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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 12/22/1999
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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 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 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 television 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 RESCISSION LIABILITY. The Rifkin and Falcon sellers who acquired
Charter Holdco membership units in connection with the respective Rifkin and
Falcon acquisitions, the Bresnan sellers who will acquire Charter Holdco
membership units connection with the Bresnan acquisition and the Helicon sellers
who acquired shares of Class A common stock in Charter may have rescission
rights against Charter or Charter Holdco, as the case may be, arising out of
possible violations of Section 5 of the Securities Act in connection with the
offers and sales of these equity interests. If all of these equity holders
successfully exercise their possible rescission rights and Charter or Charter
Holdco became obligated to repurchase all such equity interests, the total
repurchase obligations could be up to approximately $1.7 billion. We cannot
assure you that Charter or Charter Holdco would be able to obtain capital
sufficient to fund any required repurchases. This could adversely affect our
financial condition and results of operations.

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 Charter Operating's 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.



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