities or from
other sources of financing in an amount sufficient to enable us to repay our
debt, to grow our business or to fund our other liquidity and capital needs.
 
     VARIABLE INTEREST RATES.   A significant portion of our debt bears interest
at variable rates that are linked to short-term interest rates. In addition, a
significant portion of our assumed debt or debt we expect to arrange in
connection with our pending acquisitions will bear interest at variable rates.
If interest rates rise, our costs relative to those obligations will also rise.
See later discussion on "Interest Rate Risk".
 
     RESTRICTIVE COVENANTS.   Our debt and credit facilities contain and the
facilities that we expect to enter into and debt that we expect to assume in
connection with the pending acquisitions will contain a number of significant
covenants that, among other things, restrict the ability of our subsidiaries to:
 
     - pay dividends;
 
     - pledge assets;
 
     - dispose of assets or merge;
 
     - incur additional debt;
 
     - issue equity;
 
     - repurchase or redeem equity interests and debt;
 
     - create liens; and
 
     - make certain investments or acquisitions.
 
     In addition, each of the credit facilities requires the particular borrower
to maintain specified financial ratios and meet financial tests. The ability to
comply with these provisions may be affected by events beyond our control. The
breach of any of these
 
                                       99

<PAGE>   103
 
covenants will result in a default under the applicable debt agreement or
instrument, which could trigger acceleration of the debt. Any default under our
credit facilities or the indentures governing outstanding debt securities may
adversely affect our growth, our financial condition and our results of
operations.
 
     IMPORTANCE OF GROWTH STRATEGY AND RELATED RISKS.   We expect that a
substantial portion of any of our future growth will be achieved through
revenues from additional services and the acquisition of additional cable
systems. We cannot assure you that we will be able to offer new services
successfully to our customers or that those new services will generate revenues.
In addition, the acquisition of additional cable systems may not have a positive
net impact on our operating results. Acquisitions involve a number of special
risks, including diversion of management's attention, failure to retain key
acquired personnel, risks associated with unanticipated events or liabilities
and difficulties in assimilation of the operations of the acquired companies,
some or all of which could have a material adverse effect on our business,
results of operations and financial condition. If we are unable to grow our cash
flow sufficiently, we may be unable to fulfill our obligations or obtain
alternative financing.
 
     MANAGEMENT OF GROWTH.   As a result of the acquisition of the Charter
companies by Paul G. Allen, our merger with Marcus Holdings and our recent and
pending acquisitions, we have experienced and will continue to experience rapid
growth that has placed and is expected to continue to place a significant strain
on our management, operations and other resources. Our future success will
depend in part on our ability to successfully integrate the operations acquired
and to be acquired and to attract and retain qualified personnel. Historically,
acquired entities have had minimal employee benefit related costs and all
benefit plans have been terminated with acquired employees transferring to our
401(k) plan. No significant severance cost is expected in conjunction with the
recent and pending acquisitions. The failure to retain or obtain needed
personnel or to implement management, operating or financial systems necessary
to successfully integrate acquired operations or otherwise manage growth when
and as needed could have a material adverse effect on our business, results of
operations and financial condition.
 
     In connection with our pending acquisitions, we have formed
multi-disciplinary teams to formulate plans for establishing customer service
centers, identifying property, plant and equipment requirements and possible
reduction of headends. Headends are the control centers of a cable television
system, where incoming signals are amplified, converted, processed and combined
for transmission to customers. These teams also determine market position and
how to attract talented personnel. Our goals include rapid transition in
achieving performance objectives and implementing "best practice" procedures.
 
     REGULATION AND LEGISLATION.   Cable systems are extensively regulated at
the federal, state, and local level. These regulations have increased the
administrative and operational expenses of cable television systems and affected
the development of cable competition. Rate regulation of cable systems has been
in place since passage of the Cable Television Consumer Protection and
Competition Act of 1992, although the scope of this regulation
 
                                       100

<PAGE>   104
 
recently was sharply contracted. Since March 31, 1999, rate regulation exists
only with respect to the lowest level of basic cable service and associated
equipment. Basic cable service is the service that cable customers receive for a
threshold fee. This service usually includes local television stations, some
distant signals and perhaps one or more non-broadcast services. This change
affords cable operators much greater pricing flexibility, although Congress
could revisit this issue if confronted with substantial rate increases.
 
     Cable operators also face significant regulation of their channel capacity.
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 users, and
unaffiliated commercial leased access programmers. This carriage burden could
increase in the future, particularly if the Federal Communications Commission
were to require cable systems to carry both the analog and digital versions of
local broadcast signals or if it were to allow unaffiliated Internet service
providers seeking direct cable access to invoke commercial leased access rights
originally devised for video programmers. The Federal Communications Commission
is currently conducting proceedings in which it is considering both of these
channel usage possibilities.
 
     There is also uncertainty whether local franchising authorities, the
Federal Communications Commission, or the U.S. Congress will impose obligations
on cable operators to provide unaffiliated Internet service providers with
access to cable plant on non-discriminatory terms. If they were to do so, and
the obligations were found to be lawful, it could complicate our operations in
general, and our Internet operations in particular, from a technical and
marketing standpoint. These access obligations could adversely impact our
profitability and discourage system upgrades and the introduction of new
products and services.
 
     POSSIBLE SECTION 5 AND CONTRACTUAL REPURCHASE OBLIGATIONS.   The Rifkin
sellers who acquired preferred membership units in connection with the Rifkin
acquisition, the Falcon and Bresnan sellers who will acquire membership units in
the Falcon and Bresnan acquisitions and the Helicon sellers who are acquiring
Class A common stock in the directed share program may have rescission rights
against Charter Communications, Inc. and/or Charter Communications Holding
Company arising out of possible violations of Section 5 of the Securities Act in
connection with the offers and sales of these equity interests. Rifkin sellers
who hold preferred membership units also have the right to cause Charter
Communications Holding Company to redeem these securities. If all of these
sellers successfully exercised their possible rescission rights, we would be
required to repurchase these equity securities for up to approximately $1.6
billion. This amount would increase to approximately $1.7 billion if the Falcon
sellers elect to receive an additional $125 million in Charter Communications
Holding Company membership units. If we failed to satisfy these obligations,
these sellers could initiate legal proceedings against us, including under
bankruptcy and reorganization laws, for damages suffered by them as a result of
our non-performance. Any such failure could trigger defaults under our other
obligations, including our credit facilities and other debt instruments.
 
                                       101

<PAGE>   105
 
INTEREST RATE RISK
 
     The use of interest rate risk management instruments, such as interest rate
exchange agreements, interest rate cap agreements and interest rate collar
agreements, is required under the terms of our credit facilities. Our policy is
to manage interest costs using a mix of fixed and variable rate debt. Using
interest rate swap agreements, we agree to exchange, at specified intervals, the
difference between fixed and variable interest amounts calculated by reference
to an agreed-upon notional principal amount. Interest rate cap agreements are
used to lock in a maximum interest rate should variable rates rise, but enable
us to otherwise pay lower market rates. Collars limit our exposure to and
benefits from interest rate fluctuations on variable rate debt to within a
certain range of rates.
 
     The table set forth below summarizes the fair values and contract terms of
financial instruments subject to interest rate risk maintained by us as of
December 31, 1998 (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                  EXPECTED MATURITY DATE                                            FAIR VALUE AT
                                   ----------------------------------------------------                             DECEMBER 31,
                                     1999       2000       2001       2002       2003     THEREAFTER     TOTAL          1998
                                   --------   --------   --------   --------   --------   ----------   ----------   -------------
<S>                                <C>        <C>        <C>        <C>        <C>        <C>          <C>          <C>
DEBT
Fixed Rate.......................        --         --         --         --         --   $  271,799   $  271,799    $  271,799
 Average Interest Rate...........        --         --         --         --         --         13.5%        13.5%
Variable Rate....................  $ 10,450   $ 21,495   $ 42,700   $113,588   $157,250   $1,381,038   $1,726,521    $1,726,521
 Average Interest Rate...........       6.0%       6.1%       6.3%       6.5%       7.2%         7.6%         7.2%
INTEREST RATE INSTRUMENTS
Variable to Fixed Swaps..........  $130,000   $255,000   $180,000   $320,000   $370,000   $  250,000   $1,505,000    $ (28,977)
 Average Pay Rate................       4.9%       6.0%       5.8%       5.5%       5.6%         5.6%         5.6%
 Average Receive Rate............       5.0%       5.0%       5.2%       5.2%       5.4%         5.4%         5.2%
Caps.............................  $ 15,000         --         --         --         --           --   $   15,000            --
 Average Cap Rate................       8.5%        --         --         --         --           --          8.5%
Collar...........................        --   $195,000   $ 85,000   $ 30,000         --           --   $  310,000    $  (4,174)
 Average Cap Rate................        --        7.0%       6.5%       6.5%        --           --          6.8%
 Average Floor Rate..............        --        5.0%       5.1%       5.2%        --           --          5.0%
</TABLE>

 
     The notional amounts of interest rate instruments, as presented in the
above table, are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss. The estimated fair value
approximates the proceeds (costs) to settle the outstanding contracts. Interest
rates on variable debt are estimated using the average implied forward London
Interbank Offering Rate (LIBOR) rates for the year of maturity based on the
yield curve in effect at December 31, 1998. While swaps, caps and collars
represent an integral part of our interest rate risk management program, their
incremental effect on interest expense for the years ended December 31, 1998,
1997, and 1996 was not significant.
 
     In March 1999, substantially all existing long-term debt, excluding
borrowings of our previous credit facilities, was extinguished, and all previous
credit facilities were refinanced with the borrowings under credit facilities of
Charter Operating. The following
 
                                       102

<PAGE>   106
 
table sets forth the fair values and contract terms of the long-term debt
maintained by us as of June 30, 1999 (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                   EXPECTED MATURITY DATE                                           FAIR VALUE AT
                                     --------------------------------------------------                               JUNE 30,
                                       1999       2000       2001      2002      2003     THEREAFTER     TOTAL          1999
                                     --------   --------   --------   -------   -------   ----------   ----------   -------------
<S>                                  <C>        <C>        <C>        <C>       <C>       <C>          <C>          <C>
DEBT
Fixed Rate.........................        --         --         --        --        --   $3,109,310   $3,109,310    $3,010,000
 Average Interest Rate.............        --         --         --        --        --          9.0%         9.0%
Variable Rate......................        --         --         --   $25,313   $39,375   $1,960,312   $2,025,000    $2,025,000
 Average Interest Rate.............        --         --         --       6.5%      6.5%         6.8%         6.8%
</TABLE>

 
     Interest rates on variable debt are estimated using the average implied
forward LIBOR rates for the year of maturity based on the yield curve in effect
at June 30, 1999.
 
     We expect that the terms of the debt that we assume or expect to arrange in
connection with the pending acquisitions, primarily our expected new credit
facilities, will require us to use interest rate management instruments to
partially hedge our exposure to variable interest rates. We expect to use
interest rate exchange agreements, interest rate cap agreements and interest
rate collar agreements similar to those we currently use.
 
YEAR 2000 ISSUES
 
     GENERAL.   Many existing computer systems and applications, and other
control devices and embedded computer chips use only two digits, rather than
four, to identify a year in the date field, failing to consider the impact of
the upcoming change in the century. Computer chips are the physical structure
upon which integrated circuits are fabricated as components of systems, such as
telephone systems, computers and memory systems. As a result, such systems,
applications, devices, and chips could create erroneous results or might fail
altogether unless corrected to properly interpret data related to the year 2000
and beyond. These errors and failures may result, not only from a date
recognition problem in the particular part of a system failing, but may also
result as systems, applications, devices and chips receive erroneous or improper
data from third-parties suffering from the year 2000 problem. In addition, two
interacting systems, applications, devices or chips, each of which has
individually been fixed so that it will properly handle the year 2000 problem,
could nonetheless result in a failure because their method of dealing with the
problem is not compatible.
 
     These problems are expected to increase in frequency and severity as the
year 2000 approaches. This issue impacts our owned or licensed computer systems
and equipment used in connection with internal operations, including:
 
     - information processing and financial reporting systems;
 
     - customer billing systems;
 
     - customer service systems;
 
     - telecommunication transmission and reception systems; and
 
     - facility systems.
 
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<PAGE>   107
 
     THIRD PARTIES.   We also rely directly and indirectly, in the regular
course of business, on the proper operation and compatibility of third party
systems. The year 2000 problem could cause these systems to fail, err, or become
incompatible with our systems.
 
     If we or a significant third party on which we rely fails to become year
2000 ready, or if the year 2000 problem causes our systems to become internally
incompatible or incompatible with such third party systems, our business could
suffer from material disruptions, including the inability to process
transactions, send invoices, accept customer orders or provide customers with
our cable services. We could also face similar disruptions if the year 2000
problem causes general widespread problems or an economic crisis. We cannot now
estimate the extent of these potential disruptions.
 
     STATE OF READINESS.   We are addressing the year 2000 problem with respect
to our internal operations in three stages:
 
     (1) conducting an inventory and evaluation of our systems, components, and
         other significant infrastructure to identify those elements that we
         reasonably believe could be expected to be affected by the year 2000
         problems. This stage has been completed;
 
     (2) remediating or replacing equipment that, based upon such inventory and
         evaluation, we believe may fail to operate properly in the year 2000.
         This stage is substantially complete; and
 
     (3) testing of the remediation and replacement conducted in stage two. This
         stage is substantially complete.
 
     Much of our assessment efforts in stage one have involved, and depend on,
inquiries to third party service providers, suppliers and vendors of various
parts or components of our systems. We have obtained certifications from third
party service providers, suppliers and vendors as to the readiness of mission
critical elements and we are in the process of obtaining certifications of
readiness as to non-mission critical elements. Certain of these third parties
that have certified the readiness of their products will not certify their
interoperability within our fully integrated systems. We cannot assure you that
these technologies of third parties, on which we rely, will be year 2000 ready
or timely converted into year 2000 compliant systems compatible with our
systems. Moreover, because a full test of our systems, on an integrated basis,
would require a complete shut down of our operations, it is not practicable to
conduct such testing. However, we have utilized a third party, in cooperation
with other cable operators, to test a "mock-up" of our major billing and plant
components, including pay-per-view systems, as an integrated system. We are
utilizing another third party to conduct comprehensive testing on our
advertising related scheduling and billing systems. In addition, we have
evaluated the potential impact of third party failure and integration failure on
our systems in developing our contingency plans.
 
     RISKS AND REASONABLY LIKELY WORST CASE SCENARIOS.   The failure to correct
a material year 2000 problem could result in system failures leading to a
disruption in, or failure of certain normal business activities or operations,
for example, a failure of our major billing systems and plant components such as
our pay-per-view systems. Such
 
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<PAGE>   108
 
failures could materially and adversely affect our results of operations,
liquidity and financial condition. Due to the general uncertainty inherent in
the year 2000 problem, resulting in part from the uncertainty of the year 2000
readiness of third-party suppliers and customers, we are unable to determine at
this time whether the consequences of year 2000 failures will have a material
impact on our results of operations, liquidity or financial condition. However,
our year 2000 taskforce has significantly reduced our level of uncertainty about
the year 2000 problem and, in particular, about the year 2000 compliance and
readiness of our material vendors.
 
     We are in the process of acquiring certain cable television systems, and
have negotiated certain contractual rights in the acquisition agreements
relating to the year 2000 issue. We have included the acquired cable television
systems in our year 2000 taskforce's plan. We are monitoring the remediation
process for systems we are acquiring to ensure completion of remediation before
or as we acquire these systems. We have found that these companies are following
a three stage process similar to that outlined above and are on a similar time
line. We are not currently aware of any likely material system failures relating
to the year 2000 affecting the acquired systems.
 
     CONTINGENCY AND BUSINESS CONTINUATION PLAN.   Our year 2000 plan calls for
suitable contingency planning for our at-risk business functions. We normally
make contingency plans in order to avoid interrupted service providing video,
voice and data products to our customers. We also plan to distribute detailed
guidelines outlining remedial actions for year 2000 failure of any component of
our systems which is critical to the transport of our signal by mid-November.
This includes a communications plan to our key personnel in the event of a year
2000 failure so as to accelerate remediation actions throughout the company.
 
     COST.   We have incurred $5.6 million in costs to date directly related to
addressing the year 2000 problem. We have redeployed internal resources and have
selectively engaged outside vendors to meet the goals of our year 2000 program.
We currently estimate the total cost of our year 2000 remediation programs,
including pending acquisitions, to be approximately $9.8 million.
 
OPTIONS
 
     In accordance with an employment agreement between Charter Investment, Inc.
and Jerald L. Kent, the President and Chief Executive Officer of Charter
Investment, Inc. and a related option agreement between Charter Communications
Holding Company and Mr. Kent, an option to purchase 3% of the equity value of
all cable systems managed by Charter Investment, Inc. on the date of the grant,
or 7,044,127 membership units, were issued to Mr. Kent. The option vests over a
four-year period from the date of grant and expires ten years from the date of
grant.
 
     In February 1999, Charter Holdings adopted an option plan, which was
assumed by Charter Communications Holding Company in May 1999, providing for the
grant of options to purchase up to 25,009,798 Charter Communications Holding
Company membership units. The option plan provides for grants of options to
employees and consultants of Charter Communications Holding Company and its
affiliates. Options
 
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<PAGE>   109
 
granted will be fully vested after five years from the date of grant. Options
not exercised accumulate and are exercisable, in whole or in part, in any
subsequent period, but not later than ten years from the date of grant.
 
     Following the closing of the offering, membership units received upon
exercise of the options will be automatically exchanged for shares of Class A
common stock of Charter Communications, Inc. on a one-for-one basis.
 

<TABLE>
<CAPTION>
                                                                                                    OPTIONS
                                                       OPTIONS OUTSTANDING                        EXERCISABLE
                                   ------------------------------------------------------------   -----------
                                   NUMBER OF      EXERCISE       TOTAL       REMAINING CONTRACT    NUMBER OF
                                    OPTIONS        PRICE        DOLLARS       LIFE (IN YEARS)       OPTIONS
                                   ----------   ------------  ------------   ------------------   -----------
<S>                                <C>          <C>           <C>            <C>                  <C>
Outstanding as of January 1,
  1999(1)........................   7,044,127      $20.00     $140,882,540          9.2            1,761,032
Granted:
  February 9, 1999(2)............   9,111,681      20.00       182,233,620                                --
  April 5, 1999(2)...............     473,000      20.73         9,805,290                                --
Cancelled........................    (378,400)  20.00-20.73     (7,595,886)                               --
                                   ----------   ------------  ------------          ---            ---------
Outstanding as of October 15,
  1999...........................  16,250,408    $20.02(3)    $325,325,564          9.3(3)         1,761,032
                                   ==========   ============  ============          ===            =========
</TABLE>

 
---------------
(1) Granted to Jerald L. Kent pursuant to his employment agreement and related
    option agreement.
 
(2) Granted pursuant to the option plan.
 
(3) Weighted average.
 
   
     Charter Communications Holding Company intends to issue on the date of this
prospectus up to 5,000,000 additional options under the plan. The exercise price
for these options will be equal to the initial public offering price per share
of Class A common stock in this offering.
    
 
     We follow Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" to account for the option plans. We recorded stock option
compensation expense of $845,000 for the year ended December 31, 1998 and $38.2
million for the six months ended June 30, 1999 in the financial statements since
the exercise prices are less than the estimated fair values of the underlying
membership units on the date of grant. The estimated fair value was determined
using the valuation inherent in Mr. Allen's acquisition of Charter and
valuations of public companies in the cable television industry adjusted for
factors specific to us. Compensation expense is accrued over the vesting period
of each grant that varies from four to five years. As of June 30, 1999, deferred
compensation remaining to be recognized in future periods totalled $126 million.
 
ACCOUNTING STANDARD NOT YET IMPLEMENTED
 
     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge
 
                                       106

<PAGE>   110
 
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. SFAS No. 137 "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133 -- An
Amendment of FASB No. 133" has delayed the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. We have not yet quantified the
impacts of adopting SFAS No. 133 on our consolidated financial statements nor
have we determined the timing or method of our adoption of SFAS No. 133.
However, SFAS No. 133 could increase volatility in earnings (loss).
 
                                       107

<PAGE>   111
 

 
                                   BUSINESS
 
OVERVIEW
 
     We are the fourth largest operator of cable television systems in the
United States, serving approximately 6.2 million customers, after giving effect
to our pending acquisitions. We are currently the seventh largest operator of
cable television systems in the United States serving approximately 3.7 million
customers as of June 30, 1999.
 
     We offer a full range of traditional cable services. Our service offerings
include the following programming packages:
 
     - basic programming;
 
     - expanded basic programming;
 
     - premium service; and
 
     - pay-per-view television programming.
 
     As part of our Wired World vision, we are also beginning to offer an array
of new services including:
 
     - digital television;
 
     - interactive video programming; and
 
     - high-speed Internet access.
 
We are also exploring opportunities in telephony.
 
     These new products and services will take advantage of the significant
bandwidth of our cable systems. We are accelerating the upgrade of our cable
systems to more quickly provide these products and services.
 
     For the year ended December 31, 1998, pro forma for our merger with Marcus
Holdings and the acquisitions we completed during 1998 and 1999, our revenues
were approximately $1.7 billion. For the six months ended June 30, 1999, pro
forma for our merger with Marcus Holdings and the acquisitions we completed
during 1999, our revenues were approximately $910 million. Pro forma for our
merger with Marcus Holdings and our recent and pending acquisitions, for the
year ended December 31, 1998, our revenues would have been approximately $2.7
billion. Pro forma for our merger with Marcus Holdings and our recent and
pending acquisitions, for the six months ended June 30, 1999, our revenues would
have been approximately $1.4 billion.
 
     Mr. Allen, the principal owner of our ultimate parent company and one of
the computer industry's visionaries, has long believed in a Wired World in which
cable technology will facilitate the convergence of television, computers and
telecommunications. We believe cable's ability to deliver voice, video and data
at high speeds will enable it to serve as the primary platform for the delivery
of new services to the home and workplace.
 
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<PAGE>   112
 
BUSINESS STRATEGY
 
     Our objective is to increase our operating cash flow by increasing our
customer base and the amount of cash flow per customer. To achieve this
objective, we are pursuing the following strategies:
 
     INTEGRATE AND IMPROVE ACQUIRED CABLE SYSTEMS. We seek to rapidly integrate
acquired cable systems and apply our core operating strategies to raise the
financial and operating performance of these systems. Our integration process
occurs in three stages:
 
         SYSTEM EVALUATION. We conduct an extensive evaluation of each system we
     acquire. This process begins prior to reaching an agreement to purchase the
     system and focuses on the system's:
 
         - business plan;
 
         - customer service standards;
 
         - management capabilities; and
 
         - technological capacity and compatibility.
 
         We also evaluate opportunities to consolidate headends and billing and
     other administrative functions. Based upon this evaluation, we formulate
     plans for customer service centers, plant upgrades, market positioning, new
     product and service launches and human resource requirements.
 
         IMPLEMENTATION OF OUR CORE OPERATING STRATEGIES. To achieve our high
     standards for customer satisfaction and financial and operating
     performance, we:
 
         - attract and retain high quality local management;
 
         - empower local managers with a high degree of day-to-day operational
           autonomy;
 
         - set key financial and operating benchmarks for management to meet,
           such as revenue and cash flow per subscriber, subscriber growth,
           customer service and technical standards; and
 
         - provide incentives to all employees through grants of cash bonuses
           and stock options.
 
         ONGOING SUPPORT AND MONITORING. We provide local managers with regional
     and corporate management guidance, marketing and other support for
     implementation of their business plans. We monitor performance of our
     acquired cable systems on a frequent basis to ensure that performance goals
     can be met.
 
     The turn-around in our Fort Worth system, which our management team began
to manage in October 1998, is an example of our success in integrating newly
acquired cable systems into our operations. We introduced a customer care team
that has worked closely with city governments to improve customer service and
local government relations, and each of our customer service representatives
attended a training program. We also conducted extensive training programs for
our technical and engineering, dispatch, sales and support, and management
personnel. We held a series of sales events
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<PAGE>   113
 
and service demonstrations to increase customer awareness and enhance our
community exposure and reputation. We reduced the new employee hiring process
from two to three weeks to three to five days.
 
     OFFER NEW PRODUCTS AND SERVICES. We intend to expand the array of products
and services we offer to our customers to implement our Wired World vision.
Using digital technology, we plan to offer additional channels on our existing
service tiers, create new service tiers, introduce multiple packages of premium
services and increase the number of pay-per-view channels. We also plan to add
digital music services and interactive program guides which are comprehensive
guides to television program listings that can be accessed by network, time,
date or genre. In addition, we have begun to roll out advanced services,
including interactive video programming and high speed Internet access, and we
are currently exploring opportunities in telephony. We have entered into
agreements with several providers of high speed Internet and other interactive
services, including EarthLink Network, Inc., High Speed Access Corp., WorldGate
Communications, Inc., Wink Communications, Inc. and Excite@Home Corporation. We
have recently entered into a joint venture with Vulcan Ventures Inc. and Go2Net,
Inc. to form Broadband Partners, LLC. The purpose of this joint venture is to
deliver high speed Internet portal services to our subscribers.
 
     UPGRADE THE BANDWIDTH CAPACITY OF OUR SYSTEMS. Over the next three years,
we plan to spend approximately $2.9 billion from 2000 to 2002 to upgrade to 550
megahertz or greater the bandwidth of our cable systems and the systems we
acquire through our pending acquisitions and to add two-way capability.
Upgrading to at least 550 megahertz of bandwidth capacity will allow us to:
 
     - offer advanced services, such as digital television, Internet access and
       other interactive services;
 
     - increase channel capacity up to 82 channels, or even more programming
       channels if some of our bandwidth is used for digital services; and
 
     - permit two-way communication which will give our customers the ability to
       send and receive signals over the cable system so that high speed cable
       services, such as Internet access, will not require a separate telephone
       line.
 
     As of June 30, 1999, approximately 57% of our customers were served by
cable systems with at least 550 megahertz bandwidth capacity, and approximately
34% of our customers had two-way communication capability. By year-end 2003,
including all recent and pending acquisitions, we expect that approximately 94%
of our customers will be served by cable systems with at least 550 megahertz
bandwidth capacity and two-way communication capability.
 
     Our planned upgrades are designed to reduce the number of headends from
1,267 in 1999 to 479 in 2003, including our pending acquisitions. Reducing the
number of headends will reduce headend equipment and maintenance expenditures
and, together with other upgrades, will provide enhanced picture quality and
system reliability. In addition by year-end 2003, including all pending
acquisitions, we expect that
 
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<PAGE>   114
 
approximately 95% of our customers will be served by headends serving at least
5,000 customers.
 
     MAXIMIZE CUSTOMER SATISFACTION. To maximize customer satisfaction, we
operate our business to provide reliable, high-quality products and services,
superior customer service and attractive programming choices at reasonable
rates. We have implemented stringent internal customer service standards which
we believe meet or exceed those established by the National Cable Television
Association, which is the Washington, D.C.-based trade association for the cable
television industry. We believe that our customer service efforts have
contributed to our superior customer growth, and will strengthen the Charter
brand name and increase acceptance of our new products and services.
 
     EMPLOY INNOVATIVE MARKETING. We have developed and successfully implemented
a variety of innovative marketing techniques to attract new customers and
increase revenue per customer. Our marketing efforts focus on tailoring Charter
branded entertainment and information services that provide value, choice,
convenience and quality to our customers. We use demographic "cluster codes" to
address messages to target audiences through direct mail and telemarketing.
Cluster codes identify customers by marketing type such as young professionals,
retirees or families. In addition, we promote our services on radio, in local
newspapers and by door-to-door selling. In many of our systems, we offer
discounts to customers who purchase multiple premium services such as Home Box
Office or Showtime. We also have a coordinated strategy for retaining customers
that includes televised retention advertising to reinforce the link between
quality service and the Charter brand name and to encourage customers to
purchase higher service levels. Successful implementation of these marketing
techniques has contributed to internal customer growth rates in excess of the
cable industry average in each year from 1996 through 1998 for the systems we
owned in each of those years. We have begun to implement our marketing programs
in all of the systems we have recently acquired.
 
     EMPHASIZE LOCAL MANAGEMENT AUTONOMY WHILE PROVIDING REGIONAL AND CORPORATE
SUPPORT AND CENTRALIZED FINANCIAL CONTROLS. Our local cable systems are
organized into seven operating regions. A regional management team oversees
local system operations in each region. We believe that a strong management
presence at the local system level:
 
     - improves our customer service;
 
     - increases our ability to respond to customer needs and programming
       preferences;
 
     - reduces the need for a large centralized corporate staff;
 
     - fosters good relations with local governmental authorities; and
 
     - strengthens community relations.
 
     Our regional management teams work closely with both local managers and
senior management in our corporate office to develop budgets and coordinate
marketing, programming, purchasing and engineering activities. Our centralized
financial management enables us to set financial and operating benchmarks and
monitor performance on
 
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<PAGE>   115
 
an ongoing basis. In order to attract and retain high quality managers at the
local and regional operating levels, we provide a high degree of operational
autonomy and accountability and cash and equity-based compensation. Charter
Communications Holding Company has adopted a plan to distribute to employees and
consultants, including members of corporate management and key regional and
system-level management personnel, options exercisable for up to 25,009,798
Charter Communications Holding Company membership units.
 
     CONCENTRATE OUR SYSTEMS IN TIGHTER GEOGRAPHICAL CLUSTERS. To improve
operating margins and increase operating efficiencies, we regularly seek to
improve the geographic clustering of our cable systems by selectively swapping
our cable systems for systems of other cable operators or acquiring systems in
close proximity to our systems. We believe that by concentrating our systems in
clusters, we will be able to generate higher growth in revenues and operating
cash flow. Clustering enables us to consolidate headends and spread fixed costs
over a larger subscriber base. We are negotiating with several other cable
operators whose systems we consider to be potential acquisition or swapping
candidates.
 
ORGANIZATIONAL STRUCTURE
 
     Each of the entities in our organizational structure and how it relates to
us is described below. In our discussion of the following entities, we make the
same assumptions as described on page 4 with respect to our organizational
chart.
 
     CHARTER COMMUNICATIONS, INC.   Charter Communications, Inc. is a holding
company whose principal asset after completion of the offering will be an
approximate 31% equity interest and a 100% voting interest in Charter
Communications Holding Company. Charter Communications, Inc.'s only business
will be acting as the sole manager of Charter Communications Holding Company and
its subsidiaries. As sole manager of Charter Communications Holding Company,
Charter Communications, Inc. will control the affairs of Charter Communications
Holding Company and its subsidiaries. Immediately following the offering, the
holders of the Class A common stock will own more than 99.9% of Charter
Communications, Inc.'s outstanding capital stock. However, Mr. Allen, through
his ownership of Charter Communications, Inc.'s high vote Class B common stock
and his indirect ownership of Charter Communications Holding Company membership
units, will control approximately 95% of the voting power of all of Charter
Communications, Inc.'s capital stock immediately following the offering.
Accordingly, Mr. Allen will be able to elect all of Charter Communications,
Inc.'s directors.
 
     VULCAN CABLE III INC. In August 1999, Mr. Allen, through Vulcan Cable III
Inc., contributed to Charter Communications Holding Company $500 million in cash
and, in September 1999, an additional $825 million, of which approximately
$644.3 million was in cash and approximately $180.7 million was in the form of
equity interests acquired by Vulcan Cable III Inc. in connection with the Rifkin
acquisition, in each case in exchange for membership units at a price per
membership unit of $20.73. In addition, Mr. Allen, through Vulcan Cable III
Inc., has agreed to make a $750 million equity
 
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<PAGE>   116
 
contribution to Charter Communications Holding Company at the closing of the
offering. He will pay a purchase price per membership unit equal to the net
initial public offering price per share. Mr. Allen owns 100% of the equity of
Vulcan Cable III Inc. Vulcan Cable III Inc. will have a 19.6% equity interest
and no voting rights in Charter Communications Holding Company.
 
     CHARTER INVESTMENT, INC. Mr. Allen owns approximately 96.8% of the
outstanding stock of Charter Investment, Inc. The remaining equity is owned by
our founders, Jerald L. Kent, Barry L. Babcock and Howard L. Wood. Charter
Investment, Inc. will have a 39.7% equity interest and no voting rights in
Charter Communications Holding Company.
 
     FORMER OWNERS OF FALCON AND BRESNAN. Under the terms of the pending Falcon
and Bresnan acquisitions, some of the sellers will receive or have the right to
receive a portion of their purchase price in Charter Communications Holding
Company common membership units rather than in cash. To the extent they receive
common membership units, they will be able to exchange these membership units
for shares of Class A common stock. These equity holders as a group will have a
9.7% equity interest and no voting rights in Charter Communications Holding
Company. Certain sellers under the Rifkin acquisition have received, at their
election, preferred membership units of Charter Communications Holding Company,
with an approximate value of $133.3 million.
 
     CHARTER COMMUNICATIONS HOLDING COMPANY, LLC. Charter Communications Holding
Company is the indirect owner of all of our cable systems. It is the direct
parent of Charter Holdings and will be the owner of the cable systems to be
acquired through four pending acquisitions: Avalon, Fanch, Falcon and Bresnan,
as described below. Charter Communications Holding Company has an option plan
permitting the issuance to employees and consultants of Charter Communications
Holding Company and its affiliates of options exercisable for up to 25,009,798
Charter Communications Holding Company membership units of which 9,206,281 are
outstanding. Membership units received upon exercise of these options will be
automatically exchanged for Class A common stock. Of these options, 65,000
options have vested and the remaining options will vest prior to April 2000. In
addition to options available for grant to our employees under Charter
Communications Holding Company's option plan, our chief executive officer has
options to purchase 7,044,127 Charter Communications Holding Company membership
units. Membership units received upon exercise of these options will be
exchangeable for Class A common stock. Of the options granted to our chief
executive officer, 25% are immediately exercisable and the remaining 75% will
vest in 36 equal monthly installments commencing on January 1, 2000.
 
     CHARTER COMMUNICATIONS HOLDING COMPANY'S PENDING ACQUISITIONS. Charter
Communications Holding Company is a party to agreements to acquire cable systems
or the companies owning cable systems from the owners of Avalon, Fanch, Falcon
and Bresnan.
 
     CHARTER COMMUNICATIONS HOLDINGS, LLC. Charter Holdings is a co-issuer with
Charter Communications Holdings Capital Corporation of $3.6 billion in principal
amount of notes sold in March 1999. Charter Holdings owns 100% of Charter
Operating.
 
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<PAGE>   117
 
   
     CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORPORATION. Charter Communications
Holdings Capital Corporation is a wholly owned subsidiary of Charter Holdings.
    
 
     CHARTER COMMUNICATIONS OPERATING, LLC. Charter Operating is a holding
company for all of the cable systems currently owned by Charter Holdings. As of
June 30, 1999, Charter Operating was the borrower under credit facilities with
total availability of $4.1 billion and had total outstanding borrowings of
$2.025 billion.
 
     CHARTER OPERATING COMPANIES. These companies consist of the companies that
operate all of the cable systems currently owned by Charter Holdings. These
include all recent acquisitions, the systems obtained through the merger of
Marcus Holdings with Charter Holdings and the cable systems originally managed
by Charter Investment, Inc., namely Charter Communications Properties Holdings,
LLC, CCA Group and CharterComm Holdings. Historical financial information is
presented separately for these companies.
 
ACQUISITIONS
 
     Our primary criterion in considering acquisition and swapping opportunities
is the financial return that we expect to ultimately realize. We consider each
acquisition in the context of our overall existing and planned operations,
focusing particularly on the impact on our size and scope and the ability to
reinforce our clustering strategy, either directly or through future swaps or
acquisitions. Other specific factors we consider in acquiring a cable system
are:
 
     - demographic profile of the market as well as the number of homes passed
       and customers within the system;
 
     - per customer revenues and operating cash flow and opportunities to
       increase these financial benchmarks;
 
     - proximity to our existing cable systems or the potential for developing
       new clusters of systems;
 
     - the technological state of such system; and
 
     - the level of competition within the local market.
 
     We believe that there are significant advantages in increasing the size and
scope of our operations, including:
 
     - improved economies of scale in management, marketing, customer service,
       billing and other administrative functions;
 
     - reduced costs for our cable plants and our infrastructure in general;
 
     - increased leverage for negotiating programming contracts; and
 
     - increased influence on the evolution of important new technologies
       affecting our business.
 
     We believe that as a result of our acquisition strategy and our systems
upgrade we will be well-positioned to have cable systems with economies of scale
sufficient to allow
 
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<PAGE>   118
 
us to execute our strategy to expand the array of products and services that we
offer to our customers as we implement our Wired World vision. We will, however,
continue to explore acquisitions and swaps of cable systems that would further
complement our existing cable systems and those that we are acquiring in our
pending acquisitions.
 
     See "Description of Certain Indebtedness" for a description of the material
debt that we have assumed or may assume in connection with our recent and
pending acquisitions. For a discussion of the risks associated with our funding
requirements resulting from our acquisitions, see "Risk Factors -- Our
Acquisitions" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources".
 
     MERGER WITH MARCUS HOLDINGS. On April 23, 1998, Mr. Allen acquired
approximately 99% of the non-voting economic interests in Marcus Cable Company,
L.L.C., and agreed to acquire the remaining interests in Marcus Cable. The
aggregate purchase price was approximately $1.4 billion, excluding $1.8 billion
in debt assumed. On February 22, 1999, Marcus Holdings was formed, and all of
Mr. Allen's interests in Marcus Cable were transferred to Marcus Holdings on
March 15, 1999. On March 31, 1999, Mr. Allen completed the acquisition of all
remaining interests of Marcus Cable. On April 7, 1999, the holding company
parent of the Marcus companies, Marcus Holdings, merged into Charter Holdings,
which was the surviving entity of the merger. The subsidiaries of Marcus
Holdings became subsidiaries of Charter Operating. During the period of
obtaining the requisite regulatory approvals for the transaction, the Marcus
systems came under common management with our subsidiaries in October 1998
pursuant to the terms of a management agreement dated as of October 1998.
 
RECENTLY COMPLETED ACQUISITIONS
 
     RENAISSANCE. In April 1999, one of Charter Holdings' subsidiaries purchased
Renaissance Media Group LLC for approximately $459 million, consisting of $348
million in cash and $111 million of assumed debt, consisting of the Renaissance
notes. As a result of our acquisition of Renaissance, we recently completed a
tender offer for this publicly held debt pursuant to the change of control
provisions under the Renaissance notes. Holders of notes representing 30% of the
total outstanding principal amount of the notes tendered their notes. See
"Description of Certain Indebtedness" for a description of the material
restrictive covenants and other terms under the Renaissance notes. Renaissance
owns cable systems located in Louisiana, Mississippi and Tennessee, has
approximately 129,000 customers and is being operated as part of our Southern
region. For the six months ended June 30, 1999, Renaissance had revenues of
approximately $30.8 million. For the year ended December 31, 1998, Renaissance
had revenues of approximately $41.5 million. Approximately 48% of Renaissance's
customers are currently served by systems with at least 550 megahertz bandwidth
capacity.
 
     AMERICAN CABLE. In May 1999, one of Charter Holdings' subsidiaries
purchased American Cable Entertainment, LLC for approximately $240 million.
American Cable owns cable systems located in California serving approximately
69,000 customers and is being operated as part of our Western region. For the
six months ended June 30, 1999,
 
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American Cable had revenues of approximately $18.0 million. For the year ended
December 31, 1998, American Cable had revenues of approximately $15.7 million.
None of the American Cable systems' customers is currently served by systems
with 550 megahertz bandwidth capacity or greater.
 
     GREATER MEDIA SYSTEMS. In June 1999, one of Charter Holdings' subsidiaries
purchased certain cable systems of Greater Media Cablevision Inc. for
approximately $500 million. The Greater Media systems are located in
Massachusetts, have approximately 175,000 customers and are being operated as
part of our Northeast Region. For the six months ended June 30, 1999, the
Greater Media systems had revenues of approximately $42.3 million. For the year
ended December 31, 1998, the Greater Media systems had revenues of approximately
$78.6 million. Approximately 49% of the Greater Media systems' customers are
currently served by systems with at least 550 megahertz bandwidth capacity.
 
     HELICON. In July 1999, one of Charter Holdings' subsidiaries acquired
Helicon Partners I, L.P. and affiliates for approximately $550 million,
consisting of $410 million in cash, $115 million of assumed debt, and $25
million in the form of preferred limited liability company interest of
Charter-Helicon LLC, a direct wholly owned subsidiary of Charter Communications,
LLC. The holders of the preferred interest have the right to require Mr. Allen
to purchase the interest until the fifth anniversary of the closing of the
Helicon acquisition. The preferred interest will be redeemable at any time
following the fifth anniversary of the Helicon acquisition or upon a change of
control, and it must be redeemed on the tenth anniversary of the Helicon
acquisition. Helicon owns cable systems located in Alabama, Georgia, New
Hampshire, North Carolina, West Virginia, South Carolina, Tennessee,
Pennsylvania, Louisiana and Vermont, and has approximately 173,000 customers.
For the six months ended June 30, 1999, Helicon had revenues of approximately
$43.0 million. For the year ended December 31, 1998, Helicon had revenues of
approximately $75.6 million. Approximately 79% of Helicon's customers are
currently served by systems with at least 550 megahertz bandwidth capacity. The
debt we assumed consisted of publicly held Helicon notes. On November 1, 1999,
we redeemed all of the Helicon notes at a price of 103% of the total principal
amount of the notes, plus accrued and unpaid interest to the date of redemption.
In connection with the acquisition of Helicon, Charter Investment, Inc. entered
into separate agreements with Baum Investments, Inc. and with Roberts Cable
Corporation, GAK Cable, Inc. and Gimbel Cable Corp., pursuant to which Charter
Investment, Inc. has agreed to cause the underwriters to make $12 million worth
of shares of our Class A common stock being sold in this offering available for
purchase by Baum Investments, Roberts Cable, GAK Cable and Gimbel Cable, at the
initial public offering price.
 
     RIFKIN.   In September 1999, Charter Operating acquired Rifkin Acquisition
Partners L.L.L.P. and InterLink Communications Partners, LLLP for a purchase
price of approximately $1.46 billion, consisting of $1.2 billion in cash, $133.3
million in equity and $125.0 million in assumed debt.
 
     In accordance with the terms of the agreements, certain sellers elected to
receive a total of $133.3 million of the purchase price in the form of Class A
preferred
 
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membership units of Charter Communications Holding Company with the following
terms:
 
     - The value of the preferred membership units will increase at a rate of
       8.0% annually and Charter Communications Holding Company must redeem any
       preferred membership units outstanding on September 15, 2014.
 
     - In addition, the holders of the preferred membership units have the right
       to require Charter Communications Holding Company to redeem their
       preferred membership units in tranches of at least $1 million for a price
       equal to the current value of their membership units. This right will be
       exercisable at any time until the earliest to occur of:
 
       (1) September 15, 2004; and
 
       (2) a business combination in which the preferred membership units are
           converted into the right to receive consideration other than
           securities of Charter Communications Holding Company or its
           successor.
 
       If Charter Communications Holding Company defaults on this obligation,
       Mr. Allen has granted the holders the right to require Mr. Allen to
       purchase these preferred membership units at the same value. If Mr. Allen
       or any of his affiliates acquires any preferred membership units, they
       will automatically be converted into a number of common membership units
       equal to the value of the preferred membership units at that time divided
       by the initial public offering price of the Class A common stock.
 
     - The preferred membership units are exchangeable in whole or in part at
       the option of the Rifkin sellers only concurrently with this offering for
       shares of our Class A common stock. The preferred membership units are
       exchangeable for a number of shares of Class A common stock equal to the
       value of the exchanged portion of the preferred membership units at the
       time of the offering divided by the initial public offering price.
       Assuming that this offering closes on or about November 12, 1999, and
       that the initial offering price is $18.00 per share, the preferred
       membership units would be exchangeable for up to 7,502,002 shares of
       Class A common stock. After this offering, the preferred membership units
       are not exchangeable by the former Rifkin owners into Class A common
       stock or any other security.
 
     - If the former Rifkin owners exchange their preferred membership units of
       Charter Communications Holding Company for shares of Charter
       Communications, Inc. Class A common stock, those preferred membership
       units will be transferred to Charter Communications, Inc. and will
       automatically convert into a number of common membership units in Charter
       Communications Holding Company equal to the number of shares of Class A
       common stock issued in exchange for the preferred membership units.
 
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<PAGE>   121
 
     Upon the exchange by the Rifkin sellers of any or all of their preferred
membership units for shares of Class A common stock, Mr. Allen and the
exchanging holders will enter into one of the following agreements:
 
   
     - Mr. Allen will grant the exchanging holders the right to put their shares
       of Class A common stock to him at a price equal to the public offering
       price plus interest at a rate of 4.5% per year. This put right terminates
       on the second anniversary of this offering, or earlier in specified
       circumstances.
    
 
   
     - Mr. Allen will also grant the exchanging holders the right to put their
       Class A common stock to Mr. Allen for a price equal to the closing price
       of the Class A common stock on the day the notice of exercise is
       delivered, but only if on the date of exercise the holders are not able
       to resell their shares pursuant to an effective shelf registration
       statement. This put right will terminate two years after the closing of
       this offering.
    
 
     The debt assumed in the Rifkin acquisition consisted of the publicly held
Rifkin notes and one individually held promissory note. In September 1999, we
commenced an offer to repurchase the Rifkin notes at a premium over their
principal amount, plus accrued interest. In connection with this offer to
repurchase the Rifkin notes, we obtained consents to amend the related indenture
and offered to pay any holder of notes that consented and tendered on or prior
to October 1, 1999 an additional $30 for each $1,000 principal amount of notes
tendered. We repurchased Rifkin notes with a total outstanding principal amount
of $124.1 million for an aggregate purchase price of $140.6 million. In
addition, we repurchased the individually held promissory note for $3.4 million.
See "Description of Certain Indebtedness" for a description of the material
restrictive covenants and other terms of the $900,000 total principal amount of
Rifkin notes that remain outstanding.
 
     Rifkin owns cable systems primarily in Florida, Georgia, Illinois, Indiana,
Tennessee, Virginia and West Virginia, serving approximately 461,000 customers.
For the six months ended June 30, 1999, Rifkin had revenues of approximately
$105.6 million. For the year ended December 31, 1998, Rifkin had revenues of
approximately $124.4 million. Approximately 30% of the Rifkin systems' customers
are currently served by systems with at least 550 megahertz bandwidth capacity.
 
     INTERMEDIA SYSTEMS.   In October 1999, Charter Communications, LLC
purchased certain cable systems of InterMedia Capital Partners IV, L.P.,
InterMedia Partners and their affiliates in exchange for approximately $904
million in cash and certain of our cable systems. The InterMedia systems serve
approximately 412,000 customers in North Carolina, South Carolina, Georgia and
Tennessee. As part of this transaction, we agreed to "swap" some of our
non-strategic cable systems serving approximately 144,000 customers located in
Indiana, Montana, Utah and northern Kentucky.
 
     At the closing, we retained a cable system located in Indiana serving
approximately 30,000 customers for which we were unable to obtain the necessary
regulatory approval. We agreed to retain ownership and bear the risk of loss
associated with this system until
 
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such approvals can be obtained. In the event that the necessary regulatory
approvals are not obtained by November 5, 1999, InterMedia may elect to receive
other properties from us mutually acceptable to InterMedia and us.
 
     If the necessary regulatory approvals cannot be obtained for the transfer
of the Indiana system by November 5, 1999 and we are unable to transfer to
InterMedia satisfactory replacement systems before April 1, 2000, we must pay
InterMedia $0.1 billion in cash. In addition, if we transfer cash or property
other than the retained Indiana system to InterMedia, in certain circumstances,
we must indemnify InterMedia and its affiliates 50% of all taxes and associated
costs incurred or arising out of any claim that InterMedia suffered tax losses
to which it would not have been subject if we had transferred the retained
Indiana system in October 1999.
 
     This transaction after giving effect to the transfer of the retained
Indiana system will result in a net increase of 268,000 customers concentrated
in our Southeast and Southern regions. Approximately 84% of these customers are
currently served by systems with at least 550 megahertz bandwidth capacity. For
the six months ended June 30, 1999, the InterMedia systems had revenues of
approximately $100.6 million. For the year ended December 31, 1998, the
InterMedia systems had revenues of approximately $176.1 million.
 
     OTHER ACQUISITIONS. One of Charter Holdings' subsidiaries acquired Vista
Broadband Communications, LLC in July 1999 and acquired a cable system of Cable
Satellite of South Miami, Inc. in August 1999. These cable systems are located
in Georgia and southern Florida and serve a total of approximately 37,000
customers. The total purchase price for these other acquisitions was
approximately $148 million in cash. For the six months ended June 30, 1999, the
systems acquired in connection with these other acquisitions had revenues of
approximately $9.2 million. For the year ended December 31, 1998, these systems
had revenues of approximately $15.8 million. Approximately 76% of the Vista and
South Miami systems' customers are currently served by 550 megahertz bandwidth
capacity.
 
PENDING ACQUISITIONS
 
   
     AVALON.   In May 1999, Charter Investment, Inc. and Charter Communications
Holding Company entered into an agreement to purchase directly and indirectly
all of the equity interests of Avalon Cable LLC from Avalon Cable Holdings LLC
and Avalon Investors, L.L.C. for approximately $576.9 million in cash and $268.1
million in assumed notes and bank debt. In connection with the consummation of
this acquisition, Charter Communications, Inc. has agreed to assume the
obligation to acquire the stock of Avalon Cable of Michigan Holdings, Inc. See
"Description of Capital Stock and Membership Units -- Membership Units". Avalon
Cable operates primarily in Michigan and New England and serves approximately
260,000 customers. For the six months ended June 30, 1999, Avalon Cable had
revenues of approximately $51.8 million. For the year ended December 31, 1998,
Avalon Cable had revenues of approximately $18.2 million. As of June 30, 1999,
there was $150.0 million, $118.1 million and $177.4 million accreted principal
outstanding under the Avalon 9 3/8% notes, the Avalon
    
 
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<PAGE>   123
 
   
11 7/8% notes and the Avalon credit facilities, respectively. We will make an
offer to repurchase the Avalon 9 3/8% notes and the Avalon 11 7/8% notes. We
have received commitments from a group of lenders for credit facilities for
Avalon providing for borrowings of up to $300.0 million. We are not assuming
debt in connection with the Avalon acquisition. We have received commitments
from a group of leaders for credit facilities for Avalon providing for
borrowings of up $300 million, of which we expect to use $169 million to fund a
portion of the Avalon purchase price. We expect the closing of these facilities
to occur concurrently with the closing of the Avalon acquisition. See
"Description of Certain Indebtedness" for a description of the material
restrictive covenants and other terms of the Avalon indebtedness.
    
 
     Approximately 15% of the Avalon systems' customers are currently served by
systems with at least 550 megahertz bandwidth capacity. Following regulatory
approvals, we anticipate that the transaction will close during the fourth
quarter of 1999. Either Avalon Cable Holdings, LLC or we may terminate the
agreement if the acquisition has not been completed on or prior to March 31,
2000.
 
     FANCH.   In May 1999, Charter Investment, Inc. entered into an agreement to
purchase the partnership interests of Fanch Cablevision of Indiana, L.P.,
specified assets of Cooney Cable Associates of Ohio, Limited Partnership,
Fanch-JV2 Master Limited Partnership, Mark Twain Cablevision Limited
Partnership, Fanch-Narragansett CSI Limited Partnership, North Texas
Cablevision, Ltd., Post Cablevision of Texas, Limited Partnership and Spring
Green Communications, L.P. and the stock of Tioga Cable Company, Inc., Cable
Systems, Inc. and, indirectly, Hornell Television Service, Inc. for a total
combined purchase price of approximately $2.4 billion in cash. We have received
commitments from a group of lenders for credit facilities for Fanch providing
for borrowings of up to $1.2 billion. We expect to use $0.9 billion of this
availability to fund a portion of the Fanch purchase price. The closing of these
facilities is expected to occur concurrently with the closing of the Fanch
acquisition.
 
   
     Charter Investment, Inc. has assigned its rights and obligations to
purchase the stock of Tioga Cable Company, Inc. and Cable Systems, Inc. under
this agreement to Charter Communications Holding Company and its rights and
obligations to purchase partnership interests and assets under this agreement to
Charter Communications VI, LLC, an indirect wholly owned subsidiary of Charter
Communications Holding Company. Under the Fanch purchase agreement, immediately
prior to the closing of the Fanch acquisition, certain assets of TWFanch-one Co.
will be distributed to Fanch Cablevision of Indiana and Hornell Television
Service, Inc. in exchange for all of their partnership interests in TWFanch-one
Co. In addition, immediately prior to the closing of the Fanch acquisition,
certain assets of TWFanch-two Co. will be distributed to Fanch-JV2 Master and
Cooney Cable in exchange for all of their partnership interests in TWFanch-two
Co.
    
 
     The cable television systems to be acquired in this acquisition are located
in Colorado, Indiana, Kansas, Kentucky, Michigan, Mississippi, New Mexico,
Oklahoma, Texas and Wisconsin, and serve approximately 537,000 customers. For
the six months ended June 30, 1999, the cable systems to be acquired had
revenues of approximately
 
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<PAGE>   124
 
$98.9 million. For the year ended December 31, 1998, the systems to be acquired
had revenues of approximately $141.1 million. Approximately 19% of these
systems' customers are currently served by systems with at least 550 megahertz
bandwidth capacity. Following regulatory approvals, we anticipate that this
transaction will close during the last quarter of 1999. Either we or the sellers
may terminate the agreement if the acquisition is not completed on or prior to
March 31, 2000.
 
     FALCON.   In May 1999, Charter Investment, Inc. entered into an agreement
to purchase partnership interests in Falcon Communications, L.P. from Falcon
Holding Group, L.P. and TCI Falcon Holdings, LLC, interests in a number of
Falcon entities held by Falcon Cable Trust and Falcon Holding Group, Inc.,
specified interests in Enstar Communications Corporation and Enstar Finance
Company, LLC held by Falcon Holding Group, L.P., and specified interests in
Adlink held by DHN Inc. Charter Investment, Inc. assigned its rights under the
Falcon purchase agreement to Charter Communications Holding Company.
 
   
     The purchase price for the transaction is approximately $3.6 billion,
consisting of cash, membership units in Charter Communications Holding Company
and $1.67 billion in assumed debt. We will not be required to repay the Falcon
credit facilities but we will be required to make an offer to repurchase the
Falcon debentures. In addition, the Falcon acquisition will constitute a default
under the Falcon subordinated notes, and a majority of lenders acting together
would be entitled to require us to repay the Falcon subordinated notes. We
intend to finance required repayments of Falcon debentures and notes with
additional debt financing that has not yet been arranged. We have obtained a
commitment from a group of lenders to provide to Falcon bridge loans of up to
$750 million to finance these repayments until additional debt financing can be
arranged or if additional debt financing is unavailable. Goldman Sachs Credit
Partners L.P. is the administrative agent under this facility. See "Description
of Certain Indebtedness" for a discussion of the material restrictive covenants
and other terms of the Falcon indebtedness, including the Falcon bridge loan
facility.
    
 
     Under the Falcon purchase agreement, Falcon Holding Group, L.P. has agreed
to contribute to Charter Communications Holding Company a portion of its
partnership interest in Falcon Communications, L.P. in exchange for membership
units in Charter Communications Holding Company on the following terms:
 
     - Falcon Holding Group, L.P. may select the amount of its equity in Falcon
       Communications, L.P. it will transfer in exchange for membership units,
       subject to minimum and maximum limits. Falcon Holding Group, L.P. can
       elect to apply any percentage of the value of its interest in Falcon
       Communications, L.P. but such percentage can not be below 45.3%. The
       value of Falcon Communications, L.P. used for this purpose increases if
       Falcon Communications, L.P.'s net assets increase and decreases if Falcon
       Communications, L.P.'s net assets decrease. Falcon Holding Group, L.P.'s
       right to transfer interests in Falcon Communications, L.P. is subject to
       a maximum amount of $550 million. We believe that if the Falcon
       acquisition closes at the time of this offering, the minimum amount
 
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<PAGE>   125
 
       that Falcon Holding Group, L.P. may receive in the form of membership
       units will be approximately $425 million.
 
     - Falcon Holding Group, L.P. will receive a number of membership units of
       Charter Communications Holding Company that will result in ownership by
       Falcon Holding Group, L.P. of a percentage of the outstanding membership
       units equal to the amount of the purchase price payable in membership
       units divided by the value of Charter Communications Holding Company. The
       value of Charter Communications Holding Company for these purposes will
       be determined according to a formula which values Charter Communications
       Holding Company at the closing of the acquisition at a specified amount.
       This amount will decrease if its liabilities increase, and will increase
       if Charter Communications Holding Company acquires additional assets or
       agrees to acquire additional assets prior to completion of the Falcon
       acquisition.
 
     - If the Falcon acquisition is consummated prior to or concurrently with
       this offering, Falcon Holding Group, L.P. has agreed to exercise its
       right to exchange the membership units immediately prior to this
       offering, so long as certain tax requirements are satisfied.
 
   
     - Assuming that Falcon Holding Group, L.P. elects to exchange the minimum
       amount of partnership interests for membership units, we estimate that
       Falcon Holding Group, L.P. would receive 16,407,576 membership units at
       the closing of the Falcon acquisition, and each membership unit would be
       valued at $25.90 per unit for these purposes. If Falcon Holding Group,
       L.P. elects the maximum amount of membership units, we estimate that
       Falcon Holding Group, L.P. would receive 21,233,854 membership units, and
       each membership unit would be valued at $25.90.
    
 
     The Charter Communications Holding Company membership units to be issued to
Falcon Holding Group, L.P. are common membership units exchangeable at any time
for shares of our Class A common stock. The exchange agreement governing the
exchange of the common membership units issued to Falcon Holding Group, L.P.
will state that these common membership units are exchangeable for shares of
Class A common stock at a value equal to the fair market value of the common
membership units. The exchange ratio of common membership units to shares of
Class A common stock will be one to one because we have structured Charter
Communications, Inc. and Charter Communications Holding Company so that the fair
market value of a share of the Class A common stock will equal the fair market
value of a common membership unit.
 
     Our organizational documents achieve this result by:
 
     - limiting the assets and liabilities that Charter Communications, Inc. may
       hold; and
 
     - requiring the number of shares of Charter Communications, Inc. common
       stock outstanding at any time to equal the number of common membership
       units owned by Charter Communications, Inc.
 
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<PAGE>   126
 
     If we fail to comply with these provisions or they are changed, the
exchange ratio may vary from one to one and will then be based on a
pre-determined formula contained in the Falcon exchange agreement. See
"Description of Capital Stock and Membership Units" for further information.
 
   
     The holders of the membership units issued in the Falcon acquisition have
the right to require Mr. Allen or his designee to purchase these membership
units or shares of Class A common stock of Charter Communications, Inc. issued
in exchange for these membership units. The purchase price per unit or share is
equal to the aggregate amount of the purchase price of the Falcon acquisition
paid in membership units divided by the aggregate number of membership units
issued to Falcon Holdings, plus interest of 4.5% per annum. Based on the
assumptions described under "Unaudited Pro Forma Financial Statements", this
purchase price will initially equal $25.90 per unit or share. These rights
terminate upon the second anniversary of the closing of the acquisition, or
earlier in specified circumstances.
    
 
     The Falcon cable systems to be acquired are located in California and the
Pacific Northwest, Missouri, North Carolina, Alabama and Georgia and serve
approximately 1,008,000 customers. For the six months ended June 30, 1999, the
cable systems to be acquired had revenues of approximately $212.2 million. For
the year ended December 31, 1998, the cable systems to be acquired had revenues
of approximately $307.6 million. As of June 30, 1999, $375.0 million total
principal amount of Falcon senior debentures and $15.0 million total principal
amount of Falcon subordinated notes were outstanding and the accreted value of
the Falcon senior discount debentures was $308.7 million. In addition, $967.0
million was outstanding under the Falcon credit facilities. Approximately 7% of
the customers of the systems to be acquired are currently served by systems with
at least 550 megahertz bandwidth capacity. Following regulatory approvals, we
anticipate that the transaction will close during the fourth quarter of 1999.
Either we or the sellers may terminate the agreement if the acquisition is not
completed on or prior to November 30, 2000. In connection with the Falcon
acquisition, Marc Nathanson will become a director of Charter Communications,
Inc.
 
     BRESNAN. In June 1999, Charter Communications Holding Company entered into
an agreement to purchase Bresnan Communications Company Limited Partnership for
a total purchase price of approximately $3.1 billion. Of this amount, $1.3
billion is in cash and $1.0 billion is in the form of equity in Charter
Communications Holding Company. We also agreed to assume debt in the amount of
approximately $852 million as of June 30, 1999, consisting of credit facilities
borrowings and publicly held notes. We will need to raise approximately $1.72
billion by borrowing under credit facilities at Bresnan that have not yet been
arranged and/or by issuing debt or equity securities of Charter Communications,
Inc. or Charter Communications Holding Company to fund:
 
     - approximately $0.87 billion of the Bresnan purchase price;
 
     - approximately $0.50 billion in outstanding Bresnan credit facilities
       borrowings that we would have to repay if we are unable to assume and
       amend the existing Bresnan credit facilities; and
 
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<PAGE>   127
 
     - approximately $0.35 billion of publicly held notes that we expect to be
       put to us in connection with required change of control offers for these
       notes.
 
     See "Description of Certain Indebtedness" for a description of the material
restrictive covenants and other terms of the Bresnan indebtedness.
 
     The equity portion of the purchase price will be membership units in
Charter Communications Holding Company, the total amount of which was calculated
at the time the agreements were executed to equal 6.14% of the total membership
units in Charter Communications Holding Company then outstanding. We calculated
this percentage interest based on a number of assumptions about Charter
Communications Holding Company and our pending acquisitions, including our debt,
the value of our pending acquisition targets and the enterprise value of Charter
Communications Holding Company. Accordingly, this percentage interest may change
at or prior to the closing of the Bresnan acquisition.
 
     Each of the sellers under the Bresnan acquisition agreement shall have the
right, during the sixty-day period beginning on the second anniversary of the
closing of the Bresnan acquisition, to sell to Mr. Allen their common membership
units in Charter Communications Holding Company or the shares of Class A common
stock for which these membership units were exchanged. The per unit purchase
price for these securities is equal to the aggregate value of the common units
issued to the Bresnan sellers at the closing as increased or decreased pursuant
to post-closing adjustments, divided by the number of common units so issued,
plus interest of 4.5% per annum accrued to date.
 
     The Bresnan sellers will receive a number of membership units so that the
Bresnan sellers will own a percentage of the outstanding membership interests
equal to $1.0 billion divided by the value of Charter Communications Holding
Company. The value of Charter Communications Holding Company for these purposes
will be determined according to a formula pursuant to which the value of Charter
Communications Holding Company will decrease if its liabilities and preferred
equity, including liabilities it expects to incur under new acquisition
agreements other than the pending acquisitions, increase. The value of Charter
Communications Holding Company for this purpose will increase if additional
assets, other than the pending acquisitions, are acquired.
 
     The Bresnan acquisition agreement provides for post-closing adjustments
that would change the number of membership units issued to the Bresnan sellers
by recalculating the value of Charter Communications Holding Company to reflect
the failure to complete any acquisition pending at the time of the Bresnan
closing.
 
   
     We estimate that the Bresnan sellers would receive 37,068,750 membership
units at the closing of the Bresnan acquisition, and each membership unit would
be valued at $26.98 per unit for these purposes.
    
 
     The Charter Communications Holding Company membership units to be issued to
the Bresnan sellers are common membership units exchangeable at any time for
shares of our Class A common stock. So long as we comply with relevant
provisions in our organizational documents and these provisions are not changed,
the exchange ratio of common membership units for shares of Class A common stock
will be one to one, as
 
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described above with respect to the Falcon acquisition. See also "Description of
Capital Stock and Membership Units" for further information.
 
     The Bresnan cable systems to be acquired in this acquisition are located in
Michigan, Minnesota, Wisconsin and Nebraska and serve approximately 656,000
customers. For the six months ended June 30, 1999, the Bresnan cable systems we
are buying had revenues of approximately $137.3 million. For the year ended
December 31, 1998, these systems had revenues of approximately $262.0 million.
Approximately 57% of these systems' customers are currently served by systems
with at least 550 megahertz bandwidth capacity. Following regulatory approvals,
we anticipate that this transaction will close during the first quarter of 2000.
The agreement may be terminated if the acquisition has not been completed on or
prior to May 1, 2000.
 
PRODUCTS AND SERVICES
 
     We offer our customers a full array of traditional cable television
services and programming and we have begun to offer new and advanced high
bandwidth services such as high-speed Internet access. We plan to continually
enhance and upgrade these services, including adding new programming and other
telecommunications services, and will continue to position cable television as
an essential service.
 
     TRADITIONAL CABLE TELEVISION SERVICES.   As of June 30, 1999, more than 87%
of our customers subscribe to both "basic" and "expanded basic" service and
generally receive a line-up of between 33 and 85 channels of television
programming, depending on the bandwidth capacity of the system. Customers who
pay additional amounts can also subscribe for additional channels, either
individually or in packages of several channels, as add-ons to the basic
channels. As of June 30, 1999, approximately 25% of our customers subscribe for
premium channels, with additional customers subscribing for other special add-on
packages. We tailor both our basic channel line-up and our additional channel
offerings to each system according to demographics, programming preferences,
competition, price sensitivity and local regulation.
 
     Our traditional cable television service offerings include the following:
 
     - BASIC CABLE.   All of our customers receive basic cable services, which
       generally consist of local broadcast television, local community
       programming, including governmental and public access, and limited
       satellite programming. As of June 30, 1999, the average monthly fee was
       $10.59 for basic service.
 
     - EXPANDED BASIC CABLE.   This expanded tier includes a group of
       satellite-delivered or non-broadcast channels, such as Entertainment and
       Sports Programming Network (ESPN), Cable News Network (CNN) and Lifetime
       Television, in addition to the basic channel line-up. For the six months
       ended June 30, 1999, the average monthly fee was $19.16 for expanded
       basic service.
 
     - PREMIUM CHANNELS.   These channels provide unedited, commercial-free
       movies, sports and other special event entertainment programming. Home
       Box Office, Cinemax and Showtime are typical examples. We offer
       subscriptions to these
 
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       channels either individually or in packages. For the six months ended
       June 30, 1999, the average monthly fee was $6.35 per premium
       subscription.
 
     - PAY-PER-VIEW.   These channels allow customers to pay to view a single
       showing of a recently released movie, a one-time special sporting event
       or music concerts on an unedited, commercial-free basis. We currently
       charge a fee that ranges from $2.95 to $8.95 for movies. For special
       events, such as championship boxing matches, we have charged a fee of up
       to $50.95.
 
     We have employed a variety of targeted marketing techniques to attract new
customers by focusing on delivering value, choice, convenience and quality. We
employ direct mail and telemarketing, using demographic "cluster codes" to
target specific messages to target audiences. In many of our systems, we offer
discounts to customers who purchase premium services on a limited trial basis in
order to encourage a higher level of service subscription. We also have a
coordinated strategy for retaining customers that includes televised retention
advertising to reinforce the decision to subscribe and to encourage customers to
purchase higher service levels.
 
     NEW PRODUCTS AND SERVICES.   A variety of emerging technologies and the
rapid growth of Internet usage have presented us with substantial opportunities
to provide new or expanded products and services to our customers and to expand
our sources of revenue. The desire for such new technologies and the use of the
Internet by businesses in particular have triggered a significant increase in
our commercial market penetration. As a result, we are in the process of
introducing a variety of new or expanded products and services beyond the
traditional offerings of analog television programming for the benefit of both
our residential and commercial customers. These new products and services
include:
 
     - digital television and its related enhancements;
 
     - high-speed Internet access, through television set-top converter boxes,
       cable modems installed in personal computers and traditional telephone
       Internet access;
 
     - interactive services, such as Wink, which adds interactivity and
       electronic commerce opportunities to traditional programming and
       advertising; and
 
     - telephony and data transmission services, which are private network
       services interconnecting locations for a customer.
 
     Cable television's high bandwidth allows cable to be well positioned to
deliver a multitude of channels and/or new and advanced products and services.
We believe that this high bandwidth will be a key factor in the successful
delivery of these products and services.
 
     DIGITAL TELEVISION.   As part of upgrading our systems, we are installing
headend equipment capable of delivering digitally encoded cable transmissions to
a two-way digital-capable set-top converter box in the customer's home. This
digital connection offers significant advantages. For example, we can compress
the digital signal to allow the transmission of up to twelve digital channels in
the bandwidth normally used by one analog channel. This will allow us to
increase both programming and service offerings,
 
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<PAGE>   130
 
including near video-on-demand for pay-per-view customers. We expect to increase
the amount of services purchased by our customers.
 
     Digital services customers may receive a mix of additional television
programming, an electronic program guide and up to 40 channels of digital music.
The additional programming falls into four categories which are targeted toward
specific markets:
 
     - additional basic channels, which are marketed in systems primarily
       serving rural communities;
 
     - additional premium channels, which are marketed in systems serving both
       rural and urban communities;
 
     - "multiplexes" of premium channels to which a customer previously
       subscribed, such as multiple channels of HBO or Showtime, which are
       varied as to time of broadcast or varied based on programming content
       theme which are marketed in systems serving both rural and urban
       communities; and
 
     - additional pay-per-view programming, such as more pay-per-view options
       and/or frequent showings of the most popular films to provide near
       video-on-demand, which are more heavily marketed in systems primarily
       serving both rural and urban communities.
 
     As part of our current pricing strategy for digital services, we have
established a retail rate of $4.95 to $8.95 per month for the digital set-top
converter and the delivery of "multiplexes" of premium services, additional
pay-per-view channels, digital music and an electronic programming guide. Some
of our systems also offer additional basic and expanded basic tiers of service.
These tiers of services retail for $6.95 per month. As of June 30, 1999, more
than 10,900 of our customers subscribed to the digital service offered by 16 of
our cable systems, which served approximately 330,000 basic cable customers. For
the month of June 1998, revenue per customer for our digital service was
approximately $20.96 and cash flow per customer was $9.63. By December 31, 1999,
we anticipate that approximately 2.4 million of our customers will be served by
cable systems capable of delivering digital services.
 
     INTERNET ACCESS.   We currently provide Internet access to our customers by
two principal means:
 
     - via cable modems attached to personal computers, either directly or
       through an outsourcing contract with an Internet service provider; and
 
     - through television access, via a service such as WorldGate.
 
We also provide Internet access in some markets through traditional dial-up
telephone modems, using a third party service provider.
 
     The principal advantage of cable Internet connections is the high speed of
data transfer over a cable system. We currently offer these services to our
residential customers over coaxial cable at speeds that can range up to
approximately 50 times the speed of a conventional telephone modem. Furthermore,
a two-way communication cable system using a hybrid fiber optic/coaxial
structure can support the entire connection at cable modem speeds without the
need for a separate telephone line. If the cable system
 
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<PAGE>   131
 
only supports one-way signals from the headend to the customer, the customer
must use a separate telephone line in order to send signals to the provider,
although such customer still receives the benefit of high speed cable access
when downloading information, which is the primary reason for using cable as an
Internet connection. In addition to Internet access over our traditional coaxial
system, we also provide our commercial customers fiber optic cable access at a
price that we believe is less than the price offered by the telephone companies.
 
     In the past, cable Internet connections have provided customers with widely
varying access speeds because each customer accessed the Internet by sending and
receiving data through a node. Users connecting simultaneously through a single
node share the bandwidth of that node, so that users' connection speeds may
diminish as additional users connect through the same node. To induce users to
switch to our Internet services, however, we guarantee our cable modem customers
the minimum access speed selected from several speed options we offer. We also
provide higher guaranteed access speeds for customers willing to pay an
additional cost. In order to meet these guarantees, we are increasing the
bandwidth of our systems and "splitting" nodes easily and cost-effectively to
reduce the number of customers per node.
 
     - CABLE MODEM-BASED INTERNET ACCESS.   We have deployed cable modem-based
Internet access services in 27 markets including: Los Angeles, California; St.
Louis, Missouri; and Fort Worth, Texas.
 
     As of June 30, 1999, we provided Internet access service to approximately
13,460 homes and 160 commercial customers. The following table indicates the
historical and projected availability, pro forma for our recent and pending
acquisitions, of cable modem Internet access services in our systems, as of the
dates indicated. Only a small percentage of the homes passed currently subscribe
to these services.
 

<TABLE>
<CAPTION>
                                                                    HOMES PASSED BY
                                                                 ADVANCED DATA SERVICES
                                                           ----------------------------------
                                                           JUNE 30, 1999    DECEMBER 31, 1999
                                                           -------------    -----------------
                                                             (ACTUAL)          (PROJECTED)
<S>                                                        <C>              <C>
HIGH SPEED INTERNET ACCESS VIA CABLE MODEMS:
  High Speed Access .....................................      644,600          1,391,000
  EarthLink/Charter Pipeline.............................      572,700            708,700
  Excite@Home............................................      233,400            617,300
  Convergence.com........................................           --            353,200
  In-House/Other.........................................           --            344,000
                                                             ---------          ---------
     Total cable modems..................................    1,450,700          3,414,200
                                                             =========          =========
  Internet access via WorldGate..........................      245,200            428,800
                                                             =========          =========
</TABLE>

 
     We have an agreement with EarthLink, an independent Internet service
provider, to provide as a label service Charter Pipeline(TM), which is a cable
modem-based, high-speed Internet access service we offer. We currently charge a
monthly usage fee of between $24.95 and $34.95. Our customers have the option to
lease a cable modem for $10 to $15 a month or to purchase a modem for between
$300 and $400. As of June 30, 1999,
 
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<PAGE>   132
 
we offered EarthLink Internet access to approximately 573,000 of our homes
passed and have approximately 7,200 customers.
 
     We have a relationship with High Speed Access to offer Internet access in
some of our smaller systems. High Speed Access also provides Internet access
services to our customers under the Charter Pipeline brand name. Although the
Internet access service is provided by High Speed Access, the Internet "domain
name" of our customer's e-mail address and web site, if any, is "Charter.net,"
allowing the customer to switch or expand to our other Internet services without
a change of e-mail address. High Speed Access provides three different tiers of
service to us. The base tier is similar to our arrangements with EarthLink and
Excite@Home. The turnkey tier bears all capital, operating and marketing costs
of providing the service, and seeks to build economies of scale in our smaller
systems that we cannot efficiently build ourselves by simultaneously contracting
to provide the same services to other small geographically contiguous systems.
The third tier allows for a la carte selection of services between the base tier
and the turnkey tier. As of June 30, 1999, High Speed Access offered Internet
access to approximately 645,000 of our homes passed, and approximately 5,700
customers have signed up for the service. During the remaining six months of
1999, we, jointly with High Speed Access, plan to launch service in an
additional 21 systems, covering approximately 758,000 additional homes passed.
Vulcan Ventures, Inc., a company controlled by Mr. Allen, has an equity
investment in High Speed Access. See "Certain Relationships and Related
Transactions".
 
     We have a revenue sharing agreement with Excite@Home, under which
Excite@Home currently provides Internet service to customers in our systems
serving Fort Worth, University Park and Highland Park, Texas. The Excite@Home
network provides high-speed, cable modem-based Internet access using our cable
infrastructure. As of June 30, 1999, we offered Excite@Home Internet service to
approximately 233,000 of our homes passed and had approximately 3,000 customers.
 
     We also have services agreements with Convergence.com, under which
Convergence.com currently provides Internet service to customers in systems
acquired from Rifkin. The Convergence.com network provides high-speed, cable
modem-based Internet access using our cable infrastructure. As of June 30, 1999,
Rifkin offered Convergence.com service to approximately 260,000 homes passed and
had approximately 5,400 customers.
 
     We actively market our cable modem service to businesses in each one of our
systems where we have the capability to offer such service. Our marketing
efforts are often door-to-door, and we have established a separate division
whose function is to make businesses aware that this type of Internet access is
available through us. We also provide several virtual local area networks for
municipal and educational facilities in our Los Angeles cluster including Cal
Tech, the City of Pasadena and the City of West Covina.
 
     - TV-BASED INTERNET ACCESS.   We have a non-exclusive agreement with
WorldGate to provide its TV-based e-mail and Internet access to our cable
customers. WorldGate's technology is only available to cable systems with
two-way capability. WorldGate offers
 
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<PAGE>   133
 
easy, low-cost Internet access to customers at connection speeds ranging up to
128 kilobits per second. For a monthly fee, we provide our customers with e-mail
and Internet access that does not require the use of a PC, an existing or
additional telephone line, or any additional equipment. Instead, the customer
accesses the Internet through the set-top box, which the customer already has on
his television set, and a wireless keyboard, that is provided with the service
and which interfaces with the box. WorldGate works on advanced analog and
digital converters and, therefore, can be installed utilizing advanced analog
converters already deployed. In contrast, other converter-based, non-PC Internet
access products require a digital platform and a digital converter prior to
installation.
 
     Customers who opt for television-based Internet access are generally
first-time users who prefer this more user-friendly interface. Of these users,
41% use WorldGate at least once a day, and 77% use it at least once a week.
Although the WorldGate service bears the WorldGate brand name, the Internet
domain name of the customers who use this service is "Charter.net". This allows
the customer to switch or expand to our other Internet services without a change
of e-mail address.
 
     We first offered WorldGate to customers on the upgraded portion of our
systems in St. Louis in April 1998. We are also currently offering this service
in our systems in Maryville, Illinois and Newtown, Connecticut, and plan to
introduce it in eight additional systems by December 31, 1999. Charter
Investment, Inc. owns a minority interest in WorldGate which will be contributed
to Charter Communications Holding Company. See "Certain Relationships and
Related Transactions". As of June 30, 1999, we provided WorldGate Internet
service to approximately 4,300 customers.
 
   
     - INTERNET PORTAL SERVICES.   On October 1, 1999, Charter Communications
Holding Company, Vulcan Ventures, an entity controlled by Mr. Allen, and Go2Net,
Inc. entered into a joint venture to form Broadband Partners, LLC. Broadband
will provide access to the Internet through a "portal" to Charter Communications
Holding Company's current and future subscribers and potentially to other
providers of high speed Internet access. A portal is an Internet web site that
serves as a user's initial point of entry to the World Wide Web. By offering
selected content, services and links to other web sites, a portal guides and
directs users through the World Wide Web and generates revenues from advertising
on its own web pages and by sharing revenues generated by linked or featured web
sites.
    
 
     Revenue splits and other economic terms in this arrangement will be at
least as favorable to Charter Communications Holding Company as terms between
Broadband and any other party. Charter Communications Holding Company has agreed
to use Broadband's portal services exclusively for an initial six-year period
that will begin when the portal services are launched, except that Charter's
existing agreements with other Internet high speed portal services and High
Speed Access may run for their current term to the extent that such agreements
do not allow for the carriage of content provided by Charter Communications
Holding Company or Vulcan Ventures. The joint venture is for an initial 25-year
term, subject to successive five-year renewals by mutual consent. Vulcan
Ventures will own 55.2%, Charter Communications Holding Company will own
 
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<PAGE>   134
 
24.9% and Go2Net will own 19.9% of Broadband's membership interests. Vulcan
Ventures will have voting control over the Broadband entity. Broadband's board
of directors will consist of three directors designated by Vulcan Ventures and
one by each of Charter Communications Holding Company and Go2Net.
 
     Each of Broadband's investors will be obligated to provide their pro rata
share of funding for Broadband's operations and capital expenditures, except
that Vulcan Ventures will fund Charter Communications Holding Company's portion
of Broadband's expenses for the first four years and will fund Go2Net's portion
of Broadband's expenses to the extent such expenses exceed budget for the first
four years.
 
     We believe that our participation in the Broadband Partners joint venture
will facilitate the delivery of a broad array of Internet products and services
to our customers over the television set's digital set-top box and through the
personal computer.
 
     The Broadband Partners joint venture has not yet established a timetable
for launching its portal services. We do not anticipate that our participation
in the joint venture will have a material impact on our financial condition or
results of operations for the foreseeable future. This is especially the case
because Charter Communications Holding Company's portion of the joint venture's
expenses are to be funded by Vulcan Ventures during the first four years.
 
     WINK-ENHANCED PROGRAMMING.   We have formed a relationship with Wink, which
sells technology to embed interactive features, such as additional information
and statistics about a program or the option to order an advertised product,
into programming and advertisements. A customer with a Wink-enabled set-top box
and a Wink-enabled cable provider sees an icon flash on the screen when
additional Wink features are available to enhance a program or advertisement. By
pressing the select button on a standard remote control, a viewer of a
Wink-enhanced program is able to access additional information regarding such
program, including, for example, information on prior episodes or the program's
characters. A viewer watching an advertisement would be able to access
additional information regarding the advertised product and may also be able to
utilize the two-way transmission features to order a product. We have bundled
Wink's services with our traditional cable services in both our advanced analog
and digital platforms. Wink's services are provided free of charge. A company
controlled by Mr. Allen has made an equity investment in Wink. See "Certain
Relationships and Related Transactions".
 
     Various programming networks, including CNN, NBC, ESPN, HBO, Showtime,
Lifetime, VH1, the Weather Channel, and Nickelodeon, are currently producing
over 1,000 hours of Wink-enhanced programming per week. Under certain
revenue-sharing arrangements, we will modify our headend technology to allow
Wink-enabled programming to be offered on our systems. Each time one of our
customers uses Wink to request certain additional information or order an
advertised product, we receive fees from Wink.
 
     TELEPHONE SERVICES.   We expect to be able to offer cable telephony
services in the near future using our systems' direct, two-way connections to
homes and other buildings. We are exploring technologies using Internet protocol
telephony, as well as traditional
 
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<PAGE>   135
 
switching technologies that are currently available, to transmit digital voice
signals over our systems. AT&T and other telephone companies have already begun
to pursue strategic partnering and other programs which make it attractive for
us to acquire and develop this alternative Internet protocol technology. For the
last two years, we have sold telephony services as a competitive access provider
in the state of Wisconsin through one of our subsidiaries, and are currently
looking to expand our services as a competitive access provider into other
states.
 
     JOINT VENTURE WITH RCN CORPORATION.   On October 1, 1999, Charter
Communications Holding Company and RCN Corporation entered into a binding term
sheet containing the principal terms of a non-exclusive joint venture to provide
a broad range of telephony services to the customers of Charter Communications
Holding Company's subsidiaries in its Los Angeles franchise territory. RCN is
engaged in the businesses of bundling residential voice, video and Internet
access operations, cable operations and certain long distance telephony
operations. RCN is developing advanced fiber optic networks to provide a wide
range of telecommunications services, including long distance telephone, video
programming and data services, such as high speed Internet access.
 
     Charter Communications Holding Company will provide access to its
subsidiaries' Los Angeles subscriber base and will provide the capital necessary
to develop telephony capability in Los Angeles. In addition, Charter
Communications Holding Company will provide the necessary personnel to oversee
and manage the telephony services. RCN will provide the necessary personnel and
support services to develop and implement telephony services to be provided by
Charter Communications Holding Company. Charter Communications Holding Company
will pay RCN's fees at rates consistent with industry market compensation.
Charter Communications Holding Company will have all rights to the telephony
business and assets and will receive all revenues derived from the telephony
business unless the parties expand RCN's role by mutual agreement. We believe
that our telephony joint venture, together with Mr. Allen's investment in RCN,
may allow us to take advantage of RCN's telephony experience as we deliver
telephone services to our customers, although we cannot assure you that we will
realize anticipated advantages.
 
     The term sheet contains only the principal terms of this joint venture and
provides that the parties will enter into definitive agreements before the end
of 1999. These agreements will contain, among other terms, details of the
compensation to be received by RCN. To date, we and RCN have had only
preliminary discussions regarding specific operational matters and have not
determined a timetable for the commencement of services by the joint venture. We
do not anticipate that this joint venture will have a material impact on our
financial condition or results of operations for the foreseeable future.
 
     MISCELLANEOUS SERVICES.   We also offer paging services to our customers in
certain markets. As of June 30, 1999, we had approximately 9,400 paging
customers. We also lease our fiber-optic cable plant and equipment to commercial
and non-commercial users of data and voice telecommunications services.
 
                                       132

<PAGE>   136
 
OUR SYSTEMS
 
     As of June 30, 1999, our systems consisted of approximately 65,900 miles of
coaxial and approximately 10,600 sheath miles of fiber optic cable passing
approximately 4.5 million households and serving approximately 2.7 million
customers. Coaxial cable is a type of cable used for broadband data and cable
systems. This type of cable has excellent broadband frequency characteristics,
noise, immunity and physical durability. The cable is connected from each node
to individual homes or buildings. A node is a single connection to a cable
system's main high-capacity fiber optic cable that is shared by a number of
customers. A sheath mile is the actual length of cable in miles. Fiber optic
cable is a communication medium that uses hair-thin glass fibers to transmit
signals over long distances with minimum signal loss or distortion. As of June
30, 1999, approximately 57% of our customers were served by systems with at
least 550 megahertz bandwidth capacity, approximately 38% had at least 750
megahertz bandwidth capacity and approximately 34% were served by systems
capable of providing two-way interactive communication capability. Such two-way
interactive communication capability includes two-way Internet connections,
services provided by Wink, and interactive program guides. These amounts do not
reflect the impact of our recent or pending acquisitions.
 
   
     CORPORATE MANAGEMENT.   We are managed from our corporate offices in St.
Louis, Missouri. As of the closing of the offering, Charter Communications, Inc.
will have only twelve employees, all of whom are senior management and are also
executive officers of Charter Investment, Inc. Pursuant to a services agreement
between Charter Communications, Inc. and Charter Investment, Inc., Charter
Investment, Inc. will provide the necessary personnel and services to manage
Charter Communications Holding Company and its subsidiaries. These personnel and
services will be provided to Charter Communications, Inc. on a cost
reimbursement basis. Management of Charter Communications, Inc. and Charter
Investment, Inc. consists of approximately 200 people led by our chief executive
officer Jerald L. Kent. They are responsible for coordinating and overseeing our
operations, including certain critical functions, such as marketing and
engineering, that are conducted by personnel at the regional and local system
level. The corporate office also performs certain financial control functions
such as accounting, finance and acquisitions, payroll and benefit
administration, internal audit, purchasing and programming contract
administration on a centralized basis.
    
 
     OPERATING REGIONS.   To manage and operate our systems, we have established
two divisions that contain a total of seven operating regions: Western; Central;
MetroPlex (Dallas/Fort Worth); North Central; Northeast; Southeast; and
Southern. Each of the two divisions is managed by a Senior Vice President who
reports directly to Mr. Kent and is responsible for overall supervision of the
operating regions within the division. Each region is managed by a team
consisting of a Senior Vice President or a Vice President, supported by
operational, marketing and engineering personnel. Within each region, certain
groups of cable systems are further organized into clusters. We believe that
much of our success is attributable to our operating philosophy which emphasizes
decentralized management, with decisions being made as close to the customer as
possible. We anticipate that we will reorganize into a total of eleven regions
with the closings of our pending acquisitions.
 
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<PAGE>   137
 
     The following table provides an overview of selected technical, operating
and financial data for each of our operating regions as of and for the six
months ended June 30, 1999. The following table does not reflect the impact of
our pending acquisitions or acquisitions closed since June 30, 1999. Upon
completion of the pending acquisitions, our systems will pass approximately 9.7
million homes serving approximately 6.2 million customers.
 
      SELECTED TECHNICAL, OPERATING AND FINANCIAL DATA BY OPERATING REGION
                AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1999
 

<TABLE>
<CAPTION>
                                                                 NORTH
                               WESTERN    CENTRAL   METROPLEX   CENTRAL   NORTHEAST   SOUTHEAST   SOUTHERN     TOTAL
                              ---------   -------   ---------   -------   ---------   ---------   --------   ---------
<S>                           <C>         <C>       <C>         <C>       <C>         <C>         <C>        <C>
TECHNICAL DATA:
Miles of coaxial cable......      7,500     8,800      5,700     10,000      4,600      16,700     12,600       65,900
Density(a)..................        147        68         85         61         79          40         54           68
Headends....................         23        34         16         86         18          60         79          316
Planned headend
  eliminations..............          3         3          1         30         --          11          8           56
Plant bandwidth(b):
450 megahertz or less.......       32.1%     53.7%      28.0%      41.9%      43.3%       37.9%      54.3%        43.3%
550 megahertz...............        7.0%     10.2%      14.4%       9.5%      38.6%       24.0%      23.6%        19.1%
750 megahertz or greater....       60.9%     36.1%      57.6%      48.6%      18.1%       38.1%      22.1%        37.6%
Two-way capability..........       48.6%     49.0%      68.9%      64.3%      10.9%       16.8%      15.1%        33.8%
OPERATING DATA:
Homes passed................  1,101,000   595,000    487,000    606,000    364,000     672,000    684,000    4,509,000
Basic customers.............    575,000   368,000    187,000    402,000    301,000     453,000    448,000    2,734,000
Basic penetration(c)........       52.2%     61.8%      38.4%      66.3%      82.7%       67.4%      65.5%        60.6%
Premium units...............    365,000   217,000    172,000    146,000    265,000     288,000    223,000    1,676,000
Premium penetration(d)......       63.5%     59.0%      92.0%      36.3%      88.0%       63.6%      49.8%        61.3%
FINANCIAL DATA:
Revenues, in millions.......     $122.8     $82.3      $25.9      $46.1      $32.0       $89.1      $70.8       $469.0
</TABLE>

 
-------------------------
 
(a) Represents homes passed divided by miles of coaxial cable.
 
(b) Represents percentage of basic customers within a region served by the
    indicated plant bandwidth.
 
(c) Represents basic customers as a percentage of homes passed.
 
(d) Represents premium units as a percentage of basic customers.
 
                                       134

<PAGE>   138
 
     WESTERN REGION.   The Western region consists of cable systems serving
approximately 575,000 customers located entirely in the state of California,
with approximately 474,000 customers located within the Los Angeles metropolitan
area. These customers reside primarily in the communities of Pasadena, Alhambra,
Glendale, Long Beach and Riverside. We also have approximately 101,000 customers
in central California, principally located in the communities of San Luis
Obispo, West Sacramento and Turlock. The Western region is also responsible for
managing approximately 69,000 customers associated with the recent acquisition
of American Cable and 32,000 customers associated with the recent acquisition of
Rifkin. According to National Decision Systems, the projected median household
growth in the counties currently served by this region's systems is 5.2% for the
period ending 2003, which is also the projected U.S. median household growth for
the same period.
 
     The Western region's cable systems have been significantly upgraded with
approximately 68% of the region's customers served by cable systems with at
least 550 megahertz bandwidth capacity as of June 30, 1999. The planned upgrade
of the Western region's cable systems will reduce the number of headends from 21
to 18 by December 31, 2001.
 
     CENTRAL REGION.   The Central region consists of cable systems serving
approximately 368,000 customers of which approximately 250,000 customers reside
in and around St. Louis County or in adjacent areas in Illinois, and over 94%
are served by two headends. The remaining approximately 118,000 of these
customers reside in Indiana, and these systems are primarily classic cable
systems serving small to medium-sized communities. A portion of the Indiana
systems have been "swapped" as part of the InterMedia transaction. See
"Business -- Acquisitions". The Central region is also responsible for managing
approximately 77,000 customers associated with the recent acquisition of Rifkin.
According to National Decision Systems, the projected median household growth in
the counties currently served by this region's systems is 4.7% for the period
ending 2003, versus the projected U.S. median household growth of 5.2% for the
same period.
 
     At June 30, 1999, approximately 46% of the Central region's customers were
served by cable systems with at least 550 megahertz bandwidth capacity. The
majority of the cable plants in the Illinois systems have been upgraded to 750
megahertz bandwidth capacity. The planned upgrade of the Central region's cable
systems will reduce the number of headends from 34 to 31 by December 31, 2001.
We have begun a three-year project, scheduled for completion in 2001, to upgrade
the cable plant in St. Louis County, serving approximately 178,000 customers, to
870 megahertz bandwidth capability.
 
     METROPLEX REGION.   The MetroPlex region consists of cable systems serving
approximately 187,000 customers of which approximately 131,000 are served by the
Fort Worth system. The systems in this region serve one of the fastest growing
areas of Texas. The anticipated population growth combined with the existing low
basic penetration rate of approximately 38% offers significant potential to
increase the total number of customers and the associated revenue and cash flow
in this region. According
 
                                       135

<PAGE>   139
 
to National Decision Systems, the projected median household growth in the
counties served by this region's systems is 8.4% for the period ending 2003,
versus the projected U.S. median household growth of 5.2% for the same period.
 
     The MetroPlex region's cable systems have been significantly upgraded with
approximately 72% of the region's customers served by cable systems with at
least 550 megahertz bandwidth capacity as of June 30, 1999. In 1997, we began to
upgrade the Fort Worth system to 870 megahertz of bandwidth capacity. We expect
to complete this project during 1999. The planned upgrade of the MetroPlex
region's cable systems will reduce the number of headends from 16 to 15 by
December 31, 2001.
 
     NORTH CENTRAL REGION.   The North Central region consists of cable systems
serving approximately 402,000 customers. These customers are primarily located
throughout the state of Wisconsin, along with a small system of approximately
27,000 customers in Rosemont, Minnesota, a suburb of Minneapolis. Within the
state of Wisconsin, the four largest operating clusters are located in and
around Eau Claire, Fond du Lac, Janesville and Wausau. According to National
Decision Systems, the projected median household growth in the counties served
by this region's systems is 5.4% for the period ending 2003, versus the
projected U.S. median household growth of 5.2% for the same period.
 
     At June 30, 1999, approximately 58% of the North Central region's customers
were served by cable systems with at least 550 megahertz bandwidth capacity. The
planned upgrade of the North Central region's cable systems will reduce the
number of headends from 86 to 56 by December 31, 2001.
 
     NORTHEAST REGION.   The Northeast region consists of cable systems serving
approximately 301,000 customers residing in the states of Connecticut and
Massachusetts. These systems serve the communities of Newtown and Willimantic,
Connecticut, and areas in and around Pepperell, Massachusetts, and are included
in the New York, Hartford, and Boston areas of demographic influence. The
Northeast region will be responsible for managing the approximately 175,000
customers associated with the recent acquisition of cable systems from Greater
Media and approximately 15,000 customers associated with the recent acquisition
of Helicon. According to National Decision Systems, the projected median
household growth in the counties currently served by this region's systems is
3.7% for the period ending 2003, versus the projected U.S. median household
growth of 5.2% for the same period.
 
     At June 30, 1999, approximately 57% of the Northeast region's customers
were served by cable systems with at least 550 megahertz of bandwidth capacity.
 
     SOUTHEAST REGION.   The Southeast region consists of cable systems serving
approximately 453,000 customers residing primarily in small to medium-sized
communities in North Carolina, South Carolina, Georgia and eastern Tennessee.
There are significant clusters of cable systems in and around the cities and
counties of Greenville/Spartanburg, South Carolina; Hickory and Asheville, North
Carolina; Henry County, Georgia, a suburb of Atlanta; and Johnson City,
Tennessee. These areas have experienced rapid population growth over the past
few years, contributing to the high rate of internal customer growth for these
systems. According to National Decision
 
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<PAGE>   140
 
Systems, the projected median household growth in the counties currently served
by this region's systems is 6.9% for the period ending 2003, versus the
projected U.S. median household growth of 5.2% for the same period. In addition,
the Southeast region is responsible for managing an aggregate of 606,000
customers associated with the recent Helicon, InterMedia, Rifkin, Vista and
Cable Satellite acquisitions.
 
     At June 30, 1999, approximately 62% of the Southeast region's customers
were served by cable systems with at least 550 megahertz bandwidth capacity. The
planned upgrade of the Southeast region's cable systems will reduce the number
of headends from 60 to 49 by December 31, 2001.
 
     SOUTHERN REGION.   The Southern region consists of cable systems serving
approximately 448,000 customers located primarily in the states of Louisiana,
Alabama, Kentucky, Mississippi and central Tennessee. In addition, the Southern
region includes systems in Kansas, Colorado, Utah and Montana. The Southern
region has significant clusters of cable systems in and around the cities of
Birmingham, Alabama; Nashville, Tennessee; and New Orleans, Louisiana. According
to National Decision Systems, the projected median household growth in the
counties currently served by this region's systems is 6.3% for the period ending
2003, versus the projected U.S. median household growth of 5.2% for the same
period. In addition, the Southern region is responsible for managing an
aggregate of 328,000 customers associated with the recent Helicon, InterMedia
and Rifkin acquisitions.
 
     At June 30, 1999, approximately 46% of the Southern region's customers were
served by cable systems with at least 550 megahertz bandwidth capacity. The
planned upgrade of the Southeast region's cable systems will reduce the number
of headends from 59 to 51 by December 31, 2001.
 
     PLANT AND TECHNOLOGY OVERVIEW.   We have engaged in an aggressive program
to upgrade our existing cable plant over the next three years. For the period
from January 1, 2000 to December 31, 2002, we plan to spend approximately $5.5
billion for capital expenditures, approximately $2.9 billion of which will be
used to upgrade our systems to bandwidth capacity of 550 megahertz or greater,
so that we may offer advanced services. The remaining capital will be spent on
plant extensions, new services, converters and system maintenance.
 
     The following table describes the current technological state of our
systems and the anticipated progress of planned upgrades through 2001, based on
the percentage of our customers who will have access to the bandwidth and other
features shown:
 

<TABLE>
<CAPTION>
                                         LESS THAN                     750 MEGAHERTZ    TWO-WAY
                                       550 MEGAHERTZ   550 MEGAHERTZ    OR GREATER     CAPABILITY
                                       -------------   -------------   -------------   ----------
<S>                                    <C>             <C>             <C>             <C>
June 30, 1999........................      43.3%           19.1%           37.6%          33.8%
December 31, 1999....................      58.7%           15.9%           25.4%          25.4%
December 31, 2000....................      47.3%           14.5%           38.2%          38.2%
December 31, 2001....................      30.1%           12.5%           57.4%          57.4%
</TABLE>

 
     We have adopted HFC architecture as the standard for our ongoing systems
upgrades. HFC architecture combines the use of fiber optic cable, which can
carry
 
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<PAGE>   141
 
hundreds of video, data and voice channels over extended distances, with coaxial
cable, which requires a more extensive signal amplification in order to obtain
the desired transmission levels for delivering channels. In most systems, we
connect fiber optic cable to individual nodes serving an average of 500 homes or
commercial buildings. We believe that this network design provides high capacity
and superior signal quality, and will enable us to provide the newest forms of
telecommunications services to our customers. The primary advantages of HFC
architecture over traditional coaxial cable networks include:
 
     - increased channel capacity of cable systems;
 
     - reduced number of amplifiers, which are devices to compensate for signal
       loss caused by coaxial cable, needed to deliver signals from the headend
       to the home, resulting in improved signal quality and reliability;
 
     - reduced number of homes that need to be connected to an individual node,
       improving the capacity of the network to provide high-speed Internet
       access and reducing the number of households affected by disruptions in
       the network; and
 
     - sufficient dedicated bandwidth for two-way services, which avoids reverse
       signal interference problems that can otherwise occur when you have
       two-way communication capability.
 
     The HFC architecture will enable us to offer new and enhanced services,
including:
 
     - additional channels and tiers;
 
     - expanded pay-per-view options;
 
     - high-speed Internet access;
 
     - wide area networks, which permit a network of computers to be connected
       together beyond an area;
 
     - point-to-point data services, which can switch data links from one point
       to another; and
 
     - digital advertising insertion, which is the insertion of local, regional
       and national programming.
 
     The upgrades will facilitate our new services in two primary ways:
 
     - Greater bandwidth allows us to send more information through our systems.
       This provides us with the capacity to provide new services in addition to
       our current services. As a result, we will be able to roll out digital
       cable programming in addition to existing analog channels offered to
       customers who do not wish to subscribe to a package of digital services.
 
     - Enhanced design configured for two-way communication with the customer
       allows us to provide cable Internet services without telephone support
       and other interactive services, such as an interactive program guide,
       impulse pay-per-view, video-on-demand and Wink, that cannot be offered
       without upgrading the bandwidth capacity of our systems.
 
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<PAGE>   142
 
     This HFC architecture will also position us to offer cable telephony
services in the future, using either Internet protocol technology or
switch-based technology, another method of linking communications.
 
CUSTOMER SERVICE AND COMMUNITY RELATIONS
 
     Providing a high level of service to our customers has been a central
driver of our historical success. Our emphasis on system reliability,
engineering support and superior customer satisfaction is key to our management
philosophy. In support of our commitment to customer satisfaction, we operate a
24-hour customer service hotline in most systems and offer on-time installation
and service guarantees. It is our policy that if an installer is late for a
scheduled appointment the customer receives free installation, and if a service
technician is late for a service call the customer receives a $20 credit.
 
     As of June 30, 1999, we maintained eight call centers located in our seven
regions, which are responsible for handling call volume for more than 55% of our
customers. They are staffed with dedicated personnel who provide service to our
customers 24 hours a day, seven days a week. We believe operating regional call
centers allows us to provide "localized" service, which also reduces overhead
costs and improves customer service. We have invested significantly in both
personnel and equipment to ensure that these call centers are professionally
managed and employ state-of-the-art technology. We also maintain approximately
170 field offices, and employ approximately 1,200 customer service
representatives throughout the systems. Our customer service representatives
receive extensive training to develop customer contact skills and product
knowledge critical to successful sales and high rates of customer retention. We
have approximately 2,300 technical employees who are encouraged to enroll in
courses and attend regularly scheduled on-site seminars conducted by equipment
manufacturers to keep pace with the latest technological developments in the
cable television industry. We utilize surveys, focus groups and other research
tools as part of our efforts to determine and respond to customer needs. We
believe that all of this improves the overall quality of our services and the
reliability of our systems, resulting in fewer service calls from customers.
 
     We are also committed to fostering strong community relations in the towns
and cities our systems serve. We support many local charities and community
causes in various ways, including marketing promotions to raise money and
supplies for persons in need, and in-kind donations that include production
services and free air-time on major cable networks. Recent charity affiliations
include campaigns for "Toys for Tots," United Way, local theatre, children's
museums, local food banks and volunteer fire and ambulance corps. We also
participate in the "Cable in the Classroom" program, whereby cable television
companies throughout the United States provide schools with free cable
television service. In addition, we install and provide free basic cable service
to public schools, government buildings and non-profit hospitals in many of the
communities in which we operate. We also provide free cable modems and
high-speed Internet access to schools and public libraries in our franchise
areas. We place a special emphasis on education, and regularly award
scholarships to employees who intend to pursue courses of study in the
communications field.
 
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<PAGE>   143
 
SALES AND MARKETING
 
     PERSONNEL RESOURCES.   We have a centralized team responsible for
coordinating the marketing efforts of our individual systems. For most of our
systems with over 30,000 customers we have a dedicated marketing manager, while
smaller systems are handled regionally. We believe our success in marketing
comes in large part from new and innovative ideas and from good interaction
between our corporate office, which handles programs and administration, and our
field offices, which implement the various programs. We are also continually
monitoring the regulatory arena, customer perception, competition, pricing and
product preferences to increase our responsiveness to our customer base. Our
customer service representatives are given the incentive to use their daily
contacts with customers as opportunities to sell our new service offerings.
 
     MARKETING STRATEGY.   Our long-term marketing objective is to increase cash
flow through deeper market penetration and growth in revenue per household. To
achieve this objective and to position our service as an indispensable consumer
service, we are pursuing the following strategies:
 
     - increase the number of rooms per household with cable;
 
     - introduce new cable products and services;
 
     - design product offerings to enable greater opportunity for customer
       choices;
 
     - utilize "tiered" packaging strategies to promote the sale of premium
       services and niche programming;
 
     - offer our customers more value through discounted bundling of products;
 
     - increase the number of residential consumers who use our set-top box,
       which enables them to obtain advanced digital services such as a greater
       number of television stations and interactive services;
 
     - target households based on demographic data;
 
     - develop specialized programs to attract former customers, households that
       have never subscribed and illegal users of the service; and
 
     - employ Charter branding of products to promote customer awareness and
       loyalty.
 
     We have innovative marketing programs which utilize market research on
selected systems, compare the data to national research and tailor marketing
programs for individual markets. We gather detailed customer information through
our regional marketing representatives and use the Claritas geodemographic data
program and consulting services to create unique packages of services and
marketing programs. These marketing efforts and the follow-up analysis provide
consumer information down to the city block or suburban subdivision level, which
allows us to create very targeted marketing programs.
 
     We seek to maximize our revenue per customer through the use of "tiered"
packaging strategies to market premium services and to develop and promote niche
programming services.
 
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<PAGE>   144
 
     We regularly use targeted direct mail campaigns to sell these tiers and
services to our existing customer base. We are developing an in-depth profile
database that goes beyond existing and former customers to include all homes
passed. This database information is expected to improve our targeted direct
marketing efforts, bringing us closer toward our objective of increasing total
customers as well as sales per customer for both new and existing customers. For
example, using customer profile data currently available, we are able to
identify customers who have children under a specified age and do not currently
subscribe to The Disney Channel. We then target our marketing efforts with
respect to The Disney Channel to those households. In 1998, we were chosen by
Claritas Corporation, sponsor of a national marketing competition across all
industries, as the first place winner in their media division, which includes
cable systems operations, telecommunications and newspapers, for our national
segmenting and targeted marketing program.
 
     Our marketing professionals have also received numerous industry awards
within the last two years, including the Cable and Telecommunication Association
of Marketers' awards for consumer research and best advertising and marketing
programs.
 
     In 1998, we introduced a new package of premium services. Customers receive
a substantial discount on bundled premium services of HBO, Showtime, Cinemax and
The Movie Channel. We were able to negotiate favorable terms with premium
networks, which allowed minimal impact on margins and provided substantial
volume incentives to grow the premium category. The MVP package has increased
our premium household penetration, premium revenue and cash flow. As a result of
this package, HBO recognized us as a top performing customer. We are currently
introducing this same premium strategy in the systems we have recently acquired.
 
     We expect to continue to invest significant amounts of time, effort and
financial resources in the marketing and promotion of new and existing services.
To increase customer penetration and increase the level of services used by our
customers, we use a coordinated array of marketing techniques, including
door-to-door solicitation, telemarketing, media advertising and direct mail
solicitation. We believe we have one of the cable television industry's highest
success rates in attracting and retaining customers who have never before
subscribed to cable television. Historically, these "nevers" are the most
difficult customers to attract and retain.
 
PROGRAMMING SUPPLY
 
     GENERAL.   We believe that offering a wide variety of conveniently
scheduled programming is an important factor influencing a customer's decision
to subscribe to and retain our cable services. We devote considerable resources
to obtaining access to a wide range of programming that we believe will appeal
to both existing and potential customers of basic and premium services. We rely
on extensive market research, customer demographics and local programming
preferences to determine channel offerings in each of our markets. See "-- Sales
and Marketing".
 
     PROGRAMMING SOURCES.   We obtain basic and premium programming from a
number of suppliers, usually pursuant to a written contract. As of June 30,
1999, we obtain
 
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<PAGE>   145
 
approximately 64% of our programming through contracts entered into directly
with a programming supplier. We obtain the rest of our programming through
TeleSynergy, Inc., which offers its partners contract benefits in buying
programming by virtue of volume discounts available to a larger buying base.
Programming tends to be made available to us for a flat fee per customer.
However, some channels are available without cost to us. In connection with the
launch of a new channel, we may receive a distribution fee to support the
channel launch, a portion of which is applied to marketing expenses associated
with the channel launch. The amounts we receive in distribution fees are not
significant.
 
     Our programming contracts generally continue for a fixed period of time,
usually from three to ten years. Although longer contract terms are available,
we prefer to limit contracts to three years so that we retain flexibility to
change programming and include new channels as they become available. Some
program suppliers offer marketing support or volume discount pricing structures.
Some of our programming agreements with premium service suppliers offer cost
incentives under which premium service unit prices decline as certain premium
service growth thresholds are met.
 
     For home shopping channels, we may receive a percentage of the amount spent
in home shopping purchases by our customers on channels we carry. In 1998, these
revenues totalled approximately $220,000.
 
     PROGRAMMING COSTS.   Our cable programming costs have increased in recent
years and are expected to continue to increase due to factors including:
 
     - system acquisitions;
 
     - additional programming being provided to customers;
 
     - increased cost to produce or purchase cable programming; and
 
     - inflationary increases.
 
In every year we have operated, our costs to acquire programming have exceeded
customary inflationary and cost-of-living type increases. Sports programming
costs have increased significantly over the past several years. In addition,
contracts to purchase sports programming sometimes contain built-in cost
increases for programming added during the term of the contract which we may or
may not have the option to add to our service offerings.
 
     Under rate regulation of the Federal Communications Commission, cable
operators may increase their rates to customers to cover increased costs for
programming, subject to certain limitations. See "Regulation and Legislation".
We now contract through TeleSynergy for approximately 36% of our programming. We
believe our partnership in TeleSynergy limited increases in our programming
costs relative to what the increases would otherwise have been. However, given
our increased size and purchasing ability, the effect may not be material. This
is because some programming suppliers offer advantageous pricing terms to cable
operators whose number of customers exceeds thresholds established by these
programming suppliers. Our increase in size as a result of our merger with
Marcus Holdings and our recent and pending acquisitions should
 
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<PAGE>   146
 
provide increased bargaining power, whether or not through TeleSynergy,
resulting in an ability to limit increases in programming costs. In addition,
upon the close of the InterMedia, Falcon and Bresnan acquisitions, the
InterMedia, Falcon and Bresnan cable systems will no longer be able to obtain
certain of their programming services through affiliates of AT&T Broadband and
Internet Services, formerly Tele-Communications, Inc. We expect that the impact
of any programming cost increases associated with the termination of these
arrangements will be more than offset by cost savings generated from our other
recent and pending acquisitions. Management believes it will, as a general
matter, be able to pass increases in its programming costs through to customers,
although we cannot assure you that it will be possible.
 
RATES
 
     Pursuant to the Federal Communications Commission's rules, we have set
rates for cable-related equipment, such as converter boxes and remote control
devices, and installation services. These rates are based on actual costs plus a
11.25% rate of return. We have unbundled these charges from the charges for the
provision of cable service.
 
     Rates charged to customers vary based on the market served and service
selected, and are typically adjusted on an annual basis. As of June 30, 1999,
the average monthly fee was $10.59 for basic service and $19.16 for expanded
basic service. Regulation of the expanded basic service was eliminated by
federal law as of March 31, 1999 and such rates are now based on market
conditions. A one-time installation fee, which may be waived in part during
certain promotional periods, is charged to new customers. We believe our rate
practices are in accordance with Federal Communications Commission Guidelines
and are consistent with those prevailing in the industry generally. See
"Regulation and Legislation".
 
THEFT PROTECTION
 
     The unauthorized tapping of cable plant and the unauthorized receipt of
programming using cable converters purchased through unauthorized sources are
problems which continue to challenge the entire cable industry. We have adopted
specific measures to combat the unauthorized use of our plant to receive
programming. For instance, in several of our regions, we have instituted a
"perpetual audit" whereby each technician is required to check at least four
other nearby residences during each service call to determine if there are any
obvious signs of piracy, namely, a drop line leading from the main cable line
into other homes. Addresses where the technician observes drop lines are then
checked against our customer billing records. If the address is not found in the
billing records, a sales representative calls on the unauthorized user to
correct the "billing discrepancy" and persuade the user to become a formal
customer. In our experience, approximately 25% of unauthorized users who are
solicited in this manner become customers. Billing records are then closely
monitored to guard against these new customers reverting to their status as
unauthorized users. Unauthorized users who do not convert are promptly
disconnected and, in certain instances, flagrant violators are referred for
prosecution. In addition, we have prosecuted individuals who have sold cable
converters programmed to receive our signals without proper authorization.
 
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<PAGE>   147
 
FRANCHISES
 
     As of June 30, 1999, our systems operated pursuant to an aggregate of 1,247
franchises, permits and similar authorizations issued by local and state
governmental authorities. As of June 30, 1999, on a pro forma basis, we held
approximately 4,250 franchises in the aggregate. Each franchise is awarded by a
governmental authority and is usually not transferable unless the granting
governmental authority consents. Most franchises are subject to termination
proceedings in the event of a material breach. In addition, most franchises
require us to pay the granting authority a franchise fee of up to 5.0% of gross
revenues generated by cable television services under the franchise (i.e., the
maximum amount that may be charged under the Communications Act).
 
     Our franchises have terms which range from four years to more than 32
years. Prior to the scheduled expiration of most franchises, we initiate renewal
proceedings with the granting authorities. This process usually takes three
years but can take a longer period of time and often involves substantial
expense. The Communications Act provides for an orderly franchise renewal
process in which granting authorities may not unreasonably withhold renewals. If
a renewal is withheld and the granting authority takes over operation of the
affected cable system or awards it to another party, the granting authority must
pay the existing cable operator the "fair market value" of the system. The
Communications Act also established comprehensive renewal procedures requiring
that an incumbent franchisee's renewal application be evaluated on its own merit
and not as part of a comparative process with competing applications. In
connection with the franchise renewal process, many governmental authorities
require the cable operator make certain commitments, such as technological
upgrades to the system, which may require substantial capital expenditures. We
cannot assure you, however, that any particular franchise will be renewed or
that it can be renewed on commercially favorable terms. Our failure to obtain
renewals of our franchises, especially those in major metropolitan areas where
we have the most customers, would have a material adverse effect on our
business, results of operations and financial condition. See "Risk
Factors -- Regulatory and Legislative Matters". The following table summarizes
our systems' franchises by year of expiration, and approximate number of basic
customers as of June 30, 1999 and does not reflect pending acquisitions or
acquisitions closed since that date.
 

<TABLE>
<CAPTION>
                                                         PERCENTAGE                   PERCENTAGE
                                           NUMBER OF      OF TOTAL     TOTAL BASIC     OF TOTAL
YEAR OF FRANCHISE EXPIRATION               FRANCHISES    FRANCHISES     CUSTOMERS     CUSTOMERS
----------------------------               ----------    ----------    -----------    ----------
<S>                                        <C>           <C>           <C>            <C>
Prior to December 31, 1999...............      109            9%          275,000         10%
2000 to 2002.............................      239           19%          608,000         22%
2003 to 2005.............................      267           21%          525,000         19%
2006 or after............................      632           51%        1,326,000         49%
                                             -----          ---         ---------        ---
     Total...............................    1,247          100%        2,734,000        100%
</TABLE>

 
     Under the 1996 Telecom Act, cable operators are not required to obtain
franchises in order to provide telecommunications services, and granting
authorities are prohibited from limiting, restricting or conditioning the
provision of such services. In addition,
 
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<PAGE>   148
 
granting authorities may not require a cable operator to provide
telecommunications services or facilities, other than institutional networks, as
a condition of an initial franchise grant, a franchise renewal, or a franchise
transfer. The 1996 Telecom Act also limits franchise fees to an operator's
cable-related revenues and clarifies that they do not apply to revenues that a
cable operator derives from providing new telecommunications services.
 
     We believe our relations with the franchising authorities under which our
systems are operated are generally good. Substantially all of the material
franchises relating to our systems which are eligible for renewal have been
renewed or extended at or prior to their stated expiration dates.
 
COMPETITION
 
     We face competition in the areas of price, service offerings, and service
reliability. We compete with other providers of television signals and other
sources of home entertainment. In addition, as we expand into additional
services such as Internet access, interactive services and telephony, we will
face competition from other providers of each type of service. See "Risk
Factors -- We operate in a very competitive business environment which can
adversely affect our business and operations".
 
     To date, we believe that we have not lost a significant number of
customers, or a significant amount of revenue, to our competitors' systems.
However, competition from other providers of the technologies we expect to offer
in the future may have a negative impact on our business in the future.
 
     Through mergers such as the recent merger of Tele-Communications, Inc. and
AT&T, customers will come to expect a variety of services from a single
provider. While the TCI/AT&T merger has no direct or immediate impact on our
business, it encourages providers of cable and telecommunications services to
expand their service offerings. It also encourages consolidation in the cable
industry as cable operators recognize the competitive benefits of a large
customer base and expanded financial resources.
 
     Key competitors today include:
 
     - BROADCAST TELEVISION.   Cable television has long competed with broadcast
television, which consists of television signals that the viewer is able to
receive without charge using a traditional "off-air" antenna. The extent of such
competition is dependent upon the quality and quantity of broadcast signals
available through "off-air" reception compared to the services provided by the
local cable system. The recent licensing of digital spectrum by the Federal
Communications Commission will provide incumbent television licenses with the
ability to deliver high definition television pictures and multiple
digital-quality program streams, as well as advanced digital services such as
subscription video.
 
     - DBS.   Direct broadcast satellite, known as DBS, has emerged as
significant competition to cable systems. The DBS industry has grown rapidly
over the last several years, far exceeding the growth rate of the cable
television industry, and now serves
 
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<PAGE>   149
 
approximately 10 million subscribers nationwide. DBS service allows the
subscriber to receive video services directly via satellite using a relatively
small dish antenna. Moreover, video compression technology allows DBS providers
to offer more than 100 digital channels, thereby surpassing the typical cable
system. DBS, however, is limited in the local programming it can provide because
of the current capacity limitations of satellite technology. In addition,
existing copyright rules restrict the ability of DBS providers to offer local
broadcast programming. Congress is now considering legislation that would remove
these legal obstacles. DirecTV and EchoStar Communications Corporation, the two
primary DBS providers, have reached agreements allowing them to offer Fox's
owned-and-operated stations in their local markets. These agreements are
contingent upon passage of satellite TV reform legislation. America Online Inc.,
the nation's leading provider of Internet services has recently announced a plan
to invest $1.5 billion in Hughes Electronics Corp., DirecTV, Inc.'s parent
company, and these companies intend to jointly market America Online's
prospective Internet television service to DirecTV's DBS customers.
 
     - DSL.   The deployment of digital subscriber line technology, known as
DSL, will allow Internet access to subscribers at data transmission speeds
greater than those of modems over conventional telephone lines. Several
telephone companies and other companies are introducing DSL service. The Federal
Communications Commission has initiated an administrative proceeding to consider
its authority and the possibility of rules to facilitate the deployment of
advanced communications services, including high speed broadband services and
interactive online Internet services. We are unable to predict the ultimate
outcome of any Federal Communications Commission proceeding, the likelihood of
success of the Internet access offered by our competitors or the impact on our
business and operations of these competitive ventures.
 
     - TRADITIONAL OVERBUILDS.   Cable television systems are operated under
non-exclusive franchises granted by local authorities. More than one cable
system may legally be built in the same area. It is possible that a franchising
authority might grant a second franchise to another cable operator and that
franchise might contain terms and conditions more favorable than those afforded
us. In addition, entities willing to establish an open video system, under which
they offer unaffiliated programmers non-discriminatory access to a portion of
the system's cable system may be able to avoid local franchising requirements.
Well financed businesses from outside the cable industry, such as public
utilities which already possess fiber optic and other transmission lines in the
areas they serve may over time become competitors. There has been a recent
increase in the number of cities that have constructed their own cable systems,
in a manner similar to city-provided utility services. Constructing a competing
cable system is a capital intensive process which involves a high degree of
risk. We believe that in order to be successful, a competitor's overbuild would
need to be able to serve the homes and businesses in the overbuilt area on a
more cost-effective basis than us. Any such overbuild operation would require
either significant access to capital or access to facilities already in place
that are capable of delivering cable television programming.
 
     We are aware of overbuild situations in some of our systems located in
Newnan, Columbus and West Point, Georgia; Barron and Cameron, Wisconsin; Auburn,
Rancho
 
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<PAGE>   150
 
Cucamonga and Victorville, California; and Lanett and Valley, Alabama.
Approximately 49,000 basic customers, approximately 1.8% of our total basic
customers, are passed by these overbuilds. Additionally, we have been notified
that franchises have been awarded, and present potential overbuild situations,
in some of our systems located in Denton, Southlake, Roanoke and Keller, Texas
and Willimantic, Connecticut. These potential overbuild areas service an
aggregate of approximately 54,000 basic customers or approximately 2.0% of our
total basic customers. In response to such overbuilds, these systems have been
designated priorities for the upgrade of cable plant and the launch of new and
enhanced services. We have upgraded each of these systems to at least 750
megahertz two-way HFC architecture, with the exceptions of our systems in
Columbus, Georgia, and Willimantic, Connecticut. Upgrades to at least 750
megahertz two-way HFC architecture with respect to these two systems are
expected to be completed by December 31, 2000 and December 31, 2001,
respectively.
 
     - TELEPHONE COMPANIES AND UTILITIES.   The competitive environment has been
significantly affected by both technological developments and regulatory changes
enacted in The Telecommunications Act of 1996, which were designed to enhance
competition in the cable television and local telephone markets. Federal
cross-ownership restrictions historically limited entry by local telephone
companies into the cable television business. The 1996 Telecom Act modified this
cross-ownership restriction, making it possible for local exchange carriers who
have considerable resources to provide a wide variety of video services
competitive with services offered by cable systems.
 
     As we expand our offerings to include Internet and other telecommunications
services, we will be subject to competition from other telecommunications
providers. The telecommunications industry is highly competitive and includes
competitors with greater financial and personnel resources, who have brand name
recognition and long-standing relationships with regulatory authorities.
Moreover, mergers, joint ventures and alliances among franchise, wireless or
private cable television operators, local exchange carriers and others may
result in providers capable of offering cable television, Internet, and
telecommunications services in direct competition with us.
 
     Several telephone companies have obtained or are seeking cable television
franchises from local governmental authorities and are constructing cable
systems. Cross-subsidization by local exchange carriers of video and telephony
services poses a strategic advantage over cable operators seeking to compete
with local exchange carriers that provide video services. Some local exchange
carriers may choose to make broadband services available under the open video
regulatory framework of the Federal Communications Commission. In addition,
local exchange carriers provide facilities for the transmission and distribution
of voice and data services, including Internet services, in competition with our
existing or potential interactive services ventures and businesses, including
Internet service, as well as data and other non-video services. We cannot
predict the likelihood of success of the broadband services offered by our
competitors or the impact on us of such competitive ventures. The entry of
telephone companies as direct competitors in the video marketplace, however, is
likely to become more widespread and could adversely affect the profitability
and valuation of the systems.
 
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<PAGE>   151
 
     Additionally, we are subject to competition from utilities which possess
fiber optic transmission lines capable of transmitting signals with minimal
signal distortion.
 
     - SMATV.   Additional competition is posed by satellite master antenna
television systems known as "SMATV systems" serving multiple dwelling units,
referred to in the cable industry as "MDU's", such as condominiums, apartment
complexes, and private residential communities. These private cable systems may
enter into exclusive agreements with such MDUs, which may preclude operators of
franchise systems from serving residents of such private complexes. Such private
cable systems can offer both improved reception of local television stations and
many of the same satellite-delivered program services which are offered by cable
systems. SMATV systems currently benefit from operating advantages not available
to franchised cable systems, including fewer regulatory burdens and no
requirement to service low density or economically depressed communities.
Exemption from regulation may provide a competitive advantage to certain of our
current and potential competitors.
 
     - WIRELESS DISTRIBUTION.   Cable television systems also compete with
wireless program distribution services such as multi-channel multipoint
distribution systems or "wireless cable", known as MMDS. MMDS uses low-power
microwave frequencies to transmit television programming over-the-air to paying
customers. Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital compression
technology is likely to increase significantly the channel capacity of their
systems. Both analog and digital MMDS services require unobstructed "line of
sight" transmission paths. While no longer as significant a competitor, analog
MMDS has impacted our customer growth in Riverside and Sacramento, California
and Missoula, Montana. Digital MMDS is a more significant competitor, presenting
potential challenges to us in Los Angeles, California and Atlanta, Georgia.
 

PROPERTIES
 
     Our principal physical assets consist of cable television plant and
equipment, including signal receiving, encoding and decoding devices, headend
reception facilities, distribution systems and customer drop equipment for each
of our cable television systems. Our cable television plant and related
equipment are generally attached to utility poles under pole rental agreements
with local public utilities and telephone companies, and in certain locations
are buried in underground ducts or trenches. The physical components of our
cable television systems require maintenance and periodic upgrading to keep pace
with technological advances. We own or lease real property for signal reception
sites and business offices in many of the communities served by our systems and
for our principal executive offices. We own most of our service vehicles.
 
     Our subsidiaries own the real property housing our regional data center in
Town & Country, Missouri, as well as the regional office for the Northeast
Region in Newtown, Connecticut and additional real estate located in Hickory,
North Carolina; Hammond, Louisiana; and West Sacramento and San Luis Obispo,
California. Our subsidiaries lease space for our regional data center located in
Dallas, Texas and additional locations for business offices throughout our
operating regions. Our headend locations are generally
 
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located on owned or leased parcels of land, and we generally own the towers on
which our equipment is located.
 
     All of our properties and assets are subject to liens securing payment of
indebtedness under the existing credit facilities. We believe that our
properties are in good operating condition and are suitable and adequate for our
business operations.
 
EMPLOYEES
 
   
     As of the closing of the offering, Charter Communications, Inc. will have
only twelve employees, all of whom are senior management and are also executive
officers of Charter Investment, Inc. Pursuant to a services agreement between
Charter Communications, Inc. and Charter Investment, Inc., Charter Investment,
Inc. will provide the necessary personnel and services to manage Charter
Communications Holding Company and its subsidiaries. These personnel and
services will be provided to Charter Communications, Inc. on a cost
reimbursement basis. As of June 30, 1999, Charter Communications Holding
Company's subsidiaries had approximately 4,980 full-time equivalent employees of
which 280 were represented by the International Brotherhood of Electrical
Workers. We believe we have a good relationship with our employees and have
never experienced a work stoppage. See "Certain Relationships and Related
Transactions".
    
 
INSURANCE
 
     We have insurance to cover risks incurred in the ordinary course of
business, including general liability, property coverage, business interruption
and workers' compensation insurance in amounts typical of similar operators in
the cable industry and with reputable insurance providers. As is typical in the
cable industry, we do not insure our underground plant. We believe our insurance
coverage is adequate.
 
LEGAL PROCEEDINGS
 
     We are involved from time to time in routine legal matters incidental to
our business. We believe that the resolution of such matters will not have a
material adverse impact on our financial position or results of operations.
 
WHERE YOU CAN FIND ADDITIONAL INFORMATION
 
     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 to register the Class A common stock offered by this
prospectus. This prospectus, which forms a part of the registration statement,
does not contain all the information included in that registration statement.
For further information about us and the Class A common stock offered in this
prospectus, you should refer to the registration statement and its exhibits.
After completion of the offering, we will be required to file annual, quarterly
and other information with the SEC. You may read and copy any document we file
with the SEC at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional
offices at 3475 Lenox Road, N.E., Suite 1000, Atlanta, Georgia
 
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30326-1232. Copies of such material may be obtained from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You can also review such material by accessing the SEC's
Internet web site at http:// www.sec.gov. This site contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC.
 
     We intend to furnish to each holder of our Class A common stock annual
reports containing audited financial statements and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year. We will also furnish to each holder of our Class A common stock such other
reports as may be required by law.
 
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<PAGE>   154
 
                           REGULATION AND LEGISLATION
 
     The following summary addresses the key regulatory developments and
legislation affecting the cable television industry.
 
     The operation of a cable system is extensively regulated by the Federal
Communications Commission, some state governments and most local governments.
The 1996 Telecom Act has altered the regulatory structure governing the nation's
communications providers. It removes barriers to competition in both the cable
television market and the local telephone market. Among other things, it also
reduces the scope of cable rate regulation and encourages additional competition
in the video programming industry by allowing local telephone companies to
provide video programming in their own telephone service areas.
 
     The 1996 Telecom Act requires the Federal Communications Commission to
undertake a host of implementing rulemakings. Moreover, Congress and the Federal
Communications Commission have frequently revisited the subject of cable
regulation. Future legislative and regulatory changes could adversely affect our
operations, and there have been calls in Congress and at the Federal
Communications Commission to maintain or even tighten cable regulation in the
absence of widespread effective competition.
 
     CABLE RATE REGULATION.   The 1992 Cable Act imposed an extensive rate
regulation regime on the cable television industry, which limited the ability of
cable companies to increase subscriber fees. Under that regime, all cable
systems are subject to rate regulation, unless they face "effective competition"
in their local franchise area. Federal law now defines "effective competition"
on a community-specific basis as requiring satisfaction of conditions rarely
satisfied in the current marketplace.
 
     Although the Federal Communications Commission has established the
underlying regulatory scheme, local government units, commonly referred to as
local franchising authorities, are primarily responsible for administering the
regulation of the lowest level of cable -- the basic service tier, which
typically contains local broadcast stations and public, educational, and
government access channels. Before a local franchising authority begins basic
service rate regulation, it must certify to the Federal Communications
Commission that it will follow applicable federal rules. Many local franchising
authorities have voluntarily declined to exercise their authority to regulate
basic service rates. Local franchising authorities also have primary
responsibility for regulating cable equipment rates. Under federal law, charges
for various types of cable equipment must be unbundled from each other and from
monthly charges for programming services.
 
     As of June 30, 1999, approximately 21% of our local franchising authorities
were certified to regulate basic tier rates. The 1992 Cable Act permits
communities to certify and regulate rates at any time, so that it is possible
that additional localities served by the systems may choose to certify and
regulate rates in the future.
 
     The Federal Communications Commission itself directly administers rate
regulation of cable programming service tiers, which is expanded basic
programming offering more services than basic programming, which typically
contain satellite-delivered program-
 
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<PAGE>   155
 
ming. Under the 1996 Telecom Act, the Federal Communications Commission can
regulate cable programming service tier rates only if a local franchising
authority first receives at least two rate complaints from local subscribers and
then files a formal complaint with the Federal Communications Commission. When
new cable programming service tier rate complaints are filed, the Federal
Communications Commission considers only whether the incremental increase is
justified and it will not reduce the previously established cable programming
service tier rate. We currently have rate complaints relating to approximately
240,000 subscribers pending at the Federal Communications Commission. The
Federal Communications Commission's authority to regulate cable programming
service tier rates effectively expired on March 31, 1999. The Federal
Communications Commission has taken the position that it will still adjudicate
cable programming service tier complaints filed after this sunset date, but no
later than 180 days after the last cable programming service tier rate increase
imposed prior to March 31, 1999, and will strictly limit its review, and
possibly refund orders, to the time period predating the sunset date. We do not
believe any adjudications regarding these pre-sunset complaints will have a
material adverse effect on our business. The elimination of cable programming
service tier regulation, which is the rate regulation of a particular level of
packaged programming services, typically referring to the expanded basic level
of service, on a prospective basis affords us substantially greater pricing
flexibility.
 
     Under the rate regulations of the Federal Communication Commission, most
cable systems were required to reduce their basic service tier and cable
programming service tier rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The Federal Communications Commission
has modified its rate adjustment regulations to allow for annual rate increases
and to minimize previous problems associated with regulatory lag. Operators also
have the opportunity to bypass this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Cost of service regulation is a traditional form of rate
regulation, under which a utility is allowed to recover its costs of providing
the regulated service, plus a reasonable profit. The Federal Communications
Commission and Congress have provided various forms of rate relief for smaller
cable systems owned by smaller operations. Premium cable services offered on a
per-channel or per-program basis remain unregulated, as do affirmatively
marketed packages consisting entirely of new programming product. However,
federal law requires that the basic service tier be offered to all cable
subscribers and limits the ability of operators to require purchase of any cable
programming service tier if a customer seeks to purchase premium services
offered on a per-channel or per-program basis, subject to a technology exception
which sunsets in 2002.
 
     As noted above, Federal Communications Commission regulation of cable
programming service tier rates for all systems, regardless of size, sunset
pursuant to the 1996 Telecom Act on March 31, 1999. Certain legislators,
however, have called for new rate regulations if unregulated cost rates increase
dramatically. The 1996 Telecom Act also
 
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relaxes existing "uniform rate" requirements by specifying that uniform rate
requirements do not apply where the operator faces "effective competition," and
by exempting bulk discounts to multiple dwelling units, although complaints
about predatory pricing still may be made to the Federal Communications
Commission.
 
     CABLE ENTRY INTO TELECOMMUNICATIONS.   The 1996 Telecom Act creates a more
favorable environment for us to provide telecommunication services beyond
traditional video delivery. It provides that no state or local laws or
regulations may prohibit or have the effect of prohibiting any entity from
providing any interstate or intrastate telecommunications service. A cable
operator is authorized under the 1996 Telecom Act to provide telecommunication
services without obtaining a separate local franchise. States are authorized,
however, to impose "competitively neutral" requirements regarding universal
service, public safety and welfare, service quality, and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require reasonable, competitively neutral compensation for
management of the public rights-of-way when cable operators provide
telecommunications service. The favorable pole attachment rates afforded cable
operators under federal law can be gradually increased by utility companies
owning the poles, beginning in 2001, if the operator provides telecommunications
service, as well as cable service, over its plant. The Federal Communications
Commission recently clarified that a cable operator's favorable pole rates are
not endangered by the provision of Internet access.
 
     Cable entry into telecommunications will be affected by the regulatory
landscape now being developed by the Federal Communications Commission and state
regulators. One critical component of the 1996 Telecom Act to facilitate the
entry of new telecommunications providers, including cable operators, is the
interconnection obligation imposed on all telecommunications carriers. In July
1997, the Eighth Circuit Court of Appeals vacated certain aspects of the Federal
Communications Commission initial interconnection order but most of that
decision was reversed by the U.S. Supreme Court in January 1999. The Supreme
Court effectively upheld most of the Federal Communications Commission
interconnection regulations. Although these regulations should enable new
telecommunications entrants to reach viable interconnection agreements with
incumbent carriers, many issues, including whether the Federal Communications
Commission ultimately can mandate that incumbent carriers make available
specific network elements, remains subject to further Federal Communications
Commission review. Aggressive regulation by the Federal Communications
Commission in this area, if upheld by the courts, would make it easier for us to
provide telecommunications service.
 
     INTERNET SERVICE.   Although there is at present no significant federal
regulation of cable system delivery of Internet services, and the Federal
Communications Commission recently issued a report to Congress finding no
immediate need to impose such regulation, this situation may change as cable
systems expand their broadband delivery of Internet services. In particular,
proposals have been advanced at the Federal Communications Commission and
Congress that would require cable operators to provide access to unaffiliated
Internet service providers and online service providers. Certain Internet
service providers also are attempting to use existing modes of access that are
 
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commercially leased to gain access to cable system delivery. A petition on this
issue is now pending before the Federal Communications Commission. Finally, some
local franchising authorities are considering the imposition of mandatory
Internet access requirements as part of cable franchise renewals or transfers. A
federal district court in Portland, Oregon recently upheld the legal ability of
local franchising authority to impose such conditions, but an appeal has been
filed. Other local authorities have imposed or may impose mandatory Internet
access requirements on cable operators. These developments could, if they become
widespread, burden the capacity of cable systems and complicate our own plans
for providing Internet service.
 
     TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION.   The 1996 Telecom Act
allows telephone companies to compete directly with cable operators by repealing
the historic telephone company/cable cross-ownership ban. Local exchange
carriers, including the regional telephone companies, can now compete with cable
operators both inside and outside their telephone service areas with certain
regulatory safeguards. Because of their resources, local exchange carriers could
be formidable competitors to traditional cable operators, and certain local
exchange carriers have begun offering cable service.
 
     Various local exchange carriers currently are seeking to provide video
programming services within their telephone service areas through a variety of
distribution methods, including both the deployment of broadband wire facilities
and the use of wireless transmission.
 
     Under the 1996 Telecom Act, local exchange carriers or any other cable
competitor providing video programming to subscribers through broadband wire
should be regulated as a traditional cable operator, subject to local
franchising and federal regulatory requirements, unless the local exchange
carrier or other cable competitor elects to deploy its broadband plant as an
open video system. To qualify for favorable open video system status, the
competitor must reserve two-thirds of the system's activated channels for
unaffiliated entities. The Fifth Circuit Court of Appeals recently reversed
certain of the Federal Communications Commission's open video system rules,
including its preemption of local franchising. That decision may be subject to
further appeal. It is unclear what effect this ruling will have on the entities
pursuing open video system operation.
 
     Although local exchange carriers and cable operators can now expand their
offerings across traditional service boundaries, the general prohibition remains
on local exchange carrier buyouts of co-located cable systems. Co-located cable
systems are cable systems serving an overlapping territory. Cable operator
buyouts of co-located local exchange carrier systems, and joint ventures between
cable operators and local exchange carriers in the same market. The 1996 Telecom
Act provides a few limited exceptions to this buyout prohibition, including a
carefully circumscribed "rural exemption." The 1996 Telecom Act also provides
the Federal Communications Commission with the limited authority to grant
waivers of the buyout prohibition.
 
     ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE TELEVISION.   The 1996
Telecom Act provides that registered utility holding companies and subsidiaries
may provide telecommunications services, including cable television,
notwithstanding the Public Utility Holding Company Act. Electric utilities must
establish separate
 
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subsidiaries, known as "exempt telecommunications companies" and must apply to
the Federal Communications Commission for operating authority. Like telephone
companies, electric utilities have substantial resources at their disposal, and
could be formidable competitors to traditional cable systems. Several such
utilities have been granted broad authority by the Federal Communications
Commission to engage in activities which could include the provision of video
programming.
 
     ADDITIONAL OWNERSHIP RESTRICTIONS.   The 1996 Telecom Act eliminates
statutory restrictions on broadcast/cable cross-ownership, including broadcast
network/cable restrictions, but leaves in place existing Federal Communications
Commission regulations prohibiting local cross-ownership between co-located
television stations and cable systems.
 
     Pursuant to the 1992 Cable Act, the Federal Communications Commission
adopted rules precluding a cable system from devoting more than 40% of its
activated channel capacity to the carriage of affiliated national video program
services. Also pursuant to the 1992 Cable Act, the Federal Communications
Commission has adopted rules that preclude any cable operator from serving more
than 30% of all U.S. domestic video subscribers, including cable and direct
broadcast satellite subscribers. However, this provision has been stayed pending
further judicial review.
 
     MUST CARRY/RETRANSMISSION CONSENT.   The 1992 Cable Act contains broadcast
signal carriage requirements. Broadcast signal carriage is the transmission of
broadcast television signals over a cable system to cable customers. These
requirements, among other things, allow local commercial television broadcast
stations to elect once every three years between a "must carry" status or a
"retransmission consent" status. Less popular stations typically elect must
carry, which is the broadcast signal carriage requirement that allows local
commercial television broadcast stations to require a cable system to carry the
station. More popular stations, such as those affiliated with a national
network, typically elect retransmission consent which is the broadcast signal
carriage requirement that allows local commercial television broadcast stations
to negotiate for payments for granting permission to the cable operator to carry
the stations. Must carry requests can dilute the appeal of a cable system's
programming offerings because a cable system with limited channel capacity may
be required to forego carriage of popular channels in favor of less popular
broadcast stations electing must carry. Retransmission consent demands may
require substantial payments or other concessions. Either option has a
potentially adverse effect on our business. The burden associated with must
carry may increase substantially if broadcasters proceed with planned conversion
to digital transmission and the Federal Communications Commission determines
that cable systems must carry all analog and digital broadcasts in their
entirety. This burden would reduce capacity available for more popular video
programming and new internet and telecommunication offerings. A rulemaking is
now pending at the Federal Communications Commission regarding the imposition of
dual digital and analog must carry.
 
     ACCESS CHANNELS.   Local franchising authorities can include franchise
provisions requiring cable operators to set aside certain channels for public,
educational and governmental access programming. Federal law also requires cable
systems to designate a
 
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portion of their channel capacity, up to 15% in some cases, for commercial
leased access by unaffiliated third parties. The Federal Communications
Commission has adopted rules regulating the terms, conditions and maximum rates
a cable operator may charge for commercial leased access use. We believe that
requests for commercial leased access carriages have been relatively limited. A
new request has been forwarded to the Federal Communications Commission,
however, requesting that unaffiliated Internet service providers be found
eligible for commercial leased access. Although we do not believe such use is in
accord with the governing statute, a contrary ruling could lead to substantial
leased activity by Internet service providers and disrupt our own plans for
Internet service.
 
     ACCESS TO PROGRAMMING.   To spur the development of independent cable
programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring their cable operators over new competitors and requires such
programmers to sell their programming to other multichannel video distributors.
This provision limits the ability of vertically integrated cable programmers to
offer exclusive programming arrangements to cable companies. Recently, there has
been increased interest in further restricting the marketing practices of cable
programmers, including subjecting programmers who are not affiliated with cable
operators to all of the existing program access requirements, and subjecting
terrestrially delivered programming to the program access requirements.
Terrestrially delivered programming is programming delivered other than by
satellite. These changes should not have a dramatic impact on us, but would
limit potential competitive advantages we now enjoy.
 
     INSIDE WIRING; SUBSCRIBER ACCESS.   In an order issued in 1997, the Federal
Communications Commission established rules that require an incumbent cable
operator upon expiration of a multiple dwelling unit service contract to sell,
abandon, or remove "home run" wiring that was installed by the cable operator in
a multiple dwelling unit building. These inside wiring rules are expected to
assist building owners in their attempts to replace existing cable operators
with new programming providers who are willing to pay the building owner a
higher fee, where such a fee is permissible. The Federal Communications
Commission has also proposed abrogating all exclusive multiple dwelling unit
service agreements held by incumbent operators, but allowing such contracts when
held by new entrants. In another proceeding, the Federal Communications
Commission has preempted restrictions on the deployment of private antenna on
rental property within the exclusive use of a tenant, such as balconies and
patios. This Federal Communications Commission ruling may limit the extent to
which we along with multiple dwelling unit owners may enforce certain aspects of
multiple dwelling unit agreements which otherwise prohibit, for example,
placement of digital broadcast satellite receiver antennae in multiple dwelling
unit areas under the exclusive occupancy of a renter. These developments may
make it even more difficult for us to provide service in multiple dwelling unit
complexes.
 
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     OTHER REGULATIONS OF THE FEDERAL COMMUNICATIONS COMMISSION.   In addition
to the Federal Communications Commission regulations noted above, there are
other regulations of the Federal Communications Commission covering such areas
as:
 
     - equal employment opportunity,
 
     - subscriber privacy,
 
     - programming practices, including, among other things,
 
         (1) syndicated program exclusivity, which is a Federal Communications
             Commission rule which requires a cable system to delete particular
             programming offered by a distant broadcast signal carried on the
             system which duplicates the programming for which a local broadcast
             station has secured exclusive distribution rights,
 
         (2) network program nonduplication,
 
         (3) local sports blackouts,
 
         (4) indecent programming,
 
         (5) lottery programming,
 
         (6) political programming,
 
         (7) sponsorship identification,
 
         (8) children's programming advertisements, and
 
         (9) closed captioning,
 
     - registration of cable systems and facilities licensing,
 
     - maintenance of various records and public inspection files,
 
     - aeronautical frequency usage,
 
     - lockbox availability,
 
     - antenna structure notification,
 
     - tower marking and lighting,
 
     - consumer protection and customer service standards,
 
     - technical standards,
 
     - consumer electronics equipment compatibility, and
 
     - emergency alert systems.
 
     The Federal Communications Commission recently ruled that cable customers
must be allowed to purchase cable converters from third parties and established
a multi-year phase-in during which security functions, which would remain in the
operator's exclusive control, would be unbundled from basic converter functions,
which could then be satisfied by third party vendors. The Federal Communications
Commission has the authority to enforce its regulations through the imposition
of substantial fines, the issuance of cease and desist orders and/or the
imposition of other administrative sanctions, such as the revocation of Federal
Communications Commission licenses needed to operate certain transmission
facilities used in connection with cable operations.
 
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<PAGE>   161
 
     COPYRIGHT.   Cable television systems are subject to federal copyright
licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool, that varies depending on the size
of the system, the number of distant broadcast television signals carried, and
the location of the cable system, cable operators can obtain blanket permission
to retransmit copyrighted material included in broadcast signals. The possible
modification or elimination of this compulsory copyright license is the subject
of continuing legislative review and could adversely affect our ability to
obtain desired broadcast programming. We cannot predict the outcome of this
legislative activity. Copyright clearances for nonbroadcast programming services
are arranged through private negotiations.
 
     Cable operators distribute locally originated programming and advertising
that use music controlled by the two principal major music performing rights
organizations, the Association of Songwriters, Composers, Artists and Producers
and Broadcast Music, Inc. The cable industry and Broadcast Music have reached a
standard licensing agreement, and negotiations with the Association of
Songwriters are ongoing. Although we cannot predict the ultimate outcome of
these industry negotiations or the amount of any license fees we may be required
to pay for past and future use of association-controlled music, we do not
believe such license fees will be significant to our business and operations.
 
     STATE AND LOCAL REGULATION.   Cable television systems generally are
operated pursuant to nonexclusive franchises granted by a municipality or other
state or local government entity in order to cross public rights-of-way. Federal
law now prohibits local franchising authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises. Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
failed to comply with material provisions.
 
     The specific terms and conditions of franchises vary materially between
jurisdictions. Each franchise generally contains provisions governing cable
operations, service rates, franchising fees, system construction and maintenance
obligations, system channel capacity, design and technical performance, customer
service standards, and indemnification protections. A number of states,
including Connecticut, subject cable systems to the jurisdiction of centralized
state governmental agencies, some of which impose regulation of a character
similar to that of a public utility. Although local franchising authorities have
considerable discretion in establishing franchise terms, there are certain
federal limitations. For example, local franchising authorities cannot insist on
franchise fees exceeding 5% of the system's gross cable-related revenues, cannot
dictate the particular technology used by the system, and cannot specify video
programming other than identifying broad categories of programming.
 
     Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the local franchising authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and service or increased
franchise fees as a condition of renewal. Similarly, if a local franchising
authority's consent is required for the purchase or sale of
 
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<PAGE>   162
 
a cable system or franchise, such local franchising authority may attempt to
impose more burdensome or onerous franchise requirements in connection with a
request for consent. Historically, most franchises have been renewed for and
consents granted to cable operators that have provided satisfactory services and
have complied with the terms of their franchise.
 
     Under the 1996 Telecom Act, cable operators are not required to obtain
franchises for the provision of telecommunications services, and local
franchising authorities are prohibited from limiting, restricting, or
conditioning the provision of such services. In addition, local franchising
authorities may not require a cable operator to provide any telecommunications
service or facilities, other than institutional networks under certain
circumstances, as a condition of an initial franchise grant, a franchise
renewal, or a franchise transfer. The 1996 Telecom Act also provides that
franchising fees are limited to an operator's cable-related revenues and do not
apply to revenues that a cable operator derives from providing new
telecommunications services.
 
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                                   MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
   
     As of the completion of the offering, the following will be the executive
officers and directors of Charter Communications, Inc. As of the date of this
prospectus, there are three directors of Charter Communications, Inc. On the
date of this prospectus, two independent directors will be appointed to the
board. After the offering, two additional directors will be appointed to the
board. All directors will serve until Charter Communications, Inc.'s next annual
meeting. Mr. Allen, the holder of all of the Class B common stock, is entitled
to elect all but one of the directors. The remaining director is elected by the
holders of Class B common stock and Class A common stock voting together as a
class. See "Description of Capital Stock and Membership Units -- Voting Rights".
    
 
   

<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS AS OF
THE DATE OF THIS PROSPECTUS                    AGE     POSITION
--------------------------------------         ----    --------
<S>                                            <C>     <C>
Paul G. Allen................................    46    Chairman of the Board of Directors
William D. Savoy.............................    35    Director
Jerald L. Kent...............................    43    President, Chief Executive Officer and
                                                       Director
David G. Barford.............................    41    Senior Vice President of Operations -- Western
                                                       Division
Mary Pat Blake...............................    44    Senior Vice President -- Marketing and
                                                       Programming
Eric A. Freesmeier...........................    46    Senior Vice President -- Administration
Thomas R. Jokerst............................    50    Senior Vice President -- Advanced Technology
                                                       Development
Kent D. Kalkwarf.............................    40    Senior Vice President and Chief Financial
                                                       Officer
Ralph G. Kelly...............................    42    Senior Vice President -- Treasurer
David L. McCall..............................    44    Senior Vice President of Operations -- Eastern
                                                       Division
John C. Pietri...............................    50    Senior Vice President -- Engineering
Steven A. Schumm.............................    47    Executive Vice President, Assistant to the
                                                       President
Curtis S. Shaw...............................    50    Senior Vice President, General Counsel and
                                                       Secretary
Stephen E. Silva.............................    39    Senior Vice President -- Corporate Development
                                                       and Technology
TO BE APPOINTED ON THE DATE OF THIS
PROSPECTUS
---------------------------------------------
Ronald L. Nelson.............................    47    Director
Nancy B. Peretsman...........................    45    Director
TO BE APPOINTED AFTER THE OFFERING
---------------------------------------------
Marc B. Nathanson............................    54    Director
Howard L. Wood...............................    60    Director
</TABLE>

    
 
     The following sets forth certain biographical information with respect to
our executive officers, directors and director nominees.
 
     PAUL G. ALLEN is the Chairman of the board of directors of Charter
Communications, Inc. and of the board of directors of Charter Investment, Inc.
Mr. Allen has been a private investor for more than five years, with interests
in a wide variety of companies,
 
                                       160

<PAGE>   164
 
many of which focus on multimedia digital communications. Such companies include
Interval Research Corporation, of which Mr. Allen is a director, Vulcan
Ventures, Inc., of which Mr. Allen is the President, Chief Executive Officer and
Chairman of the board of directors, Vulcan Northwest, Inc., of which Mr. Allen
is the Chairman of the board, Vulcan Programming, Inc. and Vulcan Cable III Inc.
In addition, Mr. Allen is the owner and the Chairman of the board of directors
of the Portland Trail Blazers of the National Basketball Association, and is the
owner and the Chairman of the board of directors of the Seattle Seahawks of the
National Football League. Mr. Allen currently serves as a director of Microsoft
Corporation and USA Networks, Inc. and also serves as a director of various
private corporations.
 
     WILLIAM D. SAVOY is a director of Charter Communications, Inc., Charter
Holdings and Charter Investment, Inc. Since 1990, Mr. Savoy has been an officer
and a director for many affiliates of Mr. Allen, including Vice President and a
director of Vulcan Ventures, President of Vulcan Northwest, President and a
director of Vulcan Programming and President and director of Vulcan Cable III
Inc. From 1987 until November 1990, Mr. Savoy was employed by Layered, Inc. and
became its President in 1988. Mr. Savoy serves on the Advisory Board of
DreamWorks SKG and also serves as director of CNET, Inc., Go2Net, Inc.,
Harbinger Corporation, High Speed Access Corp., Metricom, Inc., Telescan, Inc.,
Ticketmaster Online -- CitySearch, Inc., USA Networks, Inc. and Value America,
Inc. Mr. Savoy holds a B.S. in computer science, accounting and finance from
Atlantic Union College.
 
     JERALD L. KENT is the President, Chief Executive Officer and director of
Charter Communications, Inc., Charter Holdings, Charter Communications Holdings
Capital Corporation and Charter Investment, Inc. and has previously held the
position of Chief Financial Officer of Charter Investment, Inc. Prior to
co-founding Charter Investment, Inc. in 1993, Mr. Kent was associated with
Cencom Cable Associates, Inc., where he served as Executive Vice President and
Chief Financial Officer. Mr. Kent also served Cencom as Senior Vice President of
Finance from May 1987, Senior Vice President of Acquisitions and Finance from
July 1988, and Senior Vice President and Chief Financial Officer from January
1989. Mr. Kent is a member of the board of directors of High Speed Access Corp.,
Cable Television Laboratories, Inc. and Com21 Inc. Prior to that time, Mr. Kent
was employed by Arthur Andersen LLP, certified public accountants, where he
attained the position of tax manager. Mr. Kent, a certified public accountant,
received his undergraduate and M.B.A. degrees with honors from Washington
University (St. Louis).
 
     DAVID G. BARFORD is Senior Vice President of Operations -- Western Division
of Charter Communications, Inc. and Charter Investment, Inc. where he has
primary responsibility for all cable operations in the Central, Western, North
Central and MetroPlex Regions. Prior to joining Charter Investment, Inc. in July
1995, he served as Vice President of Operations and New Business Development for
Comcast Cable Communications, Inc., where he held various senior marketing and
operating roles since November 1986. Mr. Barford received a B.A. degree from
California State University, Fullerton and an M.B.A. from National University in
La Jolla, California.
 
                                       161

<PAGE>   165
 
     MARY PAT BLAKE is Senior Vice President -- Marketing and Programming of
Charter Communications, Inc. and Charter Investment, Inc. and is responsible for
all aspects of marketing, sales and programming and advertising sales. Prior to
joining Charter Investment, Inc. in August 1995, Ms. Blake was active in the
emerging business sector, and formed Blake Investments, Inc. in September 1993,
which created, operated and sold a branded coffeehouse and bakery. From
September 1990 to August 1993, Ms. Blake served as Director -- Marketing for
Brown Shoe Company. Ms. Blake has 18 years of experience with senior management
responsibilities in marketing, sales, finance, systems, and general management
with companies such as The West Coast Group, Pepsico Inc.-Taco Bell Division,
General Mills, Inc. and ADP Network Services, Inc. Ms. Blake received a B.S.
degree from the University of Minnesota, and an M.B.A. degree from the Harvard
Business School.
 
     ERIC A. FREESMEIER is Senior Vice President -- Administration of Charter
Communications, Inc. and Charter Investment, Inc. and is responsible for human
resources, public relations and communications, corporate facilities and
aviation. From 1986 until joining Charter Investment, Inc. in April 1998, he
served in various executive management positions at Edison Brothers Stores,
Inc., a specialty retail company where his most recent position was Executive
Vice President -- Human Resources and Administration. From 1974 to 1986, Mr.
Freesmeier held management and executive positions with Montgomery Ward, a
national mass merchandise retailer, and its various subsidiaries. Mr. Freesmeier
holds Bachelor of Business degrees in marketing and industrial relations from
the University of Iowa and a Masters of Management degree in finance from
Northwestern University's Kellogg Graduate School of Management.
 
     THOMAS R. JOKERST is Senior Vice President -- Advanced Technology
Development of Charter Communications, Inc. and Charter Investment, Inc. Prior
to his appointment to this position, Mr. Jokerst held the position of Senior
Vice President -- Engineering since January 1994. Prior to joining Charter
Investment, Inc., from March 1991 to March 1993, Mr. Jokerst served as Vice
President -- Office of Science and Technology for Cable Television Laboratories
in Boulder, Colorado. From June 1976 to March 1993, Mr. Jokerst was Director of
Engineering for the midwest region of Continental Cablevision. Mr. Jokerst
participates in professional activities with the National Cable Television
Association, SCTE and Cable Television Laboratories. Mr. Jokerst is a graduate
of Ranken Technical Institute in St. Louis with a degree in communications
electronics and computer technology and of Southern Illinois University in
Carbondale, Illinois with a degree in electronics technology.
 
     KENT D. KALKWARF is Senior Vice President and Chief Financial Officer of
Charter Communications, Inc., Charter Holdings, Charter Communications Holdings
Capital Corporation and Charter Investment, Inc. From July 1995 to May 1997, Mr.
Kalkwarf served as a Vice President. Prior to joining Charter Investment, Inc.
in 1995, Mr. Kalkwarf was employed by Arthur Andersen LLP, from 1982 to July
1995, where he attained the position of senior tax manager. Mr. Kalkwarf has
extensive experience in cable, real estate and international tax issues. Mr.
Kalkwarf has a B.S. degree from Illinois Wesleyan University and is a certified
public accountant.
 
                                       162

<PAGE>   166
 
     RALPH G. KELLY is Senior Vice President -- Treasurer of Charter
Communications, Inc., Charter Holdings, Charter Communications Holdings Capital
Corporation and Charter Investment, Inc. Mr. Kelly joined Charter Investment
Inc. in 1993 as Vice President -- Finance, a position he held until early 1994
when he became Chief Financial Officer of CableMaxx, Inc., a wireless cable
television operator. Mr. Kelly returned to Charter Investment, Inc. as Senior
Vice President -- Treasurer in February 1996, and has responsibility for
treasury operations, investor relations and financial reporting. From 1984 to
1993, Mr. Kelly was associated with Cencom Cable Associates, Inc. where he held
the positions of Controller from 1984 to 1989 and Treasurer from 1990 to 1993.
Mr. Kelly is a certified public accountant and was in the audit division of
Arthur Andersen LLP from 1979 to 1984. Mr. Kelly received his undergraduate
degree in accounting from the University of Missouri -- Columbia and his M.B.A.
from Saint Louis University.
 
     DAVID L. MCCALL is Senior Vice President of Operations -- Eastern Division
of Charter Communications, Inc. and Charter Investment, Inc. Mr. McCall joined
Charter Investment, Inc. in January 1995 as Regional Vice President Operations
and has primary responsibility for all cable system operations managed by
Charter Investment, Inc. in the Southeast, Southern and Northeast Regions of the
United States. Prior to joining Charter Investment, Inc., Mr. McCall was
associated with Crown Cable and its predecessor company, Cencom Cable
Associates, Inc., from 1983 to 1994. As a Regional Manager of Cencom, Mr.
McCall's responsibilities included supervising all aspects of operations for
systems located in North Carolina, South Carolina and Georgia, consisting of
over 142,000 customers. From 1977 to 1982, Mr. McCall was System Manager of
Coaxial Cable Developers (known as Teleview Cablevision) in Simpsonville, South
Carolina. Mr. McCall has served as a director of the South Carolina Cable
Television Association for the past ten years.
 
     JOHN C. PIETRI is Senior Vice President -- Engineering of Charter
Communications, Inc. and Charter Investment, Inc. since November 1998. Prior to
joining Charter Investment, Inc. Mr. Pietri was with Marcus Cable in Dallas,
Texas for eight years, most recently serving as Senior Vice President and Chief
Technical Officer. Prior to Marcus, Mr. Pietri served as Regional Technical
Operations Manager for West Marc Communications in Denver, Colorado, and before
that he served as Operations Manager with Minnesota Utility Contracting. Mr.
Pietri attended the University of Wisconsin-Oshkosh.
 
     STEVEN A. SCHUMM is Executive Vice President and Assistant to the President
of Charter Communications, Inc., Charter Holdings, Charter Communications
Holdings Capital Corporation and Charter Investment, Inc. Mr. Schumm joined
Charter Investment, Inc. in December 1998 and currently directs the MIS
Regulatory and Financial Controls Groups. Prior to joining Charter Investment,
Inc., Mr. Schumm was managing partner of the St. Louis office of Ernst & Young
LLP. Mr. Schumm was with Ernst & Young LLP for 24 years and was a partner of the
firm for 14 of those years. Mr. Schumm held various management positions with
Ernst & Young LLP, including the Director of Tax Services for the three-city
area of St. Louis, Kansas City and Wichita and then National Director of
Industry Tax Services. He served as one of 10
 
                                       163

<PAGE>   167
 
members comprising the firm's National Tax Committee. Mr. Schumm earned a B.S.
degree from Saint Louis University with a major in accounting.
 
     CURTIS S. SHAW is Senior Vice President, General Counsel and Secretary of
Charter Communications, Inc., Charter Holdings, Charter Communications Holdings
Capital Corporation and Charter Investment, Inc. and is responsible for all
legal aspects of their businesses, government relations and the duties of the
corporate secretary. Prior to joining Charter Investment, Inc. in February 1997,
Mr. Shaw served as Corporate Counsel to NYNEX since 1988. From 1983 until 1988,
Mr. Shaw served as Associate General Counsel for Occidental Chemical
Corporation, and, from 1986 until 1988, as Vice President and General Counsel of
its largest operating division. Mr. Shaw has 25 years of experience as a
corporate lawyer, specializing in mergers and acquisitions, joint ventures,
public offerings, financings, and federal securities and antitrust law. Mr. Shaw
received a B.A. with honors from Trinity College and a J.D. from Columbia
University School of Law.
 
     STEPHEN E. SILVA is Senior Vice President -- Corporate Development and
Technology of Charter Communications, Inc. and Charter Investment, Inc. and is
responsible for strategic development, testing and initial rollout of new
products and services. From 1983 until joining Charter Investment, Inc. in April
1995, Mr. Silva served in various management positions at U.S. Computer
Services, Inc. (doing business as CableData), a service bureau organization
engaged in customer billing services. Mr. Silva joined Charter Investment, Inc.
as Director of Billing Services, and was promoted to Vice
President -- Information Services in January 1997. Mr. Silva became Vice
President -- Corporate Development and Technology in April 1998, and was
promoted to Senior Vice President -- Corporate Development and Technology in
September 1999. Mr. Silva is a member of the board of directors of High Speed
Access Corp.
 
   
DIRECTORS TO BE APPOINTED ON THE DATE OF THIS PROSPECTUS
    
 
     Each of the following persons has agreed to join the board of directors of
Charter Communications, Inc. upon the closing of the offering:
 
     RONALD L. NELSON is a founding member of DreamWorks LLC and has been
serving as a member of its executive management team since 1994 with
responsibility for overseeing operations and corporate finance. Prior to joining
DreamWorks, Mr. Nelson was employed for 15 years by Paramount Communications
Inc. (formerly Gulf + Western Inc.), serving in a variety of operating and
executive positions. Mr. Nelson was elected Executive Vice President of
Paramount Communications in 1990 and was appointed to its board of directors in
1992. He also served as Chief Financial Officer of the corporation from 1987
until 1994. Mr. Nelson serves on the board of directors of Advanced Tissue
Sciences, a biotechnology firm. Mr. Nelson has a B.S. in biochemistry from the
University of California at Berkeley and a masters degree in business from the
University of California at Los Angeles.
 
     NANCY B. PERETSMAN has been a managing director and executive vice
president of Allen & Company Incorporated, an investment bank unrelated to Mr.
Allen, since June 1995. Prior to joining Allen & Company Incorporated, Ms.
Peretsman had been an
 
                                       164

<PAGE>   168
 
   
investment banker since 1983 at Salomon Brothers Inc, where she was a managing
director since 1990. She served for fourteen years on the Board of Trustees of
Princeton University and is currently an emerita trustee. Ms. Peretsman also is
Vice Chairman of the board of The New School and serves on the board of
directors of Oxygen Media, Inc., an Internet and cable television enterprise.
Ms. Peretsman also serves on the board of NewSub Services, Inc. and
Priceline.com Incorporated.
    
 
DIRECTOR TO BE APPOINTED AFTER THE OFFERING
 
     MARC B. NATHANSON has been Chairman of the board and Chief Executive
Officer of Falcon Holding Group, Inc. and its predecessors since 1975, and prior
to September 1995 also served as President. Upon the closing of the Falcon
acquisition, Mr. Nathanson will be employed by Charter Communications, Inc. in a
non-executive position as Vice Chairman. Prior to 1975, Mr. Nathanson was vice
president of marketing for Teleprompter Corporation, then the largest cable
operator in the United States. He also held executive positions with Warner
Cable and Cypress Communications Corporation. He is a former President of the
California Cable Television Association and a member of Cable Pioneers. He is
currently a director of the National Cable Television Association and chaired
its 1999 National Convention. Mr. Nathanson has served as Chairman of the board,
Chief Executive Officer and President of Enstar Communications Corporation since
October 1988, and is a director of Digital Entertainment Network, Inc. and an
Advisory Board member of TVA (Brazil). Mr. Nathanson was appointed by President
Clinton on November 1, 1998 as Chair of the Board of Governors for the
International Bureau of Broadcasting, which oversees Voice of America, Radio/TV
Marti, Radio Free Asia, Radio Free Europe and Radio Liberty. Mr. Nathanson is a
trustee of the Annenburg School of Communications at the University of Southern
California and a member of the Board of Visitors of the Anderson School of
Management at UCLA. In addition, he serves on the Board of the UCLA Foundation
and the UCLA Center for Communications Policy and is on the Board of Governors
of AIDS Project Los Angeles and Cable Positive.
 
   
     HOWARD L. WOOD currently serves as Vice Chairman of Charter Communications,
Inc. and Charter Investment, Inc. and is a co-founder of Charter Investment,
Inc. Prior to co-founding Charter Investment, Inc. in 1993, Mr. Wood was
associated with Cencom Cable Associates, Inc. Mr. Wood joined Cencom as
President, Chief Financial Officer and director and assumed the additional
position of Chief Executive Officer effective January 1, 1989. Prior to that
time, Mr. Wood was a partner in Arthur Andersen LLP, certified public
accountants, where he served as Partner-in-Charge of the St. Louis Tax Division
from 1973 until joining Cencom. Mr. Wood is a certified public accountant and a
member of the American Institute of Certified Public Accountants. He also serves
as a director of VanLiner Group, Inc., First State Community Bank, Gaylord
Entertainment Company and Data Research, Inc. Mr. Wood serves as Commissioner
for the Missouri Department of Conservation. He is also a past Chairman of the
board of directors and former director of the St. Louis College of Pharmacy. Mr.
Wood graduated with honors from Washington University (St. Louis) School of
Business.
    
 
                                       165

<PAGE>   169
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     At the same time Charter Communications, Inc. completes this offering, it
will establish an audit committee and a compensation committee, each composed of
two outside directors. The audit committee will recommend the annual appointment
of Charter Communications, Inc.'s auditors with whom the audit committee will
review the scope of audit and non-audit assignments and related fees, accounting
principles used in Charter Communications, Inc.'s financial reporting, internal
auditing procedures and the adequacy of Charter Communications, Inc.'s internal
control procedures. The compensation committee will make recommendations to the
board regarding compensation for Charter Communications, Inc.'s executive
officers.
 
DIRECTOR COMPENSATION
 
   
     The employee directors of Charter Communications, Inc. are not entitled to
any compensation for serving as a director, nor are they paid any fees for
attendance at any meeting of the board of directors. Each non-employee director
will be issued 40,000 options when they join the board of directors and may
receive additional compensation in a manner to be determined. Directors may also
be reimbursed for the actual reasonable costs incurred in connection with
attendance at board meetings.
    
 
EMPLOYMENT AND CONSULTING AGREEMENTS
 
     Effective as of December 23, 1998, Jerald L. Kent entered into an
employment agreement with Mr. Allen for a three-year term with automatic
one-year renewals. The employment agreement was assigned by Mr. Allen to Charter
Investment, Inc. as of December 23, 1998. Under this agreement, Mr. Kent agrees
to serve as President and Chief Executive Officer of Charter Investment, Inc.,
with responsibility for the nationwide general management, administration and
operation of all present and future business of Charter Investment, Inc. and its
subsidiaries. During the initial term of the agreement, Mr. Kent will receive an
annual base salary of $1,250,000, or such higher rate as may from time to time
be determined by the board of directors in its discretion. In addition, Mr. Kent
will be eligible to receive an annual bonus in an aggregate amount not to exceed
$625,000, to be determined by the board based on an assessment of the
performance of Mr. Kent as well as the achievement of certain financial targets.
 
     Under the agreement, Mr. Kent is entitled to participate in any disability
insurance, pension, or other benefit plan afforded to employees generally or
executives of Charter Investment, Inc. Mr. Kent will be reimbursed by Charter
Investment, Inc. for life insurance premiums up to $30,000 per year, and is
granted personal use of Charter Investment's airplane. Mr. Kent was also granted
a car valued at up to $100,000 and membership fees and dues for his membership
in a country club of his choice, but has not accepted use of the car as of the
date of this prospectus. He may choose to do so in the future. Also under this
agreement and a related agreement with Charter Communications Holding Company,
Mr. Kent received options to purchase 3% of the equity value of all cable
systems managed by Charter Investment, Inc. on the date of the grant, or
7,044,127 Charter Communications Holding Company membership units. The options
have a term of ten years and vested 25% on December 23, 1998. The remaining
                                       166

<PAGE>   170
 
75% will vest 1/36 on the first day of each of the 36 months commencing on the
first day of the thirteenth month following December 23, 1998. The terms of
these options provide that immediately following the issuance of Charter
Communications Holding Company membership units, these units will automatically
convert to shares of Class A common stock. This exchange will occur on a
one-for-one basis, as described under "Description of Capital Stock and
Membership Units -- Exchange Agreements".
 
     Charter Investment, Inc. agrees to indemnify and hold harmless Mr. Kent to
the maximum extent permitted by law from and against any claims, damages,
liabilities, losses, costs or expenses in connection with or arising out of the
performance by Mr. Kent of his duties.
 
     If the agreement expires because Charter Investment, Inc. gives Mr. Kent
notice of its intention not to extend the initial term, or if the agreement is
terminated by Mr. Kent for good reason or by Charter Investment, Inc. without
cause:
 
     - Charter Investment, Inc. will pay to Mr. Kent an amount equal to the
       aggregate base salary due to Mr. Kent for the remaining term and the
       board will consider additional amounts, if any, to be paid to Mr. Kent;
       and
 
     - any unvested options of Mr. Kent shall immediately vest.
 
     Charter Investment, Inc. will assign Mr. Kent's employment agreement to
Charter Communications, Inc. and Charter Communications, Inc. will assume all
rights and obligations of Charter Investment, Inc. under the agreement, except
with respect to the grant of options, which will be obligations of Charter
Communications Holding Company.
 
     Charter Communications, Inc. will enter into a consulting agreement with
Howard L. Wood, who will become a director of Charter Communications, Inc. upon
the closing of the offering. The consulting agreement will become effective upon
the closing of the offering and will have a one-year term with automatic
one-year renewals. Under this agreement, Mr. Wood will provide consulting
services to Charter Communications, Inc. and will also be responsible for such
other duties as our Chief Executive Officer determines. During the term of this
agreement, Mr. Wood will receive annual cash compensation initially at a rate of
$60,000. In addition, Mr. Wood will be entitled to receive disability and health
benefits as well as use of an office and a full-time secretary.
 
     Charter Communications, Inc. will enter into a consulting agreement with
Barry L. Babcock, one of our founders and former Vice Chairman. The consulting
agreement will expire in March 2000. Under this agreement, Mr. Babcock will
provide consulting services to Charter Communications, Inc. and will be
responsible for such other duties as our Chief Executive Officer determines.
During the term of this agreement, Mr. Babcock will receive monthly cash
compensation at a rate of $10,000 per month. In addition, Mr. Babcock will be
entitled to receive disability and health benefits as well as the use of an
office and secretarial services, upon request.
 
     Charter Communications, Inc. will indemnify and hold harmless Mr. Wood and
Mr. Babcock to the maximum extent permitted by law from and against any claims,
 
                                       167

<PAGE>   171
 
damages, liabilities, losses, costs or expenses incurred in connection with or
arising out of the performance by them of their duties.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     Upon completion of the offering, Charter Communications, Inc. will appoint
three outside directors who will form Charter Communications, Inc.'s
compensation committee. There are no compensation committee interlocks.
 

EXECUTIVE COMPENSATION
 
     Charter Communications, Inc. has not paid any compensation to its executive
officers. Immediately prior to the offering, the executive officers will no
longer be paid by Charter Investment, Inc. and will become paid employees of
Charter Communications, Inc. These employees will remain as unpaid officers of
Charter Investment, Inc. The employment agreement of Mr. Kent will be assigned
from Charter Investment, Inc. to Charter Communications, Inc. Pursuant to a
mutual services agreement between Charter Communications, Inc. and Charter
Investment, Inc., to be effective upon closing of the offering, each of those
entities agrees to provide services to each other, including the knowledge and
expertise of their respective officers. See "Certain Relationships and Related
Transactions".
 
     The following table sets forth information regarding the compensation paid
by Charter Investment, Inc. during its last completed fiscal year to the
President and Chief Executive Officer and each of the other four most highly
compensated executive officers as of December 31, 1998. This compensation was
paid to these executive officers by certain of our subsidiaries and affiliates
for their services to these entities.
 
                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                                           LONG-TERM
                                                                                          COMPENSATION
                                                          ANNUAL COMPENSATION                AWARD
                                                ---------------------------------------   ------------
                                       YEAR                                  OTHER         SECURITIES
                                       ENDED                                ANNUAL         UNDERLYING       ALL OTHER
NAME AND PRINCIPAL POSITION           DEC. 31   SALARY($)   BONUS($)    COMPENSATION($)    OPTIONS(#)    COMPENSATION($)
---------------------------           -------   ---------   --------    ---------------   ------------   ---------------
<S>                                   <C>       <C>         <C>         <C>               <C>            <C>
Jerald L. Kent......................   1998      790,481    641,353              --        7,044,127(1)        18,821(2)
  President and Chief Executive
    Officer
Barry L. Babcock(3).................   1998      575,000    925,000(4)           --               --           41,866(5)
  Vice Chairman
Howard L. Wood......................   1998      575,000    675,000(6)           --               --           15,604(7)
  Vice Chairman
David G. Barford....................   1998      220,000    225,000(8)           --               --        8,395,235(9)
  Senior Vice President of
    Operations -- Western Division
Curtis S. Shaw......................   1998      190,000     80,000              --               --        8,182,303(10)
  Senior Vice President, General
    Counsel and Secretary
</TABLE>

 
---------------
 (1) Options for membership units in Charter Communications Holding Company
     granted pursuant to an employment agreement and a related option agreement.
 
 (2) Includes $4,000 in 401(k) plan matching contribution, $918 in life
     insurance premiums, $418 in gasoline reimbursement and $13,485 attributed
     to personal use of Charter Investment, Inc.'s airplane.
 
                                       168

<PAGE>   172
 
 (3) Mr. Babcock resigned as an executive officer of Charter Communications,
     Inc. in October 1999.
 
 (4) Includes $500,000 earned as a one-time bonus upon signing of an employment
     agreement.
 
 (5) Includes $4,000 in 401(k) plan matching contributions, $2,493 in life
     insurance premiums, $970 in gasoline reimbursement and $34,403 attributed
     to personal use of Charter Investment, Inc.'s airplane.
 
 (6) Includes $250,000 earned as a one-time bonus upon signing of an employment
     agreement.
 
 (7) Includes $4,000 in 401(k) plan matching contributions, $4,050 in life
     insurance premiums, $1,242 in gasoline reimbursement and $6,312 attributed
     to personal use of Charter Investment, Inc.'s airplane.
 
 (8) Includes $150,000 received as a one-time bonus after completion of three
     years of employment.
 
 (9) Includes $4,000 in 401(k) plan matching contribution, $347 in life
     insurance premiums, and $8,390,888 received in March 1999, in connection
     with a one-time change of control payment under the terms of a previous
     equity appreciation rights plan. This payment was triggered by the
     acquisition of us by Mr. Allen on December 23, 1998, but is income for
     1999.
 
(10) Includes $2,529 in 401(k) plan matching contribution, $807 in life
     insurance premiums, and $8,178,967 received in March 1999, in connection
     with a one-time change of control payment under the terms of a previous
     equity appreciation rights plan. This payment was triggered by the
     acquisition of us by Mr. Allen on December 23, 1998, but is income for
     1999.
 
1998 OPTION GRANTS
 
     The following table shows individual grants of options made to certain
executive officers during the fiscal year ended December 31, 1998.
 

<TABLE>
<CAPTION>
                             NUMBER OF                                               POTENTIAL REALIZABLE VALUE AT
                             MEMBERSHIP     % OF TOTAL                                  ASSUMED ANNUAL RATES OF
                               UNITS         OPTIONS                               MEMBERSHIP UNIT PRICE APPRECIATION
                             UNDERLYING     GRANTED TO                                     FOR OPTION TERM(1)
                              OPTIONS       EMPLOYEES     EXERCISE    EXPIRATION   ----------------------------------
NAME                          GRANTED        IN 1998        PRICE        DATE            5%                10%
----                         ----------    ------------   ---------   ----------   ---------------   ----------------
<S>                          <C>           <C>            <C>         <C>          <C>               <C>
Jerald L. Kent.............   7,044,127(2)       100%      $20.00      12/22/08      $88,600,272       $224,530,486
Barry L. Babcock...........         --          --             --            --               --                 --
Howard L. Wood.............         --          --             --            --               --                 --
David G. Barford...........         --          --             --            --               --                 --
Curtis S. Shaw.............         --          --             --            --               --                 --
</TABLE>

 
---------------
(1) This column shows the hypothetical gains on the options granted based on
    assumed annual compound price appreciation of 5% and 10% over the full
    ten-year term of the options. The assumed rates of appreciation are mandated
    by the SEC and do not represent our estimate or projection of future prices.
 
(2) Options for membership units in Charter Communications Holding Company
    granted pursuant to an employment agreement and a related option agreement
    which amends the options granted under the employment agreement. Under these
    agreements, Mr. Kent received an option to purchase 3% of the net equity
    value of all of the cable systems managed by Charter Investment, Inc. on the
    date of the grant. The option has a term of 10 years and vested one fourth
    on December 23, 1998, with the remaining portion vesting monthly at a rate
    of 1/36th on the first of each month for months 13 through 48. Upon the
    exercise of an option, each membership unit received will automatically be
    exchanged on a one-for-one basis for shares of Class A common stock.
 
                                       169

<PAGE>   173
 
1998 AGGREGATED OPTION EXERCISES AND OPTION VALUE TABLE
 
     The following table sets forth for certain executive officers information
concerning the options granted during the fiscal year ended December 31, 1998,
and the value of unexercised options as of December 31, 1998.
 

<TABLE>
<CAPTION>
                                                     NUMBER OF                  VALUE OF UNEXERCISED
                                               SECURITIES UNDERLYING                IN-THE-MONEY
                                                UNEXERCISED OPTIONS                  OPTIONS AT
                                                AT DECEMBER 31, 1998            DECEMBER 31, 1998(1)
                                            ----------------------------    ----------------------------
                                            EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
                                            -----------    -------------    -----------    -------------
<S>                                         <C>            <C>              <C>            <C>
Jerald L. Kent............................   1,761,032       5,283,095              --              --
Barry L. Babcock..........................          --              --              --              --
Howard L. Wood............................          --              --              --              --
David G. Barford..........................          --              --              --              --
Curtis S. Shaw............................          --              --              --              --
</TABLE>

 
---------------
(1) No options were in-the-money as of December 31, 1998.
 
1999 OPTION GRANTS
 
     The following table shows individual grants of options made to certain
executive officers during 1999, as of June 30, 1999. All such grants were made
under the option plan.
 

<TABLE>
<CAPTION>
                              NUMBER OF                              AGGREGATE VALUE OF OPTIONS TO HOLDER IF
                              MEMBERSHIP                                 CHARTER COMMUNICATIONS, INC.'S
                                UNITS                                    COMMON STOCK PRICE PER SHARE AT
                              UNDERLYING                                      SOME FUTURE DATE IS:
                               OPTIONS     EXERCISE   EXPIRATION   -------------------------------------------
NAME                           GRANTED      PRICE        DATE      $18.00    $22.00      $26.00       $30.00
----                          ----------   --------   ----------   ------   --------   ----------   ----------
<S>                           <C>          <C>        <C>          <C>      <C>        <C>          <C>
Jerald L. Kent..............        --          --          --        --          --           --           --
Barry L. Babcock............    65,000      $20.00      2/9/09      $  0    $130,000   $  390,000   $  650,000
Howard L. Wood..............    65,000       20.00      2/9/09         0     130,000      390,000      650,000
David G. Barford............   200,000       20.00      2/9/09         0     400,000    1,200,000    2,000,000
Curtis S. Shaw..............   200,000       20.00      2/9/09         0     400,000    1,200,000    2,000,000
</TABLE>

 
OPTION PLAN
 
   
     Charter Holdings adopted an option plan on February 9, 1999, which was
assumed by Charter Communications Holding Company on May 25, 1999. This plan
provides for the grant of options to purchase up to 25,009,798 membership units
in Charter Communications Holding Company, which is equal to 10% of the
aggregate equity value of the subsidiaries of Charter Communications Holding
Company as of February 9, 1999, the date of adoption of the plan. The plan
provides for grants of options current and prospective to employees and
consultants of Charter Communications Holding Company and its affiliates and
current and prospective non-employee directors of Charter Communications, Inc.
The plan is intended to promote the long-term financial interest of Charter
Communications Holding Company and its affiliates by encouraging eligible
individuals to acquire an ownership position in Charter Communications Holding
Company and its affiliates and providing incentives for performance. There are a
total of 9,206,281 options outstanding under the plan. The options expire after
ten years from the date of grant. Of those, 8,771,481 options were granted on
February 9, 1999 with an exercise price of $20.00 and
    
 
                                       170

<PAGE>   174
 
   
434,800 options were granted on April 5, 1999 with an exercise price of $20.73.
Of the options granted on February 9, 1999, 65,000 options have vested and an
additional 65,000 options will vest on the date of the closing of this offering.
Of the remaining 8,641,481 options, one-fourth vest on April 3, 2000 and the
remainder vest 1/45 on each monthly anniversary following April 3, 2000.
One-fourth of the options granted on April 5, 1999 vest on the 15-month
anniversary from April 5, 1999, with the remainder vesting 1/45 on each monthly
anniversary for 45 months following the 15-month anniversary. The options expire
after ten years from the date of grant. Under the plan, the plan administrator
has the discretion to accelerate the vesting of any options.
    
 
   
     Charter Communications Holding Company intends to issue on the date of this
prospectus up to 5,000,000 additional options under the plan. The exercise price
for these options will be equal to the initial public offering price per share
of Class A common stock in this offering.
    
 
     Under the terms of the plan, following consummation of the offering, each
membership unit held as a result of exercise of options will be exchanged
automatically for shares of Class A common stock on a one-for-one basis.
Exchanges will occur on a one-for-one basis, as described under "Description of
Capital Stock and Membership Units -- Exchange Agreements".
 
     Any unvested options issued under the plan vest immediately upon a change
of control of Charter Communications Holding Company. Options will not vest upon
a change of control, however, to the extent that any such acceleration of
vesting would result in the disallowance of specified tax deductions that would
otherwise be available to Charter Communications Holding Company or any of its
affiliates or to the extent that any optionee would be liable for any excise tax
under a specified section of the tax code. In the plan, a change of control
includes:
 
         (1) a sale of more than 49.9% of the outstanding membership units in
     Charter Communications Holding Company, except where Mr. Allen and his
     affiliates retain effective voting control of Charter Communications
     Holding Company;
 
         (2) a merger or consolidation of Charter Communications Holding Company
     with or into any other corporation or entity, except where Mr. Allen and
     his affiliates retain effective voting control of Charter Communications
     Holding Company; or
 
         (3) any other transactions or event, including a sale of the assets of
     Charter Communications Holding Company, that results in Mr. Allen holding
     less than 50.1% of the voting power of the surviving entity, except where
     Mr. Allen and his affiliates retain effective voting control of Charter
     Communications Holding Company.
 
The sale of Class A common stock pursuant to this prospectus is not a change of
control under the option plan.
 
     If an optionee's employment with or service to Charter Communications
Holding Company or its affiliates is terminated other than for cause, the
optionee has the right to exercise any vested options within sixty days of the
termination of employment. After this sixty-day period, all vested and unvested
options held by the optionee are automatically canceled. If an optionee's
employment or service is terminated for cause,
                                       171

<PAGE>   175
 
any unexercised options are automatically canceled. In this case, Mr. Allen, or,
at his option, Charter Communications Holding Company will have the right for
ninety days after termination to purchase all membership units held by the
optionee for a purchase price equal to the exercise price at which the optionee
acquired the membership units, or the optionee's purchase price for the
membership units if they were not acquired on the exercise of an option.
 
     In the event of an optionee's death or disability, all vested options may
be exercised until the earlier of their expiration and one year after the date
of the optionee's death or disability. Any options not so exercised will
automatically be canceled.
 
     Upon termination for any other reason, all unvested options will
immediately be canceled and the optionee will not be entitled to any payment.
All vested options will be automatically canceled if not exercised within ninety
days after termination.
 
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION MATTERS
 
     Charter Communications, Inc.'s restated certificate of incorporation will
limit the liability of directors to the maximum extent permitted by Delaware
law. The Delaware General Corporation Law provides that a corporation may
eliminate or limit the personal liability of a director for monetary damages for
breach of fiduciary duty as a director, except for liability for:
 
     (1) any breach of the director's duty of loyalty to the corporation and its
stockholders;
 
     (2) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
 
     (3) unlawful payments of dividends or unlawful stock purchases or
redemptions; or
 
     (4) any transaction from which the director derived an improper personal
benefit.
 
   
     Charter Communications, Inc.'s bylaws provide that Charter Communications,
Inc. shall indemnify all persons whom it may indemnify pursuant thereto to the
fullest extent permitted by law.
    
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Charter
Communications, Inc. pursuant to the foregoing provisions, we have been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
 
                                       172

<PAGE>   176
 
                             PRINCIPAL STOCKHOLDERS
 
     The following table sets forth certain information regarding beneficial
ownership of Charter Communications, Inc. common stock as of the closing of the
offering by:
 
     - each person known by us to own beneficially 5% or more of the outstanding
       shares of Charter Communications, Inc. common stock and Charter
       Communications Holding Company membership units;
 
     - each of our directors who owns common stock or membership units;
 
     - each of our named executive officers who owns Charter Communications,
       Inc. common stock or membership units; and
 
     - all current directors and executive officers as a group.
 
     With respect to the percentage of voting power set forth in the following
table:
 
     - each holder of Class A common stock is entitled to one vote per share;
       and
 
     - each holder of Class B common stock is entitled to a number of votes
       based on the number of outstanding Class B common stock and outstanding
       membership units exchangeable for Class B common stock. For example, Mr.
       Allen will be entitled to ten votes for each share of Class B common
       stock held by him or his affiliates and ten votes for each membership
       unit held by him or his affiliates.
 
   

<TABLE>
<CAPTION>
                                                         NUMBER OF           PERCENTAGE OF
NAME AND ADDRESS OF                                 SHARES BENEFICIALLY   SHARES BENEFICIALLY     PERCENTAGE OF
BENEFICIAL OWNER                                         OWNED(1)              OWNED(1)          VOTING POWER(1)
-------------------                                 -------------------   -------------------   ------------------
<S>                                                 <C>                   <C>                   <C>
Paul G. Allen(2)(3)...............................      317,955,052              58.0%                 95.0%
Charter Investment, Inc.(4)(5)....................      217,585,246              39.7%                  0.0%
Vulcan Cable III Inc.(2)(5).......................      107,319,806              19.6%                  0.0%
Jerald L. Kent(4)(6)..............................        5,261,032               1.0%                  0.0%
Barry L. Babcock(4)(7)............................        2,565,000               0.5%                  0.0%
Howard L. Wood(4)(8)..............................        1,065,000               0.2%                  0.0%
Marc B. Nathanson(9)..............................       16,407,576               3.0%                  0.0%
All directors and executive officers as a group
  (18 persons)....................................      340,688,660              61.9%                 95.0%
</TABLE>

    
 
---------------
   
(1) In calculating beneficial share ownership and percentages, we have made the
    same assumptions described on page 4 with respect to our organizational
    chart, except for options granted to Messrs. Kent, Babcock and Wood that
    have vested. In calculating the voting power percentages, we have also
    assumed that membership units have not been exchanged for Class A or Class B
    common stock. Membership units are exchangeable for Charter Communications,
    Inc. common stock on a one-for-one basis. Class B common stock is
    convertible into Class A common stock on a one-for-one basis.
    
 
(2) The address of these persons is 110 110th Street, NE, Suite 500, Bellevue,
    WA 98004.
 
(3) Represents 210,585,246 membership units attributable to such holder because
    of his equity interest in Charter Investment, Inc.; 107,319,806 membership
    units attributable to such holder because of his equity interest in Vulcan
    Cable III Inc.; and 50,000 shares of Class B common stock.
 
(4) The address of these persons is Charter Communications, Inc., 12444
    Powerscourt Drive, St. Louis, MO 63131.
 
(5) Represents membership units.
 
(6) Represents 3,500,000 membership units attributable to such holder because of
    his equity interest in Charter Investment, Inc.; and 1,761,032 shares of
    Class A common stock issuable upon the exchange of membership units issuable
    upon the exercise of options to purchase membership units.
 
                                       173

<PAGE>   177
 
(7) Represents 2,500,000 membership units attributable to such holder because of
    his equity interest in Charter Investment, Inc. and 65,000 shares of Class A
    common stock issuable upon exchange of membership units issuable upon
    exercise of options to purchase membership units.
 
(8) Represents 1,000,000 membership units attributable to such holder because of
    his equity interest in Charter Investment, Inc. and 65,000 shares of Class A
    common stock issuable upon exchange of membership units issuable upon
    exercise of options to purchase membership units.
 
(9) Represents membership units that will be acquired by the Falcon sellers in
    the Falcon acquisition. Falcon Holding Group, L.P. will acquire all of these
    membership units at the closing of the Falcon acquisition. Falcon Holding
    Group, Inc., which is controlled by Mr. Nathanson, is the general partner of
    Falcon Holding Group, L.P. Mr. Nathanson disclaims beneficial ownership of
    all shares owned by Falcon Holding Group, L.P. or its partners, other than
    any such shares he will directly own. The address of this person is c/o
    Falcon Communications LP and Affiliates, 10900 Wilshire Blvd., Los Angeles,
    CA 90024.
 
                                       174

<PAGE>   178
 

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The following sets forth certain transactions in which we and our
directors, executive officers and affiliates, including the directors and
executive officers of Charter Investment, Inc., are involved. We believe that
each of the transactions described below was on terms no less favorable to us
than could have been obtained from independent third parties.
 
TRANSACTIONS WITH MANAGEMENT AND OTHERS
 
MERGER WITH MARCUS
 
     On April 23, 1998, Mr. Allen acquired approximately 99% of the non-voting
economic interests in Marcus Cable, and agreed to acquire the remaining
interests in Marcus Cable. The aggregate purchase price was approximately $1.4
billion, excluding $1.8 billion in debt assumed. On February 22, 1999, Marcus
Holdings was formed, and all of Mr. Allen's interests in Marcus Cable were
transferred to Marcus Holdings on March 15, 1999. On March 31, 1999, Mr. Allen
completed the acquisition of all remaining interests in Marcus Cable.
 
     On December 23, 1998, Mr. Allen acquired approximately 94% of the equity of
Charter Investment, Inc. for an aggregate purchase price of approximately $2.2
billion, excluding $2.0 billion in debt assumed. On February 9, 1999, Charter
Holdings was formed as a wholly owned subsidiary of Charter Investment, Inc. On
February 10, 1999, Charter Operating was formed as a wholly owned subsidiary of
Charter Holdings. In April 1999, Mr. Allen merged Marcus Holdings into Charter
Holdings, and the operating subsidiaries of Marcus Holdings and all of the cable
systems they owned came under the ownership of Charter Holdings, and, in turn,
Charter Operating. On May 25, 1999, Charter Communications Holding Company was
formed as a wholly owned subsidiary of Charter Investment, Inc. All of Charter
Investment, Inc.'s equity interests in Charter Holdings were transferred to
Charter Communications Holding Company.
 
     In March 1999, we paid $20 million to Vulcan Northwest, an affiliate of Mr.
Allen, for reimbursement of direct costs incurred in connection with Mr. Allen's
acquisition of Marcus Cable. Such costs were principally comprised of financial,
advisory, legal and accounting fees.
 
     On April 7, 1999, Mr. Allen merged Marcus Holdings into Charter Holdings.
Charter Holdings survived the merger, and the operating subsidiaries of Marcus
Holdings became subsidiaries of Charter Holdings.
 
     At the time Charter Holdings issued $3.6 billion in principal amount of
notes, this merger had not yet occurred. Consequently, Marcus Holdings was a
party to the indentures governing the notes as a guarantor of Charter Holdings'
obligations. Charter Holdings loaned some of the proceeds from the sale of the
original notes to Marcus Holdings, which amounts were used to complete the cash
tender offers for then-outstanding notes of subsidiaries of Marcus Holdings.
Marcus Holdings issued a promissory note in favor of Charter Holdings. The
promissory note was in the amount of $1.7 billion, with an interest rate of
9.92% and a maturity date of April 1, 2007. Marcus
 
                                       175

<PAGE>   179
 
Holdings guaranteed its obligations under the promissory note by entering into a
pledge agreement in favor of Charter Holdings pursuant to which Marcus Holdings
pledged all of its equity interests in Marcus Cable as collateral for the
payment and performance of the promissory note. Charter Holdings pledged this
promissory note to the trustee under the indentures as collateral for the equal
and ratable benefit of the holders of the notes. Upon the closing of the merger,
and in accordance with the terms of the notes and the indentures:
 
     - the guarantee issued by Marcus Holdings was automatically terminated;
 
     - the promissory note issued by Marcus Holdings was automatically
       extinguished, with no interest having accrued or being paid; and
 
     - the pledge in favor of Charter Holdings of the equity interests in Marcus
       Cable as collateral under the promissory note and the pledge in favor of
       the trustee of the promissory note as collateral for the notes were
       automatically released.
 
MANAGEMENT AGREEMENTS
 
     PREVIOUS MANAGEMENT AGREEMENTS.   Prior to March 18, 1999, pursuant to a
series of management agreements with certain of our subsidiaries, Charter
Investment, Inc. provided management and consulting services to those
subsidiaries. In exchange for these services, Charter Investment, Inc. was
entitled to receive management fees of 3% to 5% of the gross revenues of all of
our systems plus reimbursement of expenses. However, our previous credit
facilities limited such management fees to 3% of gross revenues. The balance of
management fees payable under the previous management agreements was accrued.
Payment is at the discretion of Charter Investment, Inc. Certain deferred
portions of management fees bore interest at the rate of 8% per annum. Following
the closing of our current credit facilities, the previous management agreements
were replaced by a revised management agreement. The material terms of our
previous management agreements are substantially similar to the material terms
of the revised management agreement.
 
     PREVIOUS MANAGEMENT AGREEMENT WITH MARCUS.   On October 6, 1998, Marcus
Cable entered into a management consulting agreement with Charter Investment,
Inc. pursuant to which Charter Investment, Inc. agreed to provide certain
management and consulting services to Marcus Cable and its subsidiaries, in
exchange for a fee equal to 3% of the gross revenues of Marcus Cable's systems
plus reimbursement of expenses. Management fees expensed by Marcus Cable during
the period from October 1998 to December 31, 1998 were approximately $3.3
million. Upon Charter Holdings' merger with Marcus Holdings and the closing of
our current credit facilities, this agreement was terminated and the
subsidiaries of Marcus Cable now receive management and consulting services from
Charter Investment, Inc. under the revised management agreement.
 
     THE REVISED MANAGEMENT AGREEMENT.   On February 23, 1999, Charter
Investment, Inc. entered into a revised management agreement with Charter
Operating, which was amended and restated as of March 17, 1999. Upon the closing
of our current credit facilities on March 18, 1999, our previous management
agreements and the management consulting agreement with Marcus Cable terminated
and the revised management
                                       176

<PAGE>   180
 
agreement became operative. Under the revised management agreement, Charter
Investment, Inc. has agreed to manage the operations of the cable television
systems owned by Charter Operating's subsidiaries, as well as any cable
television systems Charter Operating may subsequently acquire in the future. The
term of the revised management agreement is ten years.
 
     The revised management agreement provides that Charter Operating will pay
Charter Investment, Inc. a management fee equal to its actual costs to provide
these services and a management fee of 3.5% of gross revenues. Gross revenues
include all revenues from the operation of Charter Operating's cable systems,
including, without limitation, subscriber payments, advertising revenues, and
revenues from other services provided by Charter Operating's cable systems.
Gross revenues do not include interest income or income from investments
unrelated to our cable systems.
 
     Payment of the management fee to Charter Investment, Inc. is permitted
under our current credit facilities, but ranks below our payment obligations
under our current credit facilities. In the event any portion of the management
fee due and payable is not paid by Charter Operating, it is deferred and accrued
as a liability. Any deferred amount of the management fee will bear interest at
the rate of 10% per annum, compounded annually, from the date it was due and
payable until the date it is paid. As of June 30, 1999, no interest had been
accrued.
 
     The management fee is payable to Charter Investment, Inc. quarterly in
arrears. If the current management agreement is terminated, Charter Investment,
Inc. is entitled to receive the fee payable for an entire quarter, even if
termination occurred before the end of that quarter. Additionally, Charter
Investment, Inc. is entitled to receive payment of any deferred amount.
 
     Pursuant to the terms of the revised management agreement, Charter
Operating has agreed to indemnify and hold harmless Charter Investment, Inc. and
its shareholders, directors, officers and employees. This indemnity extends to
any and all claims or expenses, including reasonable attorneys' fees, incurred
by them in connection with any action not constituting gross negligence or
willful misconduct taken by them in good faith in the discharge of their duties
to Charter Operating.
 
     The total management fees, including expenses, earned by Charter
Investment, Inc. under all management agreements were as follows:
 

<TABLE>
<CAPTION>
                                                                         TOTAL FEES
YEAR                                                        FEES PAID      EARNED
----                                                        ---------    ----------
                                                                (IN THOUSANDS)
<S>                                                         <C>          <C>
Six Months Ended June 30, 1999............................   $23,388      $20,796
Year Ended December 31, 1998..............................    17,073       27,500
Year Ended December 31, 1997..............................    14,772       20,290
Year Ended December 31, 1996..............................    11,792       15,443
</TABLE>

 
     As of June 30, 1999, approximately $17.0 million remains unpaid for all
management agreements.
 
                                       177

<PAGE>   181
 
     ASSIGNMENT AND AMENDMENT OF REVISED MANAGEMENT AGREEMENT.   Upon the
closing of the offering, Charter Investment, Inc. will assign to Charter
Communications, Inc. all of its rights and obligations under the revised Charter
Operating management agreement. In connection with the assignment, the revised
Charter Operating management agreement will be amended to eliminate the 3.5%
management fee. Under the amended agreement, Charter Communications, Inc. will
be entitled to reimbursement from Charter Operating for all of its expenses,
costs, losses, liabilities and damages paid or incurred by it in connection with
the performance of its obligations under the amended agreement, with no cap on
the amount of reimbursement.
 
     MANAGEMENT AGREEMENT WITH CHARTER COMMUNICATIONS, INC.   Upon the closing
of the offering, Charter Communications, Inc. intends to enter into a management
agreement with Charter Communications Holding Company. This management agreement
will provide that Charter Communications, Inc. will manage and operate the cable
television systems owned or to be acquired by Charter Communications Holding
Company and its subsidiaries.
 
     The terms of the Charter Communications, Inc. management agreement will be
substantially similar to the terms of the Charter Operating management
agreement. Charter Communications, Inc. will be entitled to reimbursement from
Charter Communications Holding Company for all expenses, costs, losses,
liabilities and damages paid or incurred by Charter Communications, Inc. in
connection with the performance of its services, which expenses will include any
fees Charter Communications, Inc. is obligated to pay under the mutual services
agreement described below. There is no cap on the amount of reimbursement to
which Charter Communications, Inc. is entitled.
 
   
     MUTUAL SERVICES AGREEMENT WITH CHARTER INVESTMENT, INC.   Charter
Communications, Inc. will initially have only twelve executive officers, all of
whom are also executive officers of Charter Investment, Inc. Charter
Communications, Inc. and Charter Investment, Inc. will enter into a mutual
services agreement to be effective upon the closing of the offering. Pursuant to
the mutual services agreement, each entity agrees to provide services to the
other as may be reasonably requested in order to manage Charter Communications
Holding Company and to manage and operate our cable systems. In addition,
officers of Charter Investment, Inc. will also serve as officers of Charter
Communications, Inc. The officers and employees of each entity will be available
to the other to provide the services described above. All expenses and costs
incurred with respect to the services provided will be paid by Charter
Communications, Inc. Charter Communications, Inc. will indemnify and hold
harmless Charter Investment, Inc. and its directors, officers and employees from
and against any and all claims that may be made against any of them in
connection with the mutual services agreement except due to its or their gross
negligence or willful misconduct. The term of the mutual services agreement will
be ten years, commencing on the closing of the offering, and the agreement may
be terminated at any time by either party upon thirty days' written notice to
the other.
    
 
                                       178

<PAGE>   182
 
CONSULTING AGREEMENT
 
        On March 10, 1999, Charter Holdings entered into a consulting agreement
with Vulcan Northwest and Charter Investment, Inc. Pursuant to the terms of the
consulting agreement, Charter Holdings retained Vulcan Northwest and Charter
Investment, Inc. to provide advisory, financial and other consulting services
with respect to acquisitions of the business, assets or stock of other companies
by Charter Holdings or by any of its affiliates. Such services include
participation in the evaluation, negotiation and implementation of these
acquisitions. The agreement expires on December 31, 2000, and automatically
renews for successive one-year terms unless otherwise terminated.
 
     All reasonable out-of-pocket expenses incurred by Vulcan Northwest and
Charter Investment, Inc. are Charter Holdings' responsibility and must be
reimbursed. Charter Holdings must also pay Vulcan Northwest and Charter
Investment, Inc. a fee for their services rendered for each acquisition made by
Charter Holdings or any of its affiliates. This fee equals 1% of the aggregate
value of such acquisition. Neither Vulcan Northwest nor Charter Investment, Inc.
will receive a fee in connection with the American Cable, Renaissance, Greater
Media, Helicon, Vista, Cable Satellite, InterMedia and Rifkin acquisitions. No
such fee is payable to either Vulcan Northwest or Charter Investment, Inc. in
connection with other acquisitions being made by Charter Holdings' affiliates.
Charter Holdings has also agreed to indemnify and hold harmless Vulcan Northwest
and Charter Investment, Inc., and their respective officers, directors,
stockholders, agents, employees and affiliates, for all claims, actions, demands
and expenses that arise out of this consulting agreement and the services they
provide to Charter Holdings.
 
     Mr. Allen owns 100% of Vulcan Northwest and is the Chairman of the board.
William D. Savoy, another of Charter Communications, Inc.'s directors, is the
President and a director of Vulcan Northwest.
 
   
TRANSACTIONS WITH MR. ALLEN
    
 
     On December 21, 1998, Mr. Allen contributed approximately $431 million to
Charter Investment, Inc. and received non-voting common stock of Charter
Investment, Inc. Such non-voting common stock was converted to voting common
stock on December 23, 1998.
 
     On December 23, 1998, Mr. Allen contributed approximately $1.3 billion to
Charter Investment, Inc. and received voting common stock of Charter Investment,
Inc. Additionally, Charter Investment, Inc. borrowed approximately $6.2 million
in the form of a bridge loan from Mr. Allen. This bridge loan was contributed by
Mr. Allen to Charter Investment, Inc. in March 1999. No interest on such bridge
loan was accrued or paid by Charter Investment, Inc. On the same date, Mr. Allen
also contributed approximately $223.5 million to Vulcan Cable II, Inc., a
company owned by Mr. Allen. Vulcan II was merged with and into Charter
Investment, Inc.
 
     On January 5, 1999, Charter Investment, Inc. borrowed approximately $132.2
million in the form of a bridge loan from Mr. Allen. This bridge loan was
contributed by Mr. Allen to Charter Investment, Inc. in March 1999. No interest
on such bridge loan was accrued or paid by Charter Investment, Inc. On the same
date, Mr. Allen also
 
                                       179

<PAGE>   183
 
acquired additional voting common stock of Charter Investment, Inc. from Jerald
L. Kent, Howard L. Wood and Barry L. Babcock for an aggregate purchase price of
approximately $176.7 million.
 
     On January 11, 1999, Charter Investment, Inc. borrowed $25 million in the
form of a bridge loan from Mr. Allen. This bridge loan was contributed by Mr.
Allen to Charter Investment, Inc. in March 1999. No interest on such bridge loan
was accrued or paid by Charter Investment, Inc.
 
     On March 16, 1999, Charter Investment, Inc. borrowed approximately $124.8
million in the form of a bridge loan from Mr. Allen. This bridge loan was
contributed by Mr. Allen to Charter Investment, Inc. in March 1999. No interest
on such bridge loan was accrued or paid by Charter Investment, Inc.
 
     The $431 million contribution was used to redeem stock of certain
shareholders in Charter Investment, Inc. The $1.3 billion and $223.5 million
contributions by Mr. Allen were used by Charter Investment, Inc. to purchase the
remaining interest in CCA Group and CharterComm Holdings. All other
contributions to Charter Investment, Inc. by Mr. Allen were used in operations
of Charter Investment, Inc. and were not contributed to Charter Holdings.
 
     On August 10, 1999, Vulcan Cable III Inc. purchased 24.1 million membership
units for $500 million. On September 22, 1999, Mr. Allen, through Vulcan Cable
III Inc., contributed an additional $825 million, consisting of approximately
$644.3 million in cash and approximately $180.7 million in equity interests in
Rifkin that Vulcan Cable III Inc. had acquired in the Rifkin acquisition in
exchange for 39.8 million membership units.
 
     As part of the membership interests purchase agreement, Vulcan Ventures
Incorporated and Charter Communications, Inc., Charter Investment, Inc. and
Charter Communications Holding Company entered into an agreement on September
21, 1999 regarding the right of Vulcan Ventures to use up to eight of our
digital cable channels. Specifically, we will provide Vulcan Ventures with
exclusive rights for carriage of up to eight digital cable television
programming services or channels on each of the digital cable television systems
with local control of the digital product now or hereafter owned, operated,
controlled or managed by us of 550 megahertz or more. If the system offers
digital services but has less than 550 megahertz of capacity, then the
programming services will be equitably reduced. The programming services will
consist of any designated by Vulcan Ventures. We agree that upon request of
Vulcan Ventures, we will attempt to reach a comprehensive programming agreement
pursuant to which we will pay the programmer, if possible, a fee per digital
subscriber. If such fee arrangement is not achieved, then we and the programmer
shall enter into a standard programming agreement. We believe that this
transaction is on terms at least as favorable to us as Mr. Allen would negotiate
with other cable operators.
 
     During the second and third quarters of 1999, one of our subsidiaries sold
shared interests in several airplanes to Mr. Allen for approximately $8 million.
We believe that the purchase price paid by Mr. Allen for these interests was the
fair market price.
 
                                       180

<PAGE>   184
 
ALLOCATION OF BUSINESS OPPORTUNITIES WITH MR. ALLEN
 
     As described under "-- Business Relationships", Mr. Allen and a number of
his affiliates have interests in various entities that provide services or
programming to a number of our subsidiaries. Given the diverse nature of Mr.
Allen's investment activities and interests, and to avoid the possibility of
future disputes as to potential business, Charter Communications Holding Company
and Charter Communications, Inc. may not, under the terms of their
organizational documents, engage in any business transaction outside the cable
transmission business except for the joint venture with Broadband Partners and
incidental businesses engaged in as of the closing of this offering. We will be
subject to this restriction until all shares of Class B common stock have
converted into Class A common stock. See "Description of Capital Stock and
Membership Units".
 
     Should we wish to pursue a business transaction outside of this scope, we
must first offer Mr. Allen the opportunity to pursue the particular business
transaction. If he decides not to do so and consents to our engaging in the
business transaction, we will be able to do so. In any such case, the restated
certificate of incorporation and the limited liability company agreement would
be amended accordingly to appropriately modify the current restrictions on our
ability to engage in any business other than the cable transmission business.
The cable transmission business means the business of transmitting video, audio,
including telephony, and data over cable television systems owned, operated or
managed by us from time to time. Under Charter Communications, Inc.'s restated
certificate of incorporation, the businesses of RCN Corporation, a company in
which Mr. Allen is making a significant investment, are not considered cable
transmission businesses. See "-- Business Relationships -- RCN Corporation".
 
     Under Delaware corporate law, each director of Charter Communications,
Inc., including Mr. Allen, is generally required to present to Charter
Communications, Inc. any opportunity he or she may have to acquire any cable
transmission business or any company whose principal business is the ownership,
operation or management of cable transmission businesses so that we may
determine whether we wish to pursue such opportunities. However, Mr. Allen and
the other directors generally will not have an obligation to present to Charter
Communications, Inc. other business opportunities and they may exploit such
opportunities for their own account.
 
ASSIGNMENTS OF ACQUISITIONS
 
     On January 1, 1999, Charter Investment, Inc. entered into a membership
purchase agreement with ACEC Holding Company, LLC for the acquisition of
American Cable. On February 23, 1999, Charter Investment, Inc. assigned its
rights and obligations under this agreement to one of our subsidiaries, Charter
Communications Entertainment II, LLC, effective as of March 8, 1999, or such
earlier date as mutually agreed to by the parties. The acquisition of American
Cable was completed in May 1999.
 
     On February 17, 1999, Charter Investment, Inc. entered into an asset
purchase agreement with Greater Media, Inc. and Greater Media Cablevision, Inc.
for the acquisition of the Greater Media systems. On February 23, 1999, Charter
Investment, Inc. assigned its rights and obligations under this agreement to one
of our subsidiaries,
 
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<PAGE>   185
 
Charter Communications Entertainment I, LLC. The acquisition of the Greater
Media systems was completed in June 1999.
 
     On April 26, 1999, Charter Communications, Inc. entered into a purchase and
sale agreement with InterLink Communications Partners, LLLP and the other
sellers listed on the signature pages of the agreement. On June 30, 1999,
Charter Communications, Inc. assigned its rights and obligations under this
agreement to Charter Communications Operating, LLC. The acquisition contemplated
by these agreements was completed in September 1999.
 
     On April 26, 1999, Charter Communications, Inc. entered into a purchase and
sale agreement with Rifkin Acquisition Partners L.L.L.P and the other sellers
listed on the signature pages of the agreement. On June 30, 1999, Charter
Communications, Inc. assigned its rights and obligations under this agreement to
Charter Communications Operating, LLC. The acquisition contemplated by these
agreements was completed in September 1999.
 
     On April 26, 1999, Charter Communications, Inc. entered into the RAP
indemnity agreement with InterLink Communications Partners, LLLP and the other
sellers and InterLink partners listed on the signature pages of the agreement.
On June 30, 1999, Charter Communications, Inc. assigned its rights and
obligations under this agreement to Charter Communications Operating, LLC.
 
     In May 1999, Charter Investment, Inc. entered into the Falcon purchase
agreement. As of June 22, 1999, pursuant to the first amendment to the Falcon
purchase agreement, Charter Investment, Inc. assigned its rights under the
Falcon purchase agreement to Charter LLC, a subsidiary of Charter Communications
Holding Company.
 
     In May 1999, Charter Investment, Inc. entered into the Fanch purchase
agreement. On September 21, 1999, Charter Investment, Inc. assigned its rights
and obligations to purchase stock interests under this agreement to Charter
Communications Holding Company and its rights and obligations to purchase
partnership interests and assets under this agreement to Charter Communications
VI, LLC, an indirect wholly owned subsidiary of Charter Communications Holding
Company.
 
     In May 1999, Charter Communications Holdings, LLC and Charter Investment,
Inc., as guarantor, entered into an agreement to purchase directly and
indirectly all of the equity interests of Avalon Cable LLC. Effective as of June
16, 1999, Charter Communications Holdings, LLC assigned its rights and
obligations under this agreement to Charter Communications Holding Company. On
October 11, 1999, Charter Communications Holding Company and Charter
Communications, Inc. entered into an Assignment and Contribution Agreement
pursuant to which Charter Communications, Inc. has agreed to assume the
obligation to acquire the stock of Avalon Cable of Michigan Holdings, Inc.
Charter Communications, Inc. is obligated under the terms of the Assignment and
Contribution Agreement to retain a portion of the proceeds of this offering to
purchase this stock and then to contribute all of the equity interests in Avalon
Cable LLC, an indirect wholly owned subsidiary of Avalon Cable of Michigan
Holdings, Inc., along with any unused proceeds, to Charter Communications
Holding Company in
 
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<PAGE>   186
 
exchange for Class B common membership units. In connection with the
contribution of this indirect interest in Avalon Cable LLC to Charter
Communications Holding Company, Avalon Cable of Michigan Holdings, Inc. will be
merged into a limited liability company. Charter Investment, Inc. remains a
guarantor of the obligations of Charter Communication Holdings, LLC and its
assignees, including Charter Communications, Inc., under the Avalon acquisition
agreement. See "Description of Capital Stock and Membership Units -- Membership
Units".
 
EMPLOYMENT AGREEMENTS
 
     Mr. Kent has entered into an employment agreement with us. We have
summarized this agreement in "Management -- Employment and Consulting
Agreements".
 
   
     Effective as of December 23, 1998, Barry L. Babcock entered into an
employment agreement with Charter Investment for a one-year term with automatic
one-year renewals. Under this agreement, Mr. Babcock agreed to serve as Vice
Chairman of Charter Investment, Inc. with responsibilities including the
government and public relations of Charter Investment, Inc. During the initial
term of the agreement, Mr. Babcock was entitled to receive a base salary of
$625,000, or such higher rate as may have been determined by the Chief Executive
Officer in his discretion. In addition, Mr. Babcock was eligible to receive an
annual bonus to be determined by the board of directors at its discretion. Mr.
Babcock received a one-time payment of $500,000 as part of his employment
agreement.
    
 
     Under the agreement, Mr. Babcock was entitled to participate in any
disability insurance, pension or other benefit plan afforded to employees
generally or executives of Charter Investment, Inc. Charter Investment, Inc.
agreed to grant options to Mr. Babcock to purchase its stock as determined by
the board of directors in its discretion, pursuant to an option plan that was
adopted by Charter Investment.
 
     Charter Investment, Inc. agreed to indemnify and hold harmless Mr. Babcock
to the maximum extent permitted by law from and against any claims, damages,
liabilities, losses, costs or expenses in connection with or arising out of the
performance by Mr. Babcock of his duties.
 
     In the event of the termination of the agreement by Charter Investment,
Inc. without cause or by Mr. Babcock for good reason:
 
     - Charter Investment, Inc. was required to pay to Mr. Babcock an amount
       equal to the aggregate base salary due to Mr. Babcock for the remainder
       of the term of the agreement; and
 
     - vested options, if any, of Mr. Babcock were to be redeemed for cash for
       their then-current intrinsic value.
 
     Mr. Babcock and Charter Investment, Inc. have reached agreement on the
principal terms of the termination of this employment agreement which include
the vesting of options held by Mr. Babcock and the payment of an amount equal to
his base salary plus a $312,500 bonus.
 
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<PAGE>   187
 
     Effective as of December 23, 1998, Howard L. Wood entered into an
employment agreement with Charter Investment, Inc. for a one-year term with
automatic one-year renewals. Under this agreement, Mr. Wood agreed to serve as
an officer of Charter Investment, Inc. During the initial term of the agreement,
Mr. Wood is entitled to receive a base salary of $312,500, or such higher rate
as determined by the Chief Executive Officer in his discretion. In addition, Mr.
Wood is eligible to receive an annual bonus to be determined by the board of
directors in its discretion. Mr. Wood received a one-time payment as part of his
employment agreement of $250,000. Under the agreement, Mr. Wood is entitled to
participate in any disability insurance, pension or other benefit plan afforded
to employees generally or executives of Charter Investment, Inc.
 
     Charter Investment, Inc. has agreed to indemnify and hold harmless Mr. Wood
to the maximum extent permitted by law from and against any claims, damages,
liabilities, losses, costs or expenses in connection with or arising out of the
performance by Mr. Wood of his duties.
 
     In the event of the termination of the agreement by Charter Investment,
Inc. without cause or by Mr. Wood for good reason, Charter Investment, Inc. is
required to pay to Mr. Wood an amount equal to the aggregate base salary due to
Mr. Wood for the remainder of the term of the agreement. Mr. Wood and Charter
Investment, Inc. have agreed that upon closing of this offering, this employment
agreement will cease to be effective. Upon termination of the employment
agreement, Mr. Wood will receive an amount equal to his base salary plus a
$312,500 bonus. In light of the consulting agreement to be entered into between
Mr. Wood and Charter Communications, Inc., the options held by Mr. Wood will
vest.
 
CONSULTING AGREEMENTS
 
     Mr. Wood and Mr. Babcock will enter into consulting agreements with us. We
have summarized these agreements in "Management -- Employment and Consulting
Agreements".
 
INSURANCE
 
     Charter Communications, Inc. receives insurance and workers' compensation
coverage through Charter Investment, Inc. Charter Investment, Inc.'s insurance
policies provide coverage for Charter Investment, Inc. and its
 
     - subsidiaries, and associated, affiliated and inter-related companies,
 
     - majority (51% or more) owned partnerships and joint ventures,
 
     - interest in (or its subsidiaries' interest in) any other partnerships,
       joint ventures or limited liability companies,
 
     - interest in (or its subsidiaries' interest in) any company or
       organization coming under its active management or control, and
 
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<PAGE>   188
 
     - any entity or party required to be insured under any contract or
       agreement, which may now exist, may have previously existed, or may
       hereafter be created or acquired.
 
     Charter Investment, Inc. expensed approximately $5,498,000 for the six
months ended June 30, 1999, approximately $603,000 for the year ended December
31, 1998, approximately $172,100 for the year ended December 31, 1997, and
approximately $108,000, for the year ended December 31, 1996, relating to
insurance allocations.
 
BUSINESS RELATIONSHIPS
 
     Paul G. Allen or certain affiliates of Mr. Allen own equity interests or
warrants to purchase equity interests in various entities which provide a number
of our subsidiaries with services or programming. Among these entities are High
Speed Access Corp., WorldGate Communications, Inc., Wink Communications, Inc.,
ZDTV, L.L.C., USA Networks, Oxygen Media, Inc., Broadband Partners LLC, Go2Net,
Inc. and RCN Corporation. Affiliates of Mr. Allen include Charter Investment,
Inc. and Vulcan Ventures, Inc. Mr. Allen owns 100% of the equity of Vulcan
Ventures, and is its Chief Executive Officer. Mr. Savoy is also a Vice President
and a director of Vulcan Ventures. The various cable, Internet and telephony
companies that Mr. Allen has invested in may mutually benefit one another. The
recently announced Broadband Partners Internet portal joint venture is an
example of a cooperative business relationship among his affiliated companies.
We can give no assurance, nor should you expect, that this joint venture will be
successful, that Charter Communications, Inc. and its subsidiaries will realize
any benefits from this or other relationships with Mr. Allen's affiliated
companies or that we will enter into any joint ventures or business
relationships in the future with Mr. Allen's affiliated companies.
 
     Mr. Allen and his affiliates have made and in the future likely will make,
numerous investments outside of Charter Communications Holding Company. We
cannot assure you that, in the event that we or any of our subsidiaries enter
into transactions in the future with any affiliate of Mr. Allen, such
transactions will be on terms as favorable to us as terms we might have obtained
from an unrelated third party. Also, conflicts could arise with respect to the
allocation of corporate opportunities between us and Mr. Allen and his
affiliates.
 
     We have not instituted any formal plan or arrangement to address potential
conflicts of interest.
 
     HIGH SPEED ACCESS.   High Speed Access is a provider of high-speed Internet
access over cable modems. In November 1998, Charter Investment, Inc. entered
into a systems access and investment agreement with Vulcan Ventures and High
Speed Access and a related network services agreement with High Speed Access.
Additionally, Vulcan Ventures and High Speed Access entered into a programming
content agreement. Under these agreements, High Speed Access will have exclusive
access to at least 750,000 of our homes with an installed cable drop from our
cable system or which is eligible for a cable drop by virtue of our cable system
passing the home. The term of the systems access and investment agreement
continues until midnight of the day High Speed Access
 
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<PAGE>   189
 
ceases to provide High Speed Access services to cable subscribers in any
geographic area or region. The term of the network services agreement is as to a
particular cable system, five years from the date revenue billing commences for
that cable system and, following this initial term, the network services
agreement automatically renews itself on a year-to-year basis. Additionally, we
can terminate our exclusivity rights, on a system-by-system basis, if High Speed
Access fails to meet performance benchmarks or otherwise breaches the agreements
including their commitment to provide content designated by Vulcan Ventures. The
programming content agreement is effective until terminated for any breach and
will automatically terminate upon the expiration of the systems access and
investment agreement. During the term of the agreements, High Speed Access has
agreed not to deploy WorldGate, Web TV, digital television or related products
in the market areas of any committed system or in any area in which we operate a
cable system. All of Charter Investment, Inc.'s operations take place at the
subsidiary level and it is through Charter Investment, Inc. that we derive our
rights and obligations with respect to High Speed Access. Under the terms of the
network services agreement, we split revenue with High Speed Access based on set
percentages of gross revenues in each category of service. The programming
content agreement provides each of Vulcan Ventures and High Speed Access with a
license to use certain content and materials of the other on a non-exclusive,
royalty-free basis. Operations began in the first quarter of 1999. Net receipts
from High Speed Access for the six months ended June 30, 1999 were approximately
$24,000.
 
     Concurrently with entering into these agreements, High Speed Access issued
8 million shares of Series B convertible preferred stock to Vulcan Ventures at a
purchase price of $2.50 per share. Vulcan Ventures also subscribed to purchase
2.5 million shares of Series C convertible preferred stock, at a purchase price
of $5.00 per share on or before November 25, 2000, and received an option to
purchase an additional 2.5 million shares of Series C convertible preferred
stock at a purchase price of $5.00 per share. In April 1999, Vulcan Ventures
purchased the entire 5 million shares of Series C convertible preferred stock
for $25 million in cash. The shares of Series B and Series C convertible
preferred stock issued to Vulcan Ventures automatically converted at a price of
$3.23 per share into 20.15 million shares of common stock upon completion of
High Speed Access' initial public offering in June 1999.
 
   
     Additionally, High Speed Access granted Vulcan Ventures warrants to
purchase up to 5,006,500 shares of common stock at a purchase price of $5.00 per
share. These warrants were converted to warrants to purchase up to 7,750,000
shares of common stock at a purchase price of $3.23 per share upon completion of
High Speed Access' initial public offering. Vulcan Ventures subsequently
assigned the warrants to Charter Investment, Inc. The warrants are exercisable
at the rate of 1.55 shares of common stock for each home passed in excess of
750,000, 3.9 million warrants may be earned on or before July 31, 2001 and must
be exercised on or before July 31, 2002. 3.9 million warrants may be earned on
or before July 31, 2003 and must be exercised on or before July 31, 2004. The
warrants may be forfeited in certain circumstances, generally if the number of
homes passed in a committed system is reduced.
    
 
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<PAGE>   190
 
     Jerald L. Kent, our President and Chief Executive Officer and a director of
Charter Holdings, Stephen E. Silva, our Senior Vice President -- Corporate
Development and Technology, and Mr. Savoy, a member of our board of directors
are all members of the board of directors of High Speed Access Corp.
 
   
     Upon completion of the offering, Charter Investment, Inc. will assign to
Charter Communications Holding Company all of its rights and obligations under
its agreements with High Speed Access, and transfer the warrants to purchase up
to 7,750,000 shares of common stock of High Speed Access, to Charter
Communications Holding Company.
    
 
     WORLDGATE.   WorldGate is a provider of Internet access through cable
television systems. On November 7, 1997, Charter Investment, Inc. signed an
affiliation agreement with WorldGate pursuant to which WorldGate's services will
be offered to some of our customers. The term of the agreement is five years
unless terminated by either party for failure of the other party to perform any
of its obligations or undertakings required under the agreement. The agreement
automatically renews for additional successive two-year periods upon expiration
of the initial five-year term. All of Charter Investment, Inc.'s operations take
place at the subsidiary level and it is through Charter Investment, Inc. that we
derive our rights and obligations with respect to WorldGate. Pursuant to the
agreement, we have agreed to use our reasonable best efforts to deploy the
WorldGate Internet access service within a portion of our cable television
systems and to install the appropriate headend equipment in all of our major
markets in those systems. Major markets for purposes of this agreement include
those in which we have more than 25,000 customers. We incur the cost for the
installation of headend equipment. In addition, we have agreed to use our
reasonable best efforts to deploy such service in all non-major markets that are
technically capable of providing interactive pay-per-view service, to the extent
we determine that it is economically practical. When WorldGate has a telephone
return path service available, we will, if economically practical, use all
reasonable efforts to install the appropriate headend equipment and deploy the
WorldGate service in our remaining markets. Telephone return path service is the
usage of telephone lines to connect to the Internet to transmit data or receive
data. We have also agreed to market the WorldGate service within our market
areas. We pay a monthly subscriber access fee to WorldGate based on the number
of subscribers to the WorldGate service. We have the discretion to determine
what fees, if any, we will charge our subscribers for access to the WorldGate
service. We started offering WorldGate service in 1998. For the six months ended
June 30, 1999, we paid to WorldGate approximately $570,000. For the year ended
December 31, 1998, we paid to WorldGate approximately $276,000. We charged our
subscribers approximately $76,000 for the six months ended June 30, 1999, and
approximately $22,000 for the year ended December 31, 1998.
 
     On November 24, 1997, Charter Investment, Inc. acquired 70,423 shares of
WorldGate's Series B preferred stock at a purchase price of $7.10 per share. On
February 3, 1999, a subsidiary of Charter Holdings acquired 90,909 shares of
Series C preferred stock at a purchase price of $11.00 per share. As a result of
a stock split, each share of Series B preferred stock will convert into
two-thirds of a share of WorldGate's common stock, and each share of Series C
preferred stock will convert into two-thirds of
 
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<PAGE>   191
 
a share of WorldGate's common stock. Upon completion of WorldGate's initial
public offering, each series of preferred stock will automatically convert into
common stock.
 
     Upon completion of the offering, Charter Investment, Inc. will assign to
Charter Communications Holding Company all of its rights and obligations under
its agreements with WorldGate and transfer its 70,423 shares of WorldGate Series
B preferred stock to Charter Communications Holding Company.
 
     WINK.   Wink offers an enhanced broadcasting system that adds interactivity
and electronic commerce opportunities to traditional programming and
advertising. Viewers can, among other things, find news, weather and sports
information on-demand and order products through use of a remote control. On
October 8, 1997, Charter Investment, Inc. signed a cable affiliation agreement
with Wink to deploy this enhanced broadcasting technology in our systems. The
term of the agreement is three years. Either party has the right to terminate
the agreement for the other party's failure to comply with any of its respective
material obligations under the agreement. All of Charter Investment, Inc.'s
operations take place at the subsidiary level and it is through Charter
Investment, Inc. that we derive our rights and obligations with respect to Wink.
Pursuant to the agreement, Wink granted us the non-exclusive license to use
their software to deliver the enhanced broadcasting to all of our cable systems.
For the first year of the agreement, we pay a monthly license fee to Wink which
is based on the number of our subscribers in our operating areas. After the
first year of the agreement we pay a fixed monthly license fee to Wink
regardless of the number of our subscribers in our operating areas. We also
supply all server hardware required for deployment of Wink services. In
addition, we agreed to promote and market the Wink service to our customers
within the area of each system in which such service is being provided. We share
in the revenue Wink generates from all fees collected by Wink for transactions
generated by our customers. The amount of revenue shared is based on the number
of transactions per month. As of June 30, 1999, no revenue or expenses have been
recognized as a result of this agreement.
 
     On November 30, 1998, Vulcan Ventures acquired 1,162,500 shares of Wink's
Series C preferred stock for approximately $9.3 million. In connection with such
acquisition, Wink issued to Vulcan Venture warrants to purchase shares of common
stock. Additionally, Microsoft Corporation, of which Mr. Allen is a director,
also owns an equity interest in Wink.
 
     Upon the completion of the offering, Charter Investment, Inc. will assign
to Charter Communications Holding Company all of its rights and obligations
under its agreements with Wink.
 
     ZDTV.   ZDTV operates a cable television channel which broadcasts shows
about technology and the Internet. Pursuant to a carriage agreement which
Charter Communications Holding Company intends to enter into with ZDTV, ZDTV has
agreed to provide us with programming for broadcast via our cable television
systems at no cost. The term of the proposed carriage agreement, with respect to
each of our cable systems, is from the date of launch of ZDTV on that cable
system until April 30, 2008. The term expires on the same day for each of our
cable systems, regardless of when any individual
 
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<PAGE>   192
 
cable system launches ZDTV. The carriage agreement grants us a limited
non-exclusive right to receive and to distribute ZDTV to our subscribers in
digital or analog format. The carriage agreement does not grant us the right to
distribute ZDTV over the Internet. We pay a monthly subscriber fee to ZDTV for
the ZDTV programming based on the number of our subscribers subscribing to ZDTV.
Additionally, we agreed to use commercially reasonable efforts to publicize the
programming schedule of ZDTV in each of our cable systems that offers or will
offer ZDTV. Upon reaching a specified threshold number of ZDTV subscribers,
then, in the event ZDTV inserts any informercials, advertorials and/or home
shopping into in the ZDTV programming, we receive from ZDTV a percentage of net
product revenues resulting from our distribution of these services. ZDTV may not
offer its services to any other cable operator which serves the same or fewer
number of subscribers at a more favorable rate or on more favorable carriage
terms. As of June 30, 1999, no expenses have been recognized as a result of
these agreements.
 
     On February 5, 1999, Vulcan Programming acquired an approximate one-third
interest in ZDTV. Mr. Allen owns 100% of Vulcan Programming. Mr. Savoy is the
president and director of Vulcan Programming. The remaining approximate
two-thirds interest in ZDTV is owned by Ziff-Davis Inc. Vulcan Ventures owns
approximately 3% of the interests in Ziff-Davis. The total investment made by
Vulcan Programming and Vulcan Ventures was $104 million.
 
     USA NETWORKS.   USA Networks operates USA Network and The Sci-Fi Channel,
which are cable television networks. USA Networks also operates Home Shopping
Network, which is a retail sales program available via cable television systems.
On May 1, 1994, Charter Investment, Inc. signed an affiliation agreement with
USA Networks. Pursuant to this affiliation agreement, USA Networks has agreed to
provide their programming for broadcast via our cable television systems. The
term of the affiliation agreement is until December 30, 1999. The affiliation
agreement grants us the nonexclusive right to cablecast the USA Network
programming service. We pay USA Networks a monthly fee for the USA Network
programming service number based on the number of subscribers in each of our
systems and the number and percentage of such subscribers receiving the USA
Network programming service. Additionally, we agreed to use best efforts to
publicize the schedule of the USA Network programming service in the television
listings and program guides which we distribute. We have paid to USA Networks
for programming approximately $4,931,614 for the six months ended June 30, 1999,
approximately $556,000 for the year ended December 31, 1998, approximately
$204,000 for the year ended December 31, 1997, and approximately $134,000 for
the year ended December 31, 1996. In addition, we received commissions from Home
Shopping Network for sales generated by our customers totaling approximately
$794,000 for the six months ended June 30, 1999, approximately $121,000 for the
year ended December 31, 1998, approximately $62,000 for the year ended December
31, 1997, and approximately $35,000 for the year ended December 31, 1996.
 
     Mr. Allen and Mr. Savoy are also directors of USA Networks. As of April
1999, Mr. Allen owned approximately 9.8% and Mr. Savoy owned less than 1% of the
common stock of USA Networks. Upon completion of the offering, Charter
Investment, Inc. will
 
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<PAGE>   193
 
assign to Charter Communications Holding Company all of its rights and
obligations under its agreements with USA Networks.
 
     OXYGEN MEDIA, INC.   Oxygen Media provides content aimed at the female
audience for distribution over the Internet and cable television systems. Vulcan
Ventures has agreed to invest up to $100 million in Oxygen Media. In addition,
Charter Communications Holding Company has agreed to enter into a carriage
agreement with Oxygen Media pursuant to which we intend to carry Oxygen Media
programming content on our cable systems. As of June 30, 1999, no expenses have
been recognized as a result of these agreements. Nancy B. Peretsman, one of our
nominees for director, serves on the board of directors of Oxygen Media.
 
     BROADBAND PARTNERS, LLC.   Charter Communications, Inc. has entered into a
joint venture with Vulcan Ventures and Go2Net to provide broadband portal
services. See "Business -- Products and Services". Mr. Allen owns approximately
33% of the outstanding equity of Go2Net. Mr. Savoy, a director of Charter
Communications, Inc., is also a director of Go2Net.
 
     RCN CORPORATION.   On October 1, 1999, Vulcan Ventures entered into an
agreement to purchase shares of convertible preferred stock of RCN Corporation
for an aggregate purchase price of approximately $1.65 billion. If Vulcan
Ventures immediately converts the RCN preferred stock it has agreed to purchase
into common stock, it will own 27.4% of RCN when combined with the common stock
that Vulcan Ventures already owns. None of Charter Communications, Inc., Charter
Communications Holding Company or their respective stockholders or members,
other than Vulcan Ventures, have any interest in the RCN investment and none of
them is expected to have any interest in any subsequent investment in RCN that
Vulcan Ventures may make. The businesses of RCN are not deemed to be the "cable
transmission business" under Charter Communications, Inc.'s Certificate of
Incorporation.
 
OTHER RELATIONSHIPS
 
     David L. McCall, Senior Vice President of Operations -- Eastern Division,
is a partner in a partnership that leases office space to us. The partnership
has received $108,647 pursuant to such lease for the period from January 1999 to
June 1999.
 
     In January 1999, Charter Investment, Inc. issued bonuses to executive
officers in the form of three-year promissory notes. One-third of the original
outstanding principal amount of each of these notes is forgiven, as long as the
employee is still employed by Charter Investment, Inc. or any of its affiliates,
at the end of each of the first three
 
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<PAGE>   194
 
anniversaries of the issue date. The promissory notes bear interest at 7% per
year. Outstanding balances as of June 30, 1999 are as follows:
 

<TABLE>
<CAPTION>
                    INDIVIDUAL                       AMOUNT
                    ----------                      --------
<S>                                                 <C>
David G. Barford..................................  $450,000
Mary Pat Blake....................................  $450,000
Eric A. Freesmeier................................  $450,000
Thomas R. Jokerst.................................  $450,000
Kent D. Kalkwarf..................................  $450,000
Ralph G. Kelly....................................  $450,000
David L. McCall...................................  $450,000
John C. Pietri....................................  $225,000
Steven A. Schumm..................................  $900,000
Curtis S. Shaw....................................  $450,000
Stephen E. Silva..................................  $300,000
</TABLE>

 
     Mr. Wood has agreed to lease, from time to time, to Charter Communications,
Inc. and its subsidiaries and affiliates an airplane owned by Mr. Wood for
business travel. We or our subsidiary or affiliate, as applicable, would, in
turn, pay Mr. Wood market rates for such use. When Mr. Wood uses the plane for
personal matters, we have agreed to provide, if available, Charter-employed
airplane operating personnel. This agreement with Mr. Wood is not in writing.
 
     Marc B. Nathanson is the Chairman of the board of directors of Falcon
Holding Group, Inc., the general partner of Falcon Holding Group, L.P.
 
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<PAGE>   195
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
     The following description of our indebtedness is qualified in its entirety
by reference to the relevant credit facility, indenture and related documents
governing the debt.
 
EXISTING CREDIT FACILITIES
 
     CHARTER OPERATING CREDIT FACILITIES.   On March 18, 1999, all of our
then-existing senior debt, consisting of seven separate credit facilities, was
refinanced with proceeds of the sale of the original Charter Holdings notes and
proceeds of our initial senior secured credit facilities. The borrower under our
initial senior secured credit facilities is Charter Operating. The initial
senior secured credit facilities were arranged by Chase Securities, Inc.,
NationsBank Montgomery Securities LLC and TD Securities (USA) Inc. The initial
Charter Operating senior secured credit facilities provided for borrowings of up
to $2.75 billion.
 
     The initial Charter Operating senior secured credit facilities were
increased on April 30, 1999 by $1.35 billion of additional senior secured credit
facilities. Obligations under the Charter Operating credit facilities are
guaranteed by Charter Operating's parent, Charter Holdings, and by Charter
Operatings' subsidiaries. The obligations under the Charter Operating credit
facilities are secured by pledges by Charter Operating of inter-company
obligations and the ownership interests of Charter Operating and its
subsidiaries, but are not secured by the other assets of Charter Operating or
its subsidiaries. The guarantees are secured by pledges of inter-company
obligations and the ownership interests of Charter Holdings in Charter
Operating, but are not secured by the other assets of Charter Holdings or
Charter Operating.
 
     The initial senior secured credit facilities of $4.1 billion consist of:
 
     - an eight and one-half year reducing revolving loan in the amount of $1.25
       billion;
 
     - an eight and one-half year Tranche A term loan in the amount of $1.0
       billion; and
 
     - a nine-year Tranche B term loan in the amount of $1.85 billion.
 
     The Charter Operating credit facilities provide for the amortization of the
principal amount of the Tranche A term loan facility and the reduction of the
revolving loan facility beginning on June 30, 2002 with respect to the Tranche A
term loan and on March 31, 2004 with respect to the revolving credit facility,
with a final maturity date of September 18, 2007. The amortization of the
principal amount of the Tranche B term loan facility is substantially
"back-ended," with more than ninety percent of the principal balance due in the
year of maturity. The Charter Operating credit facilities also provide for an
incremental term facility of up to $500 million which is conditioned upon
receipt of additional new commitments from lenders. If the incremental term
facility becomes available, up to 50% of the borrowings under it may be repaid
on terms substantially similar to that of the Tranche A term loan and the
remaining portion on terms substantially similar to the Tranche B term loan. The
credit facilities also contain provisions requiring mandatory loan prepayments
under some circumstances, such as
 
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<PAGE>   196
 
when significant amounts of assets are sold and the proceeds are not promptly
reinvested in assets useful in the business.
 
     The Charter Operating credit facilities provide the borrower with two
interest rate options, to which a margin is added: a base rate option, generally
the "prime rate" of interest, and an interest rate option based on the interbank
eurodollar rate. Interest rate margins for the Charter Operating credit
facilities depend upon performance measured by a leverage ratio, which is the
ratio of indebtedness to annualized operating cash flow. Annualized operating
cash flow is defined as the immediately preceding quarter's operating cash flow,
before management fees, multiplied by four. This leverage ratio is based on the
debt of Charter Operating and its subsidiaries, exclusive of the outstanding
notes and other debt for money borrowed, including guarantees by Charter
Operating and by Charter Holdings. The interest rate margins for the Charter
Operating credit facilities are as follows:
 
     - with respect to the revolving loan and the Tranche A term loan, the
       margin ranges from 1.5% to 2.25% for eurodollar loans and from 0.5% to
       1.25% for base rate loans; and
 
     - with respect to the Tranche B term loan, the margin ranges from 2.25% to
       2.75% for eurodollar loans and from 1.25% to 1.75% for base rate loans.
 
     The Charter Operating credit facilities contain representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default include a
cross-default provision that is triggered by the failure of Charter Holdings,
Charter Operating or Charter Operating's subsidiaries to make payment on debt
with an outstanding total principal amount exceeding $50 million or the
acceleration of debt of this amount prior to its maturity. The financial
covenants, which are generally tested on a quarterly basis, measure performance
against standards set for leverage, debt service coverage, and operating cash
flow coverage of cash interest expense.
 
     Under most circumstances, acquisitions and investments may be made without
the consent of the lenders as long as Charter Operating's operating cash flow
for the four complete quarters preceding the acquisition or investment equals or
exceeds 1.75 times the sum of its cash interest expense plus any restricted
payments, on a pro forma basis after giving effect to the acquisition or
investment.
 
     The Charter Operating credit facilities also contain a change of control
provision, making it an event of default, and permitting acceleration of the
debt, in the event that either:
 
     - Mr. Allen, including his estate, heirs and other related entities, fails
       to maintain a 51% direct or indirect voting and economic interest in
       Charter Operating, provided that after the consummation of an initial
       public offering by Charter Holdings or an affiliate of Charter Holdings,
       the economic interest percentage may be reduced to 25%, or
 
     - a change of control occurs under the indentures governing the Charter
       Holdings notes.
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<PAGE>   197
 
     The various negative covenants place limitations on the ability of Charter
Holdings, Charter Operating and their subsidiaries to, among other things:
 
     - incur debt;
 
     - pay dividends;
 
     - incur liens;
 
     - make acquisitions;
 
     - make investments or asset sales; or
 
     - enter into transactions with affiliates.
 
     Distributions by Charter Operating under the credit facilities to Charter
Holdings to pay interest on the Charter Holdings notes are generally permitted,
except during the existence of a default under the credit facilities. If the
8.250% Charter Holdings notes are not refinanced prior to six months before
their maturity date, the entire amount outstanding of the Charter Operating
credit facilities will become due and payable. As of June 30, 1999,
approximately $2.025 billion was outstanding and $2.075 billion was available
for borrowing under the Charter Operating credit facilities.
 
CREDIT FACILITIES TO BE ASSUMED OR ARRANGED IN CONNECTION WITH OUR PENDING
ACQUISITIONS
 
     FALCON CABLE COMMUNICATIONS CREDIT FACILITIES.   In May 1999, Charter
Investment, Inc. entered into the Falcon acquisition agreements. As of June 30,
1999, the assumed debt portion of the purchase price includes $967.0 million of
senior credit facilities of Falcon Cable Communications, LLC. As of July 21,
1999, a required percentage of the lenders under the credit agreement dated June
30, 1998 agreed to amend and restate the credit agreement, effective on the date
that we close our acquisition of Falcon. Unless otherwise noted, the description
below gives effect to this amendment and restatement, which becomes effective at
the time of the acquisition.
 
   
     The Falcon Cable Communications credit facilities will have maximum
borrowing availability of $1.25 billion consisting of the following:
    
 
     - a revolving facility in the amount of approximately $646.0 million;
 
   
     - a term loan B in the amount of approximately $198.5 million;
    
 
   
     - a term loan C in the amount of approximately $297.8 million; and
    
 
     - a committed supplemental revolving facility of $110.0 million.
 
     In addition, we intend to raise commitments for an additional supplemental
revolving facility of approximately $240.0 million.
 
     The revolving facility and the supplemental revolving facility amortize
beginning in 2001 and 2003, respectively, and ending on December 29, 2006 and
December 31, 2007, respectively. The term loan B and term loan C facilities
amortize beginning in 1999 and ending on June 29, 2007 and December 31, 2007,
respectively. The obligations under these facilities are guaranteed by the
subsidiaries of Falcon Cable Communications. The
 
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<PAGE>   198
 
obligations under these credit facilities are secured by pledges of the
ownership interests and inter-company obligations of Falcon Cable Communications
and its subsidiaries, but are not secured by other assets of Falcon Cable
Communications or its subsidiaries.
 
     These credit facilities also contain provisions requiring mandatory loan
prepayments under certain circumstances, such as when significant amounts of
assets are sold and the proceeds are not promptly reinvested in assets useful in
the business of Falcon Cable Communications.
 
     These credit facilities provide Falcon Cable Communications with two
interest rate options, to which a margin is added: a base rate option, generally
the "prime rate" of interest, and an interest rate option based on the interbank
eurodollar rate. Interest rates for these credit facilities, as well as a fee
payable on unborrowed amounts available under these facilities, will depend upon
performance measured by a "leverage ratio" which is the ratio of indebtedness to
annualized operating cash flow. Annualized operating cash flow is defined as the
immediately preceding quarter's operating cash flow, before management fees,
multiplied by four. This leverage ratio is based on the debt of Falcon Cable
Communications and its subsidiaries, exclusive of the Falcon debentures
described below. The interest rate margins for the Falcon Cable Communications
credit facilities are as follows:
 
     - with respect to the revolving loan facility, the margin ranges from 1.0%
       to 2.0% for eurodollar loans and from 0.0% to 1.0% for base rate loans;
 
     - with respect to Term Loan B, the margin ranges from 1.75% to 2.25% for
       eurodollar loans and from 0.75% to 1.25% for base rate loans; and
 
     - with respect to Term Loan C, the margin ranges from 2.0% to 2.5% for
       eurodollar loans and from 1.0% to 1.5% for base rate loans.
 
     These credit facilities contain representations and warranties, affirmative
and negative covenants, information requirements, events of default and
financial covenants. The events of default for these credit facilities include a
cross-default provision that is triggered by the failure to make payment
relating to specified outstanding debt of Falcon Holding Group, L.P., Falcon
Communications, L.P., Falcon Cable Communications and specified guarantors in a
total amount of principal and accrued interest exceeding $10 million. The
financial covenants, which are generally tested on a quarterly basis, measure
performance against standards set for leverage, debt service coverage, and
operating cash flow coverage of cash interest expense.
 
     These credit facilities also contain a change of control provision, making
it an event of default, and permitting acceleration of the debt, in the event
that either:
 
     - Mr. Allen, including his estate, heirs and other related entities, fails
       to maintain a 51% direct or indirect voting and economic interest in
       Falcon Cable Communications, provided that after the consummation of an
       initial public offering by the Falcon borrower or an affiliate of Falcon
       Cable Communications, the economic interest percentage may be reduced to
       25%; or
 
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<PAGE>   199
 
     - A change of control occurs under the indentures governing the Falcon
       debentures or under the terms of other debt of Falcon.
 
     The various negative covenants place limitations on the ability of Falcon
Cable Communications and its subsidiaries to, among other things:
 
     - incur debt;
 
     - pay dividends;
 
     - incur liens;
 
     - make acquisitions;
 
     - make investments or asset sales; or
 
     - enter into transactions with affiliates.
 
     Distributions by Falcon Cable Communications under its credit facilities to
pay interest on the Falcon debentures are generally permitted, except during the
existence of a default under the credit facilities.
 
   
     As of June 30, 1999, $967.0 million was outstanding, $175.3 million was
committed and available for borrowing and an additional $110.0 million was
committed and will be available for borrowing upon completion of the Falcon
acquisition under the Falcon Cable Communications credit facilities.
    
 
   
     FALCON BRIDGE LOAN FACILITY.   We have received a commitment from a group
of lenders for a bridge loan facility to finance required repayments of Falcon
debentures and notes. Goldman Sachs Credit Partners, L.P. is the administrative
agent under this facility. The Falcon bridge loan facility has a total borrowing
capacity of $750 million and Falcon Communications, L.P. will be the borrower
under the facility. Under the terms of the commitment, we are obligated to cause
Falcon Cable Communications to assume our obligations under the commitment. The
commitment to provide the bridge loans expires on February 12, 2000 if the
closing of the bridge loans has not occurred by that date. The conditions to
closing under the bridge loans include:
    
 
     - the receipt of net proceeds of at least $2.5 billion from this offering;
 
     - consummation of the Falcon acquisition and Falcon becoming a party to the
       bridge loan commitment upon consummation of the Falcon acquisition;
 
     - execution and delivery of satisfactory documentation of the bridge loans;
 
     - absence of various types of material adverse changes, including material
       adverse changes relative to us and to Falcon, as well as material adverse
       changes in the financial and capital markets;
 
     - the absence of certain litigation;
 
     - Falcon having adequate availability, in Goldman Sachs Credit Partners
       L.P.'s judgment, under the Falcon credit facilities;
 
     - satisfactory completion by the bridge lenders of a due diligence review
       of Falcon;
 
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<PAGE>   200
 
     - receipt of certain historical and pro forma financial statements for
       Falcon; and
 
     - receipt of required approvals.
 
     Many of these closing conditions are outside of the control of Falcon or
us. There can be no assurance that the closing conditions will be met.
 
     Under the commitment, the bridge loans will have a term of one year. If the
bridge loans have not been repaid in full by the maturity date, and provided
there is no default under the bridge loans or Falcon Cable Communications credit
facilities, the bridge loans will be automatically converted into nine-year term
loans. The events of default for the bridge loans will include a cross-default
provision. The specific terms of this provision have not yet been set.
 
     The bridge loans will bear interest initially at one month LIBOR plus 400
basis points. The interest rate will increase by 25 basis points at the end of
each three month period after the closing of the bridge loans. The bridge loans
may be prepaid at any time without penalty. The bridge loans must be repaid with
the net proceeds from any public or private offering of debt or equity
securities by Falcon or any of its subsidiaries, or any future bank borrowings
other than under Falcon Cable Communications credit facilities in effect at the
closing date or any future asset sales, subject to customary exceptions. The
bridge lenders may require Falcon to repay the bridge loans upon specified
changes of control of Falcon or Charter Communications, Inc.
 
     FANCH CREDIT FACILITIES.   In May 1999, Charter Communications, Inc.
entered into the Fanch purchase agreement. As of October 1, 1999, a group of
lenders had issued commitments, based on a detailed term sheet, in the aggregate
amount of $1.2 billion to the borrower, CC VI Operating, LLC, to be effective on
the date that we close our acquisition of Fanch. We intend to borrow
approximately $875 million under the Fanch credit facilities to finance a
portion of the Fanch purchase price. Upon the closing of the Fanch acquisition,
CC VI Operating will own, directly or indirectly, the cable systems we are
acquiring. The material closing conditions under the CC VI Operating credit
facilities are as follows:
 
     - consummation of the Fanch acquisition;
 
     - the indebtedness of CC VI Operating not exceeding a specified amount;
 
     - absence of material adverse changes relating to the Fanch cable systems
       being acquired; and
 
     - receipt of required approvals.
 
   
     Many of these conditions are outside the control of CC VI Operating or us.
There can be no assurance that the closing conditions will be met.
    
 
     These credit facilities have maximum borrowings of $1.2 billion, consisting
of:
 
     - a revolving facility in the amount of approximately $350 million;
 
   
     - a term loan A in the amount of approximately $450 million; and
    
 
   
     - a term loan B in the amount of approximately $400 million.
    
 
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<PAGE>   201
 
     The revolving facility amortizes beginning in 2004 and ending in May 2008.
The term loan A and term loan B facilities amortize beginning in 2003 and ending
in May 2008 and November 2008, respectively. The obligations under these
facilities are guaranteed by the subsidiaries of CC VI Operating and CC VI
Holdings, LLC, CC VI Operating's parent and a subsidiary of Charter
Communications Holding Company. The obligations under these credit facilities
are secured by pledges of the ownership interests and inter-company obligations
of CC VI Operating and its subsidiaries, but are not secured by other assets of
CC VI Operating or its subsidiaries.
 
     In addition to the foregoing, these credit facilities will permit a
supplemental credit facility in the maximum amount of $300 million. This
facility may be in the form of an additional term loan or an aggregate increase
in the amount of the term loan A or the revolving facility. Upon the
effectiveness of the CC VI Operating credit facilities, this supplemental
facility will be available, subject to the borrower's ability to obtain
additional commitments from lenders. The amortization of the additional term
loans under the supplemental credit facility prior to May 2009 shall be limited
to 1% per annum of the aggregate principal amount of such additional term loans.
 
     The CC VI Operating credit facilities also contain provisions requiring
mandatory loan prepayments under specific circumstances, including when
significant amounts of assets are sold and the proceeds are not promptly
reinvested in assets useful in the business of CC VI Operating.
 
     These credit facilities provide CC VI Operating with the following two
interest rate options, to which a margin is added:
 
     - a base rate option, generally the prime rate of interest; and
 
     - an interest rate option rate based on the interbank Eurodollar rate.
 
     Interest rates for the CC VI Operating credit facilities, as well as a fee
payable on unborrowed amounts available under these facilities, will depend upon
performance measured by a leverage ratio, which is the ratio of indebtedness to
annualized operating cash flow. Annualized operating cash flow is defined as the
immediately preceding quarter's operating cash flow, before management fees,
multiplied by four. This leverage ratio is based on the debt of CC VI Operating
and its subsidiaries. The interest rate margins for the CC VI Operating credit
facilities are as follows:
 
     - with respect to the revolving loan facility and term loan A, the margin
       ranges from 1.0% to 2.25% for Eurodollar loans and from 0.0% to 1.25% for
       base rate loans; and
 
     - with respect to term loan B, the margin ranges from 2.50% to 3.00% for
       Eurodollar loans and from 1.50% to 2.00% for base rate loans.
 
     The CC VI Operating credit facilities contain representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default for the CC VI
Operating credit facilities will include a cross-default provision covering
defaults on material debt of CC VI Operating, CC VI Holdings and specified
subsidiaries. The financial covenants, which are generally
 
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<PAGE>   202
 
tested on a quarterly basis, measure performance against standards set for
leverage, debt service coverage, and operating cash flow coverage of cash
interest expense.
 
     These credit facilities also contain a change of control provision, making
it an event of default, and permitting acceleration of the debt, in the event of
any of the following:
 
     - Mr. Allen, including his estate, heirs and other related entities, fails
       to maintain a 51% direct or indirect voting and economic interest in CC
       VI Operating. After consummation of an initial public offering by CC VI
       Operating or an affiliate of CC VI Operating, this economic interest
       percentage may be reduced to 25%.
 
     - CC VI Operating is no longer a direct or indirect subsidiary of Charter
       Communications Holding Company.
 
     - A change of control occurs under any material indebtedness of CC VI
       Holdings, CC VI Operating or CC VI Operating's subsidiaries.
 
     Various negative covenants place limitations on the ability of CC VI
Operating and its subsidiaries to, among other things:
 
     - incur debt;
 
     - pay dividends;
 
     - incur liens;
 
     - make acquisitions;
 
     - make investments or asset sales; or
 
     - enter into transactions with affiliates.
 
     Distributions by CC VI Operating under its credit facilities to pay
interest on certain indebtedness of CC VI Holdings are generally permitted,
except during the existence of a default under the CC VI Operating credit
facilities.
 
   
     AVALON CREDIT FACILITIES.
    
 
   
     As of October 22, 1999, a group of lenders had issued commitments for new
credit facilities at Avalon, based on a detailed term sheet, in the aggregate
amount of $300 million to lend to Avalon when we close our acquisition of
Avalon. Upon the closing of the Avalon acquisition, we will own, directly or
indirectly, all of the membership interests in Avalon Cable LLC, the parent
company of the Avalon borrowers that own the cable systems we are acquiring. The
material closing conditions under the Avalon credit facilities are as follows:
    
 
     - consummation of the Avalon acquisition;
 
     - indebtedness of the Avalon borrowers not exceeding a specified amount;
 
     - absence of various types of material adverse changes relating to Avalon;
       and
 
     - receipt of required approvals.
 
   
     Many of these closing conditions are outside the control of Avalon or us.
There can be no assurance that the closing conditions will be met.
    
 
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<PAGE>   203
 
   
     The new Avalon credit facilities have maximum borrowings of $300 million,
consisting of:
    
 
     - a revolving facility in the amount of approximately $175 million; and
 
     - a term loan B in the amount of approximately $125 million.
 
   
     We are not assuming debt in connection with the Avalon acquisition. We have
received commitments from a group of lenders for credit facilities for Avalon
providing for borrowings of up to $300 million, of which we expect to use $169
million to fund a portion of the Avalon purchase price.
    
 
     Amounts available under the revolving facility reduce annually in specified
percentages beginning in the fourth year following the closing date of the
facility. The term loan B facility amortizes beginning in the fourth year
following the closing date. The obligations under these facilities are
guaranteed by the subsidiaries and the parent company of the Avalon borrowers.
The obligations under the Avalon credit facilities are secured by pledges of the
ownership interests and inter-company obligations of the Avalon borrowers and
their subsidiaries, but are not secured by other assets of the Avalon borrowers
or their subsidiaries. The credit facilities are also secured by a pledge of
Avalon Cable LLC's equity interest in the Avalon borrowers.
 
     In addition to the foregoing, the Avalon credit facilities provide for a
supplemental credit facility in the maximum amount of $75 million. This facility
may be in the form of an additional term loan or an aggregate increase in the
amount of the revolving facility. Upon the effectiveness of the Avalon credit
facilities, this supplemental facility will be available, subject to the
borrowers' ability to obtain additional commitments from lenders. The
supplemental facility is available to the Avalon borrowers until December 31,
2003, and, if borrowed, the weighted average life and final maturity will not be
less than that of the revolving facility.
 
     The Avalon credit facilities also contain provisions requiring mandatory
loan prepayments under specific circumstances, including when significant
amounts of assets are sold and the proceeds are not promptly reinvested in
assets useful in the business of the Avalon borrowers.
 
     The Avalon credit facilities provide the Avalon borrowers with the
following two interest rate options, to which a margin is added:
 
     - a base rate option, generally the prime rate of interest; and
 
     - an interest rate option based on the interbank Eurodollar rate.
 
     Interest rates for the Avalon credit facilities, as well as a fee payable
on unborrowed amounts available under these facilities, will depend upon
performance measured by a leverage ratio, which is the ratio of indebtedness to
annualized operating cash flow. Annualized operating cash flow is defined as the
immediately preceding quarter's operating cash flow, before management fees,
multiplied by four. This leverage ratio is
 
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<PAGE>   204
 
based on the debt of the Avalon borrowers and their subsidiaries. The interest
rate margins for the Avalon credit facilities are as follows:
 
     - with respect to the revolving loan facility, the margin ranges from 1.0%
       to 1.875% for Eurodollar loans and from 0.0% to 0.875% for base rate
       loans; and
 
     - with respect to term loan B, the margin ranges from 2.50% to 2.75% for
       Eurodollar loans and from 1.50% to 1.750% for base rate loans.
 
     The Avalon credit facilities contain representations and warranties,
affirmative and negative covenants, information requirements, events of default
and financial covenants. The events of default for the Avalon credit facilities
and supplemental facility will include a cross-default provision for total debt
exceeding $20 million of the Avalon borrowers, Avalon Cable LLC and specified
subsidiaries. The financial covenants, which are generally tested on a quarterly
basis, measure performance against standards set for leverage, debt service
coverage, and operating cash flow coverage of cash interest expense.
 
     The Avalon credit facilities also contain a change of control provision,
making it an event of default, and permitting acceleration of the debt, in the
event that Mr. Allen, including his estate, heirs and other related entities,
fails to maintain a 25% direct or indirect voting and economic interest in the
Avalon borrowers.
 
     Various negative covenants place limitations on the ability of the Avalon
borrowers and their subsidiaries to, among other things:
 
     - incur debt;
 
     - pay dividends;
 
     - incur liens;
 
     - make acquisitions;
 
     - make investments or asset sales; or
 
     - enter into transactions with affiliates.
 
   
     Distributions by Avalon borrowers under the new credit facilities to pay
interest on certain indebtedness of Avalon Cable LLC are generally permitted,
except during the existence of a default under the Avalon credit facilities.
    
 
     BRESNAN CREDIT FACILITIES.   In connection with its acquisition of Bresnan,
we intend to assume and amend the existing Bresnan credit facilities. We cannot
assure you that we will be able to do this. If Charter Communications Holding
Company assumes and amends these facilities, it will attempt, as it has
succeeded with respect to Falcon, to renegotiate the terms of such indebtedness
on terms substantially similar or identical to the terms of the senior credit
facilities for Charter Operating and increase borrowing availability. In the
event it is unable to do so, it will refinance such indebtedness and repay all
borrowings outstanding under these credit facilities. However, we cannot assure
you that Charter Communications Holding Company will be successful in its effort
to assume and amend or to refinance any of such existing senior indebtedness.
 
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<PAGE>   205
 
     On February 2, 1999, Bresnan entered into a loan agreement providing for
borrowings of up to $650 million. The obligations under the Bresnan credit
facilities are guaranteed by the restricted subsidiaries of Bresnan. The
obligations under the Bresnan credit facilities are secured by pledges of the
ownership interests and intercompany obligations of Bresnan, its subsidiaries
and its parent company, but are not secured by other assets of Bresnan, its
subsidiaries or its parent company.
 
     The Bresnan credit facilities consist of:
 
     - a reducing revolving loan facility in the amount of $150 million;
 
     - a term loan A facility in the amount of $328 million; and
 
     - a term loan B facility in the amount of $172 million.
 
     The Bresnan credit facilities provide for the amortization of the principal
amount of the term loan A facility and the reduction of the revolving loan
facility beginning March 31, 2002, with a final maturity date of June 30, 2007.
The amortization of the term loan B facility is substantially "back-ended", with
more than ninety percent of the principal balance due on the final maturity date
of February 2, 2008. The Bresnan credit facilities also provide for an
incremental term facility of up to $200 million, which is conditioned upon
receipt of additional commitments from lenders. If the incremental term facility
becomes available, it may be in the form of revolving loans or term loans, but
may not amortize more quickly than the reducing revolving loan facility or the
term loan A facility, and may not have a final maturity date earlier than six
calendar months after the maturity date of the term loan B facility.
 
     The Bresnan credit facilities provide Bresnan with two interest rate
options, to which a margin is added: a base rate, generally the prime rate of
interest, and an interest rate option based on the interbank eurodollar rate.
Interest rate margins for the Bresnan credit facilities depend upon performance
measured by a leverage ratio, that is, the ratio of total debt to annualized
operating cash flow of Bresnan and its restricted subsidiaries. Annualized
operating cash flow is defined as the immediately preceding quarter's operating
cash flow multiplied by four. The interest rate margins for the Bresnan credit
facilities are as follows:
 
     - there is no margin with respect to the revolving loan facility;
 
     - with respect to the term loan A facility, the margin ranges from 0.75% to
       2.25% for eurodollar loans and from 0.0% to 1.25% for base rate loans;
       and
 
     - with respect to the term loan B facility, the margin ranges from 2.5% to
       2.75% for eurodollar loans and from 1.5% to 1.75% for base rate loans.
 
     The Bresnan credit facilities contain various representations and
warranties, affirmative and negative covenants, information requirements, events
of default and financial covenants. The events of default for the Bresnan credit
facilities include a cross-default provision that is triggered by any
acceleration of the maturity of debt of Bresnan, its parent and specified
subsidiaries in a total amount of at least $15 million or the nonpayment of debt
with this principal amount. The financial covenants, which are generally tested
on a quarterly basis, measure performance against standards set for
 
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<PAGE>   206
 
leverage, debt service coverage, and operating cash flow coverage of cash
interest expense. Certain negative covenants place limitations on the ability of
Bresnan and its restricted subsidiaries to, among other things:
 
     - incur debt;
 
     - pay dividends;
 
     - incur liens;
 
     - make acquisitions;
 
     - make investments or asset sales; or
 
     - enter into transactions with affiliates.
 
     Acquisitions may be made by Bresnan or its restricted subsidiaries without
the consent of the lenders so long as the leverage ratio for total debt is less
than or equal to 5.50 to 1.00, after giving effect to the acquisition. Other
investments may only be made on a limited basis within certain dollar amounts or
"baskets".
 
     The Bresnan credit facilities contain a change of control provision, making
it an event of default, and permitting acceleration of the debt, in the event of
any of the following:
 
     - TCI Communications, including its affiliates, fails to own at least 25%
       of the membership interests of Bresnan;
 
     - entities affiliated with the Blackstone Funds fail to own at least 20% of
       the membership interest in Bresnan prior to January 29, 2002; or
 
     - after January 29, 2000, if the entities affiliated with the Blackstone
       Funds fail to own at least 20% of the membership interests in Bresnan,
       any party(other than Bresnan Communications, Inc. or its affiliates),
       owns a greater percentage interest in Bresnan than the percentage
       interest held by TCI Communications and its affiliates.
 
     The Bresnan credit facilities also contain an asset sale provision,
requiring the borrower to use the net proceeds from any asset sales in excess of
$10 million:
 
     - to repay outstanding principal under the Bresnan facilities;
 
     - for permitted acquisitions; or
 
     - for the purchase of similar assets.
 
     The Bresnan credit facilities also require that the company be managed by a
Bresnan management company, BCI (USA), LLC. The foregoing provisions, among
others, will require material amendments to, or a refinancing of, the Bresnan
credit facilities upon the acquisition of Bresnan.
 
     As of June 30, 1999, there was $500 million total principal amount
outstanding under the Bresnan credit facilities.
 
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<PAGE>   207
 
EXISTING PUBLIC DEBT
 
     THE CHARTER HOLDINGS NOTES.   The original 8.250% Charter Holdings notes,
8.625% Charter Holdings notes and 9.920% Charter Holdings notes and the new
8.250% Charter Holdings notes, 8.625% Charter Holdings notes and 9.920% Charter
Holdings notes were issued under three separate indentures, each dated as of
March 17, 1999, among Charter Holdings and Charter Communications Holdings
Capital Corporation, as the issuers, Marcus Cable Holdings, LLC, as guarantor
and Harris Trust and Savings Bank, as trustee. The issuers of the original
Charter Holdings notes recently exchanged these notes for new Charter Holdings
notes with substantially similar terms, except that the new Charter Holdings
notes are registered under the Securities Act and, therefore, do not bear
legends restricting their transfer.
 
     At the time of the sale of the original Charter Holdings notes, Marcus
Holdings guaranteed the Charter Holdings notes and issued a promissory note to
Charter Holdings for certain amounts loaned by Charter Holdings to subsidiaries
of Marcus Holdings. At the time of the merger of Charter Holdings with Marcus
Holdings, both the guarantee and the promissory note automatically became
ineffective under the terms of the Charter Holdings indentures. Consequently,
all references in the Charter Holdings indentures and the Charter Holdings notes
to the guarantor, the guarantee or the promissory note, and all related matters,
such as the pledges of any collateral, became inapplicable.
 
     The Charter Holdings notes are general unsecured obligations of the
issuers. The 8.250% Charter Holdings notes mature on April 1, 2007 and as of
June 30, 1999, there was $600 million in total principal amount outstanding. The
8.625% Charter Holdings notes will mature on April 1, 2009 and as of June 30,
1999, there was $1.5 billion in total principal amount currently outstanding.
The 9.920% Charter Holdings discount notes mature on April 1, 2011 and as of
June 30, 1999, the total accreted value was $931.6 million. Net proceeds from
the sale of Charter Holdings discount notes were $905.6 million. Cash interest
on the 9.920% Charter Holdings notes will not accrue prior to April 1, 2004.
 
     The Charter Holdings notes are senior debts of the co-issuers. They rank
equally with the current and future unsecured and unsubordinated debt, including
trade payables, of Charter Holdings.
 
     The issuers will not have the right to redeem the 8.250% Charter Holdings
notes prior to their maturity date on April 1, 2007. However, before April 1,
2002, the issuers may redeem up to 35% of each of the 8.625% Charter Holdings
notes and the 9.920% Charter Holdings notes with the proceeds of certain
offerings of equity securities. In addition, on or after April 1, 2004, the
issuers may redeem some or all of the 8.625% Charter Holdings notes and the
9.920% Charter Holdings notes at any time.
 
     In the event of a specified change of control event, the issuers must offer
to repurchase any then-outstanding Charter Holdings notes at 101% of their
principal amount or accreted value, as applicable, plus accrued and unpaid
interest. The consummation of the offering will not trigger any change of
control provisions under the Charter Holdings notes.
 
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<PAGE>   208
 
     The indentures governing the Charter Holdings notes also contain certain
events of default, affirmative covenants and negative covenants. The events of
default for the Charter Holdings notes include a cross-default provision
triggered by the failure of Charter Holdings or specified subsidiaries to make
payment on debt with a total principal amount exceeding $100 million or the
acceleration of debt of this amount prior to its maturity date. Subject to
certain important exceptions, the indentures governing the Charter Holdings
notes, among other things, restrict the ability of the issuers and certain of
their subsidiaries to:
 
     - incur additional debt;
 
     - create specified liens;
 
     - pay dividends on stock or repurchase stock;
 
     - make investments;
 
     - sell all or substantially all of our assets or merge with or into other
       companies;
 
     - sell assets;
 
     - in the case of our restricted subsidiaries, create or permit to exist
       dividend or payment restrictions with respect to us; and
 
     - engage in certain transactions with affiliates.
 
     RENAISSANCE NOTES.   The original Renaissance notes and new Renaissance
notes were issued by Renaissance Media (Louisiana) LLC, Renaissance Media
(Tennessee) LLC and Renaissance Media Capital Corporation, with Renaissance
Media Group LLC as guarantor and the United States Trust Company of New York as
trustee. Renaissance Media Group LLC, which is the direct or indirect parent
company of these issuers, is now a subsidiary of Charter Operating. The
Renaissance notes and the Renaissance guarantee are unsecured, unsubordinated
debt of the issuers and the guarantor, respectively. In October 1998, the
issuers exchanged $163.175 million of the original issued and outstanding 10%
senior discount notes due 2008 for an equivalent value of 10% senior discount
notes due April 15, 2008. The form and terms of the new Renaissance notes are
the same in all material respects as the form and terms of the original
Renaissance notes except that the issuance of the new Renaissance notes was
registered under the Securities Act.
 
     There will not be any payment of interest in respect of the Renaissance
notes prior to October 15, 2003. Interest on the Renaissance notes shall be paid
semi-annually in cash at a rate of 10% per annum beginning on October 15, 2003.
The Renaissance notes are redeemable at the option of the issuer, in whole or in
part, at any time on or after April 15, 2003, initially at 105% of their
principal amount at maturity, plus accrued interest, declining to 100% of the
principal amount at maturity, plus accrued interest, on or after April 15, 2006.
In addition, at any time prior to April 15, 2001, the issuers may redeem up to
35% of the original total principal amount at maturity of the Renaissance notes
with the proceeds of one or more sales of capital stock at 110% of their
accreted value on the redemption date, provided that after any such redemption
at least
 
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<PAGE>   209
 
$106 million total principal amount at maturity of Renaissance notes remains
outstanding.
 
     Our acquisition of Renaissance triggered change of control provisions of
the Renaissance notes that required us to offer to purchase the Renaissance
notes at a purchase price equal to 101% of their accreted value on the date of
the purchase, plus accrued interest, if any. In May 1999, we made an offer to
repurchase the Renaissance notes, and holders of Renaissance notes representing
30% of the total principal amount outstanding at maturity tendered their
Renaissance notes for repurchase.
 
     The indenture contains certain covenants that restrict the ability of the
issuers and their restricted subsidiaries to:
 
     - incur additional debt;
 
     - create liens;
 
     - engage in sale-leaseback transactions;
 
     - pay dividends or make contributions in respect of their capital stock;
 
     - redeem capital stock;
 
     - make investments or certain other restricted payments;
 
     - sell assets;
 
     - issue or sell stock of restricted subsidiaries;
 
     - enter into transactions with stockholders or affiliates; or
 
     - effect a consolidation or merger.
 
     The events of default for the Renaissance notes include a cross-default
provision triggered by the failure to make payment at maturity, or an event that
causes the holder to declare the debt to be payable prior to its maturity of
debt of Renaissance Media Group LLC or any of its specified subsidiaries if this
debt has a total outstanding principal amount of at least $10 million.
 
     As of June 30, 1999, there was outstanding $114.4 million, total principal
amount at maturity of Renaissance notes, with an accreted value of $82.6
million.
 
     RIFKIN NOTES.   The Rifkin notes were issued by Rifkin Acquisition
Partners, and Rifkin Acquisition Capital Corp. as co-issuers, subsidiaries of
the partnership other than Rifkin Acquisition Capital Corp. as guarantors, and
Marine Midland Bank as trustee. In March 1996, the issuers exchanged $125
million aggregate principal amount of the originally issued and outstanding
11 1/8% senior subordinated notes due 2006 for an equivalent value of new
11 1/8% senior subordinated notes due 2006. The form and terms of the new Rifkin
notes were substantially identical to the form and terms of the original Rifkin
notes except that the new Rifkin notes have been registered under the Securities
Act and, therefore, do not bear legends restricting their transfer. Interest on
the Rifkin notes accrues at the rate of 11 1/8% per year and is payable in cash
semi-annually in arrears on January 15 and July 15 of each year.
 
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<PAGE>   210
 
     The Rifkin notes are redeemable at the issuers' option, in whole or in
part, at any time on or after January 15, 2001, at 105.563% of the principal
amount together with accrued and unpaid interest, if any, to the date of the
redemption. This redemption premium declines over time to 100% of the principal
amount, plus accrued and unpaid interest, if any, on or after January 15, 2005.
 
     In September 1999, we commenced an offer to purchase any and all of the
outstanding Rifkin notes, together with the Monroe Rifkin note, for cash, at a
premium over the outstanding principal amounts. In conjunction with this tender
offer, we sought and obtained the consent of a majority in principal amount of
the holders of the outstanding Rifkin notes to proposed amendments to the
indenture governing the Rifkin notes, which eliminated substantially all of the
restrictive covenants, including any cross-default provisions. We purchased
notes with a total outstanding principal amount of $124.1 million for a total of
$140.6 million, including a consent fee of $30 per $1,000 of outstanding
principal amount to the holders who delivered timely consents to amending the
indenture. We repurchased the promissory note payable to Monroe Rifkin for $3.4
million. Rifkin notes with a total principal amount of approximately $900,000
remain outstanding.
 
     The Rifkin notes are jointly and severally guaranteed on a senior
subordinated basis by specified subsidiaries of the issuers. The guarantees of
the Rifkin notes are general unsecured obligations of the guarantors and will be
subordinated in right of payment to all existing and future senior debt of the
guarantors.
 
     Among other restrictions, the indentures governing the Rifkin notes contain
covenants which limit the ability of the issuers and specified subsidiaries to:
 
     - assume additional debt and issue specified additional equity interests;
 
     - make restricted payments;
 
     - enter into transactions with affiliates;
 
     - incur liens;
 
     - make specified contributions and payments to Rifkin Acquisition Partners;
 
     - transfer specified assets to subsidiaries; and
 
     - merge, consolidate, and transfer all or substantially all of the assets
       of Rifkin Acquisition Partners to another person.
 
     As of June 30, 1999, there was $125.0 million total principal outstanding
on the Rifkin notes. As of October 15, 1999, Rifkin notes with a total principal
amount of approximately $900,000 remained outstanding.
 
PUBLIC DEBT TO BE ASSUMED OR REPURCHASED IN CONNECTION WITH OUR PENDING
ACQUISITIONS
 
   THE FALCON DEBENTURES.   The Falcon debentures, consisting of 8.375% Series A
senior debentures due 2010 and 9.285% Series A senior discount debentures due
2010, were issued by Falcon Holding Group, L.P. and Falcon Funding Corporation
on April 3, 1998. On August 5, 1998, the issuers proposed an exchange offer
whereby the outstanding
 
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<PAGE>   211
 
$375 million Series A senior debentures and $435.3 million Series A senior
discount debentures were exchanged for an equivalent value of Series B senior
debentures and Series B senior discount debentures. The form and terms of the
new debentures are the same as the form and terms of the corresponding original
Falcon debentures except that the issuance of the new debentures was registered
under the Securities Act of 1933 and, therefore, the new debentures do not bear
legends restricting their transfer.
 
     The Falcon debentures will mature on April 15, 2010. Interest on the Falcon
debentures accrues from the issue date or from the most recent interest payment
date to which interest has been paid or provided for, payable semiannually on
April 15 and October 15 of each year. No interest on the Series B senior
discount debentures will be paid prior to April 15, 2003. The issuers may,
however, elect to commence accrual of cash interest on any payment date, in
which case the outstanding principal amount at maturity of Series B senior
discount debenture will be reduced to the accreted value of such Series B senior
discount debenture as of such interest payment date and the interest will be
payable semiannually in cash on each interest payment date thereafter.
 
     The Falcon debentures will be redeemable at the option of the issuers, in
whole or in part, at any time on or after April 15, 2003, at a premium and, in
each case, plus accrued and unpaid interest, if any, to the date of redemption.
This premium declines over time to 100% of their principal amount, plus accrued
and unpaid interest, if any, on or after April 15, 2006. In addition, at any
time prior to April 15, 2001, the issuers may redeem, at a premium, up to 35% of
the total principal amount or accreted value, as applicable, of the Falcon
debentures with the net cash proceeds of specified equity issuances, in each
case plus accrued and unpaid interest, if any, to the date of redemption.
Following a redemption, at least 65% in total principal amount at maturity of
the Falcon senior discount debentures and $195 million of the total principal
amount of Falcon senior debentures must remain outstanding.
 
     In the event of specified change of control events, the holders of the
Falcon debentures will have the right to require the issuers to purchase their
Falcon debentures at a price equal to 101% of their principal amount or accreted
value, as applicable, plus accrued and unpaid interest, if any, to the date of
purchase. The Falcon acquisition will give rise to this right. We expect the
Falcon debentures to be tendered. We intend to finance required repayments of
Falcon debentures with debt financing that has not yet been arranged. We have
obtained a commitment for a Falcon bridge loan facility providing for borrowings
up to $750 million to finance these repayments until this additional debt
financing can be arranged or if this additional debt financing is unavailable.
 
     The Falcon debentures are joint and several senior unsecured obligations of
the issuers. The Falcon debentures are the obligations of the issuers only, and
the issuers' subsidiaries do not have any obligation to pay any amounts due
under the Falcon debentures. Therefore, the Falcon debentures are effectively
subordinated to all existing and future liabilities of the issuers'
subsidiaries.
 
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<PAGE>   212
 
     Among other restrictions, the indentures governing the Falcon debentures
contain certain limitations on the issuers' and their specified subsidiaries'
ability to:
 
     - incur additional debt;
 
     - make restricted payments;
 
     - create certain liens;
 
     - sell all or substantially all of their assets or merge with or into other
       companies;
 
     - invest in unrestricted subsidiaries and affiliates;
 
     - pay dividends or make any other distributions on any capital stock; and
 
     - guarantee any debt which is equal or subordinate in right of payment to
       the Falcon debentures.
 
     The events of default for the Falcon debentures include a cross-default
provision triggered by the acceleration of the maturity, or nonpayment of debt,
by Falcon Holding Group, L.P. or any specified subsidiary in excess of $25
million.
 
     As of June 30, 1999, there was $375.0 million total principal amount
outstanding on the Falcon senior debentures, and the accreted value of the
senior discount debentures was $308.7 million.
 
     THE FALCON SUBORDINATED NOTES.   On October 21, 1991, Falcon Telecable,
L.P., a subsidiary of Falcon Holding Group, L.P. issued $15.0 million aggregate
principal amount of 11.56% subordinated notes due 2001. Interest is payable
semi-annually on March 31 and September 30 of each year.
 
     The Falcon subordinated notes are redeemable at the issuer's option, in
whole or in part, at any time in whole or part on or after June 30, 1993, at
100% of their principal amount, plus accrued interest to the date of redemption
and a make-whole premium.
 
     Among other restrictions, the note purchase agreement governing the Falcon
subordinated notes limits the activities of the issuer and its subsidiaries to:
 
     - incur additional debt;
 
     - pay dividends or make other restricted payments;
 
     - enter into transactions with affiliates;
 
     - create liens;
 
     - incur additional debt; and
 
     - sell assets or subsidiary stock.
 
In addition, the terms of the note purchase agreement prohibits the issuer from
being acquired by an unaffiliated entity. The events of default for the Falcon
subordinated notes include a cross-default provision that is triggered by the
failure to pay the principal of debt of Falcon Telecable or specified
subsidiaries in a total principal amount in excess of $1 million, or any event
which results in acceleration of the maturity of this debt.
 
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<PAGE>   213
 
     Our acquisition of Falcon will constitute an event of default under the
note purchase agreement and will give rise, if written notice is given by
holders of a majority in outstanding amount of notes, to an obligation to repay
all outstanding principal and accrued interest on the Falcon subordinated notes,
plus a specified premium, within 30 days of the receipt of the notice. Absent
receipt of a waiver by the noteholders of the change of control default, which
we do not expect to receive, we expect to repay at the time of the closing of
the Falcon acquisition, the $15 million principal amount of the notes, plus
accrued interest and a specified premium, with available sources of funds.
 
     As of June 30, 1999, $15.0 million principal amount of the Falcon
subordinated notes was outstanding.
 
     THE AVALON 11 7/8% NOTES.   On December 3, 1998, Avalon Cable LLC and
Avalon Cable Holdings Finance, Inc. jointly issued $196 million total principal
amount at maturity of 11 7/8% senior discount notes due December 1, 2008. On
July 22, 1999, the issuers exchanged $196 million of the original issued and
outstanding 11 7/8% senior discount notes for an equivalent amount of new
11 7/8% senior discount notes due December 1, 2008. The form and terms of the
new Avalon 11 7/8% notes are substantially identical to the original Avalon
11 7/8% notes except that they will be registered under the Securities Act of
1933 and, therefore, are not subject to the same transfer restrictions. The
issuers received no proceeds from the exchange offer.
 
     The Avalon 11 7/8% notes are guaranteed by Avalon Cable of Michigan, Inc.,
an equity holder in Avalon Cable LLC, and its sole stockholder, Avalon Cable of
Michigan Holdings, Inc.
 
     There will be no current payments of cash interest on the Avalon 11 7/8%
notes before December 1, 2003. The new Avalon 11 7/8% notes accrete in value at
a rate of 11 7/8% per annum, compounded semi-annually, to an aggregate principal
amount of $196 million on December 1, 2003. After December 1, 2003, cash
interest on the Avalon 11 7/8% notes:
 
     - will accrue at the rate of 11 7/8% per year on the principal amount at
       maturity of the new notes; and
 
     - will be payable semi-annually in arrears on June 1 and December 1 of each
       year, commencing June 1, 2004.
 
     On December 1, 2003, the issuers will be required to redeem an amount equal
to $369.79 per $1,000 in principal amount at maturity of each Avalon 11 7/8%
note, on a pro rata basis at a redemption price of 100% of the principal amount
at maturity of the Avalon 11 7/8% notes so redeemed.
 
     On or after December 1, 2003, the issuers may redeem the Avalon 11 7/8%
notes, in whole or in part. Before December 1, 2001, the issuers may redeem up
to 35% of the total principal amount at maturity of the Avalon 11 7/8% notes
with the proceeds of one or more equity offerings and/or strategic equity
investments.
 
     In the event of specified change of control events, holders of the Avalon
11 7/8% notes will have the right to sell their Avalon 11 7/8% notes to the
issuers at 101% of:
 
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<PAGE>   214
 
     - the accreted value of the Avalon 11 7/8% notes in the case of repurchases
       of Avalon notes prior to December 1, 2003; or
 
     - the total principal amount of the Avalon 11 7/8% notes in the case of
       repurchases of Avalon 11 7/8% notes on or after December 1, 2003, plus
       accrued and unpaid interest and liquidated damages, if any, to the date
       of purchase.
 
Our acquisition of Avalon will trigger this right.
 
     Among other restrictions, the indenture governing the Avalon 11 7/8% notes
limits the ability of the issuers and their specified subsidiaries to:
 
     - incur additional debt;
 
     - pay dividends or make specified other restricted payments;
 
     - enter into transactions with affiliates;
 
     - sell assets or subsidiary stock;
 
     - create liens;
 
     - restrict dividends or other payments from restricted subsidiaries;
 
     - merge, consolidate or sell all or substantially all of their combined
       assets; and
 
     - with respect to restricted subsidiaries, issue capital stock.
 
     The Avalon 11 7/8% notes contain events of default that include a
cross-default provision triggered by the failure of Avalon Cable LLC, Avalon
Cable Holdings Finance, Inc. or any specified subsidiary to make payment on debt
with total principal amount of $5 million or more or the acceleration of debt of
this amount prior to maturity.
 
     As of June 30, 1999, the total accreted value of the outstanding Avalon
11 7/8% notes was $118.1 million.
 
     THE AVALON 9 3/8% NOTES.   On December 3, 1998, Avalon Cable of New England
LLC, Avalon Cable Finance, Inc. and Avalon Cable of Michigan, Inc. jointly
issued $150 million total principal amount at maturity of 9 3/8% senior
subordinated notes due December 1, 2008. On July 22, 1999, the issuers exchanged
$150 million of the original issued and outstanding 9 3/8% senior subordinated
notes for an equivalent amount of new 9 3/8% senior subordinated notes due
December 1, 2008. The form and terms of the new Avalon 9 3/8% notes are
substantially the same as the form and terms of the original Avalon 9 3/8% notes
except that the new Avalon 9 3/8% notes will be registered under the federal
securities laws and will not bear a legend restricting the transfer thereof.
 
     Interest on the Avalon 9 3/8% notes accrues at a rate of 9.375% per annum
from the date of issuance and is payable semiannually in arrears on June 1 and
December 1. The Avalon 9 3/8% notes are guaranteed by Avalon Cable of Michigan,
Inc. Avalon Cable of Michigan, Inc., however, does not have any significant
assets other than its interest in Avalon Cable LLC.
 
     On or after December 1, 2003, the issuers may redeem the Avalon 9 3/8%
notes in whole or in part. Until December 1, 2001, the issuers may redeem up to
35% of the total principal amount of the Avalon 9 3/8% notes at a redemption
price equal to 109.375% of
 
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<PAGE>   215
 
the principal amount thereof, plus accrued and unpaid interest, if any, and
liquidated damages, if any, with the net cash proceeds of a strategic equity
investment and/or an equity offering. Following the redemption, at least 65% of
the total principal amount of the Avalon 9 3/8% notes must remain outstanding
after each redemption.
 
     Upon the occurrence of specified change of control events or the sale of
certain assets, holders of the Avalon 9 3/8% notes will have the opportunity to
sell their Avalon 9 3/8% notes to the issuers at 101% of their face amount, plus
accrued and unpaid interest and liquidated damages, if any, to the date of
purchase. Our acquisition of Avalon will trigger this right.
 
     The Avalon 9 3/8% notes are general unsecured obligations of the issuers
and are subordinate in right of payment to all existing and future senior debt
of the issuers. The Avalon 9 3/8% notes rank equal in right of payment to any
senior subordinated debt of the issuers and rank senior in the right of payment
to all subordinated debt of the issuers.
 
     Among other restrictions, the indenture governing the new Avalon 9 3/8%
notes limits the activities of the issuers and of their specified subsidiaries
to:
 
         - incur additional debt;
 
         - pay dividends or make other restricted payments;
 
         - enter into transactions with affiliates;
 
         - sell assets or subsidiary stock;
 
         - create liens;
 
         - merge, consolidate or sell all or substantially all or their combined
           assets;
 
         - incur debt that is senior to the Avalon 9 3/8% notes but junior to
           senior debt; and
 
         - issue capital stock.
 
     The Avalon 9 3/8% notes contain events of default that include a
cross-default provision triggered by the failure of Avalon Cable of New England,
LLC, Avalon Cable Finance, Inc., Avalon Cable of Michigan, Inc. or any specified
subsidiary to make payment on debt with an aggregate principal amount of $5
million or more or the acceleration of debt of this amount prior to maturity.
 
     As of June 30, 1999, there was $150.0 million total principal outstanding
on the Avalon 9 3/8% notes.
 
     THE BRESNAN NOTES.   On February 2, 1999, Bresnan Communications Group LLC
and Bresnan Capital Corporation jointly issued $170 million total principal
amount of 8% Series A senior notes due 2009 and $275 million total principal
amount at maturity of 9 1/4% Series A senior discount notes due 2009.
 
     In September 1999, the issuers of the Bresnan notes completed an exchange
offer in which Bresnan senior notes and senior discount notes representing 100%
of the principal amount of all Bresnan notes outstanding were exchanged for new
notes. The form and terms of the new Bresnan notes are the same in all material
respects as the form and terms of the original Bresnan notes except that the new
Bresnan notes have been registered under the federal securities laws and will
not bear a legend restricting their transfer.
 
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<PAGE>   216
 
     The Bresnan senior notes bear interest at 8% per year from the original
issue date or from the most recent date to which interest has been paid or
provided for, payable semiannually on February 1 and August 1 of each year,
commencing on August 1, 1999. The Bresnan senior discount notes bear interest at
9 1/4% per year, compounded semiannually, to a total principal amount of $275
million by February 1, 2004, unless the issuers elect to accrue interest on or
after February 1, 2002. On and after August 1, 2004, interest on the Bresnan
senior discount notes will accrue at a rate of 9 1/4% per year and will be
payable in cash semiannually in arrears on February 1 and August 1.
 
     The Bresnan senior notes are not redeemable prior to February 1, 2004.
During the year 2004, the Bresnan senior notes are redeemable at 104.00% of the
principal amount plus accrued and unpaid interest. The premium decreases to
102.667% in 2005, 101.33% in 2006 and 100% on or after February 1, 2007.
 
     The Bresnan senior discount notes are not redeemable prior to February 1,
2004. During the year 2004, the Bresnan senior discount notes will be redeemable
at 104.625% of their accreted value plus accrued and unpaid interest. The
premium decreases to 103.083% in 2005, 101.542% in 2006 and 100% in 2007.
 
     At any time prior to February 1, 2002, the issuers may redeem up to 35% of
the total principal amount of the Bresnan senior notes at a redemption price
equal to 108% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of redemption with the net cash proceeds of one or more
equity offerings. Following such redemption, at least 65% of the total principal
amount of the Bresnan senior notes must remain outstanding.
 
     At any time prior to February 1, 2002, the issuers may also redeem up to
35% of the total principal amount at maturity of the Bresnan senior discount
notes at a redemption price equal to 109.250% of the accreted value thereof plus
accrued and unpaid interest, if any, to the date of redemption, with the net
cash proceeds of one or more equity offerings. Following such redemption, at
least 65% of the total principal amount of the Bresnan senior discount notes
must remain outstanding.
 
     The Bresnan notes will be senior unsecured obligations of the issuers and
will rank equal in right of payment with all existing and future senior debt of
and will be senior in right of payment to all its existing and future
subordinated debt. Bresnan Capital Corporation has no, and the terms of the
indenture governing the Bresnan notes prohibit it from having any, obligations
other than the Bresnan notes.
 
     Upon the occurrence of specified change of control events, each holder of
Bresnan notes shall have the right to require the issuers to purchase all or any
part of such holder's notes at a purchase price of 101% of the principal amount
in the case of the Bresnan senior notes, and 101% of the accreted value thereof
in the case of the Bresnan senior discount notes, plus accrued and unpaid
interest, if any, to the purchase date. Our acquisition of Bresnan will trigger
this right. We expect that the Bresnan notes will be tendered and that we will
repurchase the Bresnan notes with borrowings under credit facilities to be
arranged at Bresnan.
 
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<PAGE>   217
 
     Among other restrictions, the indenture governing the Bresnan notes limits
the ability of Bresnan Communications Group LLC and its specified subsidiaries
to:
 
         - incur additional debt;
 
         - make specified restricted payments;
 
         - create liens;
 
         - create or permit any restrictions on the payment of dividends or
           other distributions to Bresnan Communications Group LLC;
 
         - guarantee debt;
 
         - consolidate with, merge into or transfer all or substantially all of
           their assets;
 
         - sell assets; and
 
         - transact business with their affiliates.
 
   
     The events of default for the Bresnan notes include a cross-default
provision that is triggered by any acceleration of the maturity of debt in a
total amount in excess of $15 million of Bresnan or the specified subsidiaries
of Bresnan or the failure to pay debt in this amount at final maturity.
    
 
     As of June 30, 1999, there was $170.0 million total principal outstanding
on the Bresnan senior notes and the accreted value of the outstanding Bresnan
senior discount notes was $181.8 million.
 
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<PAGE>   218
 
               DESCRIPTION OF CAPITAL STOCK AND MEMBERSHIP UNITS
 
GENERAL
 
     Upon the completion of the offering, the capital stock of Charter
Communications, Inc. and the provisions of Charter Communications, Inc.'s
restated certificate of incorporation and bylaws will be as described below.
These summaries are qualified by reference to the restated certificate of
incorporation and the bylaws, copies of which have been filed with the
Securities and Exchange Commission as exhibits to our registration statement, of
which this prospectus forms a part.
 
     Our authorized capital stock will consist of 1.75 billion shares of Class A
common stock, par value $.001 per share, 750 million shares of Class B common
stock, par value $.001 per share, and 250 million shares of preferred stock, par
value $.001 per share.
 
     Charter Communications, Inc.'s restated certificate of incorporation and
Charter Communications Holding Company's limited liability company agreement
contain provisions that are designed to cause the number of shares of common
stock of Charter Communications, Inc. that are outstanding to equal the number
of common membership units of Charter Communication Holding Company owned by
Charter Communications, Inc. and to cause the value of a share of common stock
to be equal to the value of a common membership unit. These provisions are meant
to allow a holder of common stock of Charter Communications, Inc. to easily
understand the economic interest that such holder's common shares represent of
Charter Communications Holding Company's business.
 
     In particular, provisions in Charter Communications, Inc.'s restated
certificate of incorporation provide that:
 
     (1) at all times the number of shares of common stock of Charter
         Communications, Inc. outstanding will be equal to the number of Charter
         Communications Holding Company common membership units owned by Charter
         Communications, Inc.;
 
     (2) Charter Communications, Inc. will not hold any assets other than, among
         other allowable assets:
 
           - working capital and cash held for the payment of current
             obligations and receivables from Charter Communications Holding
             Company;
 
           - common membership units of Charter Communications Holding Company;
 
           - obligations and equity interests of Charter Communications Holding
             Company that correspond to obligations and equity interests issued
             by Charter Communications, Inc.; and
 
           - assets subject to an existing obligation to contribute such assets
             in exchange for membership units of Charter Communications Holding
             Company; and
 
     (3) Charter Communications, Inc. will not borrow any money or enter into
         any capital lease unless Charter Communications Holding Company enters
         into the
 
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<PAGE>   219
 
         same arrangements with Charter Communications, Inc. so that Charter
         Communications, Inc.'s liability flows through to Charter
         Communications Holding Company.
 
     Provisions in Charter Communications Holding Company's limited liability
company agreement provide that upon the contribution by Charter Communications,
Inc. of assets acquired through the issuance of common stock by Charter
Communications, Inc., Charter Communications Holding Company will issue to
Charter Communications, Inc. an equal number of common membership units as
Charter Communications, Inc. issued shares of common stock. In the event of the
contribution by Charter Communications, Inc. of assets acquired through the
issuance of indebtedness or preferred interests of Charter Communications, Inc.,
Charter Communications Holding Company will issue to Charter Communications,
Inc. a corresponding obligation to allow Charter Communications, Inc. to pass
through to Charter Communications Holding Company these liabilities or preferred
interests.
 
COMMON STOCK
 
     As of the completion of the offering, there will be 170,000,000 shares of
Class A common stock issued and outstanding and 50,000 shares of Class B common
stock issued and outstanding. If, as described below, all shares of Class B
common stock convert to shares of Class A common stock as a result of
dispositions by Mr. Allen and his affiliates, the holders of Class A common
stock will be entitled to elect all members of the board of directors, other
than any members elected separately by the holders of any preferred shares.
 
     VOTING RIGHTS.   The holders of Class A common stock and Class B common
stock generally have identical rights, except:
 
     - each Class A common stockholder is entitled to one vote per share; and
 
     - each Class B common stockholder is entitled to a number of votes based on
       the number of outstanding Class B common stock and membership units
       exchangeable for Class B common stock. For example, Mr. Allen will be
       entitled to ten votes for each share of Class B common stock held by him
       or his affiliates and ten votes for each membership unit held by him or
       his affiliates; and
 
     - the Class B common stockholders have the sole power to vote to amend or
       repeal the provisions of Charter Communications, Inc.'s restated
       certificate of incorporation relating to:
 
         (1) the activities in which Charter Communications, Inc. may engage;
 
         (2) the required ratio of outstanding shares of common stock to
             outstanding membership units owned by Charter Communications, Inc.;
             and
 
         (3) the restrictions on the assets and liabilities that Charter
             Communications, Inc. may hold.
 
     The effect of the provisions described in the final bullet point is that
holders of Class A common stock will have no right to vote on these matters.
These provisions
 
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would allow Mr. Allen, for example, to amend the restated certificate of
incorporation to permit Charter Communications, Inc. to engage in currently
prohibited business activities without having to seek the approval of holders of
Class A common stock.
 
     The voting rights relating to the election of Charter Communications,
Inc.'s board of directors are as follows:
 
     - The Class B common stockholders, voting separately as a class, are
       entitled to elect all but one member of Charter Communications, Inc.'s
       board of directors.
 
     - Class A and Class B common stockholders, voting together as one class,
       are entitled to elect the remaining member of Charter Communications,
       Inc.'s board of directors who is not elected by the Class B common
       stockholders.
 
     - Class A common stockholders and Class B common stockholders are not
       entitled to cumulate their votes in the election of directors.
 
     - In addition, if Charter Communications, Inc. issues any series of
       preferred stock that entitles holders to elect directors, the holders of
       such series of preferred stock may be able to vote for directors if
       provided in the instrument creating such preferred stock.
 
   
     Other than the election of directors and any matters where Delaware law or
Charter Communications, Inc.'s restated certificate of incorporation or bylaws
requires otherwise, all matters to be voted on by stockholders must be approved
by a majority of the votes cast by the holders of shares of Class A common
stockholders and Class B common stockholders present in person or represented by
proxy, voting together as a single class, subject to any voting rights granted
to holders of any preferred stock.
    
 
     Amendments to Charter Communications, Inc.'s restated certificate of
incorporation that would adversely alter or change the powers, preferences or
special rights of the Class A common stock or the Class B common stock also must
be approved by a majority of the votes entitled to be cast by the holders of the
outstanding shares of the affected class, voting as a separate class. In
addition, the following actions by Charter Communications, Inc. must be approved
by the affirmative vote of the holders of at least a majority of the voting
power of the outstanding Class B common stock, voting as a separate class:
 
     - the issuance of any Class B common stock other than to Mr. Allen and his
       affiliates and other than pursuant to specified stock splits and
       dividends;
 
     - the issuance of any stock of Charter Communications, Inc. other than
       Class A common stock (and other than Class B common stock as described
       above); and
 
     - the amendment, modification or repeal of any provision of its restated
       certificate of incorporation relating to capital stock or the removal of
       directors.
 
     Charter Communications, Inc. will lose its rights to manage the business of
Charter Communications Holding Company and Charter Investment, Inc. will become
the sole
 
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<PAGE>   221
 
manager of Charter Communications Holding Company if at any time a court holds
that the holders of the Class B common stock no longer:
 
     - have the number of votes per share of Class B common stock described
       above;
 
     - have the right to elect, voting separately as a class, all but one member
       of Charter Communications, Inc.'s board of directors, except for any
       directors elected separately by the holders of preferred stock; or
 
     - have the right to vote as a separate class on matters that adversely
       affect the Class B common stock with respect to:
 
         (1) the issuance of equity securities of Charter Communications, Inc.
             other than the Class A common stock; or
 
         (2) the voting power of the Class B common stock.
 
     These provisions are contained in the limited liability company agreement
of Charter Communications Holding Company. The Class B common stock could lose
these rights if a holder of Class A common stock successfully challenges in a
court proceeding the voting rights of the Class B common stock. In any of these
circumstances, Charter Communications, Inc. would also lose its 100% voting
control of Charter Communications Holding Company as provided in Charter
Communications Holding Company's limited liability company agreement. These
provisions exist to assure Mr. Allen that he will be able to control Charter
Communications Holding Company in the event he was no longer able to control
Charter Communications, Inc. through his ownership of Class B common stock.
These events could have a material adverse impact on our business and the market
price of the Class A common stock. See "Risk Factors -- Our Structure".
 
     DIVIDENDS.   Holders of Class A common stock and Class B common stock will
share ratably (based on the number of shares of common stock held) in any
dividend declared by Charter Communications, Inc.'s board of directors, subject
to any preferential rights of any outstanding preferred stock. Dividends
consisting of shares of Class A common stock and Class B common stock may be
paid only as follows:
 
     - shares of Class A common stock may be paid only to holders of Class A
       common stock;
 
     - shares of Class B common stock may be paid only to holders of Class B
       common stock; and
 
     - the number of shares of each class of common stock payable per share of
       such class of common stock shall be equal in number.
 
     Charter Communications, Inc.'s restated certificate of incorporation
provides that Charter Communications, Inc. may not pay a stock dividend unless
the number of outstanding Charter Communications Holding Company common
membership units are adjusted accordingly. This provision is designed to
maintain the equal value between shares of common stock and membership units and
the one-to-one exchange ratio.
 
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<PAGE>   222
 
     CONVERSION OF CLASS B COMMON STOCK.   Each share of outstanding Class B
common stock will automatically convert into one share of Class A common stock
if, at any time, Mr. Allen or any of his affiliates sells any shares of common
stock of Charter Communications, Inc. or membership units of Charter
Communications Holding Company and as a result of such sale, Mr. Allen and his
affiliates no longer own directly and indirectly common stock and other equity
interests in Charter Communications, Inc. and membership units in Charter
Communications Holding Company that in total represent at least:
 
     - 20% of the sum of the values, as of the date of this offering, of the
       shares of Class B common stock directly or indirectly owned by Mr. Allen
       and his affiliates and the shares of Class B common stock for which
       outstanding Charter Communications Holding Company membership units
       directly or indirectly owned by Mr. Allen and his affiliates are
       exchangeable, and
 
     - 5% of the sum of the values, calculated as of the date of such sale, of
       shares of outstanding common stock and other equity interests in Charter
       Communications, Inc. and the shares of Charter Communications, Inc.
       common stock for which outstanding Charter Communications Holding Company
       membership units are exchangeable.
 
     These provisions exist to assure that Mr. Allen will no longer be able to
control Charter Communications, Inc. if after sales of his equity interests he
owns an insignificant economic interest in our business. The conversion of all
Class B common stock in accordance with these provisions would not trigger
Charter Communications Holding Company's limited liability company agreement
provisions described above whereby Charter Communications, Inc. would lose its
management rights and special voting rights relating to Charter Communications
Holding Company in the event of an adverse determination of a court affecting
the rights of the Class B common stock.
 
     Each holder of a share of Class B common stock has the right to convert
such share into one share of Class A common stock at any time on a one-for-one
basis. If a Class B common stockholder transfers any shares of Class B common
stock to a person other than an authorized Class B common stockholder, these
shares of Class B common stock will automatically convert into shares of Class A
common stock. Authorized Class B common stockholders are Paul G. Allen, entities
controlled by Mr. Allen, Mr. Allen's estate, any organization qualified under
Section 501(c)(3) of the Internal Revenue Code that is Mr. Allen's beneficiary
upon his death and certain trusts established by or for the benefit of Mr.
Allen. In this context, "controlled" means the ownership of more than 50% of the
voting power and economic interest of an entity and "transfer" means the
transfer of record or beneficial ownership of any such share of Class B common
stock.
 
     OTHER RIGHTS.   Shares of Class A common stock and Class B common stock
will be treated equally in the event of any merger or consolidation of Charter
Communications, Inc. so that:
 
     - each class of common stockholders will receive per share the same kind
       and amount of capital stock, securities, cash and/or other property
       received by any
 
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<PAGE>   223
 
       other class of common stockholders, provided that any shares of capital
       stock so received may differ in a manner similar to the manner in which
       the shares of Class A common stock and Class B common stock differ; or
 
     - each class of common stockholders, to the extent they receive a different
       kind (other than as described above) or different amount of capital
       stock, securities, cash and/or other property than that received by any
       other class of common stockholders, will receive for each share of common
       stock they hold stock, securities, cash and/or other property having a
       value substantially equivalent to that received by such other class of
       common stockholders.
 
     Upon Charter Communications, Inc.'s liquidation, dissolution or winding up,
after payment in full of the amounts required to be paid to preferred
stockholders, if any, all common stockholders, regardless of class, are entitled
to share ratably in any assets and funds available for distribution to common
stockholders.
 
     No shares of any class of common stock are subject to redemption or have
preemptive rights to purchase additional shares of common stock.
 
PREFERRED STOCK
 
     Upon the closing of the offering, Charter Communications, Inc.'s board of
directors will be authorized, subject to the approval of the holders of the
Class B common stock, to issue from time to time up to an aggregate of 250
million shares of preferred stock in one or more series and to fix the numbers,
powers, designations, preferences, and any special rights of the shares of each
such series thereof, including:
 
     - dividend rights and rates;
 
     - conversion rights;
 
     - voting rights;
 
     - terms of redemption (including any sinking fund provisions) and
       redemption price or prices;
 
     - liquidation preferences; and
 
     - the number of shares constituting and the designation of such series.
 
     Upon the closing of the offering, there will be no shares of preferred
stock outstanding. Charter Communications, Inc. has no present plans to issue
any shares of preferred stock, other than possibly in connection with the
financing of the Bresnan acquisition.
 
OPTIONS
 
     As of October 15, 1999, options to purchase a total of 9,206,282 membership
units in Charter Communications Holding Company were outstanding pursuant to the
Charter Communications Holding Company 1999 option plan. Of these options,
65,000 have vested and 65,000 will vest on the date of the closing of this
offering. The remainder will not vest before April 2000. In addition, 7,044,127
options to purchase membership units
 
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<PAGE>   224
 
in Charter Communications Holding Company were outstanding pursuant to an
employment agreement and a related agreement with Charter Communications, Inc.'s
chief executive officer. Of these options, 1,761,032 vested on December 23,
1998, with the remainder vesting at a rate of 1/36th on the first of each month
for months 13 through 48.
 
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF CHARTER COMMUNICATIONS, INC.'S RESTATED
CERTIFICATE OF INCORPORATION AND BYLAWS
 
     Provisions of Charter Communications, Inc.'s restated certificate of
incorporation and bylaws may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider in its best interest, including those attempts that might result
in a premium over the market price for the shares held by stockholders.
 
     SPECIAL MEETING OF STOCKHOLDERS.   Our bylaws provide that, subject to the
rights of holders of any series of preferred stock, special meetings of our
stockholders may be called only by the chairman of our board of directors, our
chief executive officer or a majority of our board of directors.
 
     ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely prior
written notice of their proposals. To be timely, a stockholder's notice must be
received at our principal executive offices not less than 45 days nor more than
70 days prior to the first anniversary of the date on which we first mailed our
proxy statement for the prior year's annual meeting. If, however, the date of
the annual meeting is more than 30 days before or after the anniversary date of
the prior year's annual meeting, notice by the stockholder must be received not
less than 90 days prior to the annual meeting or by the 10th day following the
public announcement of the date of the meeting, whichever occurs later, and not
more than 120 days prior to the annual meeting. Our bylaws also specify
requirements as to the form and content of a stockholder's notice. These
provisions may limit stockholders in bringing matters before an annual meeting
of stockholders or in making nominations for directors at an annual meeting of
stockholders.
 
     AUTHORIZED BUT UNISSUED SHARES.   The authorized but unissued shares of
Class A common stock are available for future issuance without stockholder
approval and, subject to approval by the holders of the Class B common stock,
the authorized but unissued shares of Class B common stock and preferred stock
are available for future issuance. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and preferred stock
could render more difficult or discourage an attempt to obtain control of us by
means of a proxy contest, tender offer, merger or otherwise.
 
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<PAGE>   225
 
MEMBERSHIP UNITS
 
     Charter Communications Holding Company has four separate classes of common
membership units designated Class A, Class B, Class C and Class D and one class
of preferred membership units designated Class A. Immediately following the
offering, there will be 494,955,052 Charter Communications Holding Company
common membership units issued and outstanding.
 
     - Charter Investment, Inc. will own 217,585,246 Class A common membership
       units, Vulcan Cable III Inc. will own 107,319,806 Class A common
       membership units;
 
     - Charter Communications, Inc. will own 170,050,000 Class B common
       membership units;
 
     - 135,036,045 Class A preferred membership units are owned by the sellers
       in the Rifkin transaction;
 
     - Upon the closing of the Falcon acquisition, a portion of the purchase
       price will be paid in the form of Class D common membership units,
       ranging from a minimum amount of units with an estimated value of $425
       million to a maximum with a fixed value of $550 million at the option of
       specified Falcon sellers; and
 
     - Upon the closing of the Bresnan acquisition, approximately $1.0 billion
       of the purchase price will be paid in the form of Class C common
       membership units.
 
     Subsequent to the consummation of the offering, any matter requiring a vote
of the members will require the affirmative vote of a majority of the Class B
common membership units. Charter Communications, Inc. will own all Class B
common membership units immediately after the offering and therefore will
control Charter Communications Holding Company. Because Mr. Allen owns high vote
Class B common stock of Charter Communications, Inc. that entitles him to
approximately 95% of the voting power of the outstanding common stock of Charter
Communications, Inc., Mr. Allen controls Charter Communications, Inc. and
through this company will have voting control of Charter Communications Holding
Company.
 
     The net cash proceeds that Charter Communications, Inc. receives from any
issuance of shares of common stock will be immediately transferred to Charter
Communications Holding Company in exchange for membership units equal in number
to the number of shares of common stock issued by Charter Communications, Inc.,
except as described in the next paragraph in connection with the offering or
permitted under Charter Communications, Inc.'s restated certificate of
incorporation.
 
     Concurrently with the closing of the offering, Charter Communications, Inc.
will contribute the proceeds of the offering to Charter Communications Holding
Company, less a portion that will be retained by Charter Communications, Inc. to
permit Charter Communications, Inc. to purchase the stock of Avalon Cable of
Michigan Holdings, Inc. that will be acquired in the Avalon acquisition. Charter
Communications, Inc., rather than Charter Communications Holding Company, will
purchase this stock to simplify the organizational structure of the acquired
Avalon companies without incurring tax. This
 
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<PAGE>   226
 
tax-free simplification would not be available if the stock were purchased by a
limited liability company. After the closing of the Avalon acquisition and this
simplification transaction, Charter Communications, Inc. will be obligated to
contribute to Charter Communications Holding Company the equity interests in
Avalon Cable LLC, an indirect wholly owned subsidiary of Avalon Cable of
Michigan Holdings, Inc. that it will have purchased and any remaining cash
retained from the proceeds of the offering. If the Avalon acquisition does not
close on or before the termination date of the Avalon acquisition agreement
(currently March 31, 2000), Charter Communications, Inc. will contribute the
retained proceeds from the offering together with any earnings on the retained
proceeds to Charter Communications Holding Company. Concurrently with the
closing of the offering, Charter Communications Holding Company will issue to
Charter Communications, Inc. 170,000,000 Class B common membership units in
Charter Communications Holding Company in exchange for the contribution of
proceeds and the obligation to contribute the Avalon interests described above.
 
EXCHANGE AGREEMENTS
 
   
     Upon the closing of the offering, we will have entered into an agreement
permitting Vulcan Cable III Inc., Charter Investment, Inc. and any other
affiliate of Mr. Allen to exchange at any time on a one-for-one basis any or all
of their Charter Communications Holding Company common membership units for
shares of Class B common stock. This exchange may occur directly or, at the
election of the exchanging holder, indirectly through a tax-free reorganization
such as a share exchange or a statutory merger of any Allen-controlled entity
with and into Charter Communications, Inc. or a wholly owned subsidiary of
Charter Communications, Inc. In the case of an exchange in connection with a
tax-free share exchange or a statutory merger, shares of Class A common stock
held by Mr. Allen or the Allen-controlled entity will also be exchanged for
Class B common stock. Mr. Allen or his affiliates may own Class A common stock,
for example, if they were required to repurchase shares of Class A common stock
as a result of the exercise of put rights granted to the Rifkin, Falcon and
Bresnan sellers in respect of their shares of Class A common stock.
    
 
     Similar exchange agreements will also permit all other holders of Charter
Communications Holding Company common membership units, other than Charter
Communications, Inc., to exchange at any time on a one-for-one basis any or all
of their common membership units for shares of Class A common stock. These other
holders would include, for example, those sellers under the Falcon acquisition
and the Bresnan acquisition that receive common membership units of Charter
Communications Holding Company.
 
     Charter Communications Holding Company common membership units are
exchangeable at any time for shares of our Class A common stock or, in the case
of Mr. Allen and his affiliates, Class B common stock which is then convertible
into shares of Class A common stock. The exchange agreements, Mr. Kent's option
agreement and the Charter Communications Holding Company 1999 option plan will
state that common membership units are exchangeable for shares of common stock
at a value equal to the fair market value of the common membership units. The
exchange ratio of common
 
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<PAGE>   227
 
membership units to shares of common stock will be one to one because we have
structured Charter Communications, Inc. and Charter Communications Holding
Company so that the fair market value of a share of the Class A common stock
will equal the fair market value of a common membership unit.
 
     Our organizational documents achieve this result by:
 
     - limiting the assets and liabilities that Charter Communications, Inc. may
       hold; and
 
     - requiring the number of shares of Charter Communications, Inc. common
       stock outstanding at any time to equal the number of common membership
       units owned by Charter Communications, Inc.
 
     If we fail to comply with these provisions or they are changed, the
exchange ratio may vary from one to one and will then be based on a
pre-determined formula contained in the exchange agreements, Mr. Kent's option
agreement and the Charter Communications Holding Company 1999 option plan. This
formula will be based on the then current relative fair market values of common
membership units and common stock.
 
SPECIAL TAX ALLOCATION PROVISIONS
 
     OVERVIEW.   Charter Communications Holding Company's limited liability
company agreement contains a number of provisions affecting allocation of tax
losses and tax profits to its members. In some situations, these provisions
could result in Charter Communications, Inc. having to pay income taxes in an
amount that is more than it would have had to pay if these provisions did not
exist. The purpose of these provisions is to allow Mr. Allen to take advantage
for tax purposes of the losses expected to be generated by Charter
Communications Holding Company. We do not expect that these special tax
allocation provisions will materially affect our results of operations or
financial condition.
 
     SPECIAL LOSS ALLOCATION PROVISIONS.   The limited liability company
agreement provides that, through the end of 2003, tax losses of Charter
Communications Holding Company that would otherwise have been allocated to
Charter Communications, Inc. based generally on its percentage of outstanding
membership units will be allocated instead to the membership units held by
Vulcan Cable III Inc. and Charter Investment, Inc. We expect that the effect of
these special loss allocation provisions will be that Mr. Allen, through his
investment in Vulcan Cable III Inc. and Charter Investment, Inc., will receive
tax savings.
 
     Except as we describe below, the special loss allocation provisions should
not adversely affect Charter Communications, Inc. or its shareholders. This is
because Charter Communications, Inc. would not be in a position to benefit from
tax losses until Charter Communications Holding Company generates allocable tax
profits, and we do not expect Charter Communications Holding Company to generate
tax profits for the foreseeable future.
 
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<PAGE>   228
 
     The special loss allocation provisions will reduce Mr. Allen's rights to
receive distributions upon a liquidation of Charter Communications Holding
Company if over time there are insufficient allocations to be made under the
special profit allocation provisions described below to restore these
distribution rights.
 
     SPECIAL PROFIT ALLOCATION PROVISIONS.   The limited liability company
agreement further provides that, beginning at the time Charter Communications
Holding Company first becomes profitable (as determined under the applicable
federal income tax rules for determining book profits), tax profits that would
otherwise have been allocated to Charter Communications, Inc. based generally on
its percentage of outstanding membership units will instead be allocated to Mr.
Allen, through the membership units held by Vulcan Cable III Inc. and Charter
Investment, Inc. We expect that these special profit allocation provisions will
provide tax savings to Charter Communications, Inc. and result in additional tax
costs for Mr. Allen. The special profit allocations will also have the effect of
restoring over time Mr. Allen's rights to receive distributions upon a
liquidation of Charter Communications Holding Company. These special profit
allocations generally will continue until such time as Mr. Allen's rights to
receive distributions upon a liquidation of Charter Communications Holding
Company that had been reduced as a result of the special loss allocations have
been fully restored. We cannot assure you that Charter Communications Holding
Company will become profitable.
 
     POSSIBLE ADVERSE IMPACT FROM THE SPECIAL ALLOCATION PROVISIONS.   In a
number of situations, these special tax allocations could result in Charter
Communications, Inc. having to pay more taxes than if the special tax allocation
provisions had not been adopted.
 
     For example, the special profit allocation provisions may result in an
allocation of tax profits to the membership units held by Vulcan Cable III Inc.
and Charter Investment, Inc. that is less than the amount of the tax losses
previously allocated to these units pursuant to the special loss allocation
provisions described above. In this case, Charter Communications, Inc. could be
required to pay higher taxes but only commencing at the time when Mr. Allen's
rights to receive distributions upon a liquidation of Charter Communications
Holding Company have been fully restored as described above. These tax payments
could reduce our reported net income for the relevant period.
 
     As another example, under their exchange agreement with Charter
Communications, Inc., Vulcan Cable III Inc. and Charter Investment, Inc. may
exchange some or all of their membership units for Class B common stock prior to
the date that the special profit allocation provisions have had the effect of
fully restoring Mr. Allen's rights to receive distributions upon a liquidation
of Charter Communications Holding Company. Charter Communications, Inc. will
then be allocated tax profits attributable to the membership units it receives
in such exchange pursuant to the special profit allocation provisions. As a
result, Charter Communications, Inc. could be required to pay higher taxes in
years following such an exchange of common stock for
 
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<PAGE>   229
 
membership units than if the special tax allocation provisions had not been
adopted. These tax payments could reduce our reported net income for the
relevant period.
 
     However, we do not anticipate that the special tax allocations will result
in Charter Communications, Inc. having to pay taxes in an amount that is
materially different on a present value basis than the taxes that would be
payable had the special tax allocation provisions not been adopted, although
there is no assurance that a material difference will not result.
 
     IMPACT OF MERGER AND OTHER NON-TAXABLE TRANSACTIONS; MR. ALLEN'S
REIMBURSEMENT OBLIGATIONS.   Mr. Allen, through Vulcan Cable III Inc. and
Charter Investment, Inc., has the right to transfer his Charter Communications
Holding Company membership units in a non-taxable transaction, including a
merger, to Charter Communications, Inc. for common stock. Such a transaction may
occur prior to the date that the special profit allocation provisions have had
the effect of fully restoring Mr. Allen's rights to receive distributions upon a
liquidation of Charter Communications Holding Company. In this case, the
following will apply.
 
     Vulcan Cable III Inc. or Charter Investment, Inc. may elect to cause
Charter Communications Holding Company to make additional special allocations in
order to restore Mr. Allen's rights to receive distributions upon a liquidation
of Charter Communications Holding Company. If this election is not made, or if
an election is made but these additional special allocations are insufficient to
restore these rights to Mr. Allen, Mr. Allen, Vulcan Cable III Inc. or Charter
Investment, Inc., whichever receives the Class B common stock, will agree to
make specified payments to Charter Communications, Inc. in respect of the common
stock received. The payments will equal the amount that Charter Communications,
Inc. actually pays in income taxes solely as a result of the allocation to it of
tax profits because of the losses previously allocated to membership units
transferred to it. Any of these payments would be made at the time Charter
Communications, Inc. actually pays these income taxes.
 
     BRESNAN SPECIAL ALLOCATION PROVISIONS.   Charter Communications Holding
Company's limited liability company agreement will contain provisions for
special allocations of tax losses and tax profits between the Bresnan sellers
receiving membership units on the one hand and Mr. Allen, through Vulcan Cable
III Inc. and Charter Investment, Inc., on the other. Because of these
provisions, Charter Communications, Inc. could under some circumstances be
required to pay higher taxes in years following an exchange by the Bresnan
sellers of membership units for shares of Class A common stock. However, we do
not anticipate that any such exchange for Class A common stock will result in
our having to pay taxes in an amount that is materially different on a present
value basis than the taxes that would have been payable had the special
allocations not been adopted, although there is no assurance that a material
difference will not result.
 
     The effect of the special loss allocations discussed above is expected to
be that Mr. Allen and some of the sellers in the Bresnan transaction will
receive tax savings while at the same time reducing their rights to receive
distributions upon a liquidation of Charter Communications Holding Company. If
and when special profit allocations occur,
 
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their rights to receive distributions upon a liquidation of Charter
Communications Holding Company will be restored over time, and they will likely
incur some additional tax costs.
 
OTHER MATERIAL TERMS OF LIMITED LIABILITY COMPANY AGREEMENT OF CHARTER
COMMUNICATIONS HOLDING COMPANY
 
     GENERAL.   Charter Communications Holding Company is a limited liability
company that was formed on May 25, 1999.
 
     Charter Communications Holding Company has four separate classes of common
membership units designated as Class A, Class B, Class C and Class D and one
class of preferred membership units designated as Class A. Charter Investment,
Inc. and Vulcan Cable III Inc. are the holders of the Class A common membership
units. Charter Communications, Inc. will be the holder of the Class B common
membership units. The Bresnan and Falcon sellers will be the holders of the
Class C and Class D membership units, respectively. The Rifkin sellers are the
holders of the Class A preferred membership units.
 
     Charter Communications Holding Company's limited liability company
agreement contains provisions that permit each member (and its officers,
directors, agents, stockholders, members, partners or affiliates) to engage in
businesses that may compete with the businesses of Charter Communications
Holding Company or any subsidiary. However, the directors of Charter
Communications, Inc., including Mr. Allen and Mr. Kent, are subject to fiduciary
duties under Delaware corporate law that generally require them to present
business opportunities in the cable transmission business to Charter
Communications, Inc.
 
     The limited liability company agreement restricts the business activities
that Charter Communications Holding Company may engage in. See "Certain
Relationships and Related Transactions -- Allocation of Business Opportunities
with Mr. Allen".
 
     TRANSFER RESTRICTIONS.   The limited liability company agreement restricts
the ability of each member to transfer its membership interest unless specified
conditions have been met. These conditions include:
 
     - the transfer will not result in the loss of any license or regulatory
       approval or exemption that has been obtained by Charter Communications
       Holding Company and is materially useful in its business as then
       conducted or proposed to be conducted;
 
     - the transfer will not result in a material limitation or restriction on
       Charter Communications Holding Company's operations;
 
     - the proposed transferee agrees in writing to be bound by the limited
       liability company agreement; and
 
     - except for a limited number of permitted transfers under the limited
       liability company agreement, the transfer has been approved by the
       manager in its sole discretion.
 
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<PAGE>   231
 
     Except for a limited number of permitted transfers under the limited
liability company agreement, no holder of membership units may transfer all or a
portion of its membership interest unless it first gives written notice of the
proposed transfer to both Charter Communications Holding Company and the holders
of the Class A common membership units. Within a specified period following
receipt of the notice, Charter Communications Holding Company may elect to
purchase from the holder all or a portion of the holder's membership units being
sold. Unless Charter Communications Holding Company elects to purchase all of
these membership units, the holders of the Class A membership units may elect to
purchase a portion of the holder's membership units being sold. If Charter
Communications Holding Company and the holders of the Class A membership units
do not agree to purchase all of the membership units being sold, the relevant
holder of membership units may transfer all of these membership units to its
proposed transferee.
 
     SPECIAL RESTRICTIONS ON PARTNERS OF FALCON HOLDING GROUP, L.P. TO TRANSFER
MEMBERSHIP UNITS.   Class D common membership units held by Falcon Holding
Group, L.P. are transferable to its partners, subject to the restrictions on
transfer described above. However, if any proposed transferee fails to agree to
be bound by the limited liability company agreement and to represent that it is
an accredited investor or if Charter Communications Holding Company reasonably
determines that the transfer to this transferee would require registration under
the Securities Act of 1933, as amended, then Charter Communications Holding
Company must purchase for cash those Class D common membership units that are
proposed to be transferred.
 
     SPECIAL REDEMPTION RIGHTS RELATING TO CLASS A PREFERRED MEMBERSHIP
UNITS.   The holders of Class A preferred membership units have the right under
a separate redemption and put agreement to cause Charter Communications Holding
Company to redeem their preferred membership units at specified redemption
prices. Charter Communications Holding Company will have the right to redeem the
Class A preferred membership units at specified redemption prices at any time
starting 30 days after the this offering.
 
     SPECIAL RIGHTS GRANTED FORMER OWNERS OF BRESNAN.   The limited liability
company agreement provides that upon the closing of the Bresnan acquisition,
Charter Communications, Inc. must:
 
     - provide the Bresnan sellers that are affiliates of Blackstone Group L.P.
       consultative rights reasonably acceptable to Charter Communications, Inc.
       so that, as long as these Bresnan sellers hold Class C common membership
       units, they may preserve their status and benefits under federal tax and
       labor laws, and
 
     - attempt, in good faith, to keep in place specified notes and credit
       facilities of a number of subsidiaries of Bresnan and substantially all
       of the security and collateral relating to these obligations, as long as
       the Bresnan sellers hold Class C common membership units. The purpose of
       this obligation is to preserve specified tax benefits for the Bresnan
       sellers that depend on these notes and credit facilities remaining
       outstanding. Any required repayments of Bresnan notes and credit
 
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<PAGE>   232
 
       facilities that we may have to make, as described elsewhere in this
       prospectus, will not affect this obligation to keep specified notes and
       credit facilities in place.
 
     AMENDMENTS TO THE LIMITED LIABILITY COMPANY AGREEMENT.   Any amendment to
the limited liability company agreement generally may be adopted only upon the
approval of a majority of the Class B common membership units. The agreement may
not be amended in a manner that adversely affects the rights of any class of
common membership units without the consent of holders holding a majority of the
membership units of that class.
 
REGISTRATION RIGHTS
 
     HOLDERS OF CLASS B COMMON STOCK.   Charter Communications, Inc., Mr. Allen,
Charter Investment, Inc., Vulcan Cable III Inc., Mr. Kent, Mr. Babcock and Mr.
Wood will enter into a registration rights agreement upon the closing of this
offering. The agreement will give Mr. Allen and his affiliates the right to
cause us to register the shares of Class A common stock issued to them upon
conversion of any shares of Class B common stock that they may hold. The
agreement will give Messrs. Kent, Babcock and Wood the right to cause us to
register the shares of Class A common stock issuable to them upon exchange of
Charter Communications Holding Company membership units.
 
     This registration rights agreement provides that each eligible holder is
entitled to unlimited "piggyback" registration rights permitting them to include
their shares of Class A common stock in registration statements filed by us.
These holders may also exercise their demand rights causing us, subject to
specified limitations, to register their Class A shares, provided that the
amount of shares subject to each demand has a market value at least equal to $50
million or, if the market value is less than $50 million, all of the Class A
shares of the holders participating in the offering are included in such
registration. We are obligated to pay the costs associated with all such
registrations.
 
     Holders may elect to have their shares registered pursuant to a shelf
registration statement provided that at the time of the election, Charter
Communications, Inc. is eligible to file a registration statement on Form S-3
and the amount of shares to be registered has a market value equal to at least
$100.0 million on the date of the election.
 
     Mr. Allen also has the right to cause Charter Communications, Inc. to file
a shelf registration statement in connection with the resale of shares of Class
A common stock then held by or issuable to specified sellers under the Rifkin,
Falcon and Bresnan acquisitions that have the right to cause Mr. Allen to
purchase equity interests issued to them as a result of these acquisitions.
 
     Immediately following the offering, all shares of Class A common stock
issuable to the registration rights holders in exchange for Charter
Communications Holding Company membership units and upon conversion of
outstanding Class B common stock and conversion of Class B common stock issuable
to the registration rights holders upon exchange of Charter Communications
Holding Company membership units will be subject to the registration rights
described above.
 
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<PAGE>   233
 
     RIFKIN SELLERS.   In connection with the Rifkin acquisition, Charter
Communications, Inc. will register the resale of the Class A common stock issued
in exchange for the Charter Communications Holding Company LLC Class A preferred
membership units by specified Rifkin sellers on a shelf registration statement
on Form S-1. These Rifkin sellers executed lockup agreements restricting the
transfer of any securities exchangeable for or convertible into shares of Class
A common stock for 180 days after the date of this prospectus. We anticipate
that the shelf registration will remain in effect for a period of at least 18
months following the expiration of the lock-up period.
 
     FALCON SELLERS.   Pursuant to the registration rights agreement Charter
Communications, Inc. will enter into with specified sellers in the Falcon
acquisition, these sellers are entitled to registration rights with respect to
the shares of Class A common stock issuable upon exchange of Charter
Communications Holding Company membership units to be issued to them as part of
the consideration for the Falcon acquisition.
 
     These Falcon sellers or their permitted transferees will have "piggyback"
registration rights and, beginning 180 days after the offering, up to four
"demand" registration rights with respect to the Class A common stock issued
upon exchange of the Charter Communications Holding Company membership units.
The demand registration rights must be exercised with respect to tranches of
Class A common stock worth at least $40 million at the time of notice of demand
or at least $60 million at the initial public offering price. A majority of the
holders of Class A common stock making a demand may also require us to satisfy
our registration obligations by filing a shelf registration statement. The
selling holders of Class A common stock may also exercise their piggyback rights
with respect to the offering, to the extent this offering occurs following the
closing of the Falcon acquisition.
 
     We may register for resale the shares of our Class A common stock issuable
in exchange for common membership units issued to Falcon sellers pursuant to a
shelf registration statement on Form S-1.
 
     BRESNAN SELLERS.   Pursuant to the registration rights agreement Charter
Communications, Inc. will enter into with specified sellers under the Bresnan
acquisition, these sellers are entitled to registration rights with respect to
the shares of Class A common stock issuable upon exchange of the Charter
Communications Holding Company membership units to be issued in the Bresnan
acquisition.
 
     We may register the shares of our Class A common stock issuable to the
Bresnan sellers in exchange for these units for resale pursuant to a shelf
registration statement on Form S-1. We currently are seeking the agreement by
the Bresnan sellers not to transfer the shares prior to 180 days after the
completion of this offering.
 
     The Bresnan sellers collectively will have unlimited "piggyback"
registration rights and, beginning 180 days after this offering, up to four
"demand" registration rights with respect to the Class A common stock issued in
exchange for the membership units in Charter Communications Holding Company. The
demand registration rights must be
 
                                       230

<PAGE>   234
 
exercised with respect to tranches of Class A common stock worth at least $40
million at the time of notice of demand or at least $60 million at the initial
public offering price. The Bresnan sellers have agreed to be prohibited, except
through the exercise of any put rights, from selling shares of Class A common
stock prior to 180 days after the completion of this offering.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.
 
                                       231

<PAGE>   235
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to the offering, there has been no public market for the shares of
Class A common stock. Upon the completion of the offering, Charter
Communications, Inc. will have 170,000,000 shares of Class A common stock issued
and outstanding, or 195,500,000 if the underwriters exercise their
over-allotment option in full. In addition, the following shares of Class A
common stock will be issuable in the future:
 
     - 324,905,052 shares of Class A common stock will be issuable upon
conversion of Class B common stock issuable upon exchange of Charter
Communications Holding Company membership units held by Vulcan Cable III Inc.
and Charter Investment, Inc. These membership units are exchangeable for shares
of Class B common stock at any time following the closing of the offering on a
one-for-one basis. Shares of Class B common stock are convertible into shares of
Class A common stock at any time following the closing of the offering on a
one-for-one basis;
 
   
     - 65,818,026 shares of Class A common stock will be issuable upon the
exchange of Charter Communications Holding Company membership units issued to
specified sellers in our recent and pending acquisitions, assuming the relevant
sellers elect to receive the maximum number of Charter Communications Holding
Company membership units that they are entitled to receive;
    
 
   
     - 16,250,408 shares of Class A common stock will be issuable upon the
exchange of Charter Communications Holding Company membership units that are
received upon the exercise of options granted under the Charter Communications
Holding Company 1999 option plan and to Charter Communications, Inc.'s chief
executive officer. Charter Communications Holding Company will issue up to 5
million additional options on the date of this prospectus. Upon issuance, these
membership units will be immediately exchanged for shares of Class A common
stock, without any further action by the optionholder. The weighted average
exercise price of all outstanding options for membership units is $20.02; and
    
 
     - 50,000 shares of Class A common stock will be issuable upon conversion of
outstanding shares of Class B common stock on a one-for-one basis.
 
     Of the total number of our shares of Class A common stock issued or
issuable as described above, 170,000,000 shares will be eligible for immediate
public resale following the completion of this offering, except for any such
shares held by our "affiliates". Charter Communications, Inc., all of its
directors and executive officers, Charter Communications Holding Company,
Charter Investment, Inc. and Vulcan Cable III Inc. have agreed not to dispose of
or hedge any of their Class A common stock or securities convertible into or
exchangeable for Class A common stock during the period from the date of this
prospectus continuing through the date 180 days after the date of this
prospectus, except with the prior written consent of Goldman, Sachs & Co. and
except that Charter Communications, Inc. and Charter Communications Holding
Company will be entitled to offer and sell convertible debt, convertible
preferred or other equity securities to finance a portion of the Bresnan
acquisition purchase price. The underwriters do not have any current intention
to release shares of Class A common
 
                                       232

<PAGE>   236
 
   
stock or other securities subject to the lock-up. Any determination to release
any shares subject to the lock-up would be based on a number of factors at the
time of any such determination, including the market price of the Class A common
stock, the liquidity of the trading market for the Class A common stock, general
market conditions, the number of shares proposed to be sold, and the timing,
purpose and terms of the proposed sale.
    
 
     The sellers in the Rifkin acquisition and the Bresnan acquisition who have
received or will receive Charter Communications Holding Company membership units
have agreed to similar restrictions. The Falcon sellers who are receiving
Charter Communications Holding Company membership units will not be subject to
such restrictions except for Mr. Marc Nathanson, who will execute a lock-up
agreement in his capacity as a director nominee of Charter Communications, Inc.
The membership units issued to the Falcon sellers will be exchangeable for
shares of Class A common stock. However, such shares will not be registered and
such sellers will have no right to register the stock for a period of 180 days
following the closing of the offering.
 
     In addition, all of the shares of Class A common stock issued or issuable
as described above, except for shares issued in the offering other than to our
"affiliates", may only be sold in compliance with Rule 144 under the Securities
Act of 1933, unless registered under the Securities Act of 1933 pursuant to
demand or piggyback registration rights. Substantially all of the shares of
Class A common stock issuable upon exchange of Charter Communications Holding
Company membership units and all shares of Class A common stock issuable upon
conversion of shares of our Class B common stock will have demand and piggyback
registration rights attached to them, including those issuable to Mr. Allen
through Charter Investment, Inc. and Vulcan Cable III Inc.
 
     The sale of a substantial number of shares of Class A common stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Class A common stock. In addition, any such sale or perception
could make it more difficult for us to sell equity securities or equity-related
securities in the future at a time and price that we deem appropriate.
 
     We anticipate that a registration statement on Form S-8 covering the Class
A common stock that may be issued pursuant to the exercise of options under the
Charter Communications Holding Company 1999 option plan will be filed promptly
after completion of the offering. The shares of Class A common stock covered by
the Form S-8 registration statement generally may be resold in the public market
without restriction or limitation, except in the case of our affiliates who
generally may only resell such shares in accordance with the provisions of Rule
144 of the Securities Act of 1933, other than the holding period requirement.
 
                                       233

<PAGE>   237
 
                    CERTAIN UNITED STATES TAX CONSIDERATIONS
                         FOR NON-UNITED STATES HOLDERS
 
GENERAL
 
     The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of our Class
A common stock by a non-U.S. Holder. As used in this prospectus, the term
"non-U.S. holder" is any person or entity that, for United States federal income
tax purposes, is either a nonresident alien individual, a foreign corporation, a
foreign partnership or a foreign trust, in each case not subject to United
States federal income tax on a net basis in respect of income or gain with
respect to our common stock.
 
     This discussion does not address all aspects of United States federal
income and estate taxes that may be relevant to a particular non-U.S. holder in
light of the holder's particular circumstances. This discussion is not intended
to be applicable in all respects to all categories of non-U.S. holders, some of
whom may be subject to special treatment under United States federal income tax
laws, including "controlled foreign corporations," "passive foreign investment
companies," and "foreign personal holding companies". Moreover, this discussion
does not address United States state or local or foreign tax consequences. This
discussion is based on provisions of the Internal Revenue Code of 1986, as
amended, existing and proposed regulations promulgated under, and administrative
and judicial interpretations of, the Internal Revenue Code in effect on the date
of this prospectus. All of these authorities may change, possibly with
retroactive effect or different interpretations. The following summary is
included in this prospectus for general information. Accordingly, prospective
investors are urged to consult their tax advisors regarding the United States
federal, state, local and non-United States income and other tax consequences of
acquiring, holding and disposing of shares of our common stock.
 
     An individual may be deemed to be a resident alien, as opposed to a
nonresident alien, by virtue of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year. In determining whether an
individual is present in the United States for at least 183 days, all of the
days present in the current year, one-third of the days present in the
immediately preceding year and one-sixth of the days present in the second
preceding year are counted. Resident aliens are subject to United States federal
income and estate tax in the same manner as United States citizens and
residents.
 
DIVIDENDS
 
     We do not anticipate paying cash dividends on our capital stock in the
foreseeable future. See "Dividend Policy". In the event, however, that dividends
are paid on shares of our Class A common stock, dividends paid to a non-U.S.
holder of our Class A common stock generally will be subject to United States
withholding tax at a 30% rate, unless an applicable income tax treaty provides
for a lower withholding rate. Non-U.S. holders should consult their tax advisors
regarding their entitlement to benefits under a relevant income tax treaty.
                                       234

<PAGE>   238
 
     Currently, the applicable United States Treasury regulations presume,
absent actual knowledge to the contrary, that dividends paid to an address in a
foreign country are paid to a resident of such country for purposes of the 30%
withholding tax discussed above. However, recently finalized United States
Treasury regulations provide that in the case of dividends paid after December
31, 2000, United States backup withholding tax at a 31% rate will be imposed on
dividends paid to non-U.S. holders if the certification or documentary evidence
procedures and requirements set forth in such regulations are not satisfied
directly or through an intermediary. Further, in order to claim the benefit of
an applicable income tax treaty rate for dividends paid after December 31, 2000,
a non-U.S. holder must comply with certification requirements set forth in the
recently finalized United States Treasury regulations. The final United States
Treasury regulations also provide special rules for dividend payments made to
foreign intermediaries, United States or foreign wholly owned entities that are
disregarded for United States federal income tax purposes and entities that are
treated as fiscally transparent in the United States, the applicable income tax
treaty jurisdiction, or both. Prospective investors should consult with their
own tax advisors concerning the effect, if any, of these tax regulations and the
recent legislation on an investment in the Class A common stock.
 
     A non-U.S. holder of Class A common stock that is eligible for a reduced
rate of United States withholding tax pursuant to an income tax treaty may
obtain a refund of any excess amounts withheld by filing an appropriate claim
for a refund with the Internal Revenue Service.
 
     Dividends paid to a non-U.S. holder are taxed generally on a net income
basis at regular graduated rates where such dividends are either:
 
         (1) effectively connected with the conduct of a trade or business of
     such holder in the United States or
 
         (2) attributable to a permanent establishment of such holder in the
     United States.
 
The 30% withholding tax is not applicable to the payment of dividends if the
non-U.S. Holder files Form 4224 or any successor form with the payor, or, in the
case of dividends paid after December 31, 2000, such holder provides its United
States taxpayer identification number to the payor. In the case of a non-U.S.
holder that is a corporation, such income may also be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
 
GAIN ON DISPOSITION OF CLASS A COMMON STOCK
 
     A non-U.S. holder generally will not have to comply with United States
federal income or withholding tax requirements in respect of gain recognized on
a disposition of Class A common stock unless:
 
         (1) the gain is effectively connected with the conduct of a trade or
     business of the non-U.S. holder within the United States or of a
     partnership, trust or estate in which the non-U.S. holder is a partner or
     beneficiary within the United States,
 
         (2) the gain is attributable to a permanent establishment of the
     non-U.S. holder within the United States,
 
                                       235

<PAGE>   239
 
         (3) the non-U.S. holder is an individual who holds the Class A common
     stock as a capital asset within the meaning of Section 1221 of the Internal
     Revenue Code, is present in the United States for 183 or more days in the
     taxable year of the disposition and meets certain other tax law
     requirements,
 
         (4) the non-U.S. holder is a United States expatriate required to pay
     tax pursuant to the provisions of United States tax law, or
 
         (5) we are or have been a "United States real property holding
     corporation" for federal income tax purposes at any time during the shorter
     of the five-year period preceding such disposition or the period that the
     non-U.S. holder holds the common stock.
 
     Generally, a corporation is a United States real property holding
corporation if the fair market value of its United States real property
interests equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus its other assets used or held for use in
a trade or business.
 
     We believe that we are not, have not been and do not anticipate becoming, a
United States real property holding corporation for United States federal income
tax purposes. However, even if we were to become a United States real property
holding corporation, any gain realized by a non-U.S. holder still would not be
subject to United States federal income tax if our shares are regularly traded
on an established securities market and the non-U.S. holder did not own,
directly or indirectly, at any time during the five-year period ending on the
date of sale or other disposition, more than 5% of our Class A common stock. If,
however, our stock is not so treated, on a sale or disposition by a non-U.S.
holder of our Class A common stock, the transferee of such stock will be
required to withhold 10% of the proceeds unless we certify that either we are
not and have not been a United States real property holding company or another
exemption from withholding applies.
 
     A non-U.S. holder who is an individual and meets the requirements of clause
(1), (2) or (4) above will be required to pay tax on the net gain derived from a
sale of Class A common stock at regular graduated United States federal income
tax rates. Further, a non-U.S. holder who is an individual and who meets the
requirements of clause (3) above generally will be subject to a flat 30% tax on
the gain derived from a sale. Thus, individual non-U.S. holders who have spent
or expect to spend a short period of time in the United States should consult
their tax advisors prior to the sale of Class A common stock to determine the
United States federal income tax consequences of the sale. A non-U.S. holder who
is a corporation and who meets the requirements of clause (1) or (2) above
generally will be required to pay tax on its net gain at regular graduated
United States federal income tax rates. Such non-U.S. holder may also have to
pay a branch profits tax.
 
FEDERAL ESTATE TAX
 
     For United States federal estate tax purposes, an individual's gross estate
will include the Class A common stock owned, or treated as owned, by an
individual. Generally, this will be the case regardless of whether such
individual was a United
 
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<PAGE>   240
 
States citizen or a United States resident. This general rule of inclusion may
be limited by an applicable estate tax or other treaty.
 
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
 
     Under United States Treasury regulations, we must report annually to the
Internal Revenue Service and to each non-U.S. holder the amount of dividends
paid to such holder and the tax withheld with respect to such dividends. These
information reporting requirements apply regardless of whether withholding is
required. Copies of the information returns reporting such dividends and
withholding may also be made available to the tax authorities in the country in
which the non-U.S. holder is a resident under the provisions of an applicable
income tax treaty or agreement.
 
     Currently, the 31% United States backup withholding tax generally will not
apply:
 
     (1) to dividends which are paid to non-U.S. holders and are taxed at the
         regular 30% withholding tax rate as discussed above, or
 
     (2) before January 1, 2001, to dividends paid to a non-U.S. holder at an
         address outside of the United States unless the payor has actual
         knowledge that the payee is a U.S. holder.
 
     Backup withholding and information reporting generally will apply to
dividends paid to addresses inside the United States on shares of Class A common
stock to beneficial owners that are not "exempt recipients" and that fail to
provide identifying information in the manner required.
 
     The recently finalized United States Treasury regulations provide that in
the case of dividends paid after December 31, 2000, a non-U.S. holder generally
would be subject to backup withholding tax at the rate of 31% unless
 
     (1) certification procedures, or
 
     (2) documentary evidence procedures, in the case of payments made outside
         the United States with respect to an offshore account
 
are satisfied. These regulations generally presume a non-U.S. holder is subject
to backup withholding at the rate of 31% and information reporting requirements
unless we receive certification of the holder's non-United States status.
Depending on the circumstances, this certification will need to be provided
either:
 
     (1) directly by the non-U.S. holder,
 
     (2) in the case of a non-U.S. holder that is treated as a partnership or
         other fiscally transparent entity, by the partners, shareholders or
         other beneficiaries of such entity, or
 
     (3) by qualified financial institutions or other qualified entities on
         behalf of the non-U.S. holder.
 
     Information reporting and backup withholding at the rate of 31% generally
will not apply to the payment of the proceeds of the disposition of Class A
common stock by a holder to or through the United States office of a broker or
through a non-United States branch of a United States broker unless the holder
either certifies its status as a non-U.S. holder under penalties of perjury or
otherwise establishes an exemption. The payment of the proceeds of the
disposition by a non-U.S. holder of Class A common
                                       237

<PAGE>   241
 
stock to or through a non-United States office of a non-United States broker
will not be subject to backup withholding or information reporting unless the
non-United States broker has a connection to the United States as specified by
United States federal tax law.
 
     In the case of the payment of proceeds from the disposition of Class A
common stock effected by a foreign office of a broker that is a United States
person or a "United States related person," existing regulations require
information reporting on the payment unless:
 
     (1) the broker receives a statement from the owner, signed under penalty of
         perjury, certifying its non-United States status;
 
     (2) the broker has documentary evidence in its files as to the non-U.S.
         holder's foreign status and the broker has no actual knowledge to the
         contrary, and other United States federal tax law conditions are met;
         or
 
     (3) the beneficial owner otherwise establishes an exemption.
 
For this purpose, a "U.S. related person" is either:
 
     (1) a "controlled foreign corporation" for United States federal income tax
         purposes or
 
     (2) a foreign person 50% or more of whose gross income from all sources for
         the three-year period ending with the close of its taxable year
         preceding the payment is derived from activities that are effectively
         connected with the conduct of a United States trade or business.
 
     After December 31, 2000, the regulations under the Internal Revenue Code
will impose information reporting and backup withholding on payments of the
gross proceeds from the sale or redemption of Class A common stock that is
effected through foreign offices of brokers having any of a broader class of
specified connections with the United States. Such information reporting and
backup withholding may be avoided, however, if the applicable Internal Revenue
Service certification requirements are complied with. Prospective investors
should consult with their own tax advisors regarding the regulations under the
Internal Revenue Code and in particular with respect to whether the use of a
particular broker would subject the investor to these rules.
 
     Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder will be either refunded or credited against the holder's United
States federal tax liability, provided sufficient information is furnished to
the Internal Revenue Service.
 
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<PAGE>   242
 

                                 LEGAL MATTERS
 
   
     The validity of the shares of Class A common stock offered in this
prospectus will be passed upon for Charter Communications, Inc. by Paul,
Hastings, Janofsky & Walker LLP, New York, New York. A number of attorneys of
Paul, Hastings, Janofsky & Walker LLP intend to purchase up to 40,000 shares of
Class A common stock in this offering. Certain legal matters in connection with
the Class A common stock offered in this prospectus will be passed upon for the
underwriters by Debevoise & Plimpton, New York, New York.
    
 

                                    EXPERTS
 
     The financial statements of Charter Communications, Inc., Charter
Communications Holding Company, LLC and subsidiaries, CCA Group, CharterComm
Holdings, L.P. and subsidiaries, the Greater Media Cablevision Systems, the
Sonic Communications Cable Television Systems and Long Beach Acquisition Corp.,
included in this prospectus, to the extent and for the periods indicated in
their reports, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included in this prospectus in reliance upon the authority of said firm as
experts in giving said reports.
 
     The combined financial statements of TCI Falcon Systems as of September 30,
1998 and December 31, 1997 and for the nine-month period ended September 30,
1998, and for each of the years in the two-year period ended December 31, 1997,
the combined financial statements of Bresnan Communications Group Systems as of
December 31, 1997 and 1998, and for each of the years in the three-year period
ended December 31, 1998, the consolidated financial statements of Marcus Cable
Holdings, LLC as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, and the combined financial statements
of Helicon Partners I, L.P. and affiliates as of December 31, 1997 and 1998 and
for each of the years in the three-year period ended December 31, 1998, have
been included herein in reliance upon the reports of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
 
     The consolidated financial statements of Renaissance Media Group LLC, the
combined financial statements of the Picayune, MS, LaFourche, LA, St. Tammany,
LA, St. Landry, LA, Pointe Coupee, LA, and Jackson, TN cable systems, the
financial statements of Indiana Cable Associates, LTD., the financial statements
of R/N South Florida Cable Management Limited Partnership, the combined
financial statements of Fanch Cable Systems (comprised of components of TW
Fanch-one Co. and TW Fanch-two Co.) and the consolidated financial statements of
Falcon Communications, L.P., included in this prospectus, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere in this prospectus, and are included herein in reliance upon
such reports given on the authority of such firm as experts in accounting and
auditing.
 
                                       239

<PAGE>   243
 
     The audited combined financial statements of InterMedia Cable Systems
(comprised of components of InterMedia Partners and InterMedia Capital Partners
IV, L.P.), the audited financial statements of Rifkin Cable Income Partners
L.P., the audited consolidated financial statements of Rifkin Acquisition
Partners, L.L.L.P., the audited consolidated financial statements of Avalon
Cable of Michigan Holdings, Inc. and subsidiaries, the audited consolidated
financial statements of Cable Michigan Inc. and subsidiaries, the audited
consolidated financial statements of Avalon Cable LLC and subsidiaries, the
audited financial statements of Amrac Clear View, a Limited Partnership, the
audited combined financial statements of The Combined Operations of Pegasus
Cable Television of Connecticut, Inc. and the Massachusetts Operations of
Pegasus Cable Television, Inc., included in this prospectus, have been audited
by PricewaterhouseCoopers LLP, independent accountants. The entities and periods
covered by these audits are indicated in their reports. The financial statements
have been so included in reliance on the reports of PricewaterhouseCoopers LLP,
given on the authority of said firm as experts in auditing and accounting.
 
     The financial statements of Amrac Clear View, a Limited Partnership as of
December 31, 1996 and 1997 and for each of the three years in the period ended
December 31, 1997, included in this prospectus, have been so included in
reliance on the report of Greenfield, Altman, Brown, Berger & Katz, P.C.,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
 
                                       240

<PAGE>   244
 

                                  UNDERWRITING
 
     Charter Communications, Inc., Charter Communications Holding Company and
the underwriters for the U.S. offering named below have entered into an
underwriting agreement with respect to the Class A common stock being offered in
the United States and Canada. Subject to certain conditions, each U.S.
underwriter has severally agreed to purchase the number of shares indicated in
the following table. The underwriters are obligated to purchase all of these
shares if any shares are purchased. Goldman, Sachs & Co., Bear, Stearns & Co.
Inc., Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc., A. G. Edwards & Sons, Inc. and M. R. Beal & Company are the
representatives of the U.S. underwriters.
 

<TABLE>
<CAPTION>
                                                           Number of
                   U.S. Underwriters                        Shares
                   -----------------                      -----------
<S>                                                       <C>
Goldman, Sachs & Co.....................................
Bear, Stearns & Co. Inc.................................
Morgan Stanley & Co. Incorporated.......................
Donaldson, Lufkin & Jenrette Securities Corporation.....
Merrill Lynch, Pierce, Fenner & Smith Incorporated......
Salomon Smith Barney Inc................................
A.G. Edwards & Sons, Inc................................
M.R. Beal & Company.....................................
 
                                                          -----------
            Total.......................................  144,500,000
                                                          ===========
</TABLE>

 
                             ----------------------
 
     If the U.S. underwriters sell more shares than the total number set forth
in the table above, the U.S. underwriters have an option to buy up to an
additional 21,675,000 shares from Charter Communications, Inc. to cover such
sales. They may exercise that option for 30 days. If any shares are purchased
pursuant to this option, the U.S. underwriters will severally purchase shares in
approximately the same proportion as set forth in the table above.
 
     The following table shows the per share and total underwriting discounts to
be paid to the U.S. underwriters by Charter Communications, Inc. Such amounts
are shown assuming both no exercise and full exercise of the U.S. underwriters'
option to purchase additional shares.
 

<TABLE>
<CAPTION>
                                                     Paid by
                                          Charter Communications, Inc.
                                          -----------------------------
                                          No Exercise     Full Exercise
                                          ------------    -------------
<S>                                       <C>             <C>
Per share...............................  $               $
Total...................................  $               $
</TABLE>

 
                                       241

<PAGE>   245
 
     Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover page of this
prospectus. Any shares sold by the underwriters to securities dealers may be
sold at a discount of up to $      per share from the initial public offering
price. Any such securities dealers may resell any shares purchased from the
underwriters to certain other brokers or dealers at a discount of up to $
per share from the initial public offering price. If all of the shares are not
sold at the initial public offering price, the representatives may change the
offering price and the other selling terms.
 
     Charter Communications, Inc. and Charter Communications Holding Company
have entered into an underwriting agreement with the underwriters for the
international offering of 25,500,000 shares of Class A common stock outside the
United States and Canada. The terms and conditions of both offerings are the
same and the sale of shares in both offerings are conditioned on each other.
Goldman Sachs International, Bear, Stearns International Limited, Morgan Stanley
& Co. International Limited, Donaldson, Lufkin & Jenrette International, Merrill
Lynch International and Salomon Brothers International Limited are
representatives of the international underwriters. Charter Communications, Inc.
has granted the international underwriters an option similar to that granted the
U.S. underwriters to purchase up to an aggregate of an additional 3,825,000
shares.
 
     The underwriters for both of the offerings have entered into an agreement
in which they have agreed to restrictions on where and to whom they and any
dealer purchasing from them may offer shares as a part of the distribution of
the shares. The underwriters have also agreed that they may sell shares among
each of the underwriting groups.
 
   
     Charter Communications, Inc., all of its directors and executive officers,
Charter Communications Holding Company, Charter Investment, Inc. and Vulcan
Cable III Inc. have agreed with the underwriters not to dispose of or hedge any
of their Class A common stock or securities convertible into or exchangeable for
Class A common stock during the period from the date of this prospectus
continuing through the date 180 days after the date of this prospectus, except
with the prior written consent of Goldman, Sachs & Co. and except that Charter
Communications, Inc. and Charter Communications Holding Company will be entitled
to offer and sell convertible debt, convertible preferred or other equity
securities to finance a portion of the Bresnan acquisition purchase price. The
Rifkin sellers and the Bresnan sellers who received or will receive Charter
Communications Holding Company membership units have agreed to similar
restrictions. See "Shares Eligible for Future Sale" for a discussion of certain
transfer restrictions.
    
 
     Prior to the offering, there has been no public market for the shares. The
initial public offering price will be negotiated among Charter Communications,
Inc. and the representatives. Among the factors to be considered in determining
the initial public offering price of the shares, in addition to prevailing
market conditions, will be our historical performance, estimates of our business
potential and our earnings prospects, an assessment of our management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.
 
                                       242

<PAGE>   246
 
   
     The Class A common stock has been approved for quotation on the Nasdaq
National Market under the symbol "CHTR".
    
 
     In connection with the offering, the underwriters may purchase and sell
shares of Class A common stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the underwriters of a
greater number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Class A
common stock while the offering is in progress.
 
     The underwriters may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of such underwriter in stabilizing or short covering
transactions.
 
     These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the Class A common stock. As a result, the price of
the Class A common stock may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the underwriters at any time. These transactions may be effected on the
Nasdaq National Market, in the over-the-counter market or otherwise.
 
     The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
 
     We estimate that our share of the total expenses of the offering, excluding
underwriting discounts, will be approximately $40 million and will be paid by
Charter Communications Holding Company.
 
     Charter Communications, Inc. and Charter Communications Holding Company
have agreed to indemnify the several underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
 
   
     At our request, the underwriters have reserved for sale at the initial
public offering price up to 5% of the shares offered by Charter Communications,
Inc. to be sold to its directors, officers, employees, employees of the entities
operating the cable systems to be acquired in the pending acquisitions, and
associates and sellers in the Helicon acquisition, as described in the following
paragraph. The number of shares available for sale to the general public will be
reduced to the extent such shares are purchased. Any of these reserved shares
not so purchased will be offered by the underwriters on the same basis as the
shares offered hereby.
    
 
     At our request, the underwriters will reserve up to $12 million of Class A
common stock at the initial public offering price for sale to specified sellers
of the Helicon cable systems. This would represent 666,667 shares of Class A
common stock, calculated at the mid-point of the range set forth on the cover
page of this prospectus.
 
     A prospectus in electronic format will be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The underwriters may agree to allocate a number of shares to underwriters for
sale to their online brokerage account holders. Internet distributions will be
allocated by the representatives of the
 
                                       243

<PAGE>   247
 
   
underwriters to underwriters that may make Internet distributions on the same
basis as other allocations. Wit Capital is an on-line investment bank that will
receive an allocation of shares of Class A common stock in its capacity as a
syndicate member.
    
 
     Certain of the underwriters and their affiliates have in the past provided,
and may in the future from time to time provide, investment banking and general
financing and banking services to Charter Communications Holding Company and its
affiliates for which they have in the past received, and may in the future
receive, customary fees.
 
   
     Goldman Sachs Credit Partners L.P., an affiliate of Goldman, Sachs & Co.,
Morgan Stanley Senior Lending, Inc., an affiliate of Morgan Stanley & Co.
Incorporated, and Merrill Lynch Capital Corporation, an affiliate of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, are among the lenders who have
agreed to provide us with a bridge loan facility providing for borrowings of up
to $750 million to finance required repayments of Falcon debentures and notes
that we may have to repurchase as a result of the Falcon acquisition. Goldman
Sachs Credit Partners L.P. is the administrative agent under the bridge loan
facility. Goldman, Sachs & Co. has provided a fairness opinion to us in
connection with the Broadband Partners joint venture. Goldman Sachs & Co. acted
as financial adviser to Charter Investment, Inc. (formerly Charter
Communications, Inc.) in connection with its acquisition by Paul G. Allen in
December 1998.
    
 
     Goldman, Sachs & Co. and Donaldson Lufkin & Jenrette Securities Corporation
acted as co-lead managers and as initial purchasers in the March 1999 Rule 144A
placement of Charter Holdings' senior notes. Bear, Stearns & Co. Inc. and
Salomon Smith Barney Inc. were initial purchasers in this placement. Goldman,
Sachs & Co. and Bear, Stearns & Co. Inc. acted as co-dealer managers in
connection with three tender offers for debt securities of Charter Holdings'
subsidiaries which were made in the first quarter of 1999.
 
   
     Donaldson, Lufkin & Jenrette Securities Corporation, Citibank, N.A., an
affiliate of Salomon Smith Barney Inc., and Goldman, Sachs & Co. are lenders and
managing agents under Charter Operating's $4.1 billion senior credit facilities.
Goldman, Sachs & Co., Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated have agreed
to be lenders and managing agents under the $1.2 billion senior credit
facilities being arranged in connection with the Fanch acquisition. Citibank,
N.A., an affiliate of Salomon Smith Barney Inc., has agreed to be a lender and
documentation agent under the Fanch credit facilities being arranged in
connection with the Fanch acquisition and is also a lender under the $1.5
billion restated and amended Falcon credit facilities.
    
 
     The husband of Nancy B. Peretsman, a director nominee of Charter
Communications, Inc., is a managing director of Morgan Stanley & Co.
Incorporated.
 
     This prospectus may be used by the underwriters and other dealers in
connection with offers and sales of the shares, including sales of shares
initially sold by the underwriters in the offering being made outside of the
United States, to persons located in the United States.
 
                                       244

<PAGE>   248
 
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
CHARTER COMMUNICATIONS, INC.
Report of Independent Public Accountants....................  F-8
Balance Sheet as of July 22, 1999...........................  F-9
Notes to Financial Statement................................  F-10
 
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
Report of Independent Public Accountants....................  F-11
Consolidated Balance Sheet as of December 31, 1998..........  F-12
Consolidated Statement of Operations for the period from
  December 24, 1998 through December 31, 1998...............  F-13
Consolidated Statement of Cash Flows for the period from
  December 24, 1998 through December 31, 1998...............  F-14
Notes to Consolidated Financial Statements..................  F-15
Report of Independent Public Accountants....................  F-29
Consolidated Balance Sheet as of December 31, 1997..........  F-30
Consolidated Statement of Operations for the period from
  January 1, 1998 through December 23, 1998 and for the
  years ended December 31, 1997 and 1996....................  F-31
Consolidated Statements of Shareholder's Investment for the
  period from January 1, 1998 through December 23, 1998 and
  for the years ended December 31, 1997 and 1996............  F-32
Consolidated Statement of Cash Flows for the period from
  January 1, 1998 through December 23, 1998 and for the
  years ended December 31, 1997 and 1996....................  F-33
Notes to Consolidated Financial Statements..................  F-34
 
MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES:
  Independent Auditors' Report..............................  F-44
  Consolidated Balance Sheets as of December 31, 1998 and
    1997....................................................  F-45
  Consolidated Statements of Operations for Each of the
    Years in the Three-Year Period Ended December 31,
    1998....................................................  F-46
  Consolidated Statements of Members' Equity/Partners'
    Capital for Each of the Years in the Three-Year Period
    Ended December 31, 1998.................................  F-47
  Consolidated Statements of Cash Flows for Each of the
    Years in the Three-Year Period Ended December 31,
    1998....................................................  F-48
  Notes to Consolidated Financial Statements................  F-49
 
CCA GROUP:
  Report of Independent Public Accountants..................  F-60
  Combined Balance Sheet as of December 31, 1997............  F-61
  Combined Statements of Operations for the Period From
    January 1, 1998, Through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-62
  Combined Statements of Shareholders' Deficit for the
    Period From January 1, 1998, Through December 23, 1998
    and for the Years Ended December 31, 1997 and 1996......  F-63
  Combined Statements of Cash Flows for the Period From
    January 1, 1998, Through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-64
  Notes to Combined Financial Statements....................  F-65
 
CHARTERCOMM HOLDINGS, L.P.:
  Report of Independent Public Accountants..................  F-79
  Consolidated Balance Sheet as of December 31, 1997........  F-80
  Consolidated Statements of Operations for the Period From
    January 1, 1998 Through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-81
  Consolidated Statements of Partner's Capital for the
    Period From January 1, 1998 Through December 23, 1998
    and for the Years Ended December 31, 1997 and 1996......  F-82
  Consolidated Statements of Cash Flows for the Period From
    January 1, 1998 Through December 23, 1998 and for the
    Years Ended December 31, 1997 and 1996..................  F-83
  Notes to Consolidated Financial Statements................  F-84
</TABLE>

 
                                       F-1

<PAGE>   249
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
GREATER MEDIA CABLEVISION SYSTEMS:
  Report of Independent Public Accountants..................  F-97
  Combined Balance Sheets as of September 30, 1998 and
    1997....................................................  F-98
  Combined Statements of Income for the Nine Months Ended
    June 30, 1999 and 1998 (unaudited) and for the Years
    Ended September 30, 1998, 1997 and 1996.................  F-99
  Combined Statements of Changes in Net Assets for the Nine
    Months Ended June 30, 1999 (unaudited) and for the Years
    Ended September 30, 1996, 1997 and 1998.................  F-100
  Combined Statements of Cash Flows for the Nine Months
    Ended June 30, 1999 and 1998 (unaudited) and for the
    Years Ended September 30, 1998, 1997 and 1996...........  F-101
  Notes to Combined Financial Statements....................  F-102
 
RENAISSANCE MEDIA GROUP LLC:
  Report of Independent Auditors............................  F-108
  Consolidated Balance Sheet as of December 31, 1998........  F-109
  Consolidated Statement of Operations for the Year Ended
    December 31, 1998.......................................  F-110
  Consolidated Statement of Changes in Members' Equity for
    the Year Ended December 31, 1998........................  F-111
  Consolidated Statement of Cash Flows for the Year Ended
    December 31, 1998.......................................  F-112
  Notes to Consolidated Financial Statements for the Year
    Ended December 31, 1998.................................  F-113
 
PICAYUNE MS, LAFOURCHE, LA, ST. TAMMANY, LA, ST. LANDRY, LA,
  POINTE COUPEE, LA AND JACKSON, TN CABLE TELEVISION
  SYSTEMS:
  Report of Independent Auditors............................  F-123
  Combined Balance Sheet as of April 8, 1998................  F-124
  Combined Statement of Operations for the Period from
    January 1, 1998 through April 8, 1998...................  F-125
  Combined Statement of Changes in Net Assets for the Period
    from January 1, 1998 through April 8, 1998..............  F-126
  Combined Statement of Cash Flows for the Period from
    January 1, 1998 through April 8, 1998...................  F-127
  Notes to Combined Financial Statements....................  F-128
  Report of Independent Auditors............................  F-135
  Combined Balance Sheets as of December 31, 1996 and
    1997....................................................  F-136
  Combined Statements of Operations for the Years Ended
    December 31, 1995, 1996 and 1997........................  F-137
  Combined Statements of Changes in Net Assets for the Years
    Ended December 31, 1996 and 1997........................  F-138
  Combined Statements of Cash Flows for the Years Ended
    1995, 1996 and 1997.....................................  F-139
  Notes to Combined Financial Statements....................  F-140
 
HELICON PARTNERS I, L.P. AND AFFILIATES:
  Independent Auditors' Report..............................  F-147
  Combined Balance Sheets as of December 31, 1997 and
    1998....................................................  F-148
  Combined Statements of Operations for Each of the Years in
    the Three-Year Period Ended December 31, 1998...........  F-149
  Combined Statements of Changes in Partners' Deficit for
    Each of the Years in the Three-Year Period Ended
    December 31, 1998.......................................  F-150
  Combined Statements of Cash Flows for Each of the Years in
    the Three-Year Period Ended December 31, 1998...........  F-151
  Notes to Combined Financial Statements....................  F-152
 
INTERMEDIA CABLE SYSTEMS (COMPRISED OF COMPONENTS OF
  INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS IV,
  L.P.):
  Report of Independent Accountants.........................  F-165
  Combined Balance Sheets at December 31, 1998 and 1997.....  F-166
  Combined Statements of Operations for the Years Ended
    December 31, 1998 and 1997..............................  F-167
  Combined Statement of Changes in Equity for the Years
    Ended December 31, 1998 and 1997........................  F-168
  Combined Statements of Cash Flows for the Years Ended
    December 31, 1998 and 1997..............................  F-169
  Notes to Combined Financial Statements....................  F-170
</TABLE>

 
                                       F-2

<PAGE>   250
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
RIFKIN CABLE INCOME PARTNERS L.P.:
  Report of Independent Accountants.........................  F-182
  Balance Sheet at December 31, 1997 and 1998...............  F-183
  Statement of Operations for Each of the Three Years in the
    Period Ended December 31, 1998..........................  F-184
  Statement of Partners' Equity (Deficit) for Each of the
    Three Years in the Period Ended December 31, 1998.......  F-185
  Statement of Cash Flows for Each of the Three Years in the
    Period Ended December 31, 1998..........................  F-186
  Notes to Financial Statements.............................  F-187
 
RIFKIN ACQUISITION PARTNERS, L.L.L.P.:
  Report of Independent Accountants.........................  F-191
  Consolidated Balance Sheet at December 31, 1998 and
    1997....................................................  F-192
  Consolidated Statement of Operations for Each of the Three
    Years in the Period Ended December 31, 1998.............  F-193
  Consolidated Statement of Cash Flows for Each of the Three
    Years in the Period Ended December 31, 1998.............  F-194
  Consolidated Statement of Partners' Capital (Deficit) for
    Each of the Three Years in the Period Ended December 31,
    1998....................................................  F-195
  Notes to Consolidated Financial Statements................  F-196
 
INDIANA CABLE ASSOCIATES, LTD.:
  Report of Independent Auditors............................  F-210
  Balance Sheet as December 31, 1997 and 1998...............  F-211
  Statement of Operations for the Years Ended December 31,
    1996, 1997 and 1998.....................................  F-212
  Statement of Partners' Deficit for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-213
  Statement of Cash Flows for the Years Ended December 31,
    1996, 1997 and 1998.....................................  F-214
  Notes to Financial Statements.............................  F-215
 
R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP:
  Report of Independent Auditors............................  F-219
  Consolidated Balance Sheet as of December 31, 1997 and
    1998....................................................  F-220
  Consolidated Statement of Operations for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-221
  Consolidated Statement of Partners' Equity (Deficit) for
    the Years Ended December 31, 1996, 1997 and 1998........  F-222
  Consolidated Statement of Cash Flows for the Years Ended
    December 31, 1996, 1997 and 1998........................  F-223
  Notes to Consolidated Financial Statements................  F-224
 
SONIC COMMUNICATIONS CABLE TELEVISION SYSTEMS:
  Report of Independent Public Accountants..................  F-228
  Statement of Operations and Changes in Net Assets for the
    Period from April 1, 1998, through May 20, 1998.........  F-229
  Statement of Cash Flows for the Period from April 1, 1998,
    through May 20, 1998....................................  F-230
  Notes to Financial Statements.............................  F-231
 
LONG BEACH ACQUISITION CORP.:
  Report of Independent Public Accountants..................  F-234
  Statement of Operations for the Period from April 1, 1997,
    through May 23, 1997....................................  F-235
  Statement of Stockholder's Equity for the Period from
    April 1, 1997, through May 23, 1997.....................  F-236
  Statement of Cash Flows for the Period from April 1, 1997,
    through May 23, 1997....................................  F-237
  Notes to Financial Statements.............................  F-238
 
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets as of June 30, 1999
  (unaudited) and December 31, 1998.........................  F-242
Condensed Consolidated Statements of Operations for the six
  months ended June 30, 1999 and 1998 (unaudited)...........  F-243
Condensed Consolidated Statements of Cash Flows for the six
  months ended June 30, 1999 and 1998 (unaudited)...........  F-244
Notes to Condensed Consolidated Financial Statements........  F-245

</TABLE>

 
                                       F-3

<PAGE>   251
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
MARCUS CABLE HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Operations for the Three Months
  Ended March 31, 1999 and Six Months Ended June 30, 1998
  (unaudited)...............................................  F-252
Consolidated Statements of Cash Flows for the Three Months
  Ended March 31, 1999 and Six Months Ended June 30, 1998
  (unaudited)...............................................  F-253
Notes to Condensed Consolidated Financial Statements
  (unaudited)...............................................  F-254
 
RENAISSANCE MEDIA GROUP LLC:
  Consolidated Statement of Operations for the Four Months
    Ended April 30, 1999 and Six Months Ended June 30, 1998
    (unaudited).............................................  F-257
  Consolidated Statement of Cash Flows for the Four Months
    Ended April 30, 1999 and Six Months Ended June 30, 1998
    (unaudited).............................................  F-258
  Notes to Consolidated Financial Statements................  F-259
 
HELICON PARTNERS I, L.P. AND AFFILIATES:
  Unaudited Condensed Combined Balance Sheet as of June 30,
    1999....................................................  F-262
  Unaudited Condensed Combined Statements of Operations for
    the Six-Month Periods Ended June 30, 1998 and 1999......  F-263
  Unaudited Condensed Combined Statements of Changes in
    Partners' Deficit for the Six-Month Period Ended June
    30, 1999................................................  F-264
  Unaudited Condensed Combined Statements of Cash Flows for
    the Six-Month Periods Ended June 30, 1998 and 1999......  F-265
  Notes to Unaudited Condensed Combined Financial
    Statements..............................................  F-266
 
INTERMEDIA CABLE SYSTEMS (COMPRISED OF COMPONENTS OF
  INTERMEDIA PARTNERS AND INTERMEDIA CAPITAL PARTNERS IV,
  L.P.):
  Combined Balance Sheets as of June 30, 1999 (unaudited)
    and December 31, 1998...................................  F-268
  Combined Statements of Operations for the Six Months Ended
    June 30, 1999 and 1998 (unaudited)......................  F-269
  Combined Statement of Changes in Equity for the Six Months
    Ended June 30, 1999 (unaudited) and for the Year Ended
    December 31, 1998.......................................  F-270
  Combined Statements of Cash Flows for the Six Months Ended
    June 30, 1999 and 1998 (unaudited)......................  F-271
  Notes to Condensed Combined Financial Statements
    (unaudited).............................................  F-272
 
RIFKIN CABLE INCOME PARTNERS L.P.:
  Balance Sheet at December 31, 1998 and June 30, 1999
    (unaudited).............................................  F-278
  Statement of Operations for the Six Months Ended June 30,
    1998 and 1999 (unaudited)...............................  F-279
  Statement of Partners' Equity for the Six Months Ended
    March 31, 1998 and 1999 (unaudited).....................  F-280
  Statement of Cash Flows for the Six Months Ended June 30,
    1998 and 1999 (unaudited)...............................  F-281
  Notes to Financial Statements.............................  F-282
 
RIFKIN ACQUISITION PARTNERS, L.L.L.P.:
  Consolidated Balance Sheet at June 30, 1999 (unaudited)
    and December 31, 1998...................................  F-284
  Consolidated Statement Of Operations for the Six Months
    Ended June 30, 1999 and 1998 (unaudited)................  F-285
  Consolidated Statement of Cash Flow for the Six Months
    Ended June 30, 1999 and 1998 (unaudited)................  F-286
  Consolidated Statements of Partners' Capital (Deficit) for
    the Six Months Ended June 30, 1999 and 1998
    (unaudited).............................................  F-287
  Notes to Consolidated Financial Statements................  F-288
 
INDIANA CABLE ASSOCIATES, LTD.:
  Balance Sheet as of December 31, 1998 and June 30, 1999
    (unaudited).............................................  F-290
  Statement of Operations for the Six Months Ended June 30,
    1998 and 1999 (unaudited)...............................  F-291
  Statement of Cash Flows for the Six Months Ended June 30,
    1998 and 1999 (unaudited)...............................  F-292
  Statement of Partners' Deficit for the Six Months Ended
    June 30, 1999 and for the Year Ended December 31,
    1998....................................................  F-293
  Notes to Financial Statement (unaudited)..................  F-294
</TABLE>

 
                                       F-4

<PAGE>   252
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
R/N SOUTH FLORIDA CABLE MANAGEMENT LIMITED PARTNERSHIP
  Consolidated Balance Sheet as of June 30, 1999 (unaudited)
    and December 31, 1998...................................  F-295
  Consolidated Statement of Operations for the Six Months
    Ended June 30, 1998 and 1999 (unaudited)................  F-296
  Consolidated Statement of Partners' Equity for the Six
    Months Ended June 30, 1999 and 1998.....................  F-297
  Consolidated Statement of Cash Flows for the Six Months
    Ended June 30, 1998 and 1999 (unaudited)................  F-298
  Notes to Consolidated Financial Statement (unaudited).....  F-299
 
AVALON CABLE LLC AND SUBSIDIARIES
 
 Report of Independent Accountants.........................  F-301
  Consolidated Balance Sheet as of December 31, 1998 and
    1997....................................................  F-302
  Consolidated Statement of Operations for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-303
  Consolidated Statements of Changes in Members' Interest
    from September 4, 1997 (inception) through December 31,
    1998....................................................  F-304
  Consolidated Statement of Cash Flows for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-305
  Notes to the Consolidated Financial Statements............  F-306
 
AVALON CABLE LLC AND SUBSIDIARIES
  Consolidated Balance Sheet as of June 30, 1999 (unaudited)
    and December 31, 1998...................................  F-320
  Consolidated Statement of Operations for the six months
    ended June 30, 1999 and 1998 (unaudited)................  F-321
  Consolidated Statement of Changes in Members' Interest for
    the six months ended June 30, 1999 (unaudited)..........  F-322
  Consolidated Statement of Cash Flows for the six months
    ended June 30, 1999 and 1998 (unaudited)................  F-323
  Notes to Consolidated Financial Statements (unaudited)....  F-324
 
AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES
  Report of Independent Accountants.........................  F-329
  Consolidated Balance Sheets as of December 31, 1998 and
    1997....................................................  F-330
  Consolidated Statement of Operations for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-331
  Consolidated Statement of Shareholder's Equity for the
    period from September 4, 1997 (inception) through
    December 31, 1998.......................................  F-332
  Consolidated Statement of Cash Flows for the year ended
    December 31, 1998 and for the period from September 4,
    1997 (inception) through December 31, 1997..............  F-333
  Notes to the Consolidated Financial Statements............  F-334
 
AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES
  Consolidated Balance Sheet as of June 30, 1999 (unaudited)
    and December 31, 1998...................................  F-348
  Consolidated Statement of Operations for the six months
    ended June 30, 1999 and 1998 (unaudited)................  F-349
  Consolidated Statement of Changes in Shareholders' Equity
    for the six months ended
    June 30, 1999 (unaudited)...............................  F-350
  Consolidated Statement of Cash Flows for the six months
    ended March 31, 1999 and 1998 (unaudited)...............  F-351
  Notes to Consolidated Financial Statements (unaudited)....  F-352
 
CABLE MICHIGAN, INC. AND SUBSIDIARIES
  Report of Independent Accountants.........................  F-357
  Consolidated Balance Sheets as of December 31, 1997 and
    November 5, 1998........................................  F-358
  Consolidated Statements of Operations for the years ended
    December 31, 1996, 1997 and for the period from January
    1, 1998 through November 5, 1998........................  F-359
  Consolidated Statements of Changes in Shareholders'
    Deficit for the years ended December 31, 1996, 1997 and
    for the period from January 1, 1998 through November 5,
    1998....................................................  F-360
  Consolidated Statement of Cash Flows for the years ended
    December 31, 1996, 1997 and for the period from January
    1, 1998 through November 5, 1998........................  F-361
  Notes to Consolidated Financial Statements................  F-362
</TABLE>

 
                                       F-5

<PAGE>   253
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP
  Report of Independent Accountants.........................  F-377
  Balance Sheet as of May 28, 1998..........................  F-378
  Statement of Operations for the period from January 1,
    1998 through May 28, 1998...............................  F-379
  Statement of Changes in Partners' Equity (Deficit) for the
    period from January 1, 1998 through May 28, 1998........  F-380
  Statement of Cash Flows for the period from January 1,
    1998 through May 28, 1998...............................  F-381
  Notes to Financial Statements.............................  F-382
 
AMRAC CLEAR VIEW, A LIMITED PARTNERSHIP
  Independent Auditors' Report..............................  F-386
  Balance Sheets as of December 31, 1996 and 1997...........  F-387
  Statements of Net Earnings for the years ended December
    31, 1995, 1996 and 1997.................................  F-388
  Statements of Changes in Partners' Equity (Deficit) for
    the years ended December 31, 1995, 1996 and 1997........  F-389
  Statements of Cash Flows for the years ended December 31,
    1995, 1996 and 1997.....................................  F-390
  Notes to Financial Statements.............................  F-391
 
PEGASUS CABLE TELEVISION, INC.
  Report of Independent Accountants.........................  F-395
  Combined Balance Sheets at December 31, 1996 and 1997 and
    June 30, 1998...........................................  F-396
  Combined Statement of Operations for the years ended
    December 31, 1995, 1996 and 1997 and the six months
    ended June 30, 1998.....................................  F-397
  Combined Statements of Changes in Stockholder's Deficit
    for the three years ended December 31, 1997 and the six
    months ended June 30, 1998..............................  F-398
  Combined Statements of Cash Flows for the years ended
    December 31, 1995, 1996 and 1997 and for the six months
    ended June 30, 1998.....................................  F-399
  Notes to Combined Financial Statements....................  F-400
 
FALCON COMMUNICATIONS, L.P.
Report of Independent Auditors..............................  F-406
Consolidated Balance Sheets at December 31, 1997 and 1998...  F-407
Consolidated Statements of Operations for each of the three
  years in the period ended December 31, 1998...............  F-408
Consolidated Statements of Partners' Deficit for each of the
  three years in the period ended December 31, 1998.........  F-409
Consolidated Statements of Cash Flows for each of the three
  years in the period ended December 31, 1998...............  F-410
Notes to Consolidated Financial Statements..................  F-411
Condensed Consolidated Balance Sheets at December 31, 1998
  and June 30, 1999 (unaudited).............................  F-433
Condensed Consolidated Statements of Operations for the six
  months ended June 30, 1998 and 1999 (unaudited)...........  F-434
Condensed Consolidated Statements of Cash Flows for the six
  months ended June 30, 1998 and 1999 (unaudited)...........  F-435
Notes to Unaudited Condensed Consolidated Financial
  Statements................................................  F-436
 
TCI FALCON SYSTEMS
Independent Auditors' Report................................  F-438
Combined Balance Sheets at September 30, 1998 and December
  31, 1997..................................................  F-439
Combined Statements of Operations and Parent's Investment
  for the period from January 1, 1998 through September 30,
  1998 and for the years ended December 31, 1997 and 1996...  F-440
Combined Statements of Cash Flows for the period from
  January 1, 1998 through September 30, 1998 and for the
  years ended December 31, 1997 and 1996....................  F-441
Notes to the Combined Financial Statements for the period
  from January 1, 1998 through September 30, 1998 and for
  the years ended December 31, 1997 and 1996................  F-442
</TABLE>

 
                                       F-6

<PAGE>   254
 

<TABLE>
<CAPTION>
                                                              PAGE
                                                              -----
<S>                                                           <C>
FANCH CABLE SYSTEM (comprised of components of TWFanch-one
  Co. and TWFanch-two Co.)
Report of Independent Auditors..............................  F-449
Combined Balance Sheets as of December 31, 1998 and 1997....  F-450
Combined Statements of Operations for the years ended
  December 31, 1998 and 1997................................  F-451
Combined Statements of Net Assets for the years ended
  December 31, 1998 and 1997................................  F-452
Combined Statements of Cash Flows for the years ended
  December 31, 1998 and 1997................................  F-453
Notes to Combined Financial Statements......................  F-454
Combined Balance Sheets as of June 30, 1998 (unaudited) and
  December 31, 1998.........................................  F-459
Combined Statements of Operations for the six months ended
  June 30, 1999 and 1998
  (unaudited)...............................................  F-460
Combined Statements of Net Assets for the six months ended
  June 30, 1999 and 1998
  (unaudited)...............................................  F-461
Combined Statements of Cash Flows for the six months ended
  June 30, 1999 and 1998
  (unaudited)...............................................  F-462
Notes to Combined Financial Statements at June 30, 1999
  (unaudited)...............................................  F-463
 
BRESNAN COMMUNICATIONS GROUP LLC
Consolidated Balance Sheets at December 31, 1998 and June
  30, 1999 (unaudited)......................................  F-466
Consolidated Statements of Operations and Member's Equity
  (Deficit) for the six months ended June 30, 1998 and 1999
  (unaudited)...............................................  F-467
Consolidated Statements of Cash Flows for the six months
  ended June 30, 1998 and 1999 (unaudited)..................  F-468
Notes to Consolidated Financial Statements at June 30, 1999
  (unaudited)...............................................  F-469
 
BRESNAN COMMUNICATIONS GROUP SYSTEMS
Independent Auditors' Report................................  F-475
Combined Balance Sheets at December 31, 1997 and 1998.......  F-476
Combined Statements of Operations and Parents' Investment
  for the years ended December 31, 1996, 1997 and 1998......  F-477
Combined Statements of Cash Flows for the years ended
  December 31, 1996, 1997 and 1998..........................  F-478
Notes to Combined Financial Statements at December 31, 1996,
  1997 and 1998.............................................  F-479
</TABLE>

 
                                       F-7

<PAGE>   255
 

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Charter Communications, Inc.:
 
     We have audited the accompanying balance sheet of Charter Communications,
Inc. as of July 22, 1999. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
 
     In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Charter Communications, Inc. as of
July 22, 1999, in conformity with generally accepted accounting principles.
 
/s/ ARTHUR ANDERSEN LLP
 
St. Louis, Missouri,
   
  July 22, 1999 (except with respect

to the matter discussed in Note 2, as
to which the date is November 4, 1999)
    
 
                                       F-8

<PAGE>   256
 
                          CHARTER COMMUNICATIONS, INC.
 
                                 BALANCE SHEET
 

<TABLE>
<CAPTION>
                                                              JULY 22, 1999
                                                              -------------
<S>                                                           <C>
                           ASSETS
CASH........................................................      $100
                                                                  ====
 
                    STOCKHOLDER'S EQUITY
COMMON STOCK -- $.001 par value, 100 shares authorized,
  issued and outstanding....................................      $ --
ADDITIONAL PAID-IN CAPITAL..................................       100
                                                                  ----
          Total stockholder's equity........................      $100
                                                                  ====
</TABLE>

 
       The accompanying notes are an integral part of the balance sheet.
                                       F-9

<PAGE>   257
 
                          CHARTER COMMUNICATIONS, INC.
 
                             NOTES TO BALANCE SHEET

                                 JULY 22, 1999
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
ORGANIZATION AND BASIS OF PRESENTATION
 
     On July 22, 1999, Charter Investment, Inc. (Charter Investment), a company
controlled by Paul G. Allen, formed a wholly owned subsidiary, Charter
Communications, Inc. (CCI or the "Company"), a Delaware corporation with an
initial investment of $100. The Company has no operations or cash flows other
than the initial investment made by Charter Investment. Accordingly, statements
of operations and cash flows are not presented.
 
2. SUBSEQUENT EVENT:
 
   
     In July 1999, the Company filed a registration statement on Form S-1 with
the SEC, as amended on September 3, 1999, and further amended on September 28,
1999, October 18, 1999, November 1, 1999 and November 4, 1999 for the issuance
of Class A common stock to the public (IPO). CCI will be a holding company whose
sole asset will be a controlling equity interest in Charter Communications
Holding Company, LLC (Charter Communications Holding Company), a direct and
indirect owner of cable systems.
    
 
     Upon completion of the IPO, CCI intends to purchase membership units of
Charter Communications Holding Company representing a 100% voting interest and
an approximate 34% economic interest. As sole manager of Charter Communications
Holding Company, CCI will control the business affairs of Charter Communications
Holding Company. CCI's consolidated financial statements will include the
accounts of Charter Communications Holding Company upon completion of the IPO.
The assets and liabilities of Charter Communications Holding Company will be
reflected in the consolidated financial statements of CCI at their historical
carrying values and a minority interest will be recorded on the consolidated
balance sheet representing that portion of the net equity of Charter
Communications Holding Company not owned by CCI.
 
                                      F-10

<PAGE>   258
 

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Charter Communications Holding Company, LLC:
 
     We have audited the accompanying consolidated balance sheet of Charter
Communications Holding Company, LLC and subsidiaries as of December 31, 1998,
and the related consolidated statements of operations and cash flows for the
period from December 24, 1998, through December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Holding Company, LLC and subsidiaries as of December 31, 1998, and the results
of their operations and their cash flows for the period from December 24, 1998,
through December 31, 1998, in conformity with generally accepted accounting
principles.
 
/s/ ARTHUR ANDERSEN LLP
 
St. Louis, Missouri,
  February 5, 1999 (except with respect to the

  matters discussed in Notes 1 and 13,
  as to which the date is April 19, 1999)
 
                                      F-11

<PAGE>   259
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                           CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1998
                                                              -----------------
<S>                                                           <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................     $    9,573
  Accounts receivable, net of allowance for doubtful
     accounts of $1,728.....................................         15,108
  Prepaid expenses and other................................          2,519
                                                                 ----------
     Total current assets...................................         27,200
                                                                 ----------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment.............................        716,242
  Franchises, net of accumulated amortization of $5,253.....      3,590,054
                                                                 ----------
                                                                  4,306,296
                                                                 ----------
OTHER ASSETS................................................          2,031
                                                                 ----------
                                                                 $4,335,527
                                                                 ==========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt......................     $   10,450
  Accounts payable and accrued expenses.....................        127,586
  Payables to manager of cable television systems -- related
     party..................................................          4,334
                                                                 ----------
     Total current liabilities..............................        142,370
                                                                 ----------
LONG-TERM DEBT..............................................      1,991,756
                                                                 ----------
DEFERRED MANAGEMENT FEES -- RELATED PARTY...................         15,561
                                                                 ----------
OTHER LONG-TERM LIABILITIES.................................         38,461
                                                                 ----------
MEMBERS' EQUITY -- 100 UNITS ISSUED AND OUTSTANDING.........      2,147,379
                                                                 ----------
                                                                 $4,335,527
                                                                 ==========
</TABLE>

 
The accompanying notes are an integral part of this consolidated statement.
                                      F-12

<PAGE>   260
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                               PERIOD FROM
                                                              DECEMBER 24,
                                                              1998, THROUGH
                                                              DECEMBER 31,
                                                                  1998
                                                              -------------
<S>                                                           <C>
REVENUES....................................................     $13,713
                                                                 -------
OPERATING EXPENSES:
  Operating costs...........................................       6,168
  General and administrative................................         966
  Depreciation and amortization.............................       8,318
  Stock option compensation expense.........................         845
  Corporate expense charges -- related party................         473
                                                                 -------
                                                                  16,770
                                                                 -------
     Loss from operations...................................      (3,057)
                                                                 -------
OTHER INCOME (EXPENSE):
  Interest income...........................................         133
  Interest expense..........................................      (2,353)
                                                                 -------
                                                                  (2,220)
                                                                 -------
     Net loss...............................................     $(5,277)
                                                                 =======
</TABLE>

 
The accompanying notes are an integral part of this consolidated statement.
                                      F-13

<PAGE>   261
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                               PERIOD FROM
                                                               DECEMBER 24,
                                                              1998, THROUGH
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
<S>                                                           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $   (5,277)
  Adjustments to reconcile net loss to net cash provided by
     operating activities --
     Depreciation and amortization..........................         8,318
     Stock option compensation expense......................           845
     Changes in assets and liabilities --
       Receivables, net.....................................        (8,753)
       Prepaid expenses and other...........................          (211)
       Accounts payable and accrued expenses................        10,227
       Payables to manager of cable television systems......           473
       Other operating activities...........................         2,022
                                                                ----------
          Net cash provided by operating activities.........         7,644
                                                                ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................       (13,672)
                                                                ----------
          Net cash used in investing activities.............       (13,672)
                                                                ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..............................        14,200
                                                                ----------
          Net cash provided by financing activities.........        14,200
                                                                ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................         8,172
CASH AND CASH EQUIVALENTS, beginning of period..............         1,401
                                                                ----------
CASH AND CASH EQUIVALENTS, end of period....................    $    9,573
                                                                ==========
CASH PAID FOR INTEREST......................................    $    5,538
                                                                ==========
NONCASH TRANSACTION -- Transfer of cable television
  operating subsidiaries from the parent company (see Note
  1)........................................................    $2,151,811
                                                                ==========
</TABLE>

 
The accompanying notes are an integral part of this consolidated statement.
                                      F-14

<PAGE>   262
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION AND BASIS OF PRESENTATION
 
     Charter Communications Holding Company, LLC (CCHC), a Delaware limited
liability company, was formed in 1999 as a wholly owned subsidiary of Charter
Investment, Inc. (Charter), formerly Charter Communications, Inc. Charter,
through its wholly owned cable television operating subsidiary, Charter
Communications Properties, LLC (CCP), commenced operations with the acquisition
of a cable television system on September 30, 1995.
 
     Effective December 23, 1998, through a series of transactions, Paul G.
Allen acquired approximately 94% of Charter for an aggregate purchase price of
$211 million, excluding $214 million in debt assumed (the "Paul Allen
Transaction"). In conjunction with the Paul Allen Transaction, Charter acquired
100% of the interests it did not already own in CharterComm Holdings, LLC
(CharterComm Holdings) and CCA Group (comprised of CCA Holdings Corp., CCT
Holdings Corp. and Charter Communications Long Beach, Inc.), all cable
television operating companies, for $2.0 billion, excluding $1.8 billion in debt
assumed from unrelated third parties for fair value. Charter previously managed
and owned minority interests in these companies. These acquisitions were
accounted for using the purchase method of accounting, and accordingly, results
of operations of CharterComm Holdings and CCA Group are included in the
financial statements from the date of acquisition. In February 1999, Charter
transferred all of its cable television operating subsidiaries to a wholly owned
subsidiary of Charter Communications Holdings, LLC (Charter Holdings), Charter
Communications Operating, LLC (Charter Operating). Charter Holdings is a wholly
owned subsidiary of CCHC. This transfer was accounted for as a reorganization of
entities under common control similar to a pooling of interests.
 
     As a result of the change in ownership of CCP, CharterComm Holdings and CCA
Group, CCHC has applied push-down accounting in the preparation of the
consolidated financial statements. Accordingly, CCHC increased its members'
equity by $2.2 billion to reflect the amounts paid by Paul G. Allen and Charter.
The purchase price was allocated to assets acquired and liabilities assumed
based on their relative fair values, including amounts assigned to franchises of
$3.6 billion. The allocation of the purchase price is based, in part, on
preliminary information which is subject to adjustment upon obtaining complete
valuation information of intangible assets. The valuation information is
expected to be finalized in the third quarter of 1999. Management believes that
finalization of the purchase price will not have a material impact on the
results of operations or financial position of CCHC.
 
     On April 23, 1998, Paul G. Allen and a company controlled by Paul G. Allen,
(the "Paul G. Allen Companies") purchased substantially all of the outstanding
partnership interests in Marcus Cable Company L.L.C. (Marcus Cable) for $1.4
billion, excluding $1.8 billion in assumed liabilities. The owner of the
remaining partnership interest retained voting control of Marcus Cable. In
February 1999, Marcus Cable Holdings, LLC (Marcus Holdings) was formed and Mr.
Allen's interests in Marcus Cable were transferred to Marcus Holdings on March
15, 1999. On March 31, 1999, Paul G. Allen purchased the remaining partnership
interests in Marcus Cable, including voting control. On April 7, 1999, Marcus
Holdings was merged into Charter Holdings and Marcus Cable was transferred to
Charter Holdings. For financial reporting purposes, the merger was accounted for
as an acquisition of Marcus Cable effective March 31, 1999, the date Paul G.
Allen obtained voting control of Marcus Cable. Accordingly, the results of
operations of Marcus Cable have not been included in the financial statements
for the period ended December 31, 1998.
 
                                      F-15

<PAGE>   263
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The consolidated financial statements of CCHC include the accounts of
Charter Operating and CCP and the accounts of CharterComm Holdings and CCA Group
and their subsidiaries since December 23, 1998 (date acquired by Charter) and
are collectively referred to as the "Company" herein. All subsidiaries are
wholly owned. All material intercompany transactions and balances have been
eliminated. The Company derives its primary source of revenues by providing
various levels of cable television programming and services to residential and
business customers. As of December 31, 1998, the Company provided cable
television services to customers in 20 states in the U.S.
 
     The consolidated financial statements of CCHC for periods prior to December
24, 1998, are not presented herein since, as a result of the Paul Allen
Transaction and the application of push down accounting, the financial
information as of December 31, 1998, and for the period from December 24, 1998,
through December 31, 1998, is presented on a different cost basis than the
financial information as of December 31, 1997, and for the periods prior to
December 24, 1998. Such information is not comparable.
 
CASH EQUIVALENTS
 
     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1998,
cash equivalents consist primarily of repurchase agreements. These investments
are carried at cost that approximates market value.
 
PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installations. The costs of disconnecting a customer are charged to expense in
the period incurred. Expenditures for repairs and maintenance are charged to
expense as incurred, and equipment replacement and betterments are capitalized.
 
     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:
 

<TABLE>
<S>                                                             <C>
Cable distribution systems..................................    3-15 years
Buildings and leasehold improvements........................    5-15 years
Vehicles and equipment......................................     3-5 years
</TABLE>

 
FRANCHISES
 
     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable television systems represent management's
estimate of fair value and are generally amortized using the straight-line
method over a period of 15 years. The period of 15 years is management's best
estimate of the useful lives of the franchises and assumes substantially all of
those franchises that expire during the period will be renewed by the Company.
 
IMPAIRMENT OF ASSETS
 
     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable
 
                                      F-16

<PAGE>   264
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
based on projected undiscounted cash flows related to the asset over its
remaining life, the carrying value of such asset is reduced to its estimated
fair value.
 
REVENUES
 
     Cable television revenues from basic and premium services are recognized
when the related services are provided.
 
     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of December 31, 1998, no installation revenue has
been deferred, as direct selling costs have exceeded installation revenue.
 
     Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts. Local governmental
authorities impose franchise fees on the Company ranging up to a federally
mandated maximum of 5.0% of gross revenues. On a monthly basis, such fees are
collected from the Company's customers and are periodically remitted to local
franchises. Franchise fees collected and paid are reported as revenues.
 
INTEREST RATE HEDGE AGREEMENTS
 
     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain debt agreements. Interest rate swaps,
caps and collars are accounted for as hedges of debt obligations, and
accordingly, the net settlement amounts are recorded as adjustments to interest
expense in the period incurred. Premiums paid for interest rate caps are
deferred, included in other assets, and are amortized over the original term of
the interest rate agreement as an adjustment to interest expense.
 
     The Company's interest rate swap agreements require the Company to pay a
fixed rate and receive a floating rate thereby creating fixed rate debt.
Interest rate caps and collars are entered into by the Company to reduce the
impact of rising interest rates on floating rate debt.
 
     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designed for hedging purposes and
are not held or issued for speculative purposes.
 
INCOME TAXES
 
     Income taxes are the responsibility of the individual members or partners
and are not provided for in the accompanying consolidated financial statements.
In addition, certain subsidiaries are corporations subject to income taxes but
have no operations and, therefore, no material income tax liabilities or assets.
 
SEGMENTS
 
     In 1998, the Company adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information." Segments have been identified based upon
management responsibility. The Company operates in one segment, cable services.
 
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 reported
                                      F-17

<PAGE>   265
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
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. Actual results could differ
from those estimates.
 
2.  PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
 
     In addition to the acquisitions by Charter of CharterComm Holdings and CCA
Group, the Company acquired cable television systems for an aggregate purchase
price, net of cash acquired, of $291,800 and $342,100 in 1998 and 1997,
respectively, all prior to December 24, 1998. The Company also refinanced
substantially all of its long-term debt in March 1999 (see Note 12).
 
     Unaudited pro forma operating results as though the acquisitions and
refinancing discussed above, including the Paul Allen Transaction, had occurred
on January 1, 1997, with adjustments to give effect to amortization of
franchises, interest expense and certain other adjustments are as follows:
 

<TABLE>
<CAPTION>
                                                                   YEAR ENDED
                                                                  DECEMBER 31
                                                             ----------------------
                                                               1998         1997
                                                             ---------    ---------
<S>                                                          <C>          <C>
Revenues...................................................  $ 601,953    $ 550,259
Loss from operations.......................................    (90,346)    (129,009)
Net loss...................................................   (294,598)    (329,323)
</TABLE>

 
     The unaudited pro forma financial information has been presented for
comparative purposes and does not purport to be indicative of the results of
operations or financial position of the Company had these transactions been
completed as of the assumed date or which may be obtained in the future.
 
3.  MEMBERS' EQUITY:
 
     For the period from December 24, 1998, through December 31, 1998, members'
equity consisted of the following:
 

<TABLE>
<S>                                                           <C>
Balance, December 24, 1998..................................  $2,151,811
Net loss....................................................      (5,277)
Stock option compensation...................................         845
                                                              ----------
Balance, December 31, 1998..................................  $2,147,379
                                                              ==========
</TABLE>

 
                                      F-18

<PAGE>   266
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4.  PROPERTY, PLANT AND EQUIPMENT:
 
     Property, plant and equipment consists of the following at December 31,
1998:
 

<TABLE>
<S>                                                           <C>
Cable distribution systems..................................  $  661,749
Land, buildings and leasehold improvements..................      26,670
Vehicles and equipment......................................      30,590
                                                              ----------
                                                                 719,009
Less -- Accumulated depreciation............................      (2,767)
                                                              ----------
                                                              $  716,242
                                                              ==========
</TABLE>

 
     For the period from December 24, 1998, through December 31, 1998,
depreciation expense was $2,767.
 
5.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
 
     Accounts payable and accrued expenses consist of the following at December
31, 1998:
 

<TABLE>
<S>                                                           <C>
Accrued interest............................................  $ 30,809
Franchise fees..............................................    12,534
Programming costs...........................................    11,856
Capital expenditures........................................    15,560
Accrued income taxes........................................    15,205
Accounts payable............................................     7,439
Other accrued liabilities...................................    34,183
                                                              --------
                                                              $127,586
                                                              ========
</TABLE>

 
6.  LONG-TERM DEBT:
 
     Long-term debt consists of the following at December 31, 1998:
 

<TABLE>
<S>                                                           <C>
Credit Agreements (including CCP, CCA Group and CharterComm
  Holdings).................................................  $1,726,500
Senior Secured Discount Debentures..........................     109,152
11 1/4% Senior Notes........................................     125,000
Current maturities..........................................     (10,450)
Unamortized net premium.....................................      41,554
                                                              ----------
                                                              $1,991,756
                                                              ==========
</TABLE>

 
CCP CREDIT AGREEMENT
 
     CCP maintains a credit agreement (the "CCP Credit Agreement"), which
provides for two term loan facilities, one with the principal amount of $60,000
that matures on June 30, 2006, and the other with the principal amount of
$80,000 that matures on June 30, 2007. The CCP Credit Agreement also provides
for a $90,000 revolving credit facility with a maturity date of June 30, 2006.
Amounts under the CCP Credit Agreement bear interest at the LIBOR Rate or Base
Rate,
                                      F-19

<PAGE>   267
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
as defined, plus a margin up to 2.88%. The variable interest rates ranged from
7.44% to 8.19% at December 31, 1998.
 
CC-I, CC-II COMBINED CREDIT AGREEMENT
 
     Charter Communications, LLC and Charter Communications II, LLC,
subsidiaries of CharterComm Holdings, maintains a combined credit agreement (the
"Combined Credit Agreement"), which provides for two term loan facilities, one
with the principal amount of $200,000 that matures on June 30, 2007, and the
other with the principal amount of $150,000 that matures on December 31, 2007.
The Combined Credit Agreement also provides for a $290,000 revolving credit
facility, with a maturity date of June 30, 2007. Amounts under the Combined
Credit Agreement bear interest at the LIBOR Rate or Base Rate, as defined, plus
a margin up to 2.0%. The variable interest rates ranged from 6.69% to 7.31% at
December 31, 1998. A quarterly commitment fee of between 0.25% and 0.375% per
annum is payable on the unborrowed balance of the revolving credit facility.
 
CHARTERCOMM HOLDINGS -- SENIOR SECURED DISCOUNT DEBENTURES
 
     CharterComm Holdings issued $146,820 of Senior Secured Discount Debentures
(the "Debentures") for proceeds of $75,000. The Debentures are effectively
subordinated to the claims and creditors of CharterComm Holdings' subsidiaries,
including the lenders under the Combined Credit Agreement. The Debentures are
redeemable at the Company's option at amounts decreasing from 107% to 100% of
principal, plus accrued and unpaid interest to the redemption date, beginning on
March 15, 2001. The issuer is required to make an offer to purchase all of the
Debentures, at a purchase price equal to 101% of the principal amount, together
with accrued and unpaid interest, upon a Change in Control, as defined in the
Debentures Indenture. No interest is payable on the Debentures prior to March
15, 2001. Thereafter, interest on the Debentures is payable semiannually in
arrears beginning September 15, 2001, until maturity on March 15, 2007.
 
CHARTERCOMM HOLDINGS -- 11 1/4% SENIOR NOTES
 
     CharterComm Holdings issued $125,000 aggregate principal amount of 11 1/4%
Senior Notes (the "11 1/4% Notes"). The Notes are effectively subordinated to
the claims of creditors of CharterComm Holdings' subsidiaries, including the
lenders under the Combined Credit Agreements. The 11 1/4% Notes are redeemable
at the Company's option at amounts decreasing from 106% to 100% of principal,
plus accrued and unpaid interest to the date of redemption, beginning on March
15, 2001. The issuer is required to make an offer to purchase all of the 11 1/4%
Notes, at a purchase price equal to 101% of the principal amount, together with
accrued and unpaid interest, upon a Change in Control, as defined in the 11 1/4%
Notes indenture. Interest is payable semiannually on March 15 and September 15
until maturity on March 15, 2006.
 
     As of December 24, 1998, the Debentures and 11 1/4% Notes were recorded at
their estimated fair values resulting in an increase in the carrying values of
the debt and an unamortized net premium as of December 31, 1998. The premium
will be amortized to interest expense over the estimated remaining lives of the
debt using the interest method. As of December 31, 1998, the effective interest
rates on the Debentures and 11 1/4% Notes were 10.7% and 9.6%, respectively.
 
CCE-I CREDIT AGREEMENT
 
     Charter Communications Entertainment I LLC, a subsidiary of CCA Group,
maintains a credit agreement (the "CCE-I Credit Agreement"), which provides for
a $280,000 term loan that
                                      F-20

<PAGE>   268
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
matures on September 30, 2006, and $85,000 fund loan that matures on March 31,
2007, and a $175,000 revolving credit facility with a maturity date of September
30, 2006. Amounts under the CCE-I Credit Agreement bear interest at either the
LIBOR Rate or Base Rate, as defined, plus a margin up to 2.75%. The variable
interest rates ranged from 6.88% to 8.06% at December 31, 1998. A quarterly
commitment fee of between 0.375% and 0.5% per annum is payable on the unborrowed
balance of the revolving credit facility.
 
CCE-II COMBINED CREDIT AGREEMENT
 
     Charter Communications Entertainment II, LLC and Long Beach LLC,
subsidiaries of CCA Group, maintain a credit agreement (the "CCE-II Combined
Credit Agreement"), which provides for two term loan facilities, one with the
principal amount of $100,000 that matures on March 31, 2005, and the other with
the principal amount of $90,000 that matures on March 31, 2006. The CCE-II
Combined Credit Agreement also provides for a $185,000 revolving credit
facility, with a maturity date of March 31, 2005. Amounts under the CCE-II
Combined Credit Agreement bear interest at either the LIBOR Rate or Base Rate,
as defined, plus a margin up to 2.5%. The variable rates ranged from 6.56% to
7.59% at December 31, 1998. A quarterly commitment fee of between 0.25% and
0.375% per annum is payable on the unborrowed balance of the revolving credit
facility.
 
CCE CREDIT AGREEMENT
 
     Charter Communications Entertainment, LLC, a subsidiary of CCA Group,
maintains a credit agreement (the "CCE Credit Agreement") which provides for a
term loan facility with the principal amount of $130,000 that matures on
September 30, 2007. Amounts under the CCE Credit Agreement bear interest at the
LIBOR Rate or Base Rate, as defined, plus a margin up to 3.25%. The variable
interest rate at December 31, 1998, was 8.62%.
 
CCE-II HOLDINGS CREDIT AGREEMENT
 
     CCE-II Holdings, LLC, a subsidiary of CCA Group, entered into a credit
agreement (the "CCE-II Holdings Credit Agreement"), which provides for a term
loan facility with the principal amount of $95,000 that matures on September 30,
2006. Amounts under the CCE-II Holdings Credit Agreement bear interest at either
the LIBOR Rate or Base Rate, as defined, plus a margin up to 3.25%. The variable
rate at December 31, 1998, was 8.56%.
 
     Based upon outstanding indebtedness at December 31, 1998, and the
amortization of term and fund loans, and scheduled reductions in available
borrowings of the revolving credit facilities, aggregate future principal
payments on the total borrowings under all debt agreements at December 31, 1998,
are as follows:
 

<TABLE>
<CAPTION>
YEAR                                                            AMOUNT
----                                                          ----------
<S>                                                           <C>
1999........................................................  $   10,450
2000........................................................      21,495
2001........................................................      42,700
2002........................................................     113,588
2003........................................................     157,250
Thereafter..................................................   1,652,837
                                                              ----------
                                                              $1,998,320
                                                              ==========
</TABLE>

 
                                      F-21

<PAGE>   269
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7.  FAIR VALUE OF FINANCIAL INSTRUMENTS:
 
     A summary of debt and the related interest rate hedge agreements at
December 31, 1998, is as follows:
 

<TABLE>
<CAPTION>
                                                      CARRYING      NOTIONAL        FAIR
DEBT                                                   VALUE         AMOUNT        VALUE
----                                                 ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>
Credit Agreements (including CCP, CCA Group and
  CharterComm Holdings)............................  $1,726,500    $       --    $1,726,500
Senior Secured Discount Debentures.................     138,102            --       138,102
11 1/4% Senior Notes...............................     137,604            --       137,604
INTEREST RATE HEDGE AGREEMENTS
Swaps..............................................     (23,216)    1,105,000       (23,216)
Caps...............................................          --        15,000            --
Collars............................................      (4,174)      310,000        (4,174)
</TABLE>

 
     As the long-term debt under the credit agreements bears interest at current
market rates, their carrying amount approximates market value at December 31,
1998. The fair values of the 11 1/4% Notes and the Debentures are based on
quoted market prices.
 
     The weighted average interest pay rate for the Company's interest rate swap
agreements was 7.66% at December 31, 1998. The weighted average interest rate
for the Company's interest rate cap agreements was 8.55% at December 31, 1998.
The weighted average interest rates for the Company's interest rate collar
agreements were 8.61% and 7.31% for the cap and floor components, respectively,
at December 31, 1998.
 
     The notional amounts of interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of interest rate hedge agreements. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.
 
     The fair value of interest rate hedge agreements generally reflects the
estimated amounts that the Company would receive or pay (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Company's interest rate hedge agreements.
 
     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. In addition, some
of the interest rate hedge agreements are with certain of the participating
banks under the Company's credit facilities, thereby reducing the exposure to
credit loss. The Company has policies regarding the financial stability and
credit standing of major counterparties. Nonperformance by the counterparties is
not anticipated nor would it have a material adverse effect on the Company's
consolidated financial position or results of operations.
 
8.  RELATED-PARTY TRANSACTIONS:
 
     Charter provides management services to the Company including centralized
customer billing services, data processing and related support, benefits
administration and coordination of insurance coverage and self-insurance
programs for medical, dental and workers' compensation claims. Certain costs for
services are billed and charged directly to the Company's operating subsidiaries
and are included in operating costs. These billings are determined based on the
number of basic customers. Such costs totaled $128 for the period from December
24, 1998,
 
                                      F-22

<PAGE>   270
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
through December 31, 1998. All other costs incurred by Charter on behalf of the
Company are recorded as expenses in the accompanying consolidated financial
statements and are included in corporate expense charges -- related party.
Management believes that costs incurred by Charter on the Company's behalf and
included in the accompanying financial statements are not materially different
than costs the Company would have incurred as a stand alone entity.
 
     Charter utilizes a combination of excess insurance coverage and
self-insurance programs for its medical, dental and workers' compensation
claims. Charges are made to the Company as determined by independent actuaries
at the present value of the actuarially computed present and future liabilities
for such benefits. Medical coverage provides for $2,435 aggregate stop loss
protection and a loss limitation of $100 per person per year. Workers'
compensation coverage provides for $800 aggregate stop loss protection and a
loss limitation of $150 per person per year.
 
     The Company is charged a management fee based on percentages of revenues or
a flat fee plus additional fees based on percentages of operating cash flows, as
stipulated in the management agreements between Charter and the operating
subsidiaries. To the extent management fees charged to the Company are greater
(less) than the corporate expenses incurred by Charter, the Company will record
distributions to (capital contributions from) Charter. For the period from
December 24, 1998, through December 31, 1998, the management fee charged to the
Company approximated the corporate expenses incurred by Charter on behalf of the
Company. As of December 31, 1998, management fees currently payable of $473 are
included in payables to manager of cable television systems-related party.
Beginning in 1999, the management fee will be based on 3.5% of revenues as
permitted by the new debt agreements of the Company (see Note 13).
 
     Charter, Paul G. Allen and certain affiliates of Mr. Allen own equity
interests or warrants to purchase equity interests in various entities which
provide services or programming to the Company, including High Speed Access
Corp. (High Speed Access), WorldGate Communications, Inc. (WorldGate), Wink
Communications, Inc. (Wink), ZDTV, USA Networks, Inc. (USA Networks) and Oxygen
Media Inc. (Oxygen Media). In addition, certain officers or directors of the
Company also serve as directors of High Speed Access and USA Networks. The
Company and its affiliates do not hold controlling interests in any of these
companies.
 
     Certain of the Company's cable television subscribers receive cable
modem-based internet access through High Speed Access and TV-based internet
access through WorldGate. For the period from December 24, 1998, through
December 31, 1998, revenues attributable to these services were less than 1% of
total revenues.
 
     The Company receives or will receive programming and certain interactive
features embedded into the programming for broadcast via its cable television
systems from Wink, ZDTV, USA Networks and Oxygen Media. The Company pays a fee
for the programming service generally based on the number of subscribers
receiving the service. Such fees for the period from December 24, 1998, through
December 31, 1998, were less than 1% of total operating costs. In addition, the
Company receives commissions from USA Networks for home shopping sales generated
by its customers. Such revenues for the period from December 24, 1998, through
December 31, 1998, were less than 1% of total revenues.
 
                                      F-23

<PAGE>   271
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9.  COMMITMENTS AND CONTINGENCIES:
 
LEASES
 
     The Company leases certain facilities and equipment under noncancelable
operating leases. Leases and rental costs charged to expense for the period from
December 24, 1998, through December 31, 1998, were $70. Future minimum lease
payments are as follows:
 

<TABLE>
<S>                                                           <C>
1999........................................................  $2,843
2000........................................................   2,034
2001........................................................   1,601
2002........................................................     626
2003........................................................     366
Thereafter..................................................   1,698
</TABLE>

 
     The Company also rents utility poles in its operations. Generally, pole
rentals are cancelable on short notice, but the Company anticipates that such
rentals will recur. Rent expense incurred for pole rental attachments for the
period from December 24, 1998, through December 31, 1998, was $137.
 
LITIGATION
 
     The Company is a party to lawsuits that arose in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.
 
REGULATION IN THE CABLE TELEVISION INDUSTRY
 
     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.
 
     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.
 
     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 31,
1998, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.
 
     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in
 
                                      F-24

<PAGE>   272
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
jurisdictions that have chosen not to certify, refunds covering the previous
twelve-month period may be ordered upon certification if the Company is unable
to justify its basic rates. The Company is unable to estimate at this time the
amount of refunds, if any, that may be payable by the Company in the event
certain of its rates are successfully challenged by franchising authorities or
found to be unreasonable by the FCC. The Company does not believe that the
amount of any such refunds would have a material adverse effect on the
consolidated financial position or results of operations of the Company.
 
     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's consolidated financial position or results of operations.
 
     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.
 
     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation. The Company is subject to state regulation in
Connecticut.
 
10.  EMPLOYEE BENEFIT PLANS:
 
     The Company's employees may participate in 401(k) plans (the "401(k)
Plans"). 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 made contributions to
the 401(k) Plans totaling $20 for the period from December 24, 1998, through
December 31, 1998.
 
11.  ACCOUNTING STANDARD NOT YET IMPLEMENTED:
 
     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS No.
133 is effective for fiscal years beginning after June 15, 1999. The Company has
not yet quantified the impacts of adopting SFAS No. 133 on its consolidated
financial statements nor has it determined the timing or method of its adoption
of SFAS No. 133. However, SFAS No. 133 could increase volatility in earnings
(loss).
 
                                      F-25

<PAGE>   273
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  PARENT COMPANY ONLY FINANCIAL STATEMENTS
 
     As a result of the limitations on and prohibitions of distributions,
substantially all of the net assets of the consolidated subsidiaries are
restricted for distribution to CCHC, the parent company. CCHC (parent company
only) financial statements are presented below.
 
       CHARTER COMMUNICATIONS HOLDING COMPANY, LLC (PARENT COMPANY ONLY)
 
                                 BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1998
                                                              -----------------
<S>                                                           <C>
ASSETS
INVESTMENT IN CHARTER HOLDINGS..............................     $2,147,379
                                                                 ==========
MEMBERS' EQUITY
MEMBERS' EQUITY.............................................     $2,147,379
                                                                 ==========
</TABLE>

 
       CHARTER COMMUNICATIONS HOLDING COMPANY, LLC (PARENT COMPANY ONLY)
 
                            STATEMENT OF OPERATIONS
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                 PERIOD FROM
                                                              DECEMBER 24, 1998,
                                                                   THROUGH
                                                              DECEMBER 31, 1998
                                                              ------------------
<S>                                                           <C>
EQUITY IN LOSS OF CHARTER HOLDINGS..........................      $   (5,277)
                                                                  ==========
  Net loss..................................................      $   (5,277)
                                                                  ==========
</TABLE>

 
       CHARTER COMMUNICATIONS HOLDING COMPANY, LLC (PARENT COMPANY ONLY)
 
                          STATEMENT OF MEMBERS' EQUITY
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<S>                                                           <C>
Balance, December 24, 1998..................................     $2,151,811
Net loss....................................................         (5,277)
Stock option compensation...................................            845
                                                                 ----------
Balance, December 31, 1998..................................     $2,147,379
                                                                 ==========
</TABLE>

 
     The investment in Charter Holdings is accounted for on the equity method.
No statement of cash flows has been presented as CCHC (parent company only) had
no cash flow activity.
 
13.  SUBSEQUENT EVENTS:
 
     Through April 19, 1999, the Company has entered into definitive agreements
to purchase eight cable television companies, including a swap of cable
television systems, for approximately $4.6 billion. The swap of cable television
systems will be recorded at the fair value of the systems exchanged. The
acquisitions are expected to close no later than March 31, 2000. The
acquisitions will be accounted for using the purchase method of accounting, and
accordingly,
 
                                      F-26

<PAGE>   274
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
results of operations of the acquired businesses will be included in the
financial statements from the dates of acquisitions.
 
     In March 1999, concurrent with the issuance of $600.0 million 8.250% Senior
Notes due 2007, $1.5 billion 8.625% Senior Notes due 2009 and $1.475 billion
9.920% Senior Discount Notes due 2011 (collectively, the "CCH Notes"), the
Company extinguished substantially all long-term debt, excluding borrowings of
the Company under its credit agreements, and refinanced substantially all
existing credit agreements at various subsidiaries with a new credit agreement
(the "CCO Credit Agreement") entered into by Charter Operating. The Company
expects to record an extraordinary loss of approximately $8 million in
conjunction with the extinguishment of substantially all long-term debt and the
refinancing of its credit agreements.
 
     The CCO Credit Agreement provides for two term facilities, one with a
principal amount of $1.0 billion that matures September 2008 (Term A), and the
other with the principal amount of $1.85 billion that matures on March 2009
(Term B). The CCO Credit Agreement also provides for a $1.25 billion revolving
credit facility with a maturity date of September 2008. Amounts under the CCO
Credit Agreement bear interest at the Base Rate or the Eurodollar rate, as
defined, plus a margin up to 2.75%. A quarterly commitment fee of between 0.25%
and 0.375% per annum is payable on the unborrowed balance of Term A and the
revolving credit facility. On March 17, 1999, the Company borrowed $1.75 billion
under Term B and invested the excess cash of $1.0 billion in short-term
investments.
 
     Charter Communications Holdings Capital Corporation is a co-issuer of the
CCH Notes and is a wholly owned finance subsidiary of Charter Holdings with no
independent assets or operations.
 
     In accordance with an employment agreement between Charter and the
President and Chief Executive Officer of Charter and a related option agreement
between CCHC and the President and Chief Executive Officer of Charter, 7,044,127
options to purchase 3% of the net equity value of CCHC were issued to the
President and Chief Executive Officer of Charter. The options vest over a four
year period from the date of grant and expire ten years from the date of grant.
 
     In February 1999, the Company adopted an option plan providing for the
grant of options to purchase up to an 10% of the aggregate equity value of the
subsidiaries of CCHC as of February 1999. The option plan provides for grants of
options to employees, and consultants of CCHC and its affiliates and consultants
who provide services to CCHC. Options granted vest over five years from the date
of grant. However, if there has not been a public offering of the equity
interests of CCHC or an affiliate, vesting will occur only upon termination of
employment for any reason, other than for cause or disability. Options not
exercised accumulate and are exercisable, in whole or in part, in any subsequent
period, but not later than ten years from the date of grant.
 
     Following the completion of an initial public offering by Charter
Communications, Inc. membership units received upon exercise of the options will
be automatically exchanged for shares of Class A common stock of CCI on a
one-for-one basis. Options outstanding as of March 31, 1999, are as follows:
 

<TABLE>
<CAPTION>
                                     OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                        ----------------------------------------------  ----------------------
       EXERCISE               NUMBER OF           REMAINING CONTRACT          NUMBER OF
        PRICE                  OPTIONS             LIFE (IN YEARS)             OPTIONS
----------------------  ----------------------  ----------------------  ----------------------
<S>                     <C>                     <C>                     <C>
        $20.00                16,095,008                 9.8                  1,761,032
</TABLE>

 
                                      F-27

<PAGE>   275
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" to account for the option plans. Stock option
compensation expense of $845 has been recorded in the financial statements since
the exercise price is less than the estimated fair value of the underlying
membership interests on the date of grant. Estimated fair value was determined
by the Company using the valuation inherent in the Paul Allen Transaction and
valuations of public companies in the cable television industry adjusted for
factors specific to the Company. Compensation expense is being accrued over the
vesting period of each grant that varies from four to five years. As of March
31, 1999, deferred compensation remaining to be recognized in future periods
totalled $143 million. Had compensation expense for the option plans been
determined based on the fair value at the grant dates under the provisions of
SFAS No. 123, the Company's net loss would have been $5.5 million for the period
from December 24, 1998, through December 31, 1998. The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: no dividend yield, expected volatility of
44.00%, risk free rate of 5.00%, and expected option lives of 10 years.
 
                                      F-28

<PAGE>   276
 
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Charter Communications Holding Company, LLC:
 
     We have audited the accompanying consolidated balance sheet of Charter
Communications Holding Company, LLC and subsidiaries as of December 31, 1997,
and the related consolidated statements of operations, shareholder's investment
and cash flows for the period from January 1, 1998, through December 23, 1998,
and for the years ended December 31, 1997 and 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Charter Communications
Holding Company, LLC and subsidiaries as of December 31, 1997, and the results
of their operations and their cash flows for the period from January 1, 1998,
through December 23, 1998, and for the years ended December 31, 1997 and 1996,
in conformity with generally accepted accounting principles.
 
/s/ ARTHUR ANDERSEN LLP
 
St. Louis, Missouri,
  February 5, 1999

 
                                      F-29

<PAGE>   277
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                           CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1997
                                                              ------------
<S>                                                           <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $   626
  Accounts receivable, net of allowance for doubtful
     accounts of $52........................................        579
  Prepaid expenses and other................................         32
                                                                -------
     Total current assets...................................      1,237
                                                                -------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment.............................     25,530
  Franchises, net of accumulated amortization of $3,829.....     28,195
                                                                -------
                                                                 53,725
                                                                -------
OTHER ASSETS................................................        849
                                                                -------
                                                                $55,811
                                                                =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
CURRENT LIABILITIES:
  Accounts payable and accrued expenses.....................    $ 3,082
  Payables to manager of cable television systems -- related
     party..................................................        114
                                                                -------
     Total current liabilities..............................      3,196
                                                                -------
LONG-TERM DEBT..............................................     41,500
                                                                -------
NOTE PAYABLE TO RELATED PARTY, including accrued interest...     13,090
                                                                -------
SHAREHOLDER'S INVESTMENT:
  Common stock, $.01 par value, 100 shares authorized, one
     issued and outstanding.................................         --
  Paid-in capital...........................................      5,900
  Accumulated deficit.......................................     (7,875)
                                                                -------
     Total shareholder's investment.........................     (1,975)
                                                                -------
                                                                $55,811
                                                                =======
</TABLE>

 
The accompanying notes are an integral part of these consolidated statements.
 
                                      F-30

<PAGE>   278
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                            PERIOD FROM
                                                            JANUARY 1,         YEAR ENDED
                                                           1998, THROUGH      DECEMBER 31
                                                           DECEMBER 23,    ------------------
                                                               1998         1997       1996
                                                           -------------   -------    -------
<S>                                                        <C>             <C>        <C>
REVENUES.................................................    $ 49,731      $18,867    $14,881
                                                             --------      -------    -------
OPERATING EXPENSES:
  Operating costs........................................      18,751        9,157      5,888
  General and administrative.............................       7,201        2,610      2,235
  Depreciation and amortization..........................      16,864        6,103      4,593
  Corporate expense allocation -- related party..........       6,176          566        446
                                                             --------      -------    -------
                                                               48,992       18,436     13,162
                                                             --------      -------    -------
     Income from operations..............................         739          431      1,719
                                                             --------      -------    -------
OTHER INCOME (EXPENSE):
  Interest income........................................          44           41         20
  Interest expense.......................................     (17,277)      (5,120)    (4,415)
  Other, net.............................................        (728)          25        (47)
                                                             --------      -------    -------
                                                              (17,961)      (5,054)    (4,442)
                                                             --------      -------    -------
     Net loss............................................    $(17,222)     $(4,623)   $(2,723)
                                                             ========      =======    =======
</TABLE>

 
The accompanying notes are an integral part of these consolidated statements.
 
                                      F-31

<PAGE>   279
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
              CONSOLIDATED STATEMENTS OF SHAREHOLDER'S INVESTMENT
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                             COMMON    PAID-IN    ACCUMULATED
                                             STOCK     CAPITAL      DEFICIT       TOTAL
                                             ------    -------    -----------    --------
<S>                                          <C>       <C>        <C>            <C>
BALANCE, December 31, 1995.................    $--     $ 1,500     $   (529)     $    971
  Capital contributions....................    --        4,400           --         4,400
  Net loss.................................    --           --       (2,723)       (2,723)
                                               --      -------     --------      --------
BALANCE, December 31, 1996.................    --        5,900       (3,252)        2,648
  Net loss.................................    --           --       (4,623)       (4,623)
                                               --      -------     --------      --------
BALANCE, December 31, 1997.................    --        5,900       (7,875)       (1,975)
  Capital contributions....................    --       10,800           --        10,800
  Net loss.................................    --           --      (17,222)      (17,222)
                                               --      -------     --------      --------
BALANCE, December 23, 1998.................    $--     $16,700     $(25,097)     $ (8,397)
                                               ==      =======     ========      ========
</TABLE>

 
The accompanying notes are an integral part of these consolidated statements.
 
                                      F-32

<PAGE>   280
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                               PERIOD FROM
                                                               JANUARY 1,          YEAR ENDED
                                                              1998, THROUGH        DECEMBER 31
                                                              DECEMBER 23,     -------------------
                                                                  1998          1997        1996
                                                              -------------    -------    --------
<S>                                                           <C>              <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................    $ (17,222)     $(4,623)   $ (2,723)
  Adjustments to reconcile net loss to net cash provided by
    operating activities --
    Depreciation and amortization...........................       16,864        6,103       4,593
    Loss on sale of cable television system.................           --        1,363          --
    Amortization of debt issuance costs, debt discount and
      interest rate cap agreements..........................          267          123          --
    (Gain) loss on disposal of property, plant and
      equipment.............................................          (14)         130          --
    Changes in assets and liabilities, net of effects from
      acquisitions --
      Receivables, net......................................           10         (227)          6
      Prepaid expenses and other............................         (125)          18         312
      Accounts payable and accrued expenses.................       16,927          894       3,615
      Payables to manager of cable television systems.......        5,288         (153)        160
      Other operating activities............................          569           --          --
                                                                ---------      -------    --------
      Net cash provided by operating activities.............       22,564        3,628       5,963
                                                                ---------      -------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment................      (15,364)      (7,880)     (5,894)
  Payments for acquisitions, net of cash acquired...........     (167,484)          --     (34,069)
  Proceeds from sale of cable television system.............           --       12,528          --
  Other investing activities................................         (486)          --          64
                                                                ---------      -------    --------
      Net cash provided by (used in) investing activities...     (183,334)       4,648     (39,899)
                                                                ---------      -------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt..............................      217,500        5,100      31,375
  Repayments of long-term debt..............................      (60,200)     (13,375)     (1,000)
  Capital contributions.....................................        7,000           --       4,400
  Payment of debt issuance costs............................       (3,487)         (12)       (638)
                                                                ---------      -------    --------
      Net cash provided by (used in) financing activities...      160,813       (8,287)     34,137
                                                                ---------      -------    --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........           43          (11)        201
CASH AND CASH EQUIVALENTS, beginning of period..............          626          637         436
                                                                ---------      -------    --------
CASH AND CASH EQUIVALENTS, end of period....................    $     669      $   626    $    637
                                                                =========      =======    ========
CASH PAID FOR INTEREST......................................    $   7,679      $ 3,303    $  2,798
                                                                =========      =======    ========
</TABLE>

 
The accompanying notes are an integral part of these consolidated statements.
 
                                      F-33

<PAGE>   281
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
ORGANIZATION AND BASIS OF PRESENTATION
 
     Charter Communications Holding Company, LLC (CCHC), a Delaware limited
liability company, was formed in 1999 as a wholly owned subsidiary of Charter
Investment, Inc. (Charter), formerly Charter Communications, Inc. Charter,
through its wholly owned cable television operating subsidiary, Charter
Communications Properties, LLC (CCP), commenced operations with the acquisition
of a cable television system on September 30, 1995.
 
     Effective December 23, 1998, through a series of transactions, Paul G.
Allen acquired approximately 94% of Charter for an aggregate purchase price of
$211 million, excluding $214 million in debt assumed (the "Paul Allen
Transaction"). In conjunction with the Paul Allen Transaction, Charter acquired
100% of the interest it did not already own in CharterComm Holdings, LLC
(CharterComm Holdings) and CCA Group (comprised of CCA Holdings Corp., CCT
Holdings Corp. and Charter Communications Long Beach Inc.), all cable television
operating companies, for $2.0 billion, excluding $1.8 billion in debt assumed
from unrelated third parties for fair value. Charter previously managed and
owned minority interests in these companies. These acquisitions were accounted
for using the purchase method of accounting, and accordingly results of
operations of CarterComm Holdings and CCA Group are included in the financial
statements of Charter Holdings from the date of acquisition. In February 1999,
Charter transferred all of its cable television operating subsidiaries to a
wholly owned subsidiary of Charter Communications Holdings, LLC (Charter
Holdings), Charter Communications Operating, LLC (Charter Operating). Charter
Holdings is a wholly owned subsidiary of CCHC. The transfer was accounted for as
a reorganization of entities under common control similar to a pooling of
interests.
 
     The accompanying financial statements include the accounts of CCP,
Charter's wholly owned cable operating subsidiary, representing the financial
statements of CCHC and subsidiaries (the Company) for all periods presented. The
accounts of CharterComm Holdings and CCA Group are not included since these
companies were not owned and controlled by Charter prior to December 23, 1998.
 
     As a result of the change in ownership of CCP, CharterComm Holdings and CCA
Group, the Company has applied push-down accounting in the preparation of the
consolidated financial statements effective December 23, 1998. Accordingly, the
financial statements of the Company for periods ended on or before December 23,
1998, are presented on a different cost basis than the financial statements for
the periods after December 23, 1998 (not presented herein), and are not
comparable.
 
CASH EQUIVALENTS
 
     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1997,
cash equivalents consist primarily of repurchase agreements. These investments
are carried at cost that approximates market value.
 
PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable television
transmission and distribution facilities, and the cost of new customer
installations. The costs of disconnecting a customer are charged
 
                                      F-34

<PAGE>   282
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
to expense in the period incurred. Expenditures for repairs and maintenance are
charged to expense as incurred, and equipment replacement and betterments are
capitalized.
 
     Depreciation is provided on the straight-line basis over the estimated
useful lives of the related assets as follows:
 

<TABLE>
<S>                                                             <C>
Cable distribution systems..................................    3-15 years
Buildings and leasehold improvements........................    5-15 years
Vehicles and equipment......................................     3-5 years
</TABLE>

 
     In 1997, the Company shortened the useful lives from 10 years to 5 years of
certain plant and equipment included in cable distribution systems associated
with costs of new customer installations. As a result, additional depreciation
of $550 was recorded during 1997. The estimated useful lives were shortened to
be more reflective of average customer lives.
 
FRANCHISES
 
     Costs incurred in obtaining and renewing cable franchises are deferred and
amortized over the lives of the franchises. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. Franchise rights
acquired through the purchase of cable television systems represent management's
estimate of fair value and are generally amortized using the straight-line
method over a period of 15 years. The period of 15 years is management's best
estimate of the useful lives of the franchises and assumes substantially all of
those franchises that expire during the period will be renewed by the Company.
 
IMPAIRMENT OF ASSETS
 
     If facts and circumstances suggest that a long-lived asset may be impaired,
the carrying value is reviewed. If a review indicates that the carrying value of
such asset is not recoverable based on projected undiscounted cash flows related
to the asset over its remaining life, the carrying value of such asset is
reduced to its estimated fair value.
 
REVENUES
 
     Cable television revenues from basic and premium services are recognized
when the related services are provided.
 
     Installation revenues are recognized to the extent of direct selling costs
incurred. The remainder, if any, is deferred and amortized to income over the
estimated average period that customers are expected to remain connected to the
cable television system. As of December 31, 1997, no installation revenue has
been deferred, as direct selling costs have exceeded installation revenue.
 
     Fees collected from programmers to guarantee carriage are deferred and
amortized to income over the life of the contracts. Local governmental
authorities impose franchise fees on the Company ranging up to a federally
mandated maximum of 5.0% of gross revenues. On a monthly basis, such fees are
collected from the Company's customers and are periodically remitted to local
franchises. Franchise fees collected and paid are reported as revenues.
 
                                      F-35

<PAGE>   283
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INTEREST RATE HEDGE AGREEMENTS
 
     The Company manages fluctuations in interest rates by using interest rate
hedge agreements, as required by certain debt agreements. Interest rate swaps,
caps and collars are accounted for as hedges of debt obligations, and
accordingly, the net settlement amounts are recorded as adjustments to interest
expense in the period incurred. Premiums paid for interest rate caps are
deferred, included in other assets, and are amortized over the original term of
the interest rate agreement as an adjustment to interest expense.
 
     The Company's interest rate swap agreements require the Company to pay a
fixed rate and receive a floating rate thereby creating fixed rate debt.
Interest rate caps and collars are entered into by the Company to reduce the
impact of rising interest rates on floating rate debt.
 
     The Company's participation in interest rate hedging transactions involves
instruments that have a close correlation with its debt, thereby managing its
risk. Interest rate hedge agreements have been designed for hedging purposes and
are not held or issued for speculative purposes.
 
INCOME TAXES
 
     The Company files a consolidated income tax return with Charter. Income
taxes are allocated to the Company in accordance with the tax-sharing agreement
between the Company and Charter.
 
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 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. Actual results could differ from those estimates.
 
2.  ACQUISITIONS:
 
     In 1998, the Company acquired cable television systems for an aggregate
purchase price, net of cash acquired, of $228,400, comprising $167,500 in cash
and $60,900 in a note payable to Seller. The excess of cost of properties
acquired over the amounts assigned to net tangible assets at the date of
acquisition was $207,600 and is included in franchises.
 
     In 1996, the Company acquired cable television systems for an aggregate
purchase price, net of cash acquired, of $34,100. The excess of the cost of
properties acquired over 2>the amounts assigned to net tangible assets at the
date of acquisition was $24,300 and is included in franchises.
 
     The above acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the dates of acquisition. The
purchase prices were allocated to tangible and intangible assets based on
estimated fair values at the acquisition dates.
 
                                      F-36

<PAGE>   284
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Unaudited pro forma operating results as though the acquisition discussed
above, excluding the Paul Allen Transaction, had occurred on January 1, 1997,
with adjustments to give effect to amortization of franchises, interest expense
and certain other adjustments are as follows:
 

<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                             JANUARY 1, 1998,
                                                                  THROUGH         YEAR ENDED
                                                             DECEMBER 23, 1998       1997
                                                             -----------------    ----------
                                                                       (UNAUDITED)
<S>                                                          <C>                  <C>
Revenues...................................................      $ 67,007          $ 63,909
Loss from operations.......................................        (7,097)           (7,382)
Net loss...................................................       (24,058)          (26,099)
</TABLE>

 
     The unaudited pro forma information has been presented for comparative
purposes and does not purport to be indicative of the results of operations had
these transactions been completed as of the assumed date or which may be
obtained in the future.
 
3.  SALE OF FT. HOOD SYSTEM:
 
     In February 1997, the Company sold the net assets of the Ft. Hood system,
which served customers in Texas, for an aggregate sales price of approximately
$12,500. The sale of the Ft. Hood system resulted in a loss of $1,363, which is
included in operating costs in the accompanying statement of operations for the
year ended December 31, 1997.
 
4.  PROPERTY, PLANT AND EQUIPMENT:
 
     Property, plant and equipment consists of the following at December 31,
1997:
 

<TABLE>
<S>                                                             <C>
Cable distribution systems..................................    $29,061
Land, buildings and leasehold improvements..................        447
Vehicles and equipment......................................      1,744
                                                                -------
                                                                 31,252
Less- Accumulated depreciation..............................     (5,722)
                                                                -------
                                                                $25,530
                                                                =======
</TABLE>

 
     For the period from January 1, 1998, through December 23, 1998, and for the
years ended December 31, 1997 and 1996, depreciation expense was $6,249, $3,898
and $2,371, respectively.
 
                                      F-37

<PAGE>   285
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
 
     Accounts payable and accrued expenses consist of the following at December
31, 1997:
 

<TABLE>
<S>                                                             <C>
Accrued interest............................................    $  292
Capital expenditures........................................       562
Franchise fees..............................................       426
Programming costs...........................................       398
Accounts payable............................................       298
Other.......................................................     1,106
                                                                ------
                                                                $3,082
                                                                ======
</TABLE>

 
6.  LONG-TERM DEBT:
 
     The Company maintained a revolving credit agreement (the "Old Credit
Agreement") with a consortium of banks for borrowings up to $47,500, of which
$41,500 was outstanding at December 31, 1997. In 1997, the Credit Agreement was
amended to reflect the impact of the sale of a cable television system. The debt
bears interest, at the Company's option, at rates based on the prime rate of the
Bank of Montreal (the agent bank), or LIBOR, plus the applicable margin based
upon the Company's leverage ratio at the time of the borrowings. The variable
interest rates ranged from 7.44% to 7.63% at December 31, 1997.
 
     In May 1998, the Company entered into a credit agreement (the "CCP Credit
Agreement"), which provides for two term loan facilities, one with the principal
amount of $60,000 that matures on June 30, 2006, and the other with the
principal amount of $80,000 that matures on June 30, 2007. The CCP Credit
Agreement also provides for a $90,000 revolving credit facility with a maturity
date of June 30, 2006. Amounts under the CCP Credit Agreement bear interest at
the LIBOR Rate or Base Rate, as defined, plus a margin of up to 2.88%.
 
     Commencing March 31, 1999, and at the end of each quarter thereafter,
available borrowings under the revolving credit facility shall be reduced on an
annual basis by 3.5% in 1999, 7.0% in 2000, 9.0% in 2001, 10.5% in 2002 and
16.5% in 2003. Commencing March 31, 2000, and at the end of each quarter
thereafter, available borrowings under the term loan shall be reduced on an
annual basis by 6.0% in 2000, 8.0% in 2001, 11.0% in 2002 and 16.5% in 2003.
Commencing March 31, 2000, and at the end of each quarter thereafter, available
borrowings under the other term loan shall be reduced on an annual basis by 1.0%
in 2000, 1.0% in 2001, 1.0% in 2002 and 1.0% in 2003.
 
     The credit agreement requires the Company and/or its subsidiaries to comply
with various financial and other covenants, including the maintenance of certain
operating and financial ratios. This agreement also contains substantial
limitations on, or prohibitions of, distributions, additional indebtedness,
liens, asset sales and certain other items.
 
7.  NOTE PAYABLE TO RELATED PARTY:
 
     As of December 31, 1997, the Company holds a promissory note payable to CCT
Holdings Corp., a company managed by Charter and acquired by Charter effective
December 23, 1998. The promissory note bears interest at the rates paid by CCT
Holdings Corp. on a note payable to a third party. Principal and interest are
due on September 29, 2005.
 
                                      F-38

<PAGE>   286
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  FAIR VALUE OF FINANCIAL INSTRUMENTS:
 
     A summary of debt and the related interest rate hedge agreements at
December 31, 1997, is as follows:
 

<TABLE>
<CAPTION>
                                                              CARRYING    NOTIONAL     FAIR
                                                               VALUE       AMOUNT      VALUE
                                                              --------    --------    -------
<S>                                                           <C>         <C>         <C>
Debt
CCP Credit Agreement........................................  $41,500     $    --     $41,500
Interest Rate Hedge Agreements
Caps........................................................       --      15,000          --
Collars.....................................................       --      20,000         (74)
</TABLE>

 
     As the long-term debt under the credit agreements bears interest at current
market rates, its carrying amount approximates market value at December 31,
1997.
 
     The notional amounts of interest rate hedge agreements do not represent
amounts exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of interest rate hedge agreements. The amounts
exchanged are determined by reference to the notional amount and the other terms
of the contracts.
 
     The fair value of interest rate hedge agreements generally reflects the
estimated amounts that the Company would receive or pay (excluding accrued
interest) to terminate the contracts on the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Dealer
quotations are available for the Company's interest rate hedge agreements.
 
     Management believes that the sellers of the interest rate hedge agreements
will be able to meet their obligations under the agreements. The Company has
policies regarding the financial stability and credit standing of major
counterparties. Nonperformance by the counterparties is not anticipated nor
would it have a material adverse effect on the Company's financial position or
results of operations.
 
9.  INCOME TAXES:
 
     At December 31, 1997, the Company had net operating loss carryforwards of
$9,594, which if not used to reduce taxable income in future periods, expire in
the years 2010 through 2012. As of December 31, 1997, the Company's deferred
income tax assets were offset by valuation allowances and deferred income tax
liabilities resulting primarily from differences in accounting for depreciation
and amortization.
 
10.  RELATED-PARTY TRANSACTIONS:
 
     Charter provides management services to the Company including centralized
customer billing services, data processing and related support, benefits
administration and coordination of insurance coverage and self-insurance
programs for medical, dental and workers' compensation claims. Certain costs for
services are billed and charged directly to the Company's operating subsidiaries
and are included in operating costs. These billings are determined based on the
number of basic customers. Such costs totaled $437, $220 and $131, respectively
for the period from January 1, 1998, through December 23, 1998, and the years
ended December 31, 1997 and 1996. All other costs incurred by Charter on behalf
of the Company are expensed in the accompanying financial statements and are
included in corporate expense allocations -- related
 
                                      F-39

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          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
party. The cost of these services is allocated based on the number of basic
customers. Management considers these allocations to be reasonable for the
operations of the Company.
 
     Charter utilizes a combination of excess insurance coverage and
self-insurance programs for its medical, dental and workers' compensation
claims. Charges are made to the Company as determined by independent actuaries,
at the present value of the actuarially computed present and future liabilities
for such benefits. Medical coverage provides for $2,435 aggregate stop loss
protection and a loss limitation of $100 per person per year. Workers'
compensation coverage provides for $800 aggregate stop loss protection and a
loss limitation of $150 per person per year.
 
The Company is charged a management fee based on percentages of revenues as
stipulated in the management agreement between Charter and the Company. For the
period from January 1, 1998, through December 23, 1998, and the years ended
December 31, 1997 and 1996, the management fee charged to the Company
approximated the corporate expenses incurred by Charter on behalf of the
Company. Management fees currently payable of $114 are included in payables to
manager of cable television systems -- related party as of December 31, 1997.
 
11.  COMMITMENTS AND CONTINGENCIES:
 
LEASES
 
     The Company leases certain facilities and equipment under noncancelable
operating leases. Leases and rental costs charged to expense for the period from
January 1, 1998, through December 23, 1998, and for the years ended December 31,
1997 and 1996, were $278, $130 and $91, respectively.
 
     The Company also rents utility poles in its operations. Generally, pole
rentals are cancelable on short notice, but the Company anticipates that such
rentals will recur. Rent expense incurred for pole rental attachments for the
period from January 1, 1998, through December 23, 1998, and for the years ended
December 31, 1997 and 1996, was $421, $271 and $174, respectively.
 
LITIGATION
 
     The Company is a party to lawsuits that arose in the ordinary course of
conducting its business. In the opinion of management, after consulting with
legal counsel, the outcome of these lawsuits will not have a material adverse
effect on the Company's financial position or results of operations.
 
REGULATION IN THE CABLE TELEVISION INDUSTRY
 
     The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels. The Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act" and together with
the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996
(the "1996 Telecom Act"), establish a national policy to guide the development
and regulation of cable television systems. The Federal Communications
Commission (FCC) has principal responsibility for implementing the policies of
the Cable Acts. Many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. Legislation
and regulations continue to change, and the Company cannot predict the impact of
future developments on the cable television industry.
 
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          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The 1992 Cable Act and the FCC's rules implementing that act generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established rate regulations.
 
     The 1992 Cable Act permits certified local franchising authorities to order
refunds of basic service tier rates paid in the previous twelve-month period
determined to be in excess of the maximum permitted rates. As of December 31,
1998, the amount refunded by the Company has been insignificant. The Company may
be required to refund additional amounts in the future.
 
     The Company believes that it has complied in all material respects with the
provisions of the 1992 Cable Act, including the rate setting provisions
promulgated by the FCC. However, in jurisdictions that have chosen not to
certify, refunds covering the previous twelve-month period may be ordered upon
certification if the Company is unable to justify its basic rates. The Company
is unable to estimate at this time the amount of refunds, if any, that may be
payable by the Company in the event certain of its rates are successfully
challenged by franchising authorities or found to be unreasonable by the FCC.
The Company does not believe that the amount of any such refunds would have a
material adverse effect on the financial position or results of operations of
the Company.
 
     The 1996 Telecom Act, among other things, immediately deregulated the rates
for certain small cable operators and in certain limited circumstances rates on
the basic service tier, and as of March 31, 1999, deregulates rates on the cable
programming service tier (CPST). The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company cannot predict the ultimate effect of the 1996 Telecom Act on
the Company's financial position or results of operations.
 
     The FCC may further restrict the ability of cable television operators to
implement rate increases or the United States Congress may enact legislation
that could delay or suspend the scheduled March 1999 termination of CPST rate
regulation. This continued rate regulation, if adopted, could limit the rates
charged by the Company.
 
     A number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. State governmental agencies are
required to follow FCC rules when prescribing rate regulation, and thus, state
regulation of cable television rates is not allowed to be more restrictive than
the federal or local regulation. The Company is subject to state regulation in
Connecticut.
 
12.  EMPLOYEE BENEFIT PLAN:
 
401(k) PLAN
 
     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. The Company contributed $74, $29 and $22 for the period from
January 1, 1998, through December 23, 1998, and for the years ended December 31,
1997 and 1996, respectively.
 
                                      F-41

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          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
APPRECIATION RIGHTS PLAN
 
     Certain employees of Charter participate in the 1995 Charter
Communications, Inc. Appreciation Rights Plan (the "Plan"). The Plan permits
Charter to grant 1,500,000 units to certain key employees, of which 1,251,500
were outstanding at December 31, 1997. Units received by an employee vest at a
rate of 20% per year, unless otherwise provided in the participant's
Appreciation Rights Unit Agreement. The appreciation rights entitle the
participants to receive payment, upon termination or change in control of
Charter, of the excess of the unit value over the base value (defined as the
appreciation value) for each vested unit. The unit value is based on Charter's
adjusted equity, as defined in the Plan. Deferred compensation expense recorded
by Charter is based on the appreciation value since the grant date and is being
amortized over the vesting period.
 
     As a result of the acquisition of Charter by Paul G. Allen, the Plan was
terminated, all outstanding units became 100% vested and all amounts were paid
by Charter in 1999. The cost of this plan was allocated to the Company based on
the number of basic customers. Management considers this allocation to be
reasonable for the operations of the Company. For the period January 1, 1998,
through December 23, 1998, the Company expensed $3,800, included in corporate
expense allocation, for the cost of this plan.
 
13.  PARENT COMPANY ONLY FINANCIAL STATEMENTS
 
     As a result of the limitations on and prohibitions of distributions,
substantially all of the net assets of the consolidated subsidiaries are
restricted for distribution to CCHC, the parent company. CCHC (parent company
only) financial statements are presented below.
 
       CHARTER COMMUNICATIONS HOLDING COMPANY, LLC (PARENT COMPANY ONLY)
 
                                 BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1997
                                                              ------------
<S>                                                           <C>
LIABILITIES
INVESTMENT IN CHARTER HOLDINGS..............................    $(1,975)
                                                                =======
SHAREHOLDER'S INVESTMENT
Common Stock................................................    $    --
Paid-in-capital.............................................      5,900
Accumulated deficit.........................................     (7,875)
                                                                -------
                                                                $(1,975)
                                                                =======
</TABLE>

 
                                      F-42

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          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
       CHARTER CO